What You Do Is Who You Are: How to Create Your Business Culture

by Ben Horowitz

Revel in being discarded, or having all your energies exhausted in vain; only those who have endured hardship will be of use. Samurai who have never erred before will never have what it takes. —Hagakure

I was shocked to find out, from overhearing casual conversations, that he was taking storytelling to another level by constantly lying about everything. Thorston was soon working elsewhere, but I knew I had to deal with a much deeper problem: because it had taken me years to find out that he was a compulsive liar, during which time he’d been promoted, it had become culturally okay to lie at LoudCloud. The object lesson had been learned. It did not matter that I never endorsed it: his getting away with it made it seem okay. How could I undo that lesson and restore our culture? I hadn’t the first clue.

Because your culture is how your company makes decisions when you’re not there. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake.

Culture is not like a mission statement; you can’t just set it up and have it last forever. There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business conditions shift and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving.

“Coaching, and not direction, is the first quality of leadership now. Get the barriers out of the way to let people do the things they do well.”

In 1968, Noyce himself split off to start a new company, resigning from Fairchild Semiconductor after being passed over for CEO of Fairchild Camera. He and his colleague Gordon Moore—the coiner of Moore’s law, which holds that microchip capacity doubles every eighteen months while its price falls in half—and a young physicist named Andy Grove founded Intel to tackle the nascent field of data storage.

Breakthrough ideas have traditionally been difficult to manage for two reasons: 1) innovative ideas fail far more than they succeed, and 2) innovative ideas are always controversial before they succeed. If everyone could instantly understand them, they wouldn’t be innovative.

Hierarchies are good at weeding out obviously bad ideas. By the time an idea makes it all the way up the chain, it will have been compared to all the other ideas in the system, with the obviously good ideas ranked at the top.

The problem is that obviously good ideas are not truly innovative, and truly innovative ideas often look like very bad ideas when they’re introduced. Western Union famously passed on the opportunity to buy Alexander Graham Bell’s patents and technology for the telephone. At the time, phone calls were extremely noisy and easy to misinterpret, and they couldn’t span long distances, and Western Union knew from its telegram business that profitable communication depended on accuracy and widespread reach. And Wikipedia was considered a joke when it started. How could something written by a crowd replace the work of the world’s top scholars? Today it is so much more comprehensive than anything that came before it that it’s widely considered the only encyclopedia.

The samurai called their principles “virtues” rather than “values”; virtues are what you do, while values are merely what you believe.

Companies—just like gangs, armies, and nations—are large organizations that rise or fall because of the daily microbehaviors of the human beings that compose them.

There are plenty of massively successful companies with weak, inconsistent, or even toxic cultures; a desirable product can overcome a miserable environment, at least for a while. If you don’t believe me, read up on Enron.

So you won’t find any absolute “best cultures” in this book, just techniques to make your own culture do what you want it to.

Creating a culture is more complex than just trying to get your people to behave the way you want them to when no one is looking. Remember that your employees are far from uniform. They come from different countries, races, genders, backgrounds, even eras. Each one brings to your organization a different cultural point of departure. To get all of them to conform to and be reasonably happy with a common set of norms is a challenging puzzle.

Culture only works if the leader visibly participates in and vocally champions it.

Our aim here is to be better, not perfect.

If your product isn’t superior or the market doesn’t want it, your company will fail no matter how good its culture is.

Because who you are is how people talk about you when you’re not around. How do you treat your customers? Are you there for people in a pinch? Can you be trusted?

Who you are is not the values you list on the wall. It’s not what you say at an all-hands. It’s not your marketing campaign. It’s not even what you believe. It’s what you do. What you do is who you are. This book aims to help you do the things you need to do so you can be who you want to be.

Slavery chokes the development of culture by dehumanizing its subjects, and broken cultures don’t win wars.

If there was a motivational trigger for Louverture to turn from commerce to statecraft, perhaps it came in 1784, when he read a famous passage written by Abbé Raynal, a proponent of liberty who hoped for a slave revolt: “A courageous chief only is wanted. Where is he, that great man whom Nature owes to her vexed, oppressed, and tormented children? Where is he?” According to one account, Louverture read this passage over and over, dreaming that he might be that courageous chief.

As Louverture had envisioned, Europeans were beginning to see that it was the culture of slavery rather than the nature of the slaves themselves that shaped their behavior.

If I am to keep my word to you rather than to pursue my short-term interests, I must believe there will be a bigger payoff from the relationship in the future than whatever I can get by betraying you now. If I believe there is no tomorrow, then there can be no trust.

This dynamic becomes problematic in an army, because trust is fundamental to running any large organization. Without trust, communication breaks. Here’s why: In any human interaction, the required amount of communication is inversely proportional to the level of trust.

If I trust you completely, then I require no explanation or communication of your actions at all, because I know that whatever yo...

On the other hand, if I don’t trust you in the slightest, then no amount of talking, explaining, or reasoning will have any effect on me, because I will never believe you are tell...

“Because in this army, nothing is more important than your word. If we can’t trust you to keep your word to your wife, we definitely can’t trust you to keep your word to us.” (The matter is complicated by the fact that Louverture had illegitimate children, but no leader is perfect.)

