Book Report: The Hard Thing About Hard Things

“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.” (The Hard Thing About Hard Things)

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

Author: Ben Horowitz

Publisher: Harper Business

Publication Date: 2014

Origin: I first heard about The Hard Thing About Hard Things from a Q&A session with Mark Organ.

I’ve been part of a growing business, and would like to think that I contributed meaningfully to that growth; plus, I enjoy hearing different perspectives. My intention for The Hard Thing About Hard Things was to learn from Horowitz’ experiences and compare/contrast them with my own experiences and observations, in the never-ending quest to build an arsenal of leadership and entrepreneurial skills.

Summary: Drawing upon Horowitz’ own experiences growing and running technology startups, The Hard Thing About Hard Things is part story, with a deeply personal account of Horowitz’ time with LoudCloud/Opsware, and part reference manual, with many succinct lessons, strategies, and tactics for tech company executives.

As Horowitz says, “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.”

After a short Introduction and three chapters (From Communist to Venture Capitalist, “I Will Survive”, and This Time With Feeling) that quickly tell Horowitz’ own story, we get into the ‘meaty’ chapters. Each of these covers a general executive challenge, and includes a handful of separate sections that address a range of issues:

• When Things Fall Apart: The Struggle, CEOs Should Tell It Like It Is, The Right Way to Lay People Off, Preparing to Fire an Executive, Demoting a Loyal Friend, Lies That Losers Tell, Lead Bullets, Nobody Cares
• Take Care of The People, The Products, and The Profits – In That Order: A Good Place to Work, Why Startups Should Train Their People, Is It Okay to Hire People From Your Friend’s Company?, Why It’s Hard to Bring Big Company Execs into Little Companies, Hiring Execs: If You’ve Never Done the Job, How Do You Hire Somebody Good?, When Employees Misinterpret Managers, Management Debt, Management Quality Assurance
• Concerning the Going Concern: How to Minimize Politics in Your Company, The Right Kind of Ambition, Titles and Promotions, When Smart People are Bad Employees, Old People, One-on-One, Programming Your Culture, Taking the Mystery Out of Scaling a Company, The Scale Anticipation Fallacy
• How to Lead Even When You Don’t Know Where You Are Going: The Most Difficult CEO Skill, The Fine Line Between Fear and Courage, Ones and Twos, Follow the Leader, Peacetime CEO/Wartime CEO, Making Yourself a CEO, How to Evaluate CEOs
• First Rule of Entrepreneurship: There Are No Rules: Solving the Accountability vs. Creativity Paradox, The Freaky Friday Management Technique, Staying Great, Should You Sell Your Company?

Horowitz closes things off with The End of The Beginning, which talks a bit about how he and Andreessen are applying what they know to help the companies within their investment portfolio, and an appendix (Questions for Head of Enterprise Sales).

My Take: The Hard Thing About Hard Things is definitely geared at current and aspiring executives, but many of the lessons are applicable to team and functional/departmental leadership. Plus, I’ve always felt that understanding the larger context of the organization can help individual contributors better direct their own efforts.

I appreciated the straightforward manner in which Horowitz presents his advice, and he didn’t belabour points any more than necessary.

I definitely plan to refer to this book in future, and I can envision myself popping it open from time to time when I’m dealing with a thorny issue.

Very much worth the read.

Read This Book If: …You’re an aspiring leader within a technology startup.

Notes and Quotes

Introduction

“That’s the hard thing about hard things – there is no formula for dealing with them.“

• pix, with a cold, hard truth, and relating to management books: “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.”
• px: “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.”

From Communist to Venture Capitalist

“Until you make the effort to get to know someone or something, you don’t know anything.“

• p4: “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.”
• p14: “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.”

