The Hard Thing About Hard Things – Ben Horowitz [Book Summary]

by Nick

The book will explain to you why being a leader is one of the most difficult and lonely activities in the world, and how to cope with the stress and worries caused by such work.

Ben Horowitz is the founding partner of the venture company Andreessen Horowitz. He was also the co-founder and CEO of Opsware, an IT company acquired in 2007 by Hewlett-Packard for $ 1.6 billion. His blog is read by more than 10 million people and “The Hard Thing About Hard Things” has become an international bestseller.

This book is available as:

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Learn How to Become an Excellent Leader.

Managers face enormous difficulties: they alone are responsible for the fate of the company and must make crucial decisions on a daily basis. Perhaps, in the interests of the cause, they will have to dismiss their best friend or stop the plant, and take full responsibility.

This book will tell about the lessons learned by Ben Horowitz during the creation and management of the company, and during its sale for $ 1.6 billion.

You will learn how to fire employees if necessary, sparing their feelings as much as possible.

You will also understand why it is useful to hire people with disabilities.

And finally, you will learn what it takes to be a leader “in time of war.”

Let’s Start With the Difficulties That Managers Face.

Each leader must be able to cope with the burden of circumstances and responsibility for the company.

Everyone who starts a business and starts managing a company is dreaming.

Usually, these are dreams of building something beautiful that will change the world, and you will do it effortlessly, and even make a lot of money.

Unfortunately, no company is developing according to such a magical scenario, because crises are an integral part of building any business. Many variables interfere with calm swimming, always something goes wrong as planned.

For example, any company is partly in the grip of macroeconomic influences, such as financial crises or collapses that frighten off investors, and also depends on microeconomic problems, for example, incorrect personnel decisions or the bankruptcy of a better customer.

It is in this situation that the leader will face the struggle, it is inevitable, dreams always meet with reality.

Fighting is an integral part of the responsibility of the company, and it entails stress. Stress and the burden of problems can affect the life of a leader, affecting his mental and physical condition, as well as affecting career choices and social relationships.

The struggle is exhausting, but it is also a source of strength. Ultimately, the leader is responsible for overcoming the obstacles facing the company. He will be praised for success or fired for failure.

When the Struggle Seems Unbearable, Teamwork, Creativity and Problem-solving Will Help You.

As you know, all leaders must fight. Fortunately, there are techniques that help to cope with this task.

Firstly, even though the burden of testing always falls on the leader to a greater extent than on someone else, do not drag him alone, during the crisis, attract as many people as possible.

The author of the book realized that this would help during the crisis in his IT company, which happened as a result of the collapse of the dotcoms. As the director of the company, the author gathered all the employees for an on-site meeting and announced that they should completely redo the product, otherwise the company will be liquidated.

He said that it’s still possible to fix it, but the one who is thinking about dismissal should leave now. The people who stayed were so motivated to create a new product that the company managed to survive and succeed by raising the company’s stock price from $ 0.35 to $ 7.

The following also needs to be remembered about the struggle: when it seems to you that you have been overlaid on all sides, and the end is near, you need to apply a creative approach.

During the boom of Internet companies, Loudcloud’s venture was $ 2 million behind its ambitious goal: revenue of $ 75 million. Because of this, investors were reluctant to finance the company. The author felt trapped, so he took a creative approach and acted unexpectedly: he corporatized the company and thus received the necessary funds to save.

Do Not Forget That the Most Difficult Problem Will Be Your Own Psychological Difficulties: You Will Be Lonely and Hard.

To overcome this problem, act as racers. They concentrate on the road that stretches in front of them, trying not to think about the obstacles and the fence around the track. You should also focus on the decisions that need to be made, and not on the problems around you.

Honesty about problems and bad news helps you find solutions quickly.

So why are so many executives reluctant to share bad news? They suffer from the fallacy of positivity ─ the idea that employees cannot cope with the truth and need to be fed only good news.

In fact, employees carry the bad news better than the leader, because in case of any problems, he will be guilty, and this greatly depletes the nervous system.

It’s really simple: the sooner you talk about the problem, the faster you pass it on to people who can solve it quickly.

Nobody wants to fire people, but if necessary, you need to do it quickly and with dignity.

The need to fire employees is one of the most frightening tasks for a manager.

But you will inevitably have to face it, and the atmosphere in the company depends on how you deal with it.

First, you need to fire quickly. Once a decision has been made, action must be taken.

If you put off layoffs that everyone already knows about, it becomes like a festering wound. If you do not announce the dismissal, the information will still be leaked to employees who will think about whether they are preparing to leave or not. They will ask their leaders who will have to lie (if you insisted on the secrecy of this information). All this undermines the trust of employees in you and in the company. If you don’t

They even said their dismissals to their managers, they will look ignorant and lose their authority among subordinates.

