The Hard Thing About Hard Things

Building a Business When There Are No Easy Answers

By Ben Horowitz

Chapters 1-3 (More so anecdotal, so not too many written notes)

• 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.

When Things Fall Apart

• 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.
• It’s the moments where you feel most like hiding or dying that you can make the biggest difference as a CEO.
• First principle of the Bushido - keep death in mind at all times.
• The Struggle
  • Don’t put it all on your shoulders
  • This is not checkers; this is chess…there is always a move
  • Play long enough and you might get lucky
  • Don’t take it personally
  • Remember that this is what separates the women from the girls…if you don’t want to be great, then you never should have started a company
• CEOs Should Tell It Like It Is
  • Three key reasons why being transparent about your company’s problems makes sense:
    • Trust
    • The more brains working on the hard problems, the better
    • A good culture is like the old RIP routing protocol: bad news travels fast; good news travels slow
      • A company that discusses its problems freely and openly can quickly solve them.
      • Build a culture that rewards - not punishes - people for getting problems into the open where they can be solved.
  • If you run a company, you will experience overwhelming psychological pressure to be overly positive. Stand up to the pressure, face your fear, and tell it like it is.
• The Right Way to Lay People Off
  • Step 1: Get Your Head Right
    • During a time like this, it is difficult to focus on the future, because the past overwhelms you - but that’s exactly what you must do.
  • Step 2: Don’t Delay
    • 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.
  • Step 3: Be Clear In Your Own Mind About Why You Are Laying People Off
    • You are laying people off because the company failed to hit its plan.
  • Step 4: Train Your Managers
    • Managers must lay off their own people.
  • Step 5: Address the Entire Company
    • Many of the people whom you lay off will have closer relationships with the people who stay than you do, so treat them with the appropriate level of respect. Still, the company must move forward, so be careful not to apologize too much.
  • Step 6: Be Visible, Be Present
• Preparing to Fire an Executive
  • Step 1: Root Cause Analysis
    • The wrong way to view an executive firing is an executive failure, the correct way to view an executive firing is an interview/integration process system failure. (Figure out why you hired the wrong person for your company).
    • Special case of scaling - everybody needs to requiring for the new job, because the new job and the old job are not the same.
    • Special case of fast growth - the successful fast-growth executive is so important to building successful startups that recruiters and venture capitalists often advise CEOs to bring them in before the company is ready.
  • Step 2: Informing the Board
    • Get their support and understanding for the difficult task that you will execute
    • Get your input and approval for the separation package
    • Preserve the reputation of the fired executive
  • Step 3: Preparing for the Conversation
    • Be clear on the reasons
    • Use decisive language
    • Have the severance package approved and ready
  • Step 4: Preparing the Company Communication
    • After you informed the executive, you must quickly update the company and your staff on the change. The correct order:
      • The executive’s direct reports
      • The other members of your staff
      • The rest of the company
        • All should happen on the same day and preferably within a couple hours
  • Every CEO likes to say she runs a great company. It’s hard to tell whether the claim is true until the company or the CEO has to do something really difficult. Firing an executive is a good test.
• Demoting a Loyal Friend
• If you need to build a worldwide sales organization, your buddy who did the first few deals is almost certainly not the best choice. As hard as it may be, you need to take a Confucian approach.
• It is important to consider two deep emotions your friend will feel:
  • Embarrassment
  • Betrayal
• The key to an emotional discussion is to take the emotion out of it.
• The most important thing to decide is that you really want to do this. If you walk into a demotion discussion with an open decision, you will walk out with a mess: a mess of a situation and a mess of a relationship.
• Finally, you must decide the best role for him in the company.
• Your goal should not be to take the sting out of it, but to be honest, clear, and effective.