Venture capitalist Ben Horowitz has been called high tech's new Andy Grove, the "CEO Whisperer," and "the management guru to all of the young entrepreneurs in the Valley" by none other than Mark Zuckerberg. Reading his new book, The Hard Thing About Hard Things, it’s easy to see why.
With a candid, even profanity-laced style that quotes everyone from Silicon Valley legend Bill Campbell to hip hop star Nas, Horowitz writes about what it takes to manage people and lead organizations today. Though some material will be familiar to close readers of his popular blog, those new to Horowitz's story — he was one of the first employees of Netscape, a dot-com era CEO, and co-founder of venture capital firm Andreessen Horowitz (which has backed Facebook) — will be struck by his refreshingly smart and credible approach to the thorny day-to-day dilemmas managers face.
Horowitz offers advice on how to demote a friend, hire people for jobs you know nothing about, and minimize office politics. And he does so while avoiding the trite buzzwords and artificial formulas that have become the stock-in-trade of the genre.
Though his first audience may be young entrepreneurs, even the most seasoned managers will appreciate Horowitz's discussion of the emotional toll of high-power jobs and what he calls the CEO psychological meltdown. On Leadership spoke with Horowitz about the mistakes most leaders make when it comes to layoffs, why he charges employees $10 a minute if they're late to meetings, and why a book about a slave revolution is the best leadership book he's ever read. The Q&A below has been edited for space and clarity.
Q. What made you decide to write the book?
A. I try to help people with management stuff a lot. As a CEO, I needed help — and it was really hard to find that. I was always like, "Why is there nobody helping me with this? Why is there nothing to read that explains how to do this?" The thing I concluded was that management turns out to be really dynamic and situational and personal and emotional. So it’s pretty hard to write a formula or instruction book on it. The instructions end up being relatively trivial as a result.
Q. Did you start out with the idea that you wanted to write a different sort of management book?
A. I wanted to, as Karl Marx said about labor and capital, sharpen the contradictions. I wanted the controversial stuff — the stuff where there was tension — to be the subject of the book. What you normally find is: "Here’s all the really easy stuff. Set a big goal!" Oh yeah, that was hard. I set a big goal. But what happens when you miss a goal, like you will if you set a really big one? How do you manage that? Where is the book that’s like, "Okay, the people in your company think that you were either stupid or lied to them: What do you do now?" That comes up a lot.
I had the advantage that I'd been CEO. I was who I was, and whatever people thought about how I did as a CEO was a done deal. So I could tell the truth.
Q. That's why the book works so well: You've been there, you've done that. Many of these books are written by consultants who haven't.
A. Yeah, my old boss Jim Barksdale said that most management consultants have never managed a hot dog stand.
Q. The book deals with many management problems most books don’t address. One example: the right way to lay people off. What’s the biggest mistake managers make when it comes to letting people go?
A. The biggest mistake they make is that they’re so embarrassed about things getting to that point that they either blame the employees or hide. Those are the two big mistakes. They say, "Well, this is a performance thing. We didn't need these guys anyway. They weren't very productive." Or managers are just kind of not there, not looking employees in the eye. They're not saying, "Look, we screwed up. We planned the business this way. We hired too many people and now we’re in trouble, and you are going to personally pay the price for our mistake."
If you don’t have that moment of honesty, then it’s very hard to go forward as a company. Most companies that go through layoffs are never the same. They don't recover because trust is broken. And if you're not honest at the point where you’re breaking trust anyway, you will never recover.
Q. You offer advice for personal issues, such as the right way to demote a loyal friend. What about just not hiring friends in the first place? Is that not practical?
A. John D. Rockefeller said that he found friendships based on business to be far more long lasting and profitable than the reverse. I think there’s something to that. A company can end up being very Confucian, where the good of the individual is subjugated to the good of the whole. So if you work with individuals who are your friends, there may be a time when you have to fire them. It may be required of you as leader. You have to think about how you feel going into it, but you also become friends with people you work with.