Secondly, it is important to deal honestly with outgoing employees, pay them decent severance pay and give good recommendations. This will not only improve the atmosphere in the company and facilitate the hiring of employees in the future, but it is also just the right thing to do.

The manager must clearly explain the need for layoffs: the company can no longer pay for the work of employees.

Recognizing Your Failure Will Give You a Number of Benefits.

Firstly, this way you will build trust in the remaining employees.

Secondly, everyone will understand that the company has failed and must look for a way out, move on.

How does it work in practice?

If you are firing people because the company cannot achieve the set targets, do not say that you are correcting mistakes. Instead, explain that, unfortunately, you will have to fire some valuable employees because the company was unable to achieve its goals.

When dismissing a senior employee, accept responsibility for the wrong choice of employee and ensure continuity of work functions

When hard times come for the company, not only ordinary employees are fired. Sometimes it is necessary to dismiss the administrative staff, and this is a more difficult task, because more at stake, both financially and psychologically.

How do I fire a manager?

First of all, you need to realize that first of all it is you, as the head of the company, who are responsible for hiring the wrong employee. You must explain this position to the board of the company.

Find out why you made this mistake and how to avoid it in the future. For example, you can analyze the root causes of what happened and share the results with the board. This will build trust between you and board members.

Secondly, you should carefully prepare for the conversation with the dismissed leader, think about what you will say, what severance pay you will offer. Remember, the conversation should not turn into a discussion of the effectiveness of his work.

In no case do not humiliate a person. Well-known businessman Bill Campbell said this: “You cannot keep his post for him, but self-esteem ─ absolutely you can.”

An honest and respectful attitude towards those whom you dismiss contributes to maintaining the morale and the effective functioning of managers, which in turn will ensure the uninterrupted operation of the organization even after the departure of a team member.

Think about this: if you publicly crackdown on a fired leader, those who remain will be afraid of “public flogging”, which will reduce their motivation.

The main task for any dismissal in the leadership remains to maintain continuity of action. This means that you, as the head of the company, must do everything possible to ensure that the work goes on as normal, even if you have to temporarily replace the retired manager.

The Next Three Chapters Are Devoted to the Secrets of Building a Successful Organization.

Take care of employees: train them well and create an attractive personnel structure

Representatives of many companies argue that people are extremely important, but not everyone really understands that an effective organization can only be built on the basis of caring for employees. People are more important to a company than products or revenues.

What can you do for your employees?

First, make sure you have a reliable human resources department, as it is his staff who can tell you about problems that you do not notice. The personnel department is akin to the organization’s quality control department: it cannot independently build an organizational structure but can indicate a decrease in standards.

For example, you may not know that salaries in your company

uncompetitive until one of the applicants tells the personnel officer about this. This information will allow you to revise wages.

Secondly, in order for employees to correspond to their positions, invest in their training, this is vital. Each company has its own proven methods and tools, and it would be a mistake to believe that any newbie can learn them without training.

It is also important that employee training is functional, i.e. it should give employees the experience and skills necessary for successful work and achieving goals. After you provide the staff with the necessary skills, you should take up the training of senior personnel. You need to tell managers how to train staff and what kind of feedback you hope to receive from them.

The cornerstones of working with staff are the quality organization of personnel service and serious training.

Hire people based on their strengths, not just evaluating their weaknesses

Everyone who has had to hire people to work knows that choosing the right candidate is not an easy task. Indeed, hiring a decent staff is a matter of life and death for any company.

How to make the right choice?

When hiring, the main priority should be the strengths of candidates, no need to reject them because of shortcomings. Strengths will help a person succeed in work.

When the author was looking for an employee who will be involved in sales, the main candidate was Mark Cranny, who has all the necessary skills and advantages of an outstanding sales manager. But Cranny has the glory of a lifeless person, people next to him are uncomfortable. However, the author hired Cranny, as he has everything necessary for success.

And if he had not had minor flaws, another company would have lured him long ago, and it would have been impossible to hire him.

The next key aspect of hiring a manager is to make sure his experience matches the size of your company. The leadership roles in a small company and in a large corporation are strikingly different from each other. In a large company, managers usually have a lot of work coming to them from other people, they have to regulate and inspect existing projects. In small companies, the leader is expected to create their own projects and manage their own work.

This Difference Leads to a Mismatch in the Rhythms of Work: People Work at Different Speeds and Have Different Skills.

The rhythm mismatch is felt, for example, by a leader who came to a small business from a large company. He expects the former feverish pace, and is surprised that every day his table is not littered with new tasks and projects.

The difference in skills is manifested when a manager from a small company tries to cope with the complexities and scale of a large company.

Try to avoid such inconsistencies.