Eager to show that they were more than a pillaging mob, the rebels took on all the trappings of a European army of the Old Regime, complete with aides-de-camp, laissez-passers, and fancy officer brevets.

As we will see in the next chapter, something as seemingly simple as a dress code can change behavior, and therefore culture, not only in war but in business.

Many consumer companies want to penetrate the enterprise market—that is, selling to big companies—but resist having employees who walk around in fancy suits. They believe that their original culture should suffice. But their results prove otherwise.

Building a great culture means adapting it to circumstances. And that often means bringing in outside leadership from the culture you need to penetrate or master.

Crucially, Louverture’s ethical instruction was explicit. Often CEOs will be exceptionally explicit about goals such as shipping products, but silent on matters such as obeying the law. This can be fatal. It’s because integrity is often at odds with other goals that it must be clearly and specifically inserted into the culture. If a company expects its people to behave ethically without giving them detailed instructions on what that behavior looks like and how to pursue it, the company will fall far short no matter whom it hires.

Here are the rules for writing a rule so powerful it sets the culture for many years: It must be memorable. If people forget the rule, they forget the culture. It must raise the question “Why?” Your rule should be so bizarre and shocking that everybody who hears it is compelled to ask, “Are you serious?” Its cultural impact must be straightforward. The answer to the “Why?” must clearly explain the cultural concept. People must encounter the rule almost daily. If your incredibly memorable rule applies only to situations people face once a year, it’s irrelevant.

One value, frugality, is defined as Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing head count, budget size, or fixed expenses.

To succeed as an enterprise software company, selling our platform to big businesses, we would have to become a culture distinguished by urgency, competitiveness, and precision. I needed to bring in a leader with those attributes.

He believed that you were either selling or being sold: if you weren’t selling a customer on your product then the customer was selling you on why she wasn’t going to buy it.

He instilled in our eight-person sales team the crucial four C’s. To sell, you had have 1) the competence—expert knowledge of the product you were selling and the process to demonstrate it (qualifying the buyer by validating their need and budget; helping define what their buying criteria are while setting traps for the competition; getting sign-off from the technical and the economic buyer at the customer, and so forth) so that you could have 2) the confidence to state your point of view, which would give you 3) the courage to have 4) the conviction not to be sold by the customer on why she wasn’t going to buy your product. Cranney was obsessed with training every salesperson, testing them, and holding them accountable on the four C’s.

He was fond of saying that most reps had a Wizard of Oz problem: they lacked either the courage, the brain, or the heart to be successful by themselves.

We grew our valuation from around $50 million when we hired Mark to $1.65 billion four years later, when we sold to Hewlett-Packard. That price was roughly double what BladeLogic sold for. Adding Cranney’s cultural elements made a huge difference.

Hastings later observed that the challenge wasn’t getting into a new business—almost every company could and would do that; it’s B School 101. The challenge was getting into a new business with the intention of making it the business. Almost no companies did that.

kicked all the executives who ran the DVD business out of his weekly management meeting. “That was one of the most painful moments in building the company,” he said later. “Because we loved them, we’d grown up with them, and they’re running everything that’s important. But they weren’t adding value in terms of the streaming discussion.” Hastings had long kept looking over his shoulder for a pure-streaming company that would run right by Netflix. He knew that that competitor wouldn’t have any DVD execs in its meetings. So why should Netflix, if it was going to be that company?

When I was CEO of LoudCloud, I tried to create a transparent culture where we shared everything important with everyone. This led to a broad sense of ownership and enabled us to get more brains working on the biggest problems.

I had a slim chance to move us into the software business, which would require less capital and give us a much better chance for survival. I told almost no one of my plans. Why? Because if word got out about the impending transformation not only would our current business fall apart, but so would the deal to enable the new business.

But I had to hurt the culture—to stop walking my own talk, for a time—to save the company.

“Okay, I am the one who drove the last business into a ditch, so why should you trust me this time?”

As the New York Times reported, employees were given mattresses so they could nap as they worked late nights, and were onboarded in a boot-camp-style training course that entailed morning jogs and the performance of skits about how they’d help customers even in dangerous war zones.

What you measure is what you value. Huawei’s results echoed Uber’s. Once you remove the requirement to follow certain rules or obey certain laws, you basically remove ethics from the culture.

A value is merely a belief, but a virtue is a belief that you actively pursue or embody. The reason so many efforts to establish “corporate values” are basically worthless is that they emphasize beliefs instead of actions. Culturally, what you believe means nearly nothing. What you do is who you are. Even the samurai oath is oriented toward action:

Hagakure, the most famous collection of samurai wisdom, instructs: “The extent of one’s courage or cowardice cannot be measured in ordinary times. All is revealed when something happens.”

The biggest threat to your company’s culture is a time of crisis, a period when you’re getting crushed by the competition or are nearing bankruptcy. How do you focus on the task at hand if you might be killed at any moment? The answer: they can’t kill you if you’re already dead. If you’ve already accepted the worst possible outcome, you have nothing to lose. Hagakure commands you to imagine and accept the worst in gory detail: