Book notes: The Hard Thing About Hard Things by Ben Horowitz

The Hard Thing About Hard Things book summary by Marlo Yonocruz

The Hard Things About Hard Things by Ben Horowitz

Synopsis: Ben Horowitz, cofounder of Andreessen Horowitz and one of Silicon Valley’s most respected and experienced entrepreneurs, offers essential advice on building and running a startup – practical wisdom for managing the toughest problems business school doesn’t cover, based on his popular ben’s blog.

While many people talk about how great it is to start a business, very few are honest about how difficult it is to run one. Ben Horowitz analyzes the problems that confront leaders every day, sharing the insights he’s gained developing, managing, selling, buying, investing in, and supervising technology companies. A lifelong rap fanatic, he amplifies business lessons with lyrics from his favorite songs, telling it straight about everything from firing friends to poaching competitors, cultivating and sustaining a CEO mentality to knowing the right time to cash in.

Filled with his trademark humor and straight talk, The Hard Thing About Hard Things is invaluable for veteran entrepreneurs as well as those aspiring to their own new ventures, drawing from Horowitz’s personal and often humbling experiences.

Opening thoughts:

Again, I found this book through listening to Tim Ferriss’s podcast when he interviewed Mark Andreessen and this book came up. The reviews looked good and so far all of the books I’ve read from the podcast were great. It definitely had a weird title, but I really wasn’t sure what to expect.

Key ideas/notes:

  • There’s no recipe or formula for dealing with the complex, hard things
  • Being scared did not mean you are gutless. What you do matters, and would determine whether you’ll be a hero or coward
  • Do not judge things by the surfaces. Until you make a great effort to get to know someone or something, you don’t know anything
  • Leadership is getting somebody else to follow you, even if only through curiosity
  • Looking at the world through such different prisms and social groups helped him separate the facts from perceptions
    • Learn to look for alternative narratives and explanations coming from radically different perspectives to inform your outlook
  • “What is cheap? Flowers. What is expensive? Divorce.
  • When you are part of a family or group, thinking about yourself first can get you in trouble
  • Some business relationships become too tense to tolerate, or not tense enough to become productive after a while
  • In 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 30 who say no
  • In start ups you only experience two emotions: euphoria and terror. Lack of sleep amplifies both
  • Bill Campbell: the key to his success is no matter where he goes, he’s everybody’s favorite person
  • You need two kinds of friends in your life:
    • ones you can call when something good happens and you need someone to be excited for you
    • the other is the kind of person you call when things go horribly wrong
  • “If you’re going to eat shit, don’t nibble. Things are always darkest before they go completely black
  • Treat the people leaving fairly so that the people staying will still have the same trust in you
  • What are you not doing? Usually what you’re not focusing on is what you should be
  • Many times conventional wisdom has nothing to do with the truth
  • Lesson: start up CEOs should not play the odds. When you are building a company, you must believe there is an answer. You cannot pay attention to the odds of finding it
  • There is no secret to being a successful CEO. But if there is one skill that stands out, it is the ability to focus and make the best move when there are no good moves
  • It’s in the moments when you feel most like hiding or dying that you can make the biggest difference as CEO
    • First principle in bushido: keep death in mind at all times
    • “Life is a struggle” -Carl Marx
    • The struggle causes failure especially if you’re weak. Most people aren’t strong enough
    • The struggle is where greatness comes from
  • Don’t put it all on your shoulders. The burden will hurt hardest to whoever is most responsible. But share every burden you can, get the maximum number of brains on the problems
  • There’s always a move. Running a business is complex like 3D chess
  • In the technology world, tomorrow looks nothing like today
  • Everyone makes mistakes, CEOs make thousands of mistakes. Giving yourself an F doesn’t help
    • If you want to be great, this is a challenge. If you didn’t want to be great, you should’ve never started a company
  • CEOs should tell it like it is, never by overly optimistic
    • Employees can handle loss much better because they aren’t married to the company
  • Give the problem to the people who can fix it, and would also be personally motivated and excited to solve it
    • If something goes wrong, people need to know why so that they can fix the problem together
  • 3 reasons why being transparent about your company makes sense:
    • Trust. Without trust, communication breaks. The required amount of communication is inversely proportional to the level of trust
    • The more brains working on the hard problems, the better
      • A brain, no matter how big, cannot solve a problem it doesn’t know about
    • A good culture is like IP routing protocol: bad news travels fast, good news travels slow
      • bad company culture discourages spread of bad news
      • discussing problems openly and freely allows for quick solutions
  • In laying people off, don’t delay, be clear to the reason, admit to the failure
    • Managers should lay off. Explain what happened, clear and definitive
  • Firing an executive:
    • Root cause analysis, figure out why you hired the wrong person for the company
      • Hiring for scale too soon, re-qualifying for the same job, leaving a failing leader in their place
    • Preserve reputation of fired executive, most likely a team failure so best to portray that way
  • Demoting a loyal friend, Confucius approach: the good of the individual must be sacrificed for the good of the whole
  • Finding a silver bullet versus many lead bullets
    • No avoiding the problem, have to go straight through. Sometimes you have to fight
  • Take care of the people, products, and profits, in that order
  • Hire for strength rather than lack of weakness
    • Be clear on what you want them to do, and also why
  • In good organizations, people can focus on their work and have the confidence that if they do good work, it will benefit both the company and themselves
    • Being a good company is an end in itself
  • The manager should do the training for his employees himself
  • In building a technology company, people are the most important asset
  • Training is one of the highest leverage activities a manager can perform
    • Important to clearly set expectations when training the employee
  • One reason people quit: they hated their manager. They were appalled by the lack of guidance, career development, and feedback. They weren’t learning anything
  • Start with functional training: the knowledge and skill needed to do job, as well as expectations
  • Ask managers and highest level performers to help train. This will help build positive company culture
    • Take your best people and encourage them to share and teach their most developed skills
  • Training must be mandatory. Two types of training are functional and management training, which should be easily implemented
    • Two ways for a manager to improve output of an employee: motivation and training
    • No better time investment that will improve productivity in your company than developing a training program
  • The best product managers take full responsibility for the product from the top down
  • The job of a big company executive is very different from a small company executive
    • Big company execs tend to be interruption-driven
    • Small company execs, nothing happens until they make it happen
    • Screen in the interview process, take integration as seriously as interviewing
    • Time running vs. time creating
  • As a great general manager, you must hire and manage people who are far more competent at their jobs than you would be
  • How to hire someone good:
    • Know what you want, act in functional roles, have clear expectations for first 30-days, write what strengths you want and what weaknesses you’re willing to tolerate, will they be effective, who do you need support from
  • Set metrics that match your priorities. Supplement a great product vision with strong discipline around the metrics
    • Anything you measure creates a set of employee behaviors
  • Management debt is when you make a quick and expedient decision that is short-term, but has an expensive long-term consequence
  • Companies execute well when everybody’s on the same page and everyone is constantly improving
  • Good CEOs will make the tough decisions and quickly because they’ve paid the management debt before
  • Good HR organizations can’t create a great company culture, but they can tell you when you and your managers aren’t getting the job done
  • The best way to approach management QA is through the lens of the employee lifecycle, from hire to retire
  • Minimizing politics always starts with the CEO
    • Politics: people advancing their careers by means other than merit and contribution
    • Giving people a raise when asked and not by merit causes others to follow suit
    • Hire people with the right kind of ambition
  • Build strict processes for potentially political issues and do not deviate
  • Nothing motivates a great employee more than a mission that’s so important, it supersedes everyone’s personal ambition
  • When interviewing candidates, watch for small distinctions that indicate whether they view the world through the “me-prism” or the “team-prism”
  • Job titles? Employees want them, and eventually people need to know who is who to get their work done
    • The Peter Principle: people will be promoted in a hierarchy as long as they perform their job duties competently. They will keep being promoted until they become incompetent at their threshold level
    • The law of crappy people: for any title in a large organization, the talent on that level will eventually converge to the crappiest person with the title
  • Mark Andreessen: titles are the cheapest things people ask for from their company, and if it makes them feel better, it’ll cost nothing to outbid other companies in the recruiting process
  • Mark Zuckerberg: de-levels titles process in order to increase fairness and boost morale
  • As an organization grows, it’s important to provide organizational clarity whenever possible
  • Being an effective employee isn’t just about intelligence, it’s also about working hard, reliability, and working well with the team
  • You can only hold the bus for one person. Sometimes you have to mitigate the negative consequences of a star player, as long as they are a positive contribution to the team
  • Bringing on someone who has the right experience at the right time can help you radically speed up your time to success
    • The right reason to hire a senior person is to acquire knowledge and experience in a specific area
  • Ask yourself: do I value external or internal knowledge more for this position?
    • This will help you determine whether to go for experience or youth
  • Managing senior people: will they bring their own habits and culture from their old company? Will they work the system? How do you keep them accountable?
    • Demand and expect cultural compliance, set a high and clear standard for performance, use standards based on other high performers in their field
  • Performance: results against objectives, management, innovation (hitting goals but not ignoring future), working with peers
  • One on ones: well designed communication architecture
    • The key to a successful one on one meeting is understanding that it is the employee’s meeting, not the manager’s
  • The primary thing that any tech company must do is build a product that is at least 10x better at doing something than the current prevailing way of doing that thing
    • The second thing is take the market before somebody else does
    • Culture does not make your company
    • Culture matters to the extent that it can help you achieve the above goals, preserve your key values and help performance in the future. It makes people want to work at your company, yourself included
      • Culture is designing a way of working that distinguishes you from competitors. Helps you identify employees that fit with your mission
  • If you want to build an important company, you’ll have to learn the black art of scaling
    • Find a mentor, and find some experienced, been-there-done-that executives who already know how to scale
    • The challenge is to grow but degrade as slowly as possible
    • Start up employees start as jack-of-all-trades, but scaling requires specialization
  • Organizational design: split up a company by function or by mission
    • Figure out what needs to be communicated. List the most important knowledge and who needs to have it
    • Figure out what needs to be decided and organize accordingly
    • Prioritize the most important communication and decision paths
  • Identify issues and the processes to resolve them
    • A process is a formal, well-structure communication vehicle
    • Engineer accountability into the process system
  • When evaluating an employee, base it off of their ability to perform at current scale, not future scale
  • Investing in courage and determination is an easy investment
  • The most important thing learned as an entrepreneur was to focus on what you need to get right, and stop worrying about all the things you did wrong or might do wrong
  • Most difficult skill learned as CEO was the ability to manage his own psychology
    • Someone doesn’t become a CEO unless they have a high sense of purpose and cares deeply about the work they do. In addition, they must be accomplished enough or smart enough that people will want to work for them
  • Everyone learns how to be a CEO by being a CEO. There is no job that fully trains or prepares you
    • Everything that goes wrong is the CEO’s fault, especially founder-CEOs as there is nobody else to blame
    • The key is to not get married to the positive or dark narratives of your company
    • If you don’t like choosing between horrible and catechistic, don’t become a CEO
    • WFIO = we’re fucked, it’s over
      • Every company goes through 2 to 5 of these
    • `Make friends and talk to people who have been through similarly challenging situations
    • Focus on the road, not the wall
    • Don’t punk out or quit, great CEOs face the pain and deal with it
      • There’s little difference between a hero and a coward except what they do despite the fear
  • Two key characteristics they look for in entrepreneurs: brilliance and courage
    • Courage to make the right decision. Courage, like character, can be developed
    • In life, many decisions where you’ll choose between easy-crowd-wrong decision, and hard-lonely-right decision. As CEO, consequences of these decisions are magnified 1000 times
  • Two core skills for running and organization: knowing what to do, and getting the company to do what you know
  • There are two types of managers:
    • 1) those who like setting the direction of the company
    • 2) those who like making the company perform at the highest level
    • you need both characteristics to be a great CEO, but those who lean towards one can learn the skills of the other
  • The primary purpose of a company’s organizational structure is for decision-making efficiency
  • Most important attribute to be a great CEO: Leadership
    • The measure of the quality of a leader: the quantity, quality, and diversity of people who want to follow her
    • Three traits of what makes people want to follow a leader:
      • 1) ability to articulate the vision
        • interesting, dynamic, compelling – Steve Jobs attribute
      • 2) the right kind of ambition
        • truly great leaders create an environment where the employees feel the CEO cares more about the employee than herself – Bill Campbell attribute
      • 3) the ability to achieve the vision
        • Andy Grove attribute
  • Peacetime and wartime CEOs, hard to be both
    • Peacetime = a company has a large advantage over its competitors and core market is growing. They can focus on expanding their market and reinforcing the company’s strengths
    • Wartime = company is fending off an imminent, existential threat
    • Peacetime and wartime tactics can be extremely effective when employed at the right times
    • Most management books are written about peacetime management
    • It’s hard but not impossible to develop skill sets of both
  • Being a CEO is an unnatural job and requires learning how to do things the unnatural way
    • Giving feedback as foundational building block, the critique sandwich
    • Be authentic and come from the right place, such as wanting employees to succeed
    • Stylistically, your tone should match the employee’s personality. Be direct but not mean
    • Feedback is a dialogue, not a monologue. The goal should be to open up the discussion because they should have more data about their position than you
    • As a CEO, you should have an opinion on everything
  • Key questions they ask regarding a CEO and the company
    • 1) does the CEO know what to do?
    • 2) can the CEO get the company to do what she knows?
    • 3) did the CEO achieve the desired results against an appropriate4 set of objectives?
  • Some employees make product, others make sales. A CEO makes decisions. Therefore, a CEO can be most accurately measured by the speed and quality of those decisions
    • Great decisions are made by CEOs who display an elite mixture of intelligence, logic, and courage
  • You must systematically and continually make acquire knowledge in the company’s day to day activities
    • Executing well requires a broad set of operational skills
    • Great CEOs constantly assess whether they’re building the best team
  • Accountability vs. creativity paradox: holding people accountable for their deadlines, next to encouraging people for solving the hard problems and having the courage to identify them
    • Senior people should be able to forecast their results more accurately than junior people
  • It’s better to believe people have good intentions, are smart, intelligent, and creative, especially with your own employees
  • You owe it to your people, the employees and all the people that report to your managers and executives, to hold the executives to a high standard
  • Selling your company rule of thumb: if you are very early on in a very large market and if you have a very good chance of being number one in that market, then you should stand alone
  • Most important lesson in entrepreneurship: embrace the struggle!
    • Embrace your weirdness, your background, your instinct. If the keys are not in there, they do not exist

Closing thoughts:

Absolutely loved this book! Most books on entrepreneurship and building businesses usually focus on the one or two key principles and develop a whole book around that tactic or advice. They tell nice anecdotes about the lessons they’ve learned and how this particular strategy can change the game. This book, however, takes what feels like a unique approach and talks about all the difficult things you’ll face when building a company, with a bit of insight from Ben on some ideas that he thinks might help. It feel like we’re getting the hard truth, which is what we should always want.

Nutshell: The hard things about building a company as a CEO and some insight on how to deal with them from a veteran, wartime CEO.

Rating: 4.5/5 

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