A guidebook for the challenges of the founder-CEO

Most people in the technology industry know who Ben Horowitz is. Founding partner at a16z, he’s been involved with most of the technology companies I’m sure you engage day to day, from Facebook to Twitter to AirBnb.

But he didn’t choose the VC life by chance, he did so after living the challenging and sometimes nerve wrecking life of the founder CEO.

In The Hard Thing About Hard Things Ben Horowitz shares the insights you will not get in your average management book, rather the marks of his battles, guidance for making decisions when there are no perfect choices and your life depends on it.

Having started businesses in earlier stages of my life, and looking back at entrepreneurship as I progress into new stages, I was eager to learn what one of the most renowned venture capitalists in the modern world had to say.

Most startups fail, the effort and energy one has to put in to succeed as an entrepreneur usually surpass by orders of magnitude anything a regular good job would impose on an individual, so what is it that really drives people to make this almost incomprehensible choice, and how can I increase my odds of success?

The struggle is where greatness comes from.

A desire for building great things

So you make a choice for yourself - chase an idea, risk everything, work long hours and put your livelihood on the line to achieve a vision that maybe, with a lot of effort and not without some luck, may just succeed.

Are you not afraid?

I’ve dedicated a good amount of introspection to answer that very question, what is it that makes some people answer “yes” and continue marching on? I think I’ve found the answer.

There is one thing that makes me more afraid than any of the arguments above - what I’m really afraid of is achieving just “the average”, even afraid of building nothing more than “good”.

When one could achieve the extraordinary - when greatness exists, “just good” becomes an intolerable waste.

It taught me that being scared didn’t mean I was gutless. What I did mattered and would determine whether I would be a hero or a coward.

Borderline irrational hope

But one should be prepared, because things don’t just happen according to plan.

This is the measure of the good CEO, finding paths forward - making good decisions quickly with never enough information, and maintain both herself and her team’s hope alive and well, sometimes seemingly beyond reason.

In particularly dire circumstances when the “facts” seemed to dictate a certain outcome, I learned to look for alternative narratives and explanations coming from radically different perspectives to inform my outlook. The simple existence of an alternate, plausible scenario is often all that’s needed to keep hope alive among a worried workforce.

However, it is not quite irrational, the CEO can only be effective if she lives by a coherent, concise and rational course of action.

How to become a CEO? Be a CEO (and struggle)

The bottom line is, there’s really no way to become a CEO other than being a CEO, the experience will build and transform the individual as she goes through it, some will make it, some won’t. Embarking in the journey requires an important ability to learn very fast and, according to Horowitz perhaps even more important, the ability to control her own psychology.

I can personally relate to this, in my role as CTO. The concerns are different and the scope of action is certainly different, but the challenge is always present, the questions “am I doing what I really have to do to drive success?, am I making the right choices?” are constantly influencing your mind and can work to both erode, or strengthen your process. The difference lies in how your minds processes them, how one keeps one’s psyche under control.

Fear, sometimes insecurity, doubt and exhaustion will inevitably appear, courage will enable you to push through.

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.

Raising money

Personally, raising money is still quite of a black box for me, and probably the most challenging and intimidating. The Hard Thing About Hard Things gave me a great perspective as to how funding a startup works and important aspects to consider while looking to raise capital.

During this time I learned the most import rule of raising money privately. Look for a market of one. You only need one investor to say yes, so it’s best to ignore the other thirty who say “no”.

And this also points to a very fundamental need when you need to raise capital - you need to have a network, and you need to demonstrate qualities that allow you to influence that network.

It is people that will support you, that will risk their capital to enable you in making your vision come true, without people that appreciate the unique qualities you have to offer and the strengths of your vision, you only have a dream.

An innovators journey

Innovation is at the heart of technology entrepreneurship, therefore, the usual technology entrepreneur is an innovator, and it is this unique vision that will materialize unique value through technology.

As a result, innovation requires a combination of knowledge, skill and courage.

