49 pages • 1 hour read
Ben HorowitzThe Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
Ben HorowitzNonfiction | Book | Adult | Published in 2014A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Summary
Background
Chapter Summaries & Analyses
Key Figures
Themes
Index of Terms
Important Quotes
Essay Topics
Tools
BetaChapters 7-9Chapter Summaries & Analyses
Chapter 7 Summary: “How to Lead Even When You Don’t Know Where You Are Going”
During one of the many crises at Opsware, Horowitz learned to stop worrying about his mistakes and focus on what he needed to get right. The following segments speak to this principle.
The Most Difficult CEO Skill
Most CEOs talk about their successes but fail to discuss their inner psychological turmoil. The problem is that there is no training regimen for becoming a CEO; it’s strictly learn as you go. More importantly, things are bound to go wrong, and it will be the CEO’s fault because they are in charge. Horowitz goes on to say that oftentimes, one of two mistakes can occur: either the CEO “takes things too personally” or “[t]hey do not take things personally enough” (204). Horowitz adds that the proper course of action lies somewhere between these two extremes.
Ultimately, CEOs have to face their fears and anxieties alone, but there are some helpful techniques. Talking through the problem with friends is one way. Another is to commit one’s worries to paper. Horowitz argues for focusing on the road ahead and states that CEOs must never give up.
The Fine Line Between Fear and Courage
Both heroes and cowards feel fear, Horowitz offers, but heroes don’t let fear stand in their way, and courage is a key trait of a successful CEO. In certain situations, all or most of a CEO’s advisors may be against a particular decision. The CEO will need to exercise both their big-picture knowledge of the situation and their courage to resist being influenced by the opinions of others. Developing courage requires a CEO to overcome their fears.
Ones and Twos
Most CEOs are either a One or a Two. The Ones like to chart the company’s direction, and the Twos like to ramp up company performance. Ones excel at strategy, while Twos excel at implementation. Both skills are required to be a good CEO, but most founding CEOs are Ones. When it’s time to transition to new leadership, it makes the most sense to promote a One from within the company.
Follow the Leader
Horowitz states that good leadership boils down to three key traits. The first is being able to communicate a vision to followers. This skill becomes critical when things begin to go wrong, and the team needs to stay the course. The second trait is the right kind of ambition. Keeping the welfare of the employees in mind instills a sense of company ownership in the workforce. The third quality is the ability to deliver. The leader must be able to realize the vision. It’s important for aspiring CEOs to cultivate all three traits.
Peacetime CEO/Wartime CEO
Most CEOs feel most comfortable as either a peacetime CEO or a wartime CEO. Horowitz states that “[p]eacetime in business means those times when a company has a large advantage over the competition in its core market, and its market is growing” (225). In wartime, the business is facing some sort of existential crisis that it may not survive. Managing during both sets of conditions requires different skills.
Peacetime CEOs encourage creativity and pursue a broad range of goals. In wartime, survival is all that matters. Most management books are studies of peacetime CEO behavior, and very few address the wartime mentality. Horowitz offers that “[m]astering both wartime and peacetime skill sets means understanding the many rules of management and knowing when to follow them and when to violate them” (228).
Making Yourself a CEO
It is a common assumption that CEOs are born and not made. Horowitz believes the opposite, but the skills of a CEO feel quite unnatural in ordinary human interaction. Since most people respond poorly to negative feedback, the CEO needs to cultivate some important communication skills. Horowitz suggests being direct while conveying the impression of wanting the employee to succeed.
According to Horowitz, trying to cushion the message to remain on good terms with the recipient is manipulative. At the same time, calling someone out in front of their peers is a bad move. It’s important to tailor the approach to the sensitivity of the person receiving the criticism. Be direct but not brutal. Further, a CEO should also be prepared to hear the other person’s reaction to critique. Expressing one’s opinions honestly and openly should stimulate communication within the company rather than shutting it down. Doing so will feel unnatural at first, but it is essential to being a successful CEO.
How to Evaluate CEOs
Horowitz writes that aside from evaluating employees, it’s important to evaluate CEO performance, too. Three key questions are involved:
- Does the CEO know what to do? Knowing what to do entails strategy and decision-making. The CEO is the keeper of the company’s story. Decision-making involves fact-gathering at every step along the way.
- Can the CEO get the company to do what the CEO knows the company should be able to do? The CEO must provide an environment where employees have the talent and infrastructure to get things done.
- Did the CEO achieve the desired results against an appropriate set of objectives? Since objectives are a moving target, Horowitz offers that it makes more sense to focus on the first two questions and minimize the importance of Question 3.
Chapter 8 Summary: “First Rule of Entrepreneurship: There Are No Rules”
When Horowitz was on the verge of closing the deal with HP to acquire LoudCloud, an accounting technicality nearly destroyed the entire deal. Although everything was saved in the nick of time, the author cautions that nothing in business is a certainty.
Solving the Accountability Versus Creativity Paradox
If one holds people accountable for every minute detail of their jobs, then one will stifle creativity. However, if one rewards creativity, they risk offending people who are sticklers for following the rules. This is known as the accountability vs. creativity paradox.
Horowitz argues that the keys to solving the accountability vs. creativity paradox are to weigh the specifics of each situation and not adhere to any hard and fast rules simply because they are the rules:
The difference between being mediocre and magical is often the difference between letting people take creative risk and holding them too tightly accountable. Accountability is important, but it’s not the only thing that’s important (251).
The Freaky Friday Management Technique
Horowitz describes a crisis in which the Customer Support Department and Sales Engineering were at war with each other. His solution was to switch the managers of each department and have them do the other person’s job. Just as in the movie Freaky Friday, the combatants came to appreciate their counterpart’s point of view and were able to resolve the conflict quickly thanks to their new insight.
Staying Great
An executive who appears great during the interview process may ultimately prove to not be a great employee. Perhaps they start out brilliantly but then deteriorate. In order for the company to stay great, Horowitz contends, a CEO must be ready to jettison such an employee. While an employee deserves both the CEO’s loyalty and a great management team, it’s the CEO’s duty to replace them if need be.
Should You Sell Your Company?
Sooner or later, most CEOs face the question of whether or not to sell. Horowitz offers that there are three reasons why a buyer might want to acquire a business: its existing technology or staff, the business offers a product that the buyer doesn’t currently have, or the company’s success at generating revenue and earnings.
The most logical reason to retain ownership is if the company is a leader in its market. If this is the case, no entity can truly afford to buy out the company. The emotional process is much more difficult to navigate. Horowitz asks, “How can you ever sell your company after you’ve personally recruited every employee and sold them on your spectacular vision of a thriving, stand-alone business? How can you ever sell out your dream?” (261). Horowitz’s advice is to stop listening to one’s own anxiety and think about what is best for the future of the company.
Chapter 9 Summary: “The End of the Beginning”
After selling Opsware, it occurred to Horowitz that he now had some venture capital experience from the perspective of a company owner, and he could use that experience to become an advisor. The state of the industry in 1999 meant that venture-capital firms devalued CEOs who didn’t have a proven track record. Even though Horowitz had been a CEO and navigated multiple businesses through difficult times, venture capital firms didn’t perceive Horowitz as a “professional CEO” because his experience was in the tech industry. As a result, they weren’t prepared to develop CEO potential in a startup founder. The rules changed with the growth of the Internet and social media.
Networking made it possible for entrepreneurs to create contacts and learn from each other. Horowitz and his partner decided to launch a venture capital firm, Andreessen Horowitz, that would foster the talent of founder CEOs while helping them grow their businesses. Andreessen and Horowitz analyzed the weaknesses of founder CEOs, two of which were the lack of a CEO skillset and a CEO network. They planned to fill the gap by mentoring new CEOs in their roles. Next, they systematized the CEO network, taking their inspiration from a Hollywood talent agency that supported its artists by networking with other agents. The CEO support network they built concentrated on talent in the following categories: large companies, executives, engineers, press, and investors. In four years, the company became a great success.
Horowitz believes he is now a better CEO than he was while running Opsware. Initially, he believed that if everything wasn’t easy, he must be doing something wrong. In retrospect, he now believes the opposite: “On my grandfather’s tombstone, you will find his favorite Marx quote: ‘Life is struggle.’ I believe that within that quote lies the most important lesson in entrepreneurship: embrace the struggle” (276). Horowitz states that doing so may lead to the fulfillment of one’s dreams.
Chapters 7-9 Analysis
The book’s final segment begins by focusing heavily on the theme of Embracing the Struggle. In this instance, the struggle originates in Horowitz’s mind, similarly to how it does in the mind of every startup CEO who has doubts about their ability to lead:
By far the most difficult skill I learned as CEO was the ability to manage my own psychology. Organizational design, process design, metrics, hiring, and firing were all relatively straightforward skills to master compared with keeping my mind in check (201).
Rather than suggesting ways to improve business performance, this set of chapters begins with advice for improving a CEO’s mindset. Because Horowitz learned to be a CEO during a time of crisis in the tech industry, he emphasizes the role of wartime CEO as distinguished from peacetime CEO. More than any other chapter of the book, Chapter 7 defines this difference and emphasizes the need for more business guides that speak to operating effectively while a company is in crisis mode. When faced with adverse circumstances, the natural human tendency is self-doubt. Horowitz advises asserting courage even in the face of fear and self-doubt. It should be noted that not all CEOs experience the downside of their role as dramatically as Horowitz did. Much of his career was spent as a wartime CEO who needed to embrace the struggle or see his business fail completely.
Horowitz applies his archetype strategy to CEOs in these chapters, distinguishing between Ones and Twos. Company founders who become CEOs are Ones and typically enjoy creating the company’s vision, while Twos prefer to manage the day-to-day growth of the operation. The latter, Horowitz contends, is a far less stressful role. While Horowitz suggests that both types are necessary, he sees himself as a One and says that most founder CEOs also fall into this category. Taking this approach to a company implies a high risk of existential threat associated with the job. Horowitz asserts that most business management guides are geared toward Twos, differentiating his book from the crowd. Horowitz doesn’t suggest that becoming a founder CEO is impossible, but developing the capacity to deal with the grimmer aspects of being a wartime leader is a necessary skill that must be learned.
In Chapter 8, the focus shifts back to the theme of Adapting to Change. Here, Horowitz admits that there are no hard-and-fast rules for how to become a great CEO; rather, everyone makes up the rules as they go along. He discusses concepts of organizational behavior that weren’t covered earlier in his narrative, such as the trade-off between creativity and accountability. In emphasizing the need to stay flexible in the face of market forces, Horowitz also examines the question of whether to stay in business or sell one’s company. Making this judgment call requires sensitivity to market forces but also personal adaptability in the face of changing company needs.
The book’s final chapter returns to the theme of Embracing the Struggle. Here, Horowitz revisits his earliest days as a CEO and all the mistakes he made, humanizing himself to his reader. At the time, he thought he was a bad leader. Eight years later, he realizes that the struggle is an intrinsic part of any CEO’s job. Leading a company involves down cycles as well as up cycles. Staying the course matters more than any mistake made along the way. The greatest benefit that Horowitz derived from being a CEO was learning how to be a CEO.
In the final chapters, Horowitz reasserts his role as a mentor, citing his trials as partial motivation for founding his current firm, Andreessen Horowitz. He wants to nurture founder CEOs in their roles as well as provide them with venture capital. This assistance may eliminate some of the growing pains for future entrepreneurs, but it can never completely remove struggle from the equation. Horowitz acknowledges this truth when he concludes his text by saying, “Of course, even with all the advice and hindsight in the world, hard things will continue to be hard things” (276). This is where the book’s title comes from, emphasizing that this is the most important takeaway from the book: Being a founding CEO is difficult, but Horowitz’s story and success are intended to prove that the struggle is worth it.
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