“I Will Survive”

“I was through listening to advice about what we should do from people who did not understand all the pieces.“

• p20: “I learned the most important rule of raising money privately: Look for a market of one. You only need one investor to say yes.”
• There is a chunk of pages that talk about the origin of Opsware, a company started and run by Ben Horowitz and Marc Andreessen. Interestingly, I first became aware of Opsware right at the time it launched, thanks to the now-defunct magazine Business 2.0. I actually followed the company quite closely for a while, but it was only when reading this book that learned/realized Horowitz was a part of it. A blast from the past!
• p32 has an example about managing information flow: “At this point, our business was still a cloud business, and I gave no indication to the rest of the staff that I might have other ideas. Doing so would have instantly doomed the only business we were in, as everyone would want to work on the future and not the past.”
• A few lines later, Horowitz talks about his transition from “peacetime CEO” to a “wartime CEO” (minor note: I despise business analogies that invoke war comparisons): “I was through listening to advice about what we should do from people who did not understand all the pieces. I wanted all the data and information I could get, but I didn’t need any recommendations about the future direction of the company.”
• p36, quoting Michael Ovitz: “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.”
• p37 talks about the importance of immediately letting people know where they stand during acquisitions, spin-offs, etc. …Which seems obvious, but let me tell you from experience that some folks really screw this part up, badly, with significant consequences.

This Time With Feeling

“The customer only know what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but must often go against what she knows to be true.“

• p43: “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.”

They would say, ‘How can we walk away from requirements that we know to be true to pursue something that we think will help?’ 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.

• p49, on product strategy: “After the speech came the hard work of defining the product. The product plan was weighed down with hundreds of requirements from existing customers. The product management team had an allergic reaction to prioritizing potentially good features above features that might hypothetically beat BladeLogic. They would say, ‘How can we walk away from requirements that we know to be true to pursue something that we think will help?’ 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 know what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but must often go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.”
• p51 with a neat tip: “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.”
• p52, in a slap across the face of economists everywhere: “No, markets weren’t ‘efficient at finding the truth; they were just very efficient at converging on a conclusion – often the wrong conclusion.”

When Things Fall Apart

“It’s the moments when you feel most like hiding or dying that you can make the biggest difference as a CEO.“

• p59: “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 when you feel most like hiding or dying that you can make the biggest difference as a CEO.”
• p62, in a section on advice for coping with the challenges that come with being a CEO: “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.”
• p66, in a section on why CEOs should tell it like it is (of course, this advice only applies if the CEO is genuinely going to listen to hard truths): “As a company grows, communication becomes its biggest challenge. If the employees fundamentally trust the CEO, then communication will be vastly more efficient than if they don’t. Telling things as they are is a critical part of building this trust. A CEO’s ability to build this trust over time is often the difference between companies that execute well and companies that are chaotic.”
• p69, in a section called The Right Way to Lay People Off. Oooh man, most companies don’t follow this advice, with disastrous consequences: “Once you decide that you will have to lay people off, the time elapsed between making that decision and executing that decision should be as short as possible. If word leaks (which it inevitably will if you delay), then you will be faced with an additional set of issues. Employees will question managers and ask whether a layoff is coming. If the managers don’t know, they will look stupid. If the managers do know, they will either have to lie to their employees, contribute to the leak, or remain silent, which will create additional agitation.”
• p70, on clarity of mind and message: “You are laying people off because the company failed to hit its plan. If individual performance were the only issue, then you’d be taking a different measure. Company performance failed. This distinction is critical, because the message to the company and the laid-off individuals should not be ‘This is great, we are cleaning up performance.’ The message must be ‘The company failed and in order to move forward, we will have to lose some excellent people.’ Admitting to the failure may not seem like a bit deal, but trust me, it is.”
• p70: “The most important step in the whole exercise is training the management team. If you send managers into this super-uncomfortable situation with no training, most of them will fail.”
• p74, on firing an executive (each reason is explained, and I’ve seen them all play out first-hand): “The first step to properly firing an executive is figuring out why you hired the wrong person for your company. You may have blow it for a variety of reasons: You did a poor job defining the position in the first place; You hired for lack of weakness rather than for strengths; You hired for scale too soon; You hired for the generic position; The executive had the wrong kind of ambition; You failed to integrate the executive.”

“Leaving a failing leader in place will cause an entire department in your company to slowly rot.”

