The Hard Thing About Hard Things

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Book by Ben Horowitz


Chapter 1

Notes

  • I call managers who are happier setting the direction of the company Ones and those who more enjoy making the company perform at the highest level Twos.
  • Ones sometimes get bored with many of the important execution details required to run a company, such as process design, goal setting, structured accountability, training, and performance management.
  • 178 While people tend to be Ones or Twos, with discipline and hard work natural Twos can be competent at One tasks and Ones can be competent at Two tasks. If a CEO ignores the dimension of management she doesn’t like, she generally fails.
  • 177 I will focus the discussion on two core skills for running an organization: First, knowing what to do. Second, getting the company to do what you know
  • 166 the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong.
  • The purpose of process is communication. A process is ... A communication vehicle.
  • 160 keep in mind that it’s much easier to add new people to old processes than new processes to old people
  • 156 If you’ve ever worked in a large organization, you know that there are plenty of people with experience running them but none of the requisite skills to run them well.
  • Culture - Ensures that critical operating values persist; differentiates; helps you find people of that culture
  • 155 WHY DOGS AT WORK AND YOGA AREN’T CULTURE. This is clear if culture is defined as that which helps you ship: product and DMS (capturing a market)
    • Culture - core value that drives the business
    • Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time
  • 152 If you fail to do both of those things, your culture won’t matter one bit. The world is full of bankrupt companies with world-class cultures
  • 150 - Perhaps the CEO’s most important operational responsibility is designing and implementing the communication architecture for her company
  • 139 - The Law of Crappy People states: For any title level in a large organization, the talent on that level will eventually converge to the crappiest person with the title.
    • other employees in the company with lower titles will naturally benchmark themselves against the crappiest person at the next level
  • Andy Grove points out in his management classic High Output Management, the Peter Principle is unavoidable, because there is no way to know a priori at what level in the hierarchy a manager will be incompetent.
  • 139 Peter Principle holds that in a hierarchy, members are promoted so long as they work competently. Sooner or later they are promoted to a position at which they are no longer competent (their “level of incompetence”)
  • 135 Nothing motivates a great employee more than a mission that’s so important that it supersedes everyone’s personal ambition
  • 131 As defined by Andy Grove, the right kind of ambition is ambition for the company’s success with the executive’s own success only coming as a by-product of the company’s victory. The wrong kind of ambition is ambition for the executive’s personal success regardless of the company’s outcome.
  • 166 Perhaps the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong
  • 128 After that day, I never heard another complaint about profanity and I don’t think we lost anybody because of the policy. Sometimes an organization doesn’t need a solution; it just needs clarity.
  • 119 Ironically one of the first things you learn when you run an engineering organization is that a good quality assurance organization cannot build a high-quality product, but it can tell you when the development team builds a low quality product. Similarly, 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.
  • GOOD PRODUCT MANAGER/BAD PRODUCT MANAGER . Write the equivalent "good apprentice/bad apprentice" or open source ecologist
  • When you fired the person, how did you know with certainty that the employee both understood the expectations of the job and was still missing them?
  • 92 by Andy Grove - High Output Management,
  • 99 The amazing thing was that every one of those GO employees counted GO as one of the greatest work experiences of their lives. The best work experience ever despite the fact that their careers stood still, they made no money, and they were front-page failures. GO was a good place to work.
  • 86 As organizations grow large, important work can go unnoticed, the hardest workers can get passed over by the best politicians, and bureaucratic processes can choke out the creativity and remove all the joy.
  • 85 ‘I don’t give a fuck how well trained you are. If you don’t bring me five hundred thousand dollars a quarter, I’m putting a bullet in your head.’ ”
  • 73 the key to an emotional discussion is to take the emotion out of it. To

do that, you must be very clear in your mind about what you’ve decided and what you want to do.

  • 68 If you get lucky, the person you hired to run

the twenty-five-person team will have learned how to run the two-hundred- person team.

