Ben Horowitz’s Book: Hard Parts of Owning a Business

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What is Ben Horowitz’s book The Hard Thing About Hard Things about? What don’t other books tell you about owning a business?

Ben Horowitz’s book talks about the things that other management books either gloss over or omit. His book discusses the hard parts of starting a business, being a CEO, scaling your business, and making a good place to work.

Continue on for advice from Ben Horowitz’s book The Hard Thing About Hard Things.

The Hard Thing About Hard Things Book by Ben Horowitz

Ben Horowitz isn’t impressed with most business books. Most of what they discuss—setting audacious goals, constructing a winning strategy, building a cheerful culture—isn’t the hard part of building a company. The hard part is firing your friends when they no longer fit your company’s goals, it’s staring at impending bankruptcy and throwing your Hail Mary to save the company.

Most business books try to give a recipe for success, but “the hard thing about hard things” is that there is no recipe for those hard situations. This book is a collection of advice and first-hand experiences to help company operators deal with the hard times.

Who Is Ben Horowitz?

Ben Horowitz began his career at the dawn of the Internet, working at browser and server company Netscape before it sold to America Online. He then co-founded Loudcloud, a cloud computing company, at the height of the bubble in 1999. As the bubble crashed, the company faced an endless series of existential crises, from running out of money to having their largest customers go bankrupt to facing tough competition. Ultimately, he pulled the business around (which had rebranded as Opsware) and sold to HP for $1.6 billion in 2007.

This grueling experiences led him to do two things:

  1. Co-found the venture capital firm Andreessen Horowitz, which aimed to serve founders like no other VC firm before it.
  2. Write this book to share the major lessons he’d learned in the trenches.

The book covers a wide span of topics, including handling the psychology of a failing company, building a good place to work, scaling a company, and being a good CEO.

The Struggle of Being a CEO

Most people start their companies with boundless enthusiasm. The sky is open, the possibilities are endless, and success is inevitable.

Then reality hits. Your plans have not lived up to their promise. You don’t have the traction you hoped for. Things seem to be unraveling. Your key first hires start leaving. Your customers start churning. It seems to point to inevitable failure.

This is the Struggle. The Struggle is when the impending failure of your company swallows every thought and sensation in your waking life. The Struggle is when you question why your idiot self ever started a company. The Struggle is sleepless lonely nights when you feel you’ve failed everyone who was dumb enough to believe in you.

Every entrepreneur has gone through the Struggle, from Steve Jobs to Elon Musk. Greatness is born from the Struggle. The Struggle is a make or break moment. If you are weak and you succumb to the Struggle, you will fail. If you are strong and you can get through the Struggle, you have a fighting chance. 

Here are suggestions on how to cope with the Struggle and find a way out of it:

  • Realize failing is normal. If CEOs were graded on a test, the mean score would be 22 out of 100. Many CEOs indeed don’t know what they’re doing; even among those who do, things simply go wrong. If you don’t know the mean score is 22, then you feel bad because you think you’re the only one underperforming. 
  • Don’t quit. The only certain way you’ll fail is if you give up. When you see no good moves, you have to keep looking for a move. Push through the pain.
  • Don’t be in denial. Some CEOs delude themselves into thinking the situation is fine. They give excuses for losing customers, failing to hit targets, and churning through staff. Instead, you need to take the problems seriously, but stay emotionally detached from them so you don’t paralyze yourself.
  • Talk to other people who have been through similar difficult situations. They often can’t give you advice about your company (since you know so much more than they do), but they can give psychological support.
  • Talk to your team about the company’s problems. Don’t think you need to shelter your team from the problems because they can’t handle the bad news. In reality, no one will take the problems harder than you—other people can easily join another company, but you founded this company and will go down with the ship. If you share news with your company, they’ll help you find the solution. It’s a waste to hire all these smart people and not have them thinking about your company’s most critical problems.

Building a Good Place to Work

Take care of the people, and the products and profits will follow. If you reverse the priorities, you’ll end up with a miserable workplace and possibly sabotage your success.

You can best take care of your people by making your company a good place to work, which has the following attributes:

  • People are clear on what their jobs are and how success is measured.
  • People believe their work makes a difference to the success of the company and, by extension, to their personal success.
  • They have as few barriers to getting work done as possible. A good work environment avoids office politics, infighting, and overly bureaucratic processes, which all get in the way of doing good work.
  • People enjoy working with the people around them. They don’t always have to like each other personally, but they respect that everyone is pulling their weight.

A poor place to work inverts all of these. People aren’t clear what their jobs are; they don’t know if their work means anything; their work gets stymied by dumb obstacles; and people despise whom they work with.

Hiring Good People

Every company wants to hire the best people they can find. Ben’s general advice:

  • Hire for strength, not for lack of weakness. Hiring for lack of weakness is common in hiring by committee, where people reject people they have problems with, leading to a vanilla candidate who is not hated by anyone but is also not particularly strong at their core function. You need to hire someone who is world-class at what they need to do, regardless of tolerable faults.
  • Hire for the right kind of ambition. The wrong kind of ambition emphasizes a person’s personal success regardless of the company’s success. The right kind of ambition emphasizes the company’s success, with the person’s success coming only as a consequence. When interviewing, you can tell when someone is self-centered and focused on her career, or when someone cares more about how your company will succeed and what she can do to contribute to it.
  • Focus on the ultimate goal—how many productive people have you added? Don’t just fixate on narrow metrics like interviews conducted and hires made.

Hiring Executives

When you’re a startup, you may prefer to promote people from within. But hiring executives from outside will help you move faster. They know how to do things that your company doesn’t know right now. 

The problem: if you’ve never done the executive’s job before, you might not know how to hire for it. Here are pointers:

  • Understand the job requirements well. Interview domain experts and learn what makes them successful. Even better, do the job yourself. Be the acting VP of whatever department you’re hiring for. You may be scared that you know nothing about the role, but that’s exactly why you need to learn it.
  • Make a list of job requirements. What strengths are you looking for? What weaknesses can you tolerate? Note that different positions need different skills—a VP of sales may need to be a disciplined team manager, while a CFO may not.
  • Understand what your company needs, today. Don’t hire based on a resume—a VP of engineering from Google may be a terrible fit for your company. Don’t hire for someone you need in 24 months when you scale; she’ll be useless up until that point.
  • Write questions that test for these requirements. Write good answers to those questions. 
  • Assemble an interview team. This should consist of two groups of people: 1) people who can assess the candidate’s functional performance, 2) people who can assess the candidate’s fit after joining. Consider including outside domain experts.
  • Conduct the interview and review the interview with each interviewer. You can verify that the interviewer understands the criteria and how to grade the candidate.
  • Make the final decision yourself. Only you have the global view of the hiring requirements, the company’s needs, and the interview team’s scoring. Do not hire by committee.

Training Employees

Training new people is one of the most valuable activities a company can do. It is wonderfully high-leverage—each person spends 2,000 hours per year working for your company. Say you spend ten hours to train a group of ten people, who collectively work 20,000 hours in their first year. If you improve their performance by 1%, you have converted 10 hours of your time into 200 hours of extra team productivity.

There are two types of training in a company: functional training, which provides the knowledge and skills to do the job, and management training, which trains managers to manage their teams.

Functional Training

In general, functional training should do the following:

  • Make clear the expectations of the job and how the worker will be evaluated.
  • Introduce the worker to the materials and systems she’ll be working with. (For example, a software engineer will need an introduction to the product, codebase, and coding practices.)
  • Draw from the best functional experts on the team. Make training an honorable and respected job in the company, rather than grunt work.

Beyond these generalities, functional training should be customized to the job that needs to be done. 

Management Training

Management training prepares managers to lead their teams. It should do the following:

  • Make clear what tasks managers should be doing, such as one-on-one meetings, performance feedback, training, and goal setting. You should be the person teaching this course and setting these expectations.
  • Train managers on how to accomplish these tasks (for example, how to run a one-on-one meeting).
  • Enlist the best managers to teach the courses.

Managing People

Once you hire the right people and train them, you’ll need systems in place to keep them productive and happy. Maintaining a strong work culture, facilitating communication, and providing frequent feedback are all important.

Culture

Culture consists of key values that define what your company does and how it does it. Examples of key values include frugality, customer obsession, and beauty of design. Good key values meaningfully distinguish you from your competitors.

A strong culture is practically useful—it helps you filter for hires who will fit, and it shapes the behavior of people at the company.

Beyond just articulating vague cultural values, implement a simple, scalable behavior that reinforces the key value. For example, Amazon emphasizes frugality with its famous door desks. Jeff Bezos knew that competing in the cutthroat online retail industry would require the lowest pricing, which required the company to save as much money on overhead as it could. He built the company’s first desks by buying a door and screwing legs into them. This reinforced the cultural value of frugality and how the employees are saving money to save the customers money. These small actions reinforced the key cultural value across the company in a highly scalable way. 

One-on-One Meetings

One-on-one meetings are private meetings between a manager and her direct report. Compared to email or group meetings, they’re relatively informal and intimate, and thus provide a good avenue for discovering issues and ideas that aren’t fully formed.

Here’s how to run a one-on-one:

  • Adopt the mindset that the one-on-one is a meeting for the employee, not for the manager. As a manager, you should talk only 10% of the time and listen 90% of the time.
  • Ask your direct report to set the agenda and send it to you in advance.
  • During the meeting, try to read between the lines and draw out the important issues. The more soft-spoken the person is, the more important this will be. 
  • Ask open-ended questions, like “what’s our number one problem?” and “are you happy working here?”

Delivering Feedback

As a manager, you should constantly be evaluating people and giving feedback. This gives people ways to improve. In turn, this makes them more productive and makes them feel you care about their development. 

You should develop a personal style around giving feedback based on your own personality. However, here are general pointers that apply to everyone:

  • Come from an earnest desire to improve the person. When someone trusts your intentions, she will be much more receptive to what you have to say.
  • Customize the feedback to the person. Some people are delicate; others are thick-skinned. Some people get the point right away; others need a message drilled in. Delivering the message the wrong way for the person will be counterproductive.
  • Be clear, not vague. Vague feedback is useless (“it’s good, just needs one more pass”). Point out precisely what needs work (“your conclusion is confusing because it doesn’t logically follow from the earlier slides.”)
  • Don’t be mean. Don’t use feedback to bully someone or assert your dominance. If you come from an earnest desire to improve the person, this shouldn’t be an issue.
  • Don’t embarrass someone in front of the team. Some feedback can be delivered in a team setting, but embarrassing someone will cause her to resent you.
  • Open up discussion. Be open to the idea that you might be wrong. Encourage the person to share her opinion and argue where you’ve misjudged. Resolve the discussion so that you both understand the quality bar better.

Scaling Your Company with Process

When you’re at five people, you don’t need processes. Everyone communicates with each other by talking across a table, and decisions are made quickly. There is no politics because everyone can hear each other.

When your company grows, these problems become exponentially more difficult. You will need to build processes to keep people communicating, making good decisions, and sharing knowledge. 

In general, here are the main principles of designing a good process:

  • Define your ultimate goal. In product development, the ultimate goal may be customer satisfaction, not the number of features. In hiring, the ultimate goal is the number of productive employees you gain, not the number of interviews you run.
  • Define the steps that lead to the ultimate goal. In hiring, the steps involve sourcing candidates, filtering candidates, interviewing, giving job offers, onboarding and training them, and retaining them.
  • Measure how each step is performing. You should be able to see which step is underperforming.
  • Assign accountability to each step. Someone should be responsible for each step’s performance.

Processes help deal with the touchiest issues of compensation, promotions, and complaints. If you don’t handle these well, politics will set in, and people will get ahead by means other than merit. The full summary has more detailed advice around this, but the general premise is to create a well-defined process, then stick to it regardless of what politics people try to play.

How to Be a Good CEO

The most important responsibility of a CEO is leadership. You can measure a leader by the quantity and quality of people who want to follow her.

In practice, people want to follow leaders who do three things well:

  1. Know what to do—articulate the vision and make decisions
  2. Get the team to work on the vision
  3. Achieve results

Know What to Do

Knowing what to do consists of two activities: articulating the vision and making decisions to achieve the vision.

Articulating the vision: The vision is the story for what the company is capable of doing and why it’s exciting to work on. It’s also the strategy behind how the company can achieve this vision. It answers the deepest questions of why: “Why is this important to build? Why is the world better off because of our work? Why should I work here instead of anywhere else?”

A compelling vision gets talented people to work for you when they have the option of working anywhere. It also retains people when your company struggles. It aligns the entire team to make decisions that support each other.

Making decisions: Just as engineers output code and marketers output advertisements, the CEO outputs decisions. A good CEO makes high-quality decisions quickly. As CEO, you should be gathering information in every interaction you have with employees, customers, competitors, and outsiders.

Once you know what decision to make, be bold. You will never have enough information to make a decision with complete confidence. Your decisions may be unpopular with your team. A courageous CEO makes the right decision, no matter how hard it is. 

Get the Team to Work on the Vision

A compelling vision is well and good, but to make it real, you need a team to build toward it. This means hiring great people, then getting them to do good work.

The best way to accomplish both is to make your company a great place to work, which is the subject of most of the book and the advice so far.

Achieve Results

Having defined a vision and made progress toward the vision, ideally you’ve achieved the results you were looking for. But what are “good” results? It depends on the size and nature of the opportunity, which are idiosyncratic to each company.

Therefore, you should measure your results against your own company’s opportunity, not anyone else’s company

Embrace the Struggle

In closing, Ben Horowitz’s book gives a reminder that building a company will be a struggle. But greatness is created through the struggle. And if you endure the struggle and trust your ability to overcome it, you may just make your dreams real.

Ben Horowitz’s Book: Hard Parts of Owning a Business

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Here's what you'll find in our full The Hard Thing About Hard Things summary:

  • What it was like to head a company through the dotcom bubble and subsequent burst
  • Why failing is normal
  • How to build a good place to work

Hannah Aster

Hannah graduated summa cum laude with a degree in English and double minors in Professional Writing and Creative Writing. She grew up reading books like Harry Potter and His Dark Materials and has always carried a passion for fiction. However, Hannah transitioned to non-fiction writing when she started her travel website in 2018 and now enjoys sharing travel guides and trying to inspire others to see the world.

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