Now, let’s get to some of the teachings

You really should get the story straight from the source, I really hope you take the time to read The Hard Thing About Hard Things, but let me give you my personal interpretation of some of the teachings that I found more meaningful.

Yes, most things could still be delegated and most managers would be empowered to make decisions in their areas of expertise, but the fundamental question of whether -and how- Loudcloud could survive was mine and mine alone to answer.

Tell it like it is

There’s an interesting catch 22 to communication: The more people trust you, the less you depend on communication to drive towards a common goal, but to get people to trust you, the more you have to communicate.

A CEO’s ability to build trust over time is often the difference between companies that execute well and companies that are chaotic.

Communication is a key trait to leadership - a concept also mentioned in other great works on leadership by the way, so communicate constantly and extensively:

• Clearly communicate the why, not just the what
• Provide constant feedback, to everybody, always
• Encourage others to communicate, create a culture where people are not afraid to talk about bad news

In any human interaction, the required amount of communication is inversely proportional to the level of trust.

Don’t lie to yourself

It takes a lot of guts to not find convenient explanations to why your company is losing battles. It’s easier to make up explanations (really, lies) than to confront the harsh truth of mistakes.

Don’t fall into that trap, don’t be afraid to look at things raw and with no sugar coat. Never take things for granted, in the words of Andrew Grove “only the paranoids survive”.

All you have are lead bullets

There are no silver bullets - if your company is losing traction, if your market is going to the competition, take a long hard look at your product or service because if there are fundamental flaws, no miraculous ideas will solve the problem. You will have to fix your offering.

People come first, product second, profits third

I think this piece of wisdom has two angles to it:

1. The quality of your people will define the success of your product or service and your eventual ability to generate profits. One of the key skills of a CEO is to select the right people for the right moment in the leadership team, and be able to determine when the moment has passed and the skills of the existing people no longer apply to that moment in the organization.

I’d learned the hard way when hiring executives, one should follow Collin Powell’s instructions and hire for strength rather than lack of weakness.

2. The ongoing development and leadership of your people should always come before anything else. Training, feedback, motivation and inspiration are primary objectives of a successful CEO.

My old boss Jim Barksdale was fond of saying, “We take care of the people, the products and the profits-in that order”. It’s a simple saying, but it’s deep. “Taking care of the people” is the most difficult of the three by far, and if you don’t do it, the other two won’t matter.

To the latter point, training is crucial - people are the most important asset of any technology company, and training is, in the words of Andrew Grove, former CEO of Intel, the highest leverage activity a manager can perform, and one out of two things she can do to impact employee’s output.

Building a good place to work matters

There’s more bad companies out there than there are good companies, and a lot of pretty bad places to work still make profits.

To be clear, a good company is one where there’s an empowering culture, it’s a company where people truly enjoy working, where they feel they are working on a meaningful mission towards a great future. It doesn’t have anything to do with revenues or profit.

It takes a lot of effort to become a great company, and the fact that as much as being a great company has nothing to do with cash flow, you can’t just focus on building a great company if you have no money flowing in, doesn’t make it any simpler.

But it is the difference between life and death, because being a great company matters the most when things are not going well - it’s the difference between your team marching into battle with you, or bailing on you. And things will always go wrong at one point or another.

Culture is indispensable for a place of work to matter

Culture is about defining a way of working from which market differentiation, operating values and getting the right talent will derive. Jeff Bezos, Mark Zuckerberg, Steve Jobs, they all have strong cultures that permeate every aspect, from work practices, environment and communication.

This is just the tip of the iceberg

How to hire and when? The importance of picking the right leadership. Identifying your CEO “type”. How to evaluate performance? I could keep going, but what I will tell you now is: if you are currently a founder CEO, or you’re thinking about embarking in that journey, you’d be wise to pick up this book and keep it handy.

And if you are indeed one running or looking to run a company, the best of luck, you are not alone, and kudos for not wasting the opportunity for greatness.

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