• p77. OH MAN! Gimme a call someday if you wanna talk about this one: “Leaving a failing leader in place will cause an entire department in your company to slowly rot.”
• p79, on preparing the company communication: “After you have informed the executive, you must quickly update the company and your staff on the change. The correct order for informing the company is (1) the executive’s direct reports – because they will be most impacted; (2) the other members of your staff – because they will need to answer questions about it; and (3) the rest of the company. All of these communications should happen on the same day and preferably within a couple of hours.”
• p79 continues: “Generally, it’s smart for the CEO to act in the executive role in the meanwhile. If you do act in the role, you must really act – staff meetings, one-on-ones, objective setting, etc. Doing so will provide excellent continuity for the team and greatly inform your thinking on whom to hire next.”
• The introductory paragraph to the section on Demoting a Loyal Friend (p81) reminded me of the excellent documentary Print the Legend.
• p84: “Let him know that you appreciate what he’s done and that your decision results from a forward-looking examination of what the company needs, not a review of his past performance.”

“Your goal should not be to take the sting out of it, but to be honest, clear, and effective.”

• p84: “Your goal should not be to take the sting out of it, but to be honest, clear, and effective.”
• p85 starts a section called Lies that Losers Tell, and I’ve seen and heard them all.
• p92, from a section called Nobody Cares: “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.”

Take Care of The People, The Products, and The Profits – In That Order

“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.“

• The name of the chapter runs almost completely against the philosophy (MSSPEER) of the team that has taken over Sandvine; while I’m no longer directly experiencing the impact, I’m still observing from afar and I remain academically curious how the grand experiment is going to play out
• p94: “I’d learned the hard way that when hiring executives, one should follow Colin Powell’s instructions and hire for strength rather than lack of weakness.”
• IMO, this piece of advice has pros and cons and situation/circumstance is important: “He wasn’t an easy cultural fit, but he was a genius. I needed his genius and worked with him on the fit.”
• p101: “In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally. It is a true pleasure to work in an organization such as this.”
• p102: “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. Being a good company is an end in itself.”
• p105, in Why Startups Should Train Their People: “A lot of companies think their employees are so smart that they require no training. That’s silly.”
• p105 also refers to Andy Grove‘s book High Output Management, which is probably worth a read
• p106 mentions a tool (explained on p111) that Horowitz wrote called Good Product Manager/Bad Product Manager…I might do the same one of these days for Product Marketers
• p109: “The first thing to recognize is that no startup has time to do optional things. Therefore, training must be mandatory.”

“Big company executives tend to be interrupt-driven. In contrast, when you are a startup executive, nothing happens unless you make it happen.”

• p120: “Big company executives tend to be interrupt-driven. In contrast, when you are a startup executive, nothing happens unless you make it happen.”
• p125: “You must hire the right person for your company at this particular point in time.”
• p131 has some examples that underscore the importance of making intentions/goals clear, and includes this sentence: “In all three cases, managers got what we asked for, but not what we wanted.”
• I’ve reported into metric-driven managers, and this is exactly what happens…we end up chasing stupid meaningless things and trying to get our real work done in the time left over; p132: “At a basic level, metrics are incentives. By measuring quality, features, and schedule and discussing them at every staff meeting, my people focused intensely on those metrics to the exclusion of other goals. The metrics did not describe the real goals and I distracted the team of a result.”

“Management purely by numbers is sort of like painting by numbers – it’s strictly for amateurs.”

• p132: “If you report on the quantitative goals and ignore the qualitative ones, you won’t get the qualitative goals, which may be the most important ones. Management purely by numbers is sort of like painting by numbers – it’s strictly for amateurs.”
• I love this description of ‘management debt’, from p134: “Like technical debt, management debt is incurred when you make an expedient, short-term management decision with an expensive, long-term consequence. Like technical debt, the trade-off sometimes makes sense, but often does not. More important, if you incur the management debt without accounting for it, then you will eventually go management bankrupt.” The following pages have some good examples.
• p137: “Companies execute well when everybody is on the same page and everybody is constantly improving. In a vacuum of feedback, there is almost no chance that your company will perform optimally across either dimension.”
• p139: “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.”
• p140 begins a list of good questions to consider to improve a management team

