Book - The Hard Thing About Hard Things By Ben Horowitz

Overview

This book is insanely well-written and very funny, but very serious at the same time. It has many moments of lightness to balance out the weight of big concepts. I love this one because it reinforces my belief that anything worth doing is difficult. In business, there are patterns. And we can learn from others’ failures. But there is no recipe for success. Every leader has to conquer their own “hard things.”

INTRODUCTION

"This the real world, homie, school finished
They done stole your dreams, you dunno who did it."
—KANYE WEST, "GORGEOUS"

The hard thing isn’t setting a big, hairy, audacious goal. The hard thing is laying people off when you miss the big goal.
The hard thing isn’t hiring great people. The hard thing is when those "great people" develop a sense of entitlement and start demanding unreasonable things.
The hard thing isn’t setting up an organizational chart. The hard thing is getting people to communicate within the organization that you just designed.
The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.

The problem with these books is that they attempt to provide a recipe for challenges that have no recipes. There’s no recipe for really complicated, dynamic situations. There’s no recipe for building a high-tech company; there’s no recipe for leading a group of people out of trouble; there’s no recipe for making a series of hit songs; there’s no recipe for playing NFL quarterback; there’s no recipe for running for president; and there’s no recipe for motivating teams when your business has turned to crap. That’s the hard thing about hard things—there is no formula for dealing with them.

Nonetheless, there are many bits of advice and experience that can help with the hard things.

CHAPTER 1 — FROM COMMUNIST TO VENTURE CAPITALIST

"This here is all about
My wife, my kids, the life that I live
Through the night, I was his, it was right, but I did
My ups, and downs, my slips, my falls
My trials and tribulations, my heart, my balls."
—DMX, "WHO WE BE"

Being scared doesn’t mean being gutless. What you do matter and would determine whether you would be a hero or a coward. Do not judge things by their surfaces. Until you make the effort to get to know someone or something, you don’t know anything. There are no shortcuts to knowledge, especially knowledge gained from personal experience. Following conventional wisdom and relying on shortcuts can be worse than knowing nothing at all.

TURN YOUR SHIT IN

My first lesson in leadership: Former secretary of state Colin Powell says that leadership is the ability to get someone to follow you even if only out of curiosity.

Looking at the world through different prisms helps separate facts from perception. In particularly dire circumstances when the “facts” seem to dictate a certain outcome, learn to look for alternative narratives and explanations coming from radically different perspectives to inform your outlook. The simple existence of an alternate, plausible scenario is often all that’s needed to keep hope alive among a worried workforce.

BLIND DATE

That’s the price of not taking the time to understand: you will never know.

SILICON VALLEY

Don’t run out of time. Up until a certain point, we do not really make any serious choices. We feel like we have unlimited bandwidth and could do everything in life that we wanted to do simultaneously.

We need to look at the world through priorities that were not purely our own. When you are part of a family or part of a group, that kind of thinking can get you into trouble. In your mind, you may be confident that your are a good person and not selfish, but your actions say otherwise. You have to stop being a boy and become a man. Put first things first. Consider the people who you care about most before considering yourself.

Stop thinking about yourself and focus on what is best for your family.

NETSCAPE

Most business relationships either become too tense to tolerate or not tense enough to be productive after a while. Either people challenge each other to the point where they don’t like each other or they become complacent about each other’s feedback and no longer benefit from the relationship.

CHAPTER 2 — “I WILL SURVIVE”

"Did you think I’d crumble?
Did you think I’d lay down and die?
Oh no, not I
I will survive."
—GLORIA GAYNOR, "I WILL SURVIVE"

EUPHORIA AND TERROR

People offer many complex reasons for why Bill Campbell rates so highly. In my experience it’s pretty simple. No matter who you are, you need two kinds of friends in your life. The first kind is one you can call when something good happens, and you need someone who will be excited for you. Not a fake excitement veiling envy, but a real excitement. You need someone who will actually be more excited for you than he would be if it had happened to him. The second kind of friend is somebody you can call when things go horribly wrong—when your life is on the line and you only have one phone call. Who is it going to be? Bill Campbell is both of those friends.

IF YOU ARE GOING TO EAT SHIT, DON’T NIBBLE

“Gentlemen, I’ve done many deals in my lifetime and through that process, I’ve developed a methodology, a way of doing things, a philosophy if you will. Within that philosophy, I have certain beliefs. I believe in artificial deadlines. I believe in playing one against the other. I believe in doing everything and anything short of illegal or immoral to get the damned deal done.”

We thanked him and headed to the airport. We called both EDS and IBM to let them know that we would complete the process over the next eight weeks and sell the Loudcloud business to someone. If they wanted to play, they had to move on that schedule or withdraw immediately. The Michael Ovitz artificial deadline was in full effect. We knew that we might have to go past it, but Michael gave us confidence that going past the deadline was a better move than not having one.

I called Bill Campbell to tell him the good news: The deal was signed and we would be announcing it in New York on Monday. He replied, “Too bad you can’t go to New York and be part of the announcement; you’ll have to send Marc.” I said, “What do you mean?” He said, “You need to stay home and make sure everybody knows where they stand. You can’t wait a day. In fact, you can’t wait a minute. They need to know whether they are working for you, EDS, or looking for a fucking job.” Damn. He was right. I sent Marc to New York and prepared to let people know where they stood. That small piece of advice from Bill proved to be the foundation we needed to rebuild the company. If we hadn’t treated the people who were leaving fairly, the people who stayed would never have trusted me again. Only a CEO who had been through some awful, horrible, devastating circumstances would know to give that advice at that time.

CHAPTER 3 — THIS TIME WITH FEELING

"I move onward, the only direction
Can’t be scared to fail in search of perfection."
—JAY Z, "ON TO THE NEXT ONE"

SIXTY DAYS TO LIVE

An early lesson I learned in my career was that whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project. An engineer might get stuck waiting for a decision or a manager may think she doesn’t have authority to make a critical purchase. These small, seemingly minor hesitations can cause fatal delays. I could not afford any hesitation, so I scheduled a daily meeting with Anthony, Jason, and the team—though they were now based in Plano. The purpose was to remove all roadblocks. If anyone was stuck on anything for any reason, it could not last more than twenty-four hours—the time between meetings.

SURVIVAL OF THE FITTEST

It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.

In my weekly staff meeting, I inserted an agenda item titled “What Are We Not Doing?” Ordinarily in a staff meeting, you spend lots of time reviewing, evaluating, and improving all of the things that you do: build products, sell products, support customers, hire employees, and the like. Sometimes, however, the things you’re not doing are the things you should actually be focused on.

Unfortunately, the Jive was not a good code base and could not be turned into a commercial product. My choices were: (a) start a new project or (b) buy one of the four existing network automation companies. Early in my career as an engineer, I’d learned that all decisions were objective until the first line of code was written. After that, all decisions were emotional.

Surprisingly, among the four existing network automation players, the company that we thought had the best product architecture, Rendition Networks, had the lowest revenues. This made some of our businesspeople skeptical of our technical evaluation. However, if I’d learned anything it was that conventional wisdom had nothing to do with the truth and the efficient market hypothesis was deceptive. How else could one explain Opsware trading at half of the cash we had in the bank when we had a $20 million a year contract and fifty of the smartest engineers in the world? No, markets weren’t “efficient” at finding the truth; they were just very efficient at converging on a conclusion—often the wrong conclusion.

After confirming that acquiring would be superior to building, we negotiated a deal to buy Rendition Networks for $33 million. Within three months of completing the acquisition, John negotiated a deal with Cisco Systems—the world’s largest networking company—to resell our product. The deal included an agreement to prepay us $30 million for advanced licenses. As a result, the Cisco deal alone paid more than 90 percent of the acquisition costs.

Note to self: It’s a good idea to ask, “What am I not doing?”

THE ULTIMATE DECISION

To get things started, John and I called Michael Ovitz to get some advice. We felt one of the potential bidders, Oracle, would be the least likely to bid high, because it was extremely disciplined in its financial analysis. We conveyed this to Michael and questioned whether we should pursue Oracle at all. His reply was priceless: “Well, boys, if you are going to have a dog race, then you are going to need a rabbit. And Oracle will be one hell of a rabbit.”