  • 66- There is no such thing as a great CEO,

a great head of marketing, or a great head of sales. There is only a great head of sales for your company for the next twelve to twenty-four months.

  • Executive hiring - Consensus decisions

about executives almost always sway the process away from strength and toward lack of weakness.

  • After layoff speech - They want to see

whether you care. The people whom you laid off will want to know if they still have a relationship with you and the company. Talk to people. Help them carry their things to their cars. Let them know that you appreciate their efforts.

  • Address the company in layoffs. The message is for the people who are staying.
  • Managers must lay off their own people. 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.

  • “The company failed

and in order to move forward, we will have to lose some excellent people.” - not 'cleaning up performance', Must admit to company failure, not individual failure, in mass layoffs.

  • we were able to keep cultural continuity and retain our best

employees despite multiple massive layoffs because we laid people off the right way

  • 61 After seeing their friends laid off, employees were no

longer willing to make the requisite sacrifices needed to build a company.

  • If you run a company, you will experience overwhelming psychological pressure

to be overly positive.

  • End of positivity delusion is critical for gaining trust.
  • I thought that I would be best

able to handle bad news. The opposite was true: Nobody took bad news harder than I did.

  • My single biggest personal improvement as CEO occurred on the

day when I stopped being too positive.

  • This is not checkers; this is motherfuckin’ chess
  • 56 The Struggle is when you know that you are in over your head and you know

that you cannot be replaced.

  • 54 Bushido—the way of the warrior: keep death in mind at

all times

  • but if there is one skill that stands out, it’s the ability to focusand make the best move when there are no good moves.
  • 53 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.

  • I couldn’t

believe that I’d sold what it took eight years and all of my life force to build. How could I have done that? I was sick. I couldn’t sleep, I had cold sweats, I threw up, and I cried. And then I realized that it was the smartest thing that I’d ever done in my career.

  • “Not for sale” didn’t mean that we

wouldn’t listen to offers—it just meant that we weren’t trying to sell the company.

  • Note to self: It’s a good idea to ask, “What am I not doing?”
  • 48 efficient market hypothesis was

deceptive. No, markets weren’t “efficient” at finding the truth; they were just very efficient at converging on a conclusion—often the wrong conclusion.

  • 44We were fighting for our lives, but he was about to lose his. I decided to pay

for his health costs and find the money elsewhere in the budget. I guess i did it because i knew what desparation felt like.

  • 42 Frank expected to get screwed by us. It’s what always

happened to him in his job and presumably in his personal life. We needed something dramatic to break his psychology. We needed to be associated with the airport bar, not with his job or his family.

  • 41 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.

  • 39 I had a CFO who didn’t know software accounting, a head of sales who had never sold software, and a head of marketing who did not know our market.
  • 34 He then informed me that Atriax was bankrupt and could not pay any of the $25 million he owed us.
  • 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. This was wartime. The company would live or die by the quality of my decisions, and there was no way to hedge or soften the responsibility.
  • When they finished I said, “Did I ask for this presentation?” Those were the first words I spoke as I made the transition from a peacetime CEO to a wartime CEO.
  • 32 - different to ask '“What’s the worst thing that could happen?” The answer always came back the same: “We’ll go bankrupt,' - VS - “What would I do if we went bankrupt?”
  • 30 If you are going to eat shit, don’t nibble.
  • 29 - I turned to Scott Kupor, my director offinance, and said, “We did it!” He replied, “Yeah, but we’re still fucked.”
  • 25 - People offer many complex reasons for why Bill rates so highly. In myexperience 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 goodhappens, and you need someone who will be excited for you. Not a fakeexcitement veiling envy, but a real excitement. You need someone who willactually be more excited for you than he would be if it had happened to him. Thesecond 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.

  • 21 - Andy said to me, “Ben, think about how you might run the business if capital were free.”
  • 10 - Following conventional wisdom is worse than knowing nothing at all.
  • 11 -Former secretary of state Colin Powell says that leadership is the ability to get someone to follow you even if only out of curiosity