Owning a business or being a CEO may seem enviable, but in reality, it’s full of challenges. The hardest thing is, there are no fixed formulas you can follow. The author, Ben Horowitz, is one of the most respected and experienced entrepreneurs in Silicon Valley. In “The Hard Thing about Hard Things”, he shares his experience as an entrepreneur, CEO and venture capitalist, and offers practical tips and advice for dealing with the “hard things” in business that have no clear answers. In this summary, we’ll outline what’s covered in the book, and share some of the business and management tips.
As a CEO, some of the hard things you have to face include: building something from nothing, running out of cash & facing bankruptcy, laying off people or firing executives/friends, keeping people motivated during a crisis, finding solutions where there seems to be none, and rebuilding a business after it collapses.
In the book, Horowitz shares his personal journey to give us a glimpse of what really goes on behind the scenes of running a business. He shares how he went from an employee to entrepreneur, built Loudcloud (together with ex-CTO of Netscape, Andreessen), fell to nothing, and struggled to rebuild Opsware that was eventually sold to HP for $1.65 billion. We’ve captured the highlights of this journey in our full 14-page book summary.
Horowitz then moves on to explain the key lessons learnt about building and running a business, using anecdotes from his experiences. While his experiences are in technology companies, the insights are applicable to most businesses.
We’ll now take a look at some of these ideas in 2 parts:
Building a Business
The correct sequence of priorities for any business should be: people, products, then profits. Horowitz shares his perspective and advice on several aspects of building and running a business. We’ve organized the key ideas into several key topics in our full summary, including: why building a great workplace should be a core business goal, what to look out for when hiring people, why training is important to startups (and how to get started), things to look out for in scaling and managing your company.
Let’s zoom in on one of the areas—HIRING THE RIGHT PEOPLE:
Many startups hire big company executives, only to realize there’s a mismatch. Work in a startup involves different rhythms and skill-sets from that of a large company. Startup executives must be hands-on, create things from scratch, handle 8-10 new initiatives a day, and get out there to make things happen. On the other hand, large company executives must be good at juggling tons of emails/meetings, handle organizational design and process improvements, and usually take on ≤3 new initiatives a quarter.
To avoid wrong hires, test for mismatches during interviews. Ask questions like, “What will you do in your first month on the job?”, “What do you think will be different between your current job and this job?” Integrate your new hires asap by requiring weekly creations, hands-on involvement in product/customer details, and personal interaction with key people in the company.
Knowing What to Look For in your New Hires
• As a CEO, you must hire and manage executives who can do things better than you can, and for jobs you’ve never done yourself. How do you know what to look for? The best way is to put yourself in the role, to get first-hand knowledge of what’s needed for your company. Identify what’s required for the specific role, at that specific point in time. Convert the criteria into processes. Identify the essential strengths, acceptable weaknesses, and hire for those strengths (not for a lack of weaknesses). Develop specific questions that test for those criteria.
Horowitz shared why/how he hired Mark Cranney as Opsware’s Head of Sales at a critical juncture of their business—he decided to accept Marks’ weaknesses despite objections from other stakeholders, as Mark had the vital strengths that Opsware needed at that point. needed to assemble a strong Opsware sales team for their new product. This turned out to be the right decision–Mark grew Opware’s sales by more than 10x during his tenure, with low staff turnover on his team.
Do read the book or get our full The Hard Thing about Hard Things summary for other tips on building a business, including: types of training, how to avoid “management debt”, what to consider in management, target-setting, HR, managing politics, titles & promotions, growth and building culture.
Holding Things Together as the CEO
Challenges are inevitable in business. When things fall apart, it’s the CEO’s job to hold everything together and find a solution. In fact, greatness is born from struggles, and the CEO can make the biggest difference in times of crises. In the book, Horowitz shares the insights he gleaned from some of his toughest challenges. Here’s an overview:
SURVIVING THE STRUGGLE
Everyone starts the entrepreneurship journey feeling confident of success—you see yourself making a positive impact, with a great team, great products and happy customers. However, the reality often turns out to be the opposite: your product isn’t ideal, market conditions aren’t up to expectations, good people leave and you run out of cash.
Every successful entrepreneur goes through the phase when everything seems to fall apart: Horowitz calls this “The Struggle”. At this point, you’ll feel lost and lonely; you’re filled with self-doubt and wonder why you’re hanging on. Rather than waste energy feeling sorry for yourself, just do what you have to do to fix things. That is the job of the CEO. Here are some tips that can help you to survive The Struggle:
Share your burdens
As the CEO, you’re the only one who can see all the pieces of the puzzle, and have to shoulder the full burden. However, don’t try to take on everything yourself, or feel bad about troubling others. No one will feel the load or responsibility as much as you. Opsware survived its multiple crises due to the entire team’s effort.
There are always options
Businesses are complex, with constantly changing variables (people, competitors, technology etc.). This means that there will always be moves that you can make, however desperate the situation. As things change, new answers (that previously weren’t available) also emerge—the key is to stay long enough in the game to find them.
Don’t take it personally
Although you are ultimately responsible for your decisions/mistakes, bashing yourself won’t help. Everyone makes mistakes; don’t be too hard on yourself.
OVERCOMING CRISIS AND HOLDING THINGS TOGETHER
In the book and our 14-page book summary, we cover several other concepts & tips including: Why you should tell things as they are (and why it’s not a good idea to put up a positive front to keep morale high), how to handle the sensitive process of laying off people or firing senior executives, the differences between a “wartime” vs “peacetime” CEO, and tips for becoming a better CEO.
Other Details in “The Hard Thing about Hard Things”
While there are no secret formulas for the “hard things” addressed in this book, Horowitz uses a wide range of anecdotal examples to illustrate how you can deal with these tough issues, and the important pitfalls to avoid. In the book, he includes many other details including:
• Sample interview questions, documents and checklists that he used to communicate expectations and review his organization;
• Detailed accounts of how he handled situations involving politics, competition, internal communications etc.; and
• Other advice on how to give feedback, how to evaluate CEOs, whether you should sell your company, etc.
Gain powerful insights to become a more effective CEO or business owner!