Concerning the Going Concern

“The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts.“

• p145: “Sometimes an organization doesn’t need a solution; it just needs clarity.”
• p153, another one I can relate to from personal experience: “If one of your executives summons the courage to complain about the competency of one of their peers, then there is a good chance that either the complainer or the targeted executive has a major problem.”
• Next to this bit from p156, I have scrawled “internal accountability vs external deflection”, which is a dichotomy that I’ve encountered frequently: “At a macro level, everybody views the world through her own personal prism. When interviewing candidates, it’s helpful to watch for small distinctions that indicate whether they view the world through the ‘me’ prism or the ‘team’ prism.”
• p170, in a section called Old People: “Why hire a senior person? The short answer is time. As a technology startup, from the day you start until your last breath, you will be in a furious race against time.”
• p171: “In order to make all go well, if you are considering hiring a senior person do not chase an abstract rational like ‘adult supervision’ or ‘becoming a real company.’ A weak definition of what you are looking for will lead to a bad outcome. The proper reason to hire a senior person is to acquire knowledge and experience in a specific area.”
• p171 makes a crucial point: “One good test for determining whether to go with outside experience versus internal promotion is to figure out whether you value inside knowledge or outside knowledge more for the position.”
• p176: “Generally, people who think one-on-one meetings are a bad idea have been victims of poorly designed ones. The key to a good one-on-one meeting is the understanding that it’s the employee’s meeting rather than the manager’s meeting. This is the free-form meeting for all the pressing issues, brilliant ideas, and chronic frustrations that do not fit neatly into status reports, email, and other less personal and intimate mechanisms.”
• Farther down p177, Horowitz lists some questions that he’s found to be effective in one-on-ones
• p183. YES! “Startups today do all kinds of things to distinguish themselves. Many great, many original, many quirky, but most of them will not define the company’s culture. Yes, yoga may make your company a better place to work for people who like yoga. It may also be a great team-building exercise for people who like yoga. Nonetheless, it’s not culture. It will not establish a core value that drives the business and helps promote it in perpetuity. It is not specific with respect to what your business aims to achieve. Yoga is a perk.”

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

• p185: “If you want to do something that matters, then you are going to have to learn the black art of scaling a human organization.”
• p188: “The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts.”
• p189 (they’re explained in the book): “Here are the basic steps to organizational design: 1. Figure out what needs to be communicated; 2. Figure out what needs to be decided; 3. Prioritize the most important communication and decision paths; 4. Decide who’s going to run each group; 5. Identify the paths that you did not optimize; 6. Build a plan for mitigating the issues identified in step five.”
• p192: “Be mindful of your company’s true growth rate as you add architectural components. It’s good to anticipate growth, but it’s bad to overanticipate growth.”

How to Lead Even When You Don’t Know Where You Are Going

“The enemy of competence is sometimes confidence.“

• p202, sounds like fun! “No training as a manager, general manager, or in any other job actually prepares you to run a company. The only thing that prepares you to run a company is running a company. This means that you will face a broad set of things that you don’t know how to do that require skills you don’t have.”
• p213: “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. If you are CEO, these choices will lead to a courageous or cowardly company.”
• p215: “Most founding CEOs tend to be Ones [they are happier setting the direction of the company]. When founding CEOs fail, a significant reason is that they never invested the time to be competent enough in the Two tasks [enjoy making the company perform at the highest level] to direct those activities effectively. The resulting companies become too chaotic to reach their full potential and the CEO ends up being replaced.”
• p217…I didn’t realize that GE’s Jack Welch was promoted from two levels down in the org chart to lead the company, overtaking all of his superiors. Neato!
• p219, reminiscent of Lessons from the Top: “So what make people want to follow a leader? We look for three key traits: The ability to articulate the vision; The right kind of ambition; The ability to achieve the vision.”
• p222: “The enemy of competence is sometimes confidence. A CEO should never be so confident that she stops improving her skills.”

“Be aware that management books tend to be written by management consultants who study successful companies during their times of peace.”

• p228, after an interesting little sub-section contrasting peacetime and wartime CEO behaviour: “Be aware that management books tend to be written by management consultants who study successful companies during their times of peace. As a result, the resulting books describe the methods of peacetime CEOs.”
• I also had to laugh a little on p228, when Horowitz described Google Glass as a “brilliant” product. Technologically, sure. But in any other way?
• p230: “Giving feedback turns out to be the unnatural atomic building block atop which the unnatural ski set of management gets built.”
• p231 includes a number of good tips for giving feedback, and I’m proud to say I think I figured all these out on my own: “Be authentic. Come from the right place. Don’t get personal. Don’t clown people in front of their peers. Feedback is not one-size-fits-all. Be direct, but not mean.”
• In the description for that last tip, Horowitz says: “Watered-down feedback can be worse than no feedback at all because it’s deceptive and confusing to the recipient… When done properly, feedback is a dialogue, not a monologue.”
• p233 continues: “Your employee should know more about her function than you. She should have more data than you. You may be wrong. As a result, your goal should be for your feedback to open up rather than close down discussion. Encourage people to challenge your judgment and argue the point to conclusion.”
• p236, reminiscent of Why Should I Choose You? “Well-structured goals and objectives contribute to the context, but they do not provide the whole story. More to the point, they are not the story. The story of the company goes beyond quarterly or annual goals and gets to the hard-core question of why. Why should I join this company? Why should I be excited to work here? Why should I buy its product? Why should I invest in the company? Why is the world better off as a result of this company’s existence?”

“A company without a story is usually a company without a strategy.”

• p237: “A company without a story is usually a company without a strategy.”
• p237 also references Jeff Bezos’ letter to shareholders in 1997, which I hadn’t read until now: “In telling Amazon’s story in this extended form – not as a mission statement, not as a tagline – Jeff got all the people who mattered on the same page as to what Amazon was about.”
• p238: “Great CEOs build exceptional strategies for gathering the required information continuously. They embed their quest for intelligence into all of their daily actions from staff meetings to customer meetings to one-on-ones. Winning strategies are built on comprehensive knowledge gathered in every interaction the CEO has with an employee, a customer, a partner, or an investor.”

First Rule of Entrepreneurship: There Are No Rules

“Just when you think there are things you can count on in business, you quickly find that the sky is purple. When this happens, it usually does no good to keep arguing that the sky is blue.“

• p247, after telling the story of HP’s acquisition of Opsware: “I am telling this story today because just when you think there are things you can count on in business, you quickly find that the sky is purple. When this happens, it usually does no good to keep arguing that the sky is blue. You just have to get on and deal with the fact that it’s going to look like Barney for a while.”
• p256 reminds me of the personnel management advice in Good to Great, to be fair but ruthless: “In providing this kind of direction [that the job requirements of tomorrow are not the same as today or yesterday], it’s important to point out to the executive that when the company doubles in size, she has a new job. This means that doing things that made her successful in her old job will not necessarily translate to success in the new job. In fact, the number-one way that executives fail is by continuing to do their old job rather than moving on to their new job. But, what about being loyal to the team that got you here? If your current executive team helped you grow your company tenfold, how can you dismiss them when they fall behind in running the behemoth they created? The answer is that your loyalty must go to your employees – the people who report to your executives. Your engineers, marketing people, salespeople, and finance and HR people who are doing the work. You owe them a world-class management team. That’s the priority.”

The End of The Beginning

“There are lots of smart people in the world, but smart is not good enough. I needed people who were great where I needed greatness.“

• An interesting point from p268: “First, technical founders are the best people to run technology companies. All of the long-lasting technology companies that we admired – Hewlett-Packard, Intel, Amazon, Apple, Google, Facebook – had been run by their founders. More specifically, the innovator was running the company.”
• p268: “We identified two key deficits that a founder CEO had when compared with a professional CEO: 1. The CEO skill set – Managing executives, organizational design, running sales organizations and the like were all important skills that technical founders lacked. 2. The CEO network – Professional CEOs knew lots of executives, potential customers and partners, people in the press, investors, and other important business connections. Technical founders, on the other hand, knew some good engineers and how to program.”
• p272: “There are lots of smart people in the world, but smart is not good enough. I needed people who were great where I needed greatness. I needed people who really wanted to do the jobs they were hired for. And I needed people who believed in the mission.”
• p274: “It’s those fears and controversial opinions that hold the clues to dealing with hard things. 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.”
• p275, “When I first because a CEO, I genuinely thought that I was the only one struggling.”, reminded me of a recent experience I had. A friend of mine had started in a new job, and was running into some challenges and maybe starting to doubt himself. We got together for coffee just to chat about things, and in that chat I told him about some of my personal experiences taking on challenges and figuring things out on-the-fly, and so on. By the end, he felt much better, and even realized that he’d been a bit silly or naive to think that he was the only one feeling this way in a new role. Just knowing that others had gone through it, too, and that they had succeeded, gave him renewed confidence, and he’s continued to excel.