TL;DR: This book is a great reference for the following things (some well-summarized in this YC talk):
- Various aspects of running an enterprise tech company in the valley.
- How to hire execs. Contains a comprehensive checklist of things one should think about hiring a VP of enterprise sales.
- How to handle performance reviews, firings, demotions.
- What a good HR organization should do, and help you with.
- How to design your organization (think of org. design as a communications architecture for the company).
- How to conduct effective 1:1s as an organization (followed by a great list of questions for a manager ask).
- Misc. tricky situations to handle as a founder – hiring from your friends’ company, promote from within or bring external candidates, when to sell etc.
Life advice from the book
- There is no silver bullet or recipe for the hard things. Only experiences that may or may not apply.
- The coward and the hero experience the same input and have similar emotions. Its what they do that matters. Being scared doesn’t mean you are gutless.
- Look at the world through different prisms – helps you separate facts from perception. For instance, hanging out with vastly different groups – the sporty kids, and the calculus nerds.
- Life will throw multiple, multi-faceted roadblocks at you at the same time – deal with it. Ben describes the struggles of taking his startup to IPO followed by a billion+ sale. Not mentioned in the book, but he was also concurrently raising three kids, of which one was autistic and one turned transgender.
- “Most business relationships become too tense to tolerate or not tense enough to be productive for a while.”
- “When raising money privately, look for a market of one.” The ‘look for a market of one’ applies to many other things in life as well.
- Bill Campbell – ‘everybody’s favorite person’ – is a leader worth striving to emulate.
- Markets are not efficient at finding the truth – they are just efficient at converging to a conclusion – very often the wrong one.
- “Statistical ways of thinking, rather than deterministic (like calculus taught in schools), are going to define the future.” – Peter Thiel.
- “You must believe that there is an answer, and you cannot pay attention to the odds of finding it. You just have to find it.” When going through tough times, statistical thinking does not pay.
- If there’s one big quality that defines good CEOs, it is the ability to focus and make the best move when there are no good moves.
- Ask yourself hard questions, and then ask questions in a different way to get the solution from yourself. Examples:
- Andy Grove – “If the board fired us and brought a new management team in, what would they do?” (during the memory to microprocessor transition). Ben Horowitz – “What’s the worst thing that can happen?” “Bankruptcy (shudder).” “What would I do if we went bankrupt?” (coming up with the idea of separating Opsware from LoudCloud).
- “The key to an emotional discussion is to take the emotion out of it.”
- “We take actions on positive indicators, and look for the alternative explanations on the negative indicators.” (Andy Grove, on why big-tech companies were missing their quarters by giant amounts after the dot-com crash, when what was coming was very predictable).
- “Nobody cares.” In the face of tough times, buckle up and do the best you can. People care about outcomes, not circumstances.
- Bring people in for their strengths, not their lack of weakness. Determine the strengths you need for the role, and the weaknesses that you would be willing to accept for those strengths. Hiring (personal or professional) for lack of weaknesses is a bad idea.
- Dealing with nerves: Focus on the road, not on the wall (on where you need to go, not what you are trying to avoid). Follow it up by writing it on paper (get it out of your head), above all, make friends who have been through similarly challenging decisions.
- Hard things are hard because your emotions are at odds with your logic.
- Hard things are hard because you do not know the answer and you cannot ask for help without showing weakness. For a CEO, “unrelenting confidence is necessary.”
- “Embrace the struggle, embrace your weirdness – your background, your instinct. If the keys are not in there, they don’t exist.”
Makings of a16z:
- Figured out who it is important to have great impressions with and a great network with: large companies, executives from past startups and large companies, engineers, press and analysts, investors and acquirers. Explains the a16z the intentions behind the PR machinery.
- Letting the technical co-founder be/stay CEO is important to them.
- Marc Andreessen co-founded Netscape at age 22, when nobody believed the Internet could be something. Everyone including Bill Gates and especially the big companies, were touting the proprietary ‘Information Superhighway’. Gates’ “The Road Ahead” is about this – worth visiting to see how leaders can be wrong.
- Exodus is a LoudCloud competitor that was valued at $50bn during the dot-com bubble days and had raised $800mn. Filed for bankruptcy nine months after raising the money.
