"The Hard Thing about Hard Things": The most valuable book on startup management hands down
It's not a surprise that Ben Horowitz got a book deal, that the book is already getting a flood of press, or that it'll sell well. Horowitz is one of the most powerful investors in Silicon Valley right now and has built his following largely through his writing on this blog. A book collecting a lot of these posts was a no brainer for him to pull together and a publisher to commission.
But fortunately The Hard Thing about Hard Things is way, way more than that.
I found myself rushing through the section that was basically reprinted blog posts. Sure, great advice. But like a lot of people in the Valley, I'd read a lot of them before. What I devoured as if it were a scandalous true crime novel was the opening chapters that relive the horror of Horowitz's own personal journey.
Horowitz wasn't the Mark Zuckerberg of his day or even the Mark Pincus. He wasn't on magazine covers and his company-- Opsware-- wasn't remotely sexy. He wasn't a rogue of enterprise software like Larry Ellison or Tom Siebel. He didn't pull elaborate publicity stunts like Marc Benioff.
His story is gripping because he went through more shit than most CEOs will ever endure.... well, will endure without giving up at least. There's none of the Y-Combinator "this is merely an experiment" attitude in this book. The pressure of being a CEO-- the jobs, the investor pressure, the pride, the customers, his board-- these all weighed on Horowitz for years. At one point he writes:
I had a great deal of trouble sleeping as I thought about our fate. I tried to make myself feel better by asking, "What's the worst thing that could happen?" The answer always came back the same: "We'll go bankrupt, I'll lose everybody's money including my mother's, I'll have to lay off all the people who have been working so hard in a very bad economy, all of the customers that trusted me will be screwed, and my reputation will be ruined." Funny, asking that question never made me feel any better.Put another way: Opsware wasn't some "experiment." And Horowitz was no "serial entrepreneur;" he was no "idea man" happy to hand off the nuts and bolts of building a business to someone else while he pursued his next idea. Tellingly, he's never been a CEO since and says he never will again. That's how seriously he takes what he famously calls "the struggle."
He said in an interview with Pando last week, it was difficult reliving it-- even on the other side of a $1.65 billion exit. "Marc and I used to joke, 'One day we'll chuckle nervously and change the subject,' but it was weird how vividly it all came back," he says. "Some things make me nervous all over again. I can see myself on that roadshow sitting in that chair in an ink black jacket and dark blue suit pants."
Readers of the book will know that at that moment Horowitz was not only fighting to keep his company out of bankruptcy, he'd found out his wife was in the hospital thousands of miles away. He was so overwhelmed he was literally incapable of dressing himself.
Horowitz described that IPO roadshow to me as a decision between jumping into a volcano versus facing a firing squad. The probability of death versus the absolute certainty of it. "People in the press were going on about how stupid we were for going public in the bottom of the market. We weren't going out because we wanted to."
Horowitz's partner, Marc Andreessen, once told me there are two very simple hallmarks to success in entrepreneurship: Giving a shit and not giving up. This book is a painful manifesto of that. (Disclosure: Andreessen is a personal investor in PandoDaily. Horowitz turned us down. Horowitz's daughter did however do a summer internship with us our first year, which he has rightly called a more valuable contribution to the company.)
After reading Sheryl Sandberg's Lean In, I've advised all men who employ women -- or strive to employ more women-- it's essential reading to understand what women go through in society and work. Likewise, I've told all of the Pando team for weeks they should read Horowitz's book. They'll understand entrepreneurs we cover better-- and selfishly-- they'll understand what I've gone through over the last two years, what Paul Carr went through before selling NSFWCORP. I want my husband to read it. I want my parents to read it.
It's almost impossible to describe the unique psychological torture of building a company-- particularly given the last decade of "glamour" tech blogging, stupid reality shows, and wildly fictionalized movies, all written by people who mostly haven't built companies, laid anyone off, or once negotiated a term sheet.
But Horowitz comes close. The closest I've seen anyone come in fifteen years of covering this subject. He writes:
If CEOs were graded on a curve, the mean on the test would be a 22 out of 100. This kind of mean can be psychologically challenging for a straight-A student. It is particularly challenging because nobody tells you that the mean is 22....When people in my company would complain about one thing or another being broken, such as the expense reporting process, I would joke that it was all my fault. The joke was funny, because it wasn't really a joke. Every problem in the company was indeed my fault....Being responsible for everything and getting a 22 on the test starts to weigh on your consciousness."Hard" doesn't begin to cover it.
That alone would be a reason to read this book, if you've built, are thinking about building, or know a loved one who is building a company. But it's also more than that. There is real, practical business advice in here that contradicts everything anyone else in the Valley will tell you.
An example: "Hire a worldclass team!" they say. "Make a wish list of who you want and go after them!" "A players only want to work with A players, so don't hire B players."
Wait a minute-- you are saying I should try to hire great talent? Because I was just going to walk outside and yell that I had jobs available.
"Hire a worldclass team" is about as helpful as telling someone to "Try their hardest." Anyone building a company likely already is, and if not, you telling them isn't going to suddenly make them try harder.
You know what's hard? Hiring a worldclass sales manager when you have a company that is trading at less than cash at the wake of the dot com bust. Astoundingly, the best sales managers in the world just weren't returning Horowitz's calls. So instead-- in one of my favorite sections of the book-- he describes hiring Mark Cranney.
It was a decision most of his board and his executive team were violently against. (Lesson to Horowitz: "No one else gets a vote.") Cranney actively made people feel uncomfortable-- not what you want in a sales guy. Horowitz describes him as physically looking like a perfect "square." But he was a savant at how to build an effective sales team.
My favorite passage is when Horowitz sat down to explain to his cofounder-- and to many, the face of the company-- Andreessen why he was hiring him:
I let Marc open the conversation...by listing his issues with Cranney: doesn't look or sound like a head of sales, went to a weak school, makes him uncomfortable. I listened very carefully and replied, "I agree with every single one of those isues. However, Mark Cranney is a sales savant. He has mastered sales to a level that far exceeds anybody that I have ever known. If he didn't have the things wrong with him that you enumerated, he wouldn't be willing to join a company that just traded at thirty-five cents per share; he'd be the CEO of IBM." Marc's reply came quickly: "Got it. Let's hire him!"That is the reality of how you hire as a startup CEO going through any degree of shit, which let's face it, they all are. Unless you are Facebook, you can't call whoever you want an offer them a job. (And truth be told, even Facebook doesn't have a 100% batting average on hiring.) You have to find the person the best at the single unique skill you need and tolerate everything else that comes with them. The reason they aren't running IBM despite their skills. That is helpful hiring advice.
The other big take away for me was Horowitz's belief that you should never hire for where you think your company will be in the future. Everyone who has been near a startup has seen the all too common and sad situation where people don't scale with a company. A sales manager-- for instance-- scraps in the early days and is essential towards making your company great, getting you to the next funding round, but when you get to that next size, that person is no longer the right person for that job. It's heartbreaking. This person sacrificed for years for your dream and now you have to fire them.
People advise to correct against this by hiring for "scale." Hiring who you think you'll need in the future. Think of it like buying your kids a coat with "room to grow."
Here's the problem, Horowitz explains, to the exact contrary of most advice I've received: You have no idea what your company will need at that mythical future point. And in the meantime, you need someone to do the job that needs to be done now. It is a different skill set to sell for a fledgling company and a large organization.
Think of it like a pivotal, tied game four of the World Series. Do you put the ace starter in to close the game, knowing he'll be wrecked for game five? If you do, you may not win game five. If you don't, Horowitz would argue, you don't get to game five. Building a company is about getting to game five, not worrying about what happens when you get there. Those are comparatively high class problems to have.
As I read this section of the book I instinctively disagreed. And then I thought through the many hires I've seen that haven't worked-- both at Pando and at TechCrunch. Almost all of them fit into this category. I was so bought into the Valley's conventional wisdom to hire for scale that I hadn't even recognized that it hadn't worked for me when the pattern smacked me in the face.
Horowitz describes the widespread belief that you should build for future scale as a human reaction from the pain of having to lay off people who don't scale. But that doesn't make it a better solution. This is the pain of being a startup CEO. It's which option is worse, not finding the good option. "When you go through that you think, 'Wow that's sad,' but then if you try and do something else, it's like, 'Wow; that's much worse,'" he says. "You need someone for your company, not for Dropbox, and you need it for your company now."
When an author can change my perception of what happened to me, and offer advice no other investor has, that's a book worth reading. It's a book worth reading if you have a great board and investors and mentors, as I do. And it's a book you must read if you are alone on the far-flung edges of the startup world.
But despite all this, I was greedy. In our interview, I asked for another piece of advice Horowitz didn't cover in such detail in the book: Work-life balance. Women aren't the only ones who grapple with this, and I know that Horowitz is devoted to his wife and kids. Early on, he gave me one of the best pieces of advice on this topic I'd heard, and it's something I think about a lot: "Remember, you aren't CEO at home."
I asked if he had any more advice for me. "I try to do two or three things every week I can do without being asked that will make home feel much better; something that shows at least I have consideration for them. I used to put it in my calendar, so I wouldn't forget. Things like 'Write a card with a nice note in it.' That level of stuff. It's not big but it shows I at least thought about it. I found that to be very powerful."
For more with Horowitz, watch our PandoMonthly with him-- still one of my favorites.
[Image courtesy Christopher.Michel]