This book is one of the first books to read as an entrepreneur. Ben Horowitz candidly talks about the struggles, and hard things about starting, running and growing companies. Here is a Techcrunch article reviewing this book.

The beginning

A bully told Ben to ask another kid for his wagon, and if the other kid refuses, to spit in his face and call him profanity. Ben reluctantly went to the other kid and politely asked to play with his wagon, and the other kid obliged. This is how Ben met his best friend - by doing something uncomfortable. It taught him not to judge things by their surfaces, and that there are no shortcuts to anything.

Some tidbits of learning:

  • The most important rule of raising money privately: Look for a market of one. You only need one investor to say yes, so it is better to ignore the other thirty who say “no”
  • The best things about startups is that you only ever experience two emotions - euphoria and terror, and the lack of sleep enhances them both.
  • You need 2 kinds of friends in your life - the one you can call when things are great and who can be happy for you, and one you can call when things are going bad and who is your lifeline in that bad time.
  • Have mentors who have gone though some horrible and devastating circumstances so that they can advice you how to avoid them
  • Startup CEOs should not play the odds. WHen you are building a company, you must believe that there is an answer and you cannot pay attention to your odds of finding it.

When things fall apart

The secret to being a successful CEO is the ability to focus and make the best move when there are no good moves.

Struggle in your company is not failure - but it often causes failure - if you are not strong enough to endure it.

How to deal with struggle:

  • Divide and conquer - seek help, don’t put it all on your own shoulders
  • Don’t underestimate the complexity - this is chess not checkers.
  • Play long enough and you might get lucky
  • Do not take it personally

CEOs should tell it like it is

  • ignoring the negatives does not pain a realistic picture and makes you appear less trustworthy
  • If there is a problem, it is better for the team to find a solution together, rather that the CEO to shelter the team from it

If you ever need to fire your employees, executives, or demote a friend - do it the right way.

When you are in a trouble, nobody really cares - not employees, customers, media or investors. Your time is best spent on figuring out a solution, thank worrying about what anyone thinks of you.

Take care of the people, the products and the profits - in that order

  • when hiring executives, hire for strength rather than lack of weakness.
  • If you are looking for a genius who might not be the best cultural fit, know what you are getting into, and hire them for the genius that they bring to the team
  • Being a good company doesn’t matter when things go well, but it can be the difference between life and death when things go wrong. Things always go wrong!
  • It is important to train your employees
    • It improves productivity
    • Sets expectations
    • Improves quality and throughput
    • Increases employee retention as they will strive hard to reach specific targets
    • Best place to start is management and new employees
Good Product Managers Bad Product Managers
Know the marker, product, product line and competition extremely well Work with excuses - not enough funding, too much competition etc.
Crisply define the target and the “what” Feel good about themselves when they figure out the “how”
Create collateral such as FAQs presentations Complain about spending their time answering questions
Take written positions on important issues Use verbal communication
Focus the team on revenue and customers Focus the team on how many features the competitors are building
Decompose problems into segments Combine all problems into one
Think about the story they want to be written in the press Think about covering every feature and being technically accurate with the press
Articulate simply and clearly Never explain the obvious
Disciplined execution of status reports Don’t value discipline

Should you hire your friends employees?

  • probably not, if you don’t want to do the same to you

Issues with hiring big company executives:

  • Rhythm mismatch - exec is used to waiting for incoming communication rather than taking action
  • Skill-set mismatch - Large company execs are good at managing complex organizations, process improvement etc, which isn’t quite where a smaller organization skill requirement is.

These problems can be allayed by screening for mismatches early on and asking questions like:

  • what will you do in your first month on the job
  • how will your new job differ from your current job
  • why do you want to join a small company

Once a candidate is on board, aggressively integrate them in your company by doing the following:

  • force them to create and produce immediately
  • make sure they “get it”
  • make sure they connect with and initiate connections with everyone in the organization

While hiring executives:

  • Know what you want
  • Run a process the figures out the right match
  • Sometimes make the lonely decision that a CEO has to make

Like technical debt, be careful of management debt. Here are a few ways in which management debt can arise:

  • Putting two people together to manage
  • Overcompensation a key employee because they get another job offer
  • No performance management of employee feedback process

Concerning the growing concern

Sometimes an organization doesn’t need a solution, it just needs clarity. E.g. Ben’s employees were uncomfortable with the amount of profanity used at the company. He offered an explanation and suggestion to use it in the right context of work and urgency, and not to intimidate or sexually harass anymore. He compared it to the word “cupcake”. It is okay to say - “Those cupcakes you baked were delicious”, but it is not okay to say “Hey cupcakes, you look fine in those jeans. “

No one likes corporate politics, however it often unintentionally develops in an organization by sometimes incentivizing political behavior (unwittingly). E.g. if a senior executive requests a pay raise, with a competitive offer at hand, a CEO might offer them additional compensation to have them stay. Although it might seem innocent, this is strong incentive for political behavior as the CEO is rewarding behavior that has nothing to do with advancing the business. This is bad because:

  • others in the staff would like to ask for raises as well and this doesn’t seem performance driven but arbitrary
  • less aggressive members might be denied off cycle raises
  • people start optimizing over total compensation rather than growth of the product

How to minimize politics:

  • Hire people with the right kind of ambition and not necessarily political.
  • Build strict process for potentially political issues and do not deviate

Smart people are sometimes bad employees:

  • when they are disempowereed
  • when they are fundamentally a rebel
  • when they are immature/naive

Hiring senior people (older people - who have been there) to your startup is like taking performance enhancing drugs. If all goes well, you will achieve incredible new heights. If all goes wrong, you will start degenerating from the inside out.

It is challenging to hire senior employees:

  • they come with their own culture
  • they know how to work the system
  • you do not know the job as well as they do

It is important to have effective one on ones with employees. Here are a few questions:

  • if we could improve in any way, how could we do it?
  • what is the #1 problem with our organization? why?
  • what is not fun about working here?
  • who is really kicking ass in the company? who do you admire?
  • if you were me, what changes would you make?
  • what don’t you like about the product?
  • what is the biggest opportunity that we are missing out on?
  • what are we not doing that we should be doing?
  • are you happy working here?

When you are building a company and a product, you should have the following covered:

  • You should be at least 10 times better than the competition (one 2 or 3 times better)
  • You should take the market before anyone else does

If you are in the right direction with your product and market, company culture is the next important thing because it:

  • distinguishes you from the competitors
  • ensures and defines operating values
  • helps identify employees who fit with your mission

E.g. Amazon has frugality as their culture as they made employees use cheap doors from Home Depot as desks. E.g. Facebook has the motto of “Move fast and break things”, which make people stop and realize that they need to move fast and innovate, which might lead to breaking things - which is accepted.

How to lead even when you don’t know where you are going

As an entrepreneur one needs to stop focusing on the things you did wrong, or might do wrong.

The most difficult skill to learn as a CEO is the ability to manage their own psychology. Everything else is relatively straightforward as compared to keeping the mind in check.

As CEO - nothing prepares you to run a company (not being a manager, etc). You learn how to run a company, by running a company.

If CEOs were graded on a curve, the mean on the test would be 22 out of 100. This is because:

  • there is always broken stuff, and CEOs either take it too personally, or not personally enough
  • It is a lonely job being a CEO

Great CEOs face the pain, and the torture. Great CEos don’t quit.

There is no difference in how you feel when you are a hero or a coward. The fear is the same. The only difference is what you do with that fear that makes you either a hero, or a coward.

Great CEOs need to trust themselves and might have to go against the wishes of their team - for hiring, etc. for the benefit of the company.

There are 2 types of CEOs in the world:

  • ONES - managers who are happier setting the direction of the company
    • most founding CEOs tend to be ones
    • enjoy making decisions
    • strategic minds and enjoy the 8 dimensional chess with their competitors
  • TWOS - those who enjoy making the company perform at the highest level
    • enjoy the process of making the company run well
    • often have difficulty with the strategic process itself

A good CEO needs to have the qualities of ONES and TWOS. Most organizations are run by ONES and have a team of TWOS.

What makes people follow a leader?

  • The ability to articulate the vision
  • The right kind of ambition
  • The ability to achieve the vision

There are 2 modes of being a CEO:

  • when facing an imminent threat - Wartime CEO
  • when it is business as usual - peacetime CEO It is an art to be able to be a wartime and peacetime CEO.

It takes a long time to develop CEO skillset, and it is hard to tell whether someone can develop it or not.

How to give feedback as a CEO:

  • be authentic
  • some from the right place (you want them to succeed)
  • don’t get personal
  • don’t embarrass anyone in front of their peers
  • feedback is not one size-fits all
  • be direct, but not mean
  • feedback is a dialog, not a monologue

First rule of entrepreneurship - there are no rules

In technology business you rarely know everything upfront, and letting people be creative can be the difference between magical and mediocre.