CHAPTER 4 — WHEN THINGS FALL APART

“There are several different frameworks one could use to get a handle on the indeterminate vs. determinate question. The math version is calculus vs. statistics. In a determinate world, calculus dominates. You can calculate specific things precisely and deterministically. When you send a rocket to the moon, you have to calculate precisely where it is at all times. It’s not like some iterative startup where you launch the rocket and figure things out step by step. Do you make it to the moon? To Jupiter? Do you just get lost in space? There were lots of companies in the ’90s that had launch parties but no landing parties.

“But the indeterminate future is somehow one in which probability and statistics are the dominant modality for making sense of the world. Bell curves and random walks define what the future is going to look like. The standard pedagogical argument is that high schools should get rid of calculus and replace it with statistics, which is really important and actually useful. There has been a powerful shift toward the idea that statistical ways of thinking are going to drive the future.”

—PETER THIEL

Through the seemingly impossible Loudcloud series C and IPO processes, I learned one important lesson: Startup CEOs should not play the odds. When you are building a company, you must believe there is an answer and you cannot pay attention to your odds of finding it. You just have to find it. It matters not whether your chances are nine in ten or one in a thousand; your task is the same.

To this day, I sincerely appreciate his telling me the truth about the odds. But I don’t believe in statistics. I believe in calculus.

People always ask me, “What’s the secret to being a successful CEO?” Sadly, there is no secret, but if there is one skill that stands out, it’s the ability to focus and make the best move when there are no good moves. It’s the moments where you feel most like hiding or dying that you can make the biggest difference as a CEO.

I put this section first even though it deals with some serious endgame issues such as how to fire an executive and how to lay people off. In doing so, I follow the first principle of the Bushido—the way of the warrior: keep death in mind at all times. If a warrior keeps death in mind at all times and lives as though each day might be his last, he will conduct himself properly in all his actions. Similarly, if a CEO keeps the following lessons in mind, she will maintain the proper focus when hiring, training, and building her culture.

THE STRUGGLE

ABOUT THE STRUGGLE
"Life is struggle."
—KARL MARX

The Struggle is when you wonder why you started the company in the first place.

The Struggle is when people ask you why you don’t quit and you don’t know the answer.

The Struggle is when your employees think you are lying and you think they may be right.

The Struggle is when food loses its taste.

The Struggle is when you don’t believe you should be CEO of your company. The Struggle is when you know that you are in over your head and you know that you cannot be replaced. The Struggle is when everybody thinks you are an idiot, but nobody will fire you. The Struggle is where self-doubt becomes self-hatred.

The Struggle is when you are having a conversation with someone and you can’t hear a word that they are saying because all you can hear is the Struggle.

The Struggle is when you want the pain to stop. The Struggle is unhappiness.

The Struggle is when you go on vacation to feel better and you feel worse.

The Struggle is when you are surrounded by people and you are all alone. The Struggle has no mercy.

The Struggle is the land of broken promises and crushed dreams. The Struggle is a cold sweat. The Struggle is where your guts boil so much that you feel like you are going to spit blood.

The Struggle is not failure, but it causes failure. Especially if you are weak. Always if you are weak.

Most people are not strong enough.

Every great entrepreneur from Steve Jobs to Mark Zuckerberg went through the Struggle and struggle they did, so you are not alone. But that does not mean that you will make it. You may not make it. That is why it is the Struggle.

The Struggle is where greatness comes from.

SOME STUFF THAT MAY OR MAY NOT HELP

There is no answer to the Struggle, but here are some things that helped me:

1. Don’t put it all on your shoulders. Nobody takes the losses harder than the person most responsible. Nobody feels it more than you. You won’t be able to share every burden, but share every burden that you can. Get the maximum number of brains on the problems even if the problems represent existential threats.
2. This is not checkers; this is motherfuckin’ chess. Technology businesses tend to be extremely complex. The underlying technology moves, the competition moves, the market moves, the people move. As a result, like playing three-dimensional chess on Star Trek, there is always a move.
3. Play long enough and you might get lucky. In the technology game, tomorrow looks nothing like today. If you survive long enough to see tomorrow, it may bring you the answer that seems so impossible today.
4. Don’t take it personally. The predicament that you are in is probably all your fault. You hired the people. You made the decisions. But you knew the job was dangerous when you took it. Everybody makes mistakes. Every CEO makes thousands of mistakes. Evaluating yourself and giving yourself an F doesn’t help.
5. Remember that this is what separates the women from the girls. If you want to be great, this is the challenge. If you don’t want to be great, then you never should have started a company.

