The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers

by Ben Horowitz

its illegal to forbid employees discussing their pay

In a vacuum of feedback, there is almost no chance that your company will perform optimally across either dimension. Directions with no corrections will seem fuzzy and obtuse. People rarely improve weakness they are unaware of. The ultimate price you will pay for not giving feedback: systematically crappy company performance.

Every really good, really experienced CEO I know shares one important characteristic: They tend to opt for the hard answer to organizational issues.

Ironically one of the first things you learn when you run an engineering organization is that a good quality assurance organization cannot build a high-quality product, but it can tell you when the development team builds a low quality product. Similarly, a high quality human resources organization cannot make you a well-managed company with a great culture, but it can tell you when you and your managers are not getting the job done.

Sometimes an organization doesn’t need a solution; it just needs clarity. Once I made it clear that cursing was okay—so long as it wasn’t used to intimidate or harass—nobody had a problem with it anymore.

Bottom line, the results of the policy were good: a comfortable work environment, low attrition, and no complaining.

For a complete explanation of the dangers of managers with the wrong kind of ambition, I strongly recommend Dr. Seuss’s management masterpiece Yertle the Turtle.

However, sometimes a really smart employee develops an agenda other than improving the company. Rather than identifying weaknesses so that he can fix them, he looks for faults to build his case. Specifically, he builds his case that the company is hopeless and run by a bunch of morons. The smarter the employee, the more destructive this type of behavior can be.

She is immature and naive. She cannot comprehend that the people running the company do not know every minute detail of the operation and therefore they are complicit in everything that’s broken.

As a company grows, its biggest challenge always becomes communication.

If a member of your staff is a raging jerk, it may be impossible. Some people are so belligerent in their communication style that people just stop talking when they are in the room.

Note that this only happens if the jerk in question is unquestionably brilliant. Otherwise, nobody will care when she attacks them.

The first question you might ask is “Why do I need senior people at all? Won’t they just ruin the culture with their fancy clothes, political ambitions, and need to go home to see their families?” To some extent, the answer to all of those may be “yes,” which is why this question must be taken quite seriously.

Asking yourself, “Do I value internal or external knowledge more for this position?” will help you determine whether to go for experience or youth.

You don’t know the job as well as they do. In fact, you are hiring them precisely because you don’t know how to do the job. So how do you hold them accountable for doing a good job?

First, you should demand cultural compliance.

Do not be intimidated by experience on this issue; stick to your guns and stick to your culture.

Perhaps most important, set a high and clear standard for performance. If you want to have a world-class company, you must make sure that the people on your staff—be they young or old—are world-class. It is not nearly enough that someone on your staff can do the job better than you can, because you are incompetent at the job—that’s why you hired them in the first place.

One excellent way to develop a high standard is to interview people who you see doing a great job in their field. Find out what their standard is and add it to your own.

If you are an employee, how do you get feedback from your manager on an exciting but only 20 percent formed idea that you’re not sure is relevant, without sounding like a fool? How do you point out that a colleague you do not know how to work with is blocking your progress without throwing her under the bus? How do you get help when you love your job but your personal life is melting down? Through a status report? On email? Yammer? Asana? Really? For these and other important areas of discussions, one-on-ones can be essential.

During the meeting, since it’s the employee’s meeting, the manager should do 10 percent of the talking and 90 percent of the listening. Note that this is the opposite of most one-on-ones.

but when a shocked new employee asks why she must work on a makeshift desk constructed out of random Home Depot parts, the answer comes back with withering consistency: “We look for every opportunity to save money so that we can deliver the best products for the lowest cost.” If you don’t like sitting at a door, then you won’t last long at Amazon.

is this still true? is this legal if someone needs an ergonomic desk?

If you don’t think entrepreneurs are more important than venture capitalists, we can’t use you at Andreessen Horowitz.

how does he define entrepreneur

Every smart company values its employees. Perks are good, but they are not culture. THE POINT OF IT ALL In the later section “How to Evaluate CEOs”, I describe the CEO job as knowing what to do and getting the company to do what you want. Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time. TAKING THE MYSTERY OUT OF SCALING A COMPANY If you want to build an important company, then at some point you have to scale. People in startup land often talk about the magic of how few people built the original Google or the original Facebook, but today’s Google employs twenty thousand people and today’s Facebook employs more than fifteen hundred people. So,

if you want to do something that matters, then you are going to have to learn the black art of scaling a human organization.

Specifically, the following things that cause no trouble when you are small become big challenges as you grow: Communication Common knowledge Decision making

Getting a new engineer up to speed starts to become more difficult than doing the work yourself. At this point, you need to specialize.

With this in mind, here are the basic steps to organizational design:

Figure out what needs to be communicated.

Figure out what needs to be decided. Consider the types of decisions

Prioritize the most important communication and decision paths.

Decide who’s going to run each group. Notice

Identify the paths that you did not optimize.

Build a plan for mitigating the issues identified in step five.

When should you start implementing processes? While that varies depending on your situation, keep in mind that it’s much easier to add new people to old processes than new processes to old people. Formalize what you are doing to make it easy to onboard new people.

I have found the “The Basics of Production,” the first chapter of Andy Grove’s High Output Management, to be particularly helpful.

Focus on the output first. What should the process produce?

Figure out how you’ll know if you are getting what you want at each step. Are you getting enough candidates? Are you getting the right candidates?

Engineer accountability into the system. Which organization and which individual is responsible for each step?

you must constantly evaluate all the members of your team. However, evaluating people against the future needs of the company based on a theoretical view of how they will perform is counterproductive, for the following reasons:

Managing at scale is a learned skill rather than a natural ability. Nobody comes out of the womb knowing how to manage a thousand people. Everybody learns at some point.

It’s nearly impossible to make the judgment in advance. How do you tell in advance if an executive can scale?

The act of judging people in advance will retard their development. If you make a judgment that someone is incapable of doing something such as running a larger organization, will it make sense to teach them those skills or even point out the anticipated deficiencies? Probably not. You’ve already decided they can’t do it.

You still have to make the judgment at the actual point in time when you hit the higher level of scale. Even if you avoid the trap of hiring a scalable executive too early or retarding the new executive’s development, you still haven’t actually bought yourself anything by making the prejudgment.

It’s no way to live your life or run an organization. Deciding (with woefully incomplete data) that someone who works their butt off, does a terrific job, and loyally contributes to your mission won’t be with you three years from now takes you to a dark place.

You should evaluate your team at least once a quarter on all dimensions.

Don’t separate scale from the rest of the evaluation. The relevant question isn’t whether an executive can scale; it’s whether the executive can do the job at the current scale.

Make the judgment on a relative rather than an absolute scale. Asking yourself whether an executive is great can be extremely difficult to answer. A better question: For this company at this exact point in time, does there exist an executive who I can hire who will be better?

What I saw was two guys come visit me when every other public company CEO and chairman was hiding under their desk. Not only did you come see me, but you were more determined and convinced you would succeed than guys running giant businesses. Investing in courage and determination was an easy decision for me.”

Perhaps the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong.