Friday, May 1, 2020

The Hard Thing About Hard Things - Book Review

Summary - 
A book about the difficult problems and situations start up founders face (chock full of examples from Ben Horowitz's personal experience) and his advice on how to think through these problems.

My thoughts -  
I must be honest, it took me quite a while to finish this book. I read the first half of the book and put it down for a couple months before going back to it recently as I was determined to at least skim through the end before returning the book to my friend. Personally, the first half of the book was fairly slow and I honestly do not recall what it covered.

The second half of the book though, I found much more useful as it focused a lot more on culture building, hiring, motivating and leading. As someone stepping in to a new industry and into a leadership position, it's been a lot of learning by fire so these chapters have provided some sort of anchor for me to frame my thinking. It addressed a lot of hairy, complicated topics with clear examples on how to tackle them - insightful for anyone in a leadership position (or who is working their way there). But it did read more like an amalgamation of a handful of blog posts grouped by topic rather than a traditional book with a clear trajectory.

Who would like this book - 
A good management book for people who are leaders at a start up or who one day want to be a founder CEO.

My 5 main takeaways - 

  1. The primary thing that any technology start up must do is build a product that's at least 10x better than the existing product. 
  2. When hiring for executive roles you've never done - (i) act as the interim to figure out what strengths are critical for the role, (ii) do informational interviews with successful people in those roles to find out what is needed 
  3. Company culture is not bringing your dog to work, or yoga sessions. These are perks, not culture. Culture sets the tone and is a dogma of your companies' values and mode of operation. 
  4. To scale a company - specialization is needed but need to make sure there are still strong communication channels. This is done via (i) organizational design (optimize around functions vs projects), and (ii) a process that ensures communication and accountability.
  5. CEOs are made, not born. CEOs should be evaluated on (i) their ability to articulate a strategy/story, (ii) decision making skills, (iii) ability to build world class team, and (iv) create an environment where employees can get things accomplished.


A few difficult situations + Ben's advice that I found helpful
  • Lay people off the right way
    • Once you've decided to lay people off, don't delay
    • Reason for layoff = company failure, not personal failure
    • Managers must lay off their own people, they cannot pass the task to HR. 
    • Address the entire company 
      • Message is for the people who are staying. The people who stay will care deeply about how you treat their colleagues. 
      • The company must move forward, so be careful not to apologize too much
    • Be visible, be present after the layoff. 
      • Employees want to know that you care. Help them carry their things to their cars. Let them know that you appreciate their efforts.
  • Firing executives
    • Not an executive failure but an interview/integration failure (hired the wrong person for the company)
      • Did a poor job defining the position
      • Hired for lack of weakness > strengths
      • Hired for scale too soon
      • Hired for the generic position (your company's head of sales =/= head of sales at Facebook)
      • Executive had wrong kind of ambition
      • Failed to integrate executive
    • Hire an executive who has grown an organization like yours quickly and successfully before > one who has worked their way up to running a very large organization.
      • Big company executive 
        • Interrupt-driven
        • Good at complex decision making, prioritization, organizational design, process improvement, organizational communication
      • Start up executive
        • Nothing will happen unless you make it happen. You have to take 8-10 new initiatives a day or the company will stand still
        • Adept at running high-quality hiring process, have terrific domain expertise (personally responsible for quality control), know how to create process from scratch, creative about initiating new directions and tasks  
    • Once you've told the executive, let them decide how the news will be communicated to the company and outside world
    • CEO should act in the executive role in the meanwhile. Will provide continuity for the team and inform your thinking on who to hire next
  • If you've never done the job, how do you hire a good executive?
    • Act in the role
    • Bring in domain experts - interview them to figure out which of those strengths most directly match the needs of your company
    • Be clear in your mind about what this person will do upon joining
    • Write down the strengths you want and the weaknesses you are willing to tolerate
    • Conduct reference checks yourself 
    • You were hiring her for the current job, but she will have a new and very different job that you will need to reevaluate her on 12 months from now when the company doubles in size.
  • What to look for in a Head of HR
    • World class process design skills
    • True diplomat
    • Industry knowledge - compensation, benefits, best recruiting practices etc.
    • CEO must trust Head of HR's thinking and judgment
    • Understanding things unspoken
  • How to minimize politics
    • Hire people with the right kind of ambition (the executive's own success only comes as a by-product of the company's success, team>individual success)
    • Build strict processes for potentially political issues 
      • Well structured and regular performance evaluation and promotion process to ensure fair compensation 
      • Organizational design and territory 
        • If you manage ambitious people, from time to time they will want to expand their scope of responsibility. Be careful what you say because everything you say can be turned into political cannon fodder. Best to say nothing. 
        • Evaluate your organizational design on a regular basis and decide without tipping people off on your plan. Once you decide, execute the reorg. Don't leave time for leaks and lobbying.
  • Should you hire experienced "old" people?
    • They come with their own culture - therefore must demand cultural compliance 
    • They will know how to work the system - set a high and clear standard for performance 
      • To develop a high standard, interview people you see who's doing a great job in their field. Find out what their standard is and add to your own. 
    • You don't know the job as well as they do
    • Metrics of success
      • Results against objectives
      • Ability to build a strong and loyal team
      • Innovation 
      • Working with peers
  • One-on-one
    • Have employee send the agenda in advance - she can cancel the meeting if nothing is pressing and will make clear it is her meeting
    • Manager talks 10%, 90% listening 
    • Questions to ask
      • If we could improve in any way, how would we do it?
      • What's the #1 problem with our organization? Why?
      • What's not fun about working here?
      • Who's really kicking ass in the company? Whom do you admire?
      • If you were me, what changes would you make?
      • What don't you like about the product?
      • What's the biggest opportunity that we're missing out on?
      • What are we not doing that we should be doing?
      • Are you happy working here?
  • Creating a company culture (Dogs at work and Yoga aren't culture)
    • Examples of culture: 
      • Amazon - Desks made out of doors
      • Andreessen Horowitz - $10/minute you are late to meeting with founder
      • Facebook - Move fast and break things
    • Distinguish you from competitors
    • Ensure critical operating values persist such as delighting customers or making beautiful products
    • Help you identify employees who fit with your mission
  • Scaling a company 
    • Give ground grudgingly - specialization complicates things but will prevent your company from descending into chaos
    • Specialization 
    • Organizational design - needed when there's specialization 
      • Organize company around functions (sales, marketing, product management, engineering) [OR] organize around missions (self contained business units that contain multiple functions)
      • Your goal is to choose the one that optimizes for communication and decision making 
        • Is it more important for product managers to understand the product architecture or the market? Is it more important for engineers to understand the customer or the architecture?
      • Then identify the paths that you did not optimize for and build a plan for mitigating those issues 
    • Process - the purpose of process is communication
      • Focus on the output - what should the process produce?
      • How will you know if you are getting what you want at each step? How will you measure each step?
      • Engineer accountability into the system
  • CEO - loneliest job, have to be comfortable choosing between horrible and cataclysmic decisions
    • Talk to other CEOs
    • Get it out of your head and into paper to clarify and articulate your thoughts
    • Focus on where you are going rather than on what you hope to avoid
    • Don't quit
  • Ones and Twos
    • Ones = love making decisions, strategic minded, bored of the many important execution details required to run a company (process design, goal setting, accountability, performance management)
    • Twos = loves execution, insist on super clear goals, have difficulty with strategic thinking (reading, studying, thinking)
      • Executive Twos - often act as Ones for their functions, but Twos as members of the management team
    • Difficult question is do you promote an Executive Two to CEO position and hope they will turn into a One, hire externally (won't know your business as well) or promote a One from 2 levels down and risk losing your entire executive team? Horowitz has no answer to this.
  • What makes people want to follow a leader?
    • Ability to articulate the vision (Steve Jobs)
    • Right kind of ambition (make employees feel like the CEO cares more about the employees than they do about themselves)
    • Ability to achieve the vision (competence)
  • You're not born to be a CEO - CEOs are made, it is an unnatural job
    • Shit sandwich
    • How to give feedback
      • Be authentic
      • Be direct
      • Come from the right place - you want them to succeed not to fail
      • Don't get personal
      • Don't give feedback in a group setting
    • Feedback is a dialogue
    • As CEO you should have an opinion about everything - express yourself
  • Evaluating CEO - (1) do they know what to do?
    • Strategy / story 
    • Decision making - knowing what to do is the speed and quality of the CEO's decisions
      • Intelligence, logic, courage
      • Courage because every decision is based on incomplete information 
      • To prepare to make any decision, you must systematically acquire the knowledge of everything that might impact any decision that you might make
        • What are competitors likely to do?
        • What's possible technically and in what time frame?
        • What are the true capabilities of the company and how to maximize?
        • How much financial risk does this imply?
        • What will the issues be, given your current product architecture? 
  • Evaluating CEO - (2) can they get the company to do what they know? 
    • The company must have the capacity to do so
      • Is it building a world class team?
    • The company must be a place where employees can get things accomplished
  • Evaluating CEO - (3) did they achieve the desired results against an appropriate set of objectives?
  • Accountability vs Creativity (risk taking)
    • Accountability for effort (employee must show that they are making an effort)
    • Accountability for promises (keeping their promise)
    • Accountability for results - more complicated, measure based on...
      • Seniority of employee - experienced person should be better able to forecast their results 
      • Degree of difficulty of the project
      • Amount of stupid risk
  • Selling your business
    • Talent and/or technology - usually sell for $5-50 million
    • Product - $25-250 million
    • Business - can be extremely large, Microsoft offered $30 billion for Yahoo
    • Don't sell your business if - 
      • You're very early on in a large market AND you have a good chance of being number one in the market
    Other quotes I underlined -  

    • Business is like playing 3 dimension chess
    • As a start up, if you cannot pay people in cash or equity, pay in title
    • Two kinds of friends you need 
      • The first kind is one you can call when something good happens, and you need someone who will be excited for you. Not a fake excitement veiling envy, but a real excitement. You need someone who will actually be more excited for you than he would be if it had happened to him. 
      • The second kind of friend is somebody you can call when things go horribly wrong - when your life is on the line and you only have one phone call. 
    • My single biggest personal improvement as CEO occurred on the day when I stopped being too positive. [...] In my mind, I was keeping everyone in high spirits by accentuating the positive and ignoring the negative. But my team knew that reality was more nuanced than I was describing it. 
      • Important to tell it like it is to (1) build trust, (2) the more brains working on the hard problems, the better
    • A hero and a coward are both afraid of dying. The hero is more disciplined and he fights those feelings off and he does what he has to do. But both feel the same way. People who watch you judge you on what you do, not how you feel.


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