THE END

When you are in the Struggle, nothing is easy and nothing feels right. You have dropped into the abyss and you may never get out.

So to all of you in it, may you find strength and may you find peace.

CEOS SHOULD TELL IT LIKE IT IS

THE POSITIVITY DELUSION

WHY IT’S IMPERATIVE TO TELL IT LIKE IT IS

1. Trust.

   Without trust, communication breaks. More specifically: In any human interaction, the required amount of communication is inversely proportional to the level of trust.

2. The more brains working on the hard problems, the better.

   In order to build a great technology company, you have to hire lots of incredibly smart people. It’s a total waste to have lots of big brains but not let them work on your biggest problems. A brain, no matter how big, cannot solve a problem it doesn’t know about. As the open-source community would explain it, “Given enough eyeballs, all bugs are shallow.”

3. A good culture is like the old RIP routing protocol: Bad news travels fast; good news travels slow.

FINAL THOUGHT

Stand up to the pressure, face your fear, and tell it like it is.

THE RIGHT WAY TO LAY PEOPLE OFF

STEP 1: GET YOUR HEAD RIGHT

During a time like this, it is difficult to focus on the future, because the past overwhelms you—but that’s exactly what you must do.

STEP 2: DON’T DELAY

STEP 3: BE CLEAR IN YOUR OWN MIND ABOUT WHY YOU ARE LAYING PEOPLE OFF

You are laying people off because the company failed to hit its plan. Admitting to the failure may not seem like a big deal, but trust me, it is. “Trust me.” That’s what a CEO says every day to her employees. Trust me: This will be a good company. Trust me: This will be good for your career. Trust me: This will be good for your life. A layoff breaks that trust. In order to rebuild trust, you have to come clean.

STEP 4: TRAIN YOUR MANAGERS

Once you make it clear that managers must lay off their own people, be sure to prepare them for the task:

1. They should explain briefly what happened and that it is a company rather than a personal failure.
2. They should be clear that the employee is impacted and that the decision is nonnegotiable.
3. They should be fully prepared with all of the details about the benefits and support the company plans to provide.

STEP 5: ADDRESS THE ENTIRE COMPANY

STEP 6: BE VISIBLE, BE PRESENT

DEMOTING A LOYAL FRIEND

SHOULD YOU DO IT AT ALL?

The good of the individual must be sacrificed for the good of the whole.

LIES THAT LOSERS TELL

When a company starts to lose its major battles, the truth often becomes the first casualty.

SOME FAMILIAR LIES

Andy explained that humans, particularly those who build things, only listen to leading indicators of good news.

LEAD BULLETS

We had to go through the front door and deal with the big, ugly guy blocking it. Lead bullets.

If you find yourself running when you should be fighting, you need to ask yourself, “If our company isn’t good enough to win, then do we need to exist at all?”

NOBODY CARES
"Just win, baby."
—AL DAVIS

When things go wrong in your company, nobody cares. The media don’t care, your investors don’t care, your board doesn’t care, your employees don’t care, and even your mama doesn’t care.

Nobody cares.

And they are right not to care. A great reason for failing won’t preserve one dollar for your investors, won’t save one employee’s job, or get you one new customer. It especially won’t make you feel one bit better when you shut down your company and declare bankruptcy.

All the mental energy you use to elaborate your misery would be far better used trying to find the one seemingly impossible way out of your current mess. Spend zero time on what you could have done, and devote all of your time on what you might do. Because in the end, nobody cares;

CHAPTER 5 — TAKE CARE OF THE PEOPLE, THE PRODUCTS, AND THE PROFITS—IN THAT ORDER

"I roll with the hardest niggas, make money with the smartest niggas
I ain’t got time for you fuckin artist niggas
Better shut your trap before you become a target nigga
Y’all army brats I’m the motherfuckin sergeant nigga."
—THE GAME, "SCREAM ON ’EM"

The world looks one way in peacetime but very different when you must fight for your life every day. In times of peace, one has time to care about things like appropriateness, long-term cultural consequences, and people’s feelings. In times of war, killing the enemy and getting the troops safely home is all that counts.

IS IT OKAY TO HIRE PEOPLE FROM YOUR FRIEND’S COMPANY?

WHY IT’S HARD TO BRING BIG COMPANY EXECS INTO LITTLE COMPANIES

Beware of equity being the primary motivation. One percent of nothing is nothing.

HIRING EXECUTIVES: IF YOU’VE NEVER DONE THE JOB, HOW DO YOU HIRE SOMEBODY GOOD?

“If you don’t know what you want, the chances that you’ll get it are extremely low.”

CHAPTER 6 — CONCERNING THE GOING CONCERN

"This ain’t for no fuck niggas
If you a real nigga then fuck with me."
—TRINIDAD JAMES, "ALL GOLD EVERYTHING"

WHEN SMART PEOPLE ARE BAD EMPLOYEES

In business, intelligence is always a critical element in any employee, because what we do is difficult and complex and the competitors are filled with extremely smart people. However, intelligence is not the only important quality. Being effective in a company also means working hard, being reliable, and being an excellent member of the team.

CHAPTER 7 — HOW TO LEAD EVEN WHEN YOU DON’T KNOW WHERE YOU ARE GOING

"This for every ghetto in the hood
Nas the Don, Super Cat the Don Dada, understood."
—NAS, "THE DON"

"You can’t blame Jazz musicians
or David Stern with his NBA fashion issues."
—NAS, "HIP HOP IS DEAD"

TECHNIQUES TO CALM YOUR NERVES

The problem with psychology is that everybody’s is different.

Make some friends.

Get it out of your head and onto paper.

Focus on the road, not the wall. Focus on where you are going rather than on what you hope to avoid.

THE FINE LINE BETWEEN FEAR AND COURAGE

“I tell my kids, what is the difference between a hero and a coward? What is the difference between being yellow and being brave? No difference. Only what you do. They both feel the same. They both fear dying and getting hurt. The man who is yellow refuses to face up to what he’s got to face. The hero is more disciplined and he fights those feelings off and he does what he has to do. But they both feel the same, the hero and the coward. People who watch you judge you on what you do, not how you feel.” —CUS D’AMATO, LEGENDARY BOXING TRAINER

COURAGE, LIKE CHARACTER, CAN BE DEVELOPED

In life, everybody faces choices between doing what’s popular, easy, and wrong versus doing what’s lonely, difficult, and right.

Every time you make the hard, correct decision you become a bit more courageous and every time you make the easy, wrong decision you become a bit more cowardly.

Over the past ten years, technological advances have dramatically lowered the financial bar for starting a new company, but the courage bar for building a great company remains as high as it has ever been.

What is leadership? The measure of the quality of a leader: the quantity, quality, and diversity of people who want to follow her.

Feedback is a dialogue, not a monologue.

CHAPTER 8 — FIRST RULE OF ENTREPRENEURSHIP: THERE ARE NO RULES

"That the that the that that don’t kill me
Can only make a me stronger
I need you to hurry up now
’Cause I can’t wait much longer
I know I got to be right now
’Cause I can’t get much wronger
Man I been waitin’ all night now
That’s how long I been on ya."
—KANYE WEST, "STRONGER"

CHAPTER 9 — THE END OF THE BEGINNING

"We walk the same path, but got on different shoes
Live in the same building, but we got different views."
—DRAKE, "RIGHT ABOVE IT"

"I know you think my life is good cause my diamond piece
But my life been good since I started finding peace."
—NAS, "LOCO-MOTIVE"

Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic. They are hard because you don’t know the answer and you cannot ask for help without showing weakness.

Kark Marx’s quote: “Life is struggle.” I believe that within that quote lies the most important lesson in entrepreneurship: Embrace the struggle.