- Sales tactics: LoudCloud had their two potential bidders scheduled for meetings in overlapping slots, orchestrated such that the bidders would pass each other in the hallway.
Misc. dos and donts:
- Promoting internally v/s externally: Does the role require extensive outside knowledge and experience (head of sales, bring from outside) or inside knowledge (head of engineer – promote from within)?
- How to have a good idea of a functional role you have never done before (e.g. PR): Find someone who is rocking that job. Interview them. Find their standards, add them to your own. This helps you develop good benchmarks while hiring.
- Think of 1:1s as a mechanism for ideas and information to flow up through the organization. 10:90 rule for 1:1s: Manager should do 10% of the talking.
- Building a cultural design-point – trivial to implement but will have long-last implications on the company. e.g Door desks at Amazon.
- All organizational designs are bad. Sort of like creating a graph with constraints. Think of it as a communications and decision making infrastructure.
- When you hit bad lows, focus on what you need to get right and stop worrying about things that you did wrong or might do wrong.
- Being diligent is helpful. Being surrounded by brilliant and powerful people who recognize that diligence is a force multiplier. Ben Horowitz was committed to his company. Yet, when his public company stock hit $0.35 (market cap became half the cash they had in the bank, valuing them at at a negative), nothing could have helped better than the advice/help he got from Andy Rachleff (board member), Ron Conway (SV Angel) and Herb Allen (connected via Ron).
- “The most difficult thing I learned as CEO was the ability to manage my own psychology”. This is made more difficult because nobody openly talks about the psychological challenges of being CEO or that most CEOs falter at so many things.
- The pressure causes CEO to react at two extremes – taking things too personally or not taking them personally enough and rationalizing the issues away. Both are bad.
- Separate the importance of the issues from how you feel about them.
- Most companies go through between 2 and 5 of “WFIO” moments. We are Fucked, Its Over.
- People who watch you judge you based on what you do, not how you feel. The coward and the hero both have the same feelings in a difficult situation, they only act differently.
- Most important decisions as CEO test courage far more than intelligence. a16z looks for brilliance and courage.
- One-Two phenomenon: Ones are people who like thinking, reading, information gathering, decision making and strategy. Twos are people biased towards action instead of thinking, great at execution. An ideal company leadership is CEO being a One with a team of Twos (and functional Ones – they are Ones for their own individual teams, but Twos for the overall company, taking direction from the CEO and executing them).
- The societal image of the overtly ambitious, ruthless, callous CEO is wrong. The CEO has to be someone who makes the employees feel like she cares more for them than they care for themselves. e.g. Bill Campbell.
- Key 3 attributes for being CEO: (a) Storytelling – articulate the vision. Think Steve Jobs. (b) Right kind of ambition – have interests aligned with the team/employees. Think Bill Campbell. (c) Execution – achieve the vision. Think Andy Grove.
- Peacetime v/s Wartime CEOs – vastly different approaches. Eric Schmidt at Google v/s Andy Grove at Intel.
- A great company story is a must. It gets you instant alignment from and interest of – employees, partners, customers, investors and press. Sample – Jeff Bezos’ 1997 letter to shareholders.
- As CEO, keep gathering information systematically and continuously – when a crucial decision making point arrives, you must be armed to know what impact the decision might make.
- Measuring CEO performance: Past performance doesn’t guarantee the future. Focus on whether they know what to do and whether they can get the company to do it.
- Just when you think that there are things you can count on in the business, you will quickly find that the sky is purple. Deal with it.
- Accountability v/s Creativity Paradox: You need to hold your people accountable, but if you do that too strictly, you’ll prevent people from taking risks, speaking up (you’ve shot the messenger) and doing good stuff in general, because they’ll be too busy saving their butt.
- Freaky Friday management: If two people/teams blame each other and don’t gel well, get them to switch places. Being in each others’ shoes helps them understand the actual issues without making things personal.
- Your loyalty must go to your employees not your management team. Management team (VPs) must keep up as the nature of the industry and company (size, market) changes, or go away. This applies to CEO too.
- Decision to sell the company: Stay standalone if you are the early one in a large market, and have a good chance at being number one. To make the decision to sell more logical, do two things: get paid well (as CEO or founder CEO), and be clear with the company about what circumstances you will sell under.