My reading of The Hard Thing About Hard Things, by Ben Horowitz


 I read Ben Horowitz book like a Roman à clef  to learn its secrets from what he says and what he doesn't say. The real message, is in the white spaces between the letters. The essence of what Ben writes is not at the beginning, nor at the end of  of the book. It is in the middle, on page 212:
In all the difficult decisions that I made through the course of running Loudcloud and Opsware, I never once felt brave. In fact, I often felt scared to death. I never lost those feelings, but after much practice, I learned to ignore them. That learning process might also be called courage development process....
Over the past ten years technological advances have  dramatically lower the financial bar for starting a new company, but the courage bar for building a great company remains as high as it has ever been
Here are some samples sub-titles of chapters to see what Ben means by courage development process:
  • The right way to lay people off
  • Preparing to fire an executive
  • Demoting a loyal friend
  • When smart people are bad employees
  • ...
  • Old People
The last is a sub-chapter in Chapter Six, page 170 which brought me shivers. Ben uses the word "Old" only in the title, The rest he calls them "senior" people. This is what Ben writes on page 175
Aw Man, you sold your soul: hiring your first senior people into your company, may feel like selling your soul, and if you are not careful, you may well end up selling the soul of your company. You take risks and you have to win your race against time. This means acquiring your best talent, knowledge and experience even if it requires dealing with some serious age diversity.
71 year old woman skydiving 
Ben's  grand-father Phil Horowitz was a "card carrying Communist" and lost his teacher job during McCarthy era.

I am from Romania and  grew up with Communism as a state dogma. Most of my "communists" friends were also one of the finest people and were as disillusioned with the regime as we were.

Ben Horowitz met Marc Andreeseen when he applied for a job at Netscape. He was already married with  three children, including daughter Mariah who is autistic (like my son).

Figure 3: Ben and his wife Felicia Horowitz. They met in a blind date in 1986
The recruiter rejected Ben as an ideal candidate because he was not a graduate from Stanford or Harvard. Then he met Marc who was 22 at the time. The two developed natural  bond and Marc got the job. This is the miracle #1.

Marc was ahead of his time. Just read the Employer Creed to see what I mean.

Marc changed Ben's life for ever.
The launch of Netscape did no go smooth. Here are Ben and Marc email exchanges, under stress.

Figure 4: Ben email to Marc
Figure 5: Marc email to Ben
This would worry anyone and got worried Ben. He was 29 and had a family and many responsibilities.  He  showed these emails to Felicia and she said: "You should start looking for a job right away."

But the miracle #2 happened. Ben was not fired. He writes: "more shocking, Marc and I became friends; we have been friends and business partners ever since."

These two miracles can never happen on demand.

Chapter 9 The End of the Beginning

The last chapter finally reveals the key of this book: how the idea of Andreeseen Horowitz (A16z.com)  was born.

While a founding CEO of Loudcloud,  David Beirne a partner at Benchmark Capital jumps in a meeting and asks Ben this question: "When are you going to get a real CEO?". This was in front of all co-founders, humiliating him.

Ben says:
Not a day went by, when I didn't think of the interaction with David Beirne...  Marc and I discussed this paradox often We wondered aloud why as founders we have to prove our investors that we can run the company, rather than our investors assuming that we would run the company we created
The revolution A16z.com was partly made possible by Marc and Ben experience with a VC like David Beirne. I looked him up on The Funded 

Figure 6: See David Beirne rating as a partner (1.8)
Personal Specialty: None
See Andreeseen Horowitz as 4.1 top rated fund
Screen shot taken October 20, 2014
Marc and Ben looked at over 800 venture capital firms. Only about 6  (0.75%) of them had consistent returns. This means the overwhelming 99.25% of the VCs had no consistent returns

Marc and Ben realized that it is easier to make a CEO from a technical founder, rather than bringing  in the so called "professional CEO". When Adreeseen Horowitz started the great majority of VCs "were better designed to replace the founder, rather than help the founder grow and succeed"

Therefore A16z.com  identified key deficits and should address, while creating itself as a new breed of capital funding technology company - new and refreshing:
  1. The CEO skill set
  2. The CEO network
    (Large companies, executives, engineers, press and analysts, investors and acquirers)
I did write before about romanticizing the startup in San Francisco The best and the worst companies are startups, but the best are usually remembered. The others disappear.

In a way, The Hard Thing about Hard Things is written as a response to a generalized David Beirne mentality. But it is also written for the technical CEO skill set. For example, DataBricks CEO is Ioan Stoica a distinguished researcher, I suppose this book is written for him.  They support Apache Spark and soon probably Mesos. This is a big data, not social network field, with some serious scientists involved. I am familiar with this field, as you see from my blog on BoscoR. University professors are, as a rule, are notorious for their reluctance to risk. Most keep their academic position in parallel

Can one teach them entrepreneurship?  Ben Horowitz warns us right at the beginning in the introduction. Business book recipe-like books are mostly useless. The real life challenges have no recipes:
I do not attempt to present a formula in this book. Instead I present my story and the difficulties I had faced.
Just patterns that one discovers.  However each time Ben had a challenge as a CEO, he had no fall back alternatives. So it is hard to have a CEO completely succeed, when one cherishes the safe, lukewarm office of the tenure for life as a plan B,

To me, being a mensch, should be first and foremost goal. Here is the definition of a mensch, for easy reference.:
Mensch (מענטש) a Yiddish word that means "a person of integrity." A mensch is someone who is responsible, has a sense of right and wrong and is the sort of person other people look up to. In English the word has come to mean "a good guy." Menschlichkeit (מענטשלעכקייט) is a related Yiddish word used to describe the collective qualities that make someone a mensch.
Andreeseen Horowitz is in essence, an example of Menschlichkeit.  This is the real treasure underneath the apparent toughness  the book projects to a superficial reading.


Figure 7: The Rainmakers (click to enlarge)




Comments

Popular Posts