Q. You say in the book that “being a good company is an end in itself.” Yet there’s a lot of talk today about how leaders need to find meaning and purpose in people’s jobs to help motivate them. How necessary do you think that really is?
A. I think there’s a lot to be said about just enjoying your work. It can be very contrived when people say their work is for the good of mankind. To me, the more sustainable thing is that when you go to work, you enjoy the work you do — the craftsmanship of it, the contribution you can make, that you’re being part of something bigger than yourself. People like to contribute and like to be a part of something. You don't have to make it much more than that.
Q. There’s a big focus in your book on training — you even say it’s one of the most important activities a manager can perform. And yet training is so often outsourced to consultants, or it's one of the first things cut during tough times.
A. You spend an incredible amount on people's salary, then don’t teach them how to do the job — that’s just bad design. I do think the trend is going the other way in Silicon Valley, where companies like Facebook and Twitter now have very extensive training programs. I like to think I’ve had some contribution. You can hire people who are talented and very unproductive. That happens all the time.
Q. In business, the word "culture" may be as muddy of the word "leadership." Building real culture, you say, is about designing a way of working that will distinguish the company from competitors, ensure values persist and help find employees who fit. One way of doing this is to go for shock value, you say. How have you done this at Andreessen Horowitz?
A. The cultural trait we wanted was for our people to have the highest respect for an entrepreneur’s time. To get that, what we did was create a system of fines that says if you're late to a meeting with an entrepreneur, you’re fined ten dollars a minute. They're like, "Why are you taking all my money and embarrassing me in front of our friends?" It becomes a built-in cultural training mechanism in a way that an all-hands meeting or one-time training couldn't.
I've always found a lot of the writing about "culture" to be very abstract. It's very hard to follow, and then dances around the subject. It talks about effects of the culture rather than how you program it.
Q. One of your best known pieces of writing before this book was the blog post you wrote on why founders should remain CEOs. Is there ever a good time to bring in a professional manager to replace the founder?
A. There definitely is. One is if the founder doesn’t want to run the company. A great example of that is LinkedIn: Reid Hoffman didn’t want to be CEO, but he wanted to have input and offer ideas. And then I think there are times when the founder is just not willing to do the things that he or she needs to do to become competent at the CEO skill set, which is a very big and complicated skill set. The only option is to replace the founder with a professional CEO.
But the mistake people make is to over-anticipate, in a negative way, the founder’s capability to learn. They also fail to recognize that it’s a lot easier to teach a founder to be a CEO then to teach a professional CEO how to innovate.
Q. You write that perhaps the best advice came from Al Davis, the former Raiders general manager and owner, when he told longtime NFL coach Bill Parcells: “Nobody cares. Just coach your team.” Why is that such good advice?
A. The way Bill Parcells tells that anecdote is so amazing. It’s the way everybody feels. He says to Davis, "I have all these injuries. Can we win any of our games without our best players? I’m really worried about the injuries." And Al Davis says, "Nobody cares." That’s so much the psychology you go through when you’re a CEO. There are so many things that go wrong, so many things out of your control.
When I was CEO, the NASDAQ dropped about 80 percent. You want to tell everybody that, but nobody cares. All everyone will remember is whether you failed or whether you succeeded. It’s great to keep that in mind. Just coach your team. Just run your company. You can’t think about all these externalities.
Q. You have high praise for former Intel CEO Andy Grove’s book High Output Management, and question some advice from management guru Jim Collins. I’d guess far more people have read the latter than the former. Any other lesser-known leadership books you think are essential?
The leadership book that’s been most inspirational for me was The Black Jacobins, about Toussaint L'Ouverture, who led the only successful slave revolution in human history. When you go through what he did and how he thought about it and how counterintuitive everything he did in his life was, it’s a phenomenal book. He would capture English and Spanish soldiers and make them part of his army, which is amazing — as is how he thought about adopting the best parts of their culture into his culture. These were the people fighting for slavery. If you could read one book on leadership, that would be the one I would pick.