Build a good company that you want to work for: do without politics

Every leader and founder wants people to be happy to work in his company.

How to achieve this?

First, get rid of the so-called corporate policy, the manifestation of which is, for example, the opportunity for employees to get an undeserved promotion.

The best way to avoid such a policy is to hire not just careerists, but people whose ambitions are directly related to the interests of the company. This is especially true for executives who should be fully focused on the success of the company, and not spend energy on political maneuvers.

Another tool to get rid of corporate policy is to create clear procedures that determine the regular assessment of performance, salaries and bonuses, as well as planned promotions. Having standard deadlines and procedures makes undeserved promotions almost impossible.

In addition, you can make your company attractive to employees by creating a corporate culture in it that compares favorably with your competitors.

For example, Amazon seeks to demonstrate that it is doing everything possible to save money for its customers, so its employees work at tables made from old doors.

And also, inform each employee about his role in the company and procedures for evaluating his work.

You should have a clear hierarchy of posts in which the words “vice president” or “manager” actually mean something. The hierarchy helps people understand how much their work is valued and how much money they should receive for it.

But when evaluating work based on a hierarchy of posts, beware of the so-called Law of “trashy” people, which states that the most incompetent person in a particular position determines the value of the post itself. If the company has three senior marketing managers, people look at the most ineffective of them and spread a low

rating of his work to the other two. As a result, these two feel underestimated and unmotivated.

In the Last Five Chapters, I Will Tell You How to Become an Excellent Company Leader.

The key to leadership in an organization is knowing what to do and having people do it.

It is no coincidence that the biographies of successful leaders are in great demand among readers. Obviously, successfully managing a company is very difficult.

What does the ability to manage a company consist of?

In short, a successful leader can do two things.

Firstly, he finds the right direction for the company.

When Opsware’s shares fell to $ 0.35 per share, NASDAQ announced that in less than 3 months it should raise the value of shares to $ 1 per share, otherwise they will be transferred to the lower category of “small shares”.

The author managed to convince the investor to support the company, this saved the situation. It turned out that the investor was convinced by the absolute confidence of the author that he was leading the company in the right way.

Secondly, when you find the right direction, you need to formulate your vision, convey it to others and make sure that they follow this direction. There are three important aspects: formulating your point of view, the ability to be honest and motivate employees, and the ability to inspire people to translate your ideas into reality.

Let’s look at each aspect in detail on the example of companies – leaders in the technology industry.

When it comes to formulating your vision, then Steve Jobs has no equal. Even a week before the bankruptcy of Apple, in this way, he painted a picture of the exciting prospects that the company employees believed in him.

Bill Campbell, who has been a director at many companies, has become famous for his kindness, honesty, and motivation. His employees felt that the company belonged to them too, that they were involved in its success.

And finally, remember Andy Grove, the head of Intel. Despite the prohibitive costs, he made the company a pioneer in the microprocessor data processing. His determination and conviction that he was right led Intel to its current market leadership position.

There Are Two Types of Managers: “Decision Makers” and Performers

There are no two absolutely identical leaders in the world. But based on the approach to leadership, leaders can be divided into Units and Twins.

Units are more concentrated on determining the path of development of an organization than on realizing this path in practice. As a rule, the founders of the company ─ Units. A typical example of the Unit is Bill Gates, which determined the long-term and extremely convincing path of Microsoft development.

Units like to explore and make important strategic decisions, they like the intricate chess game in which they confront the competition. They are not too interested in current activities: training, performance management, process design, goal setting, etc.

Units-based companies may be in chaos and confusion.

Deuces, on the contrary, prefer research and planning to the executive and managerial aspects of leadership. They are not inclined to make crucial decisions related to serious strategic changes.

They can fluctuate for a long time if necessary to make an important decision, which slows down the development of the company.

Obviously, truly great leaders combine the features of a Unit and a Two.

Such a combination is available to the functional Unit.

Functional Units are similar to Deuces in solving general corporate issues. Here they focus on the implementation of the functional, and not on strategic planning.

But when it comes to their personal responsibility and competence, they become designers and organizers, i.e. In units.

For example, a sales manager can be a Unit and make global sales decisions. But when implementing the general plan of the company, he concentrates his efforts on its implementation, providing global decision-making to other managers.

In general, it is not so important whether you are a Unit or a Deuce, you need to improve skills that go beyond your comfort zone, this will lead to the perfect combination of skills.

Depending on the circumstances of the company, either a leader “for peacetime” or a leader “for war” is needed

The shelves are full of management books written by company executives and business leaders. The problem is that most of them describe a situation in which it is clear where to go when the business is aimed at capturing the market segment from competitors.

But the authors of these books forget that many companies are in a more difficult position. The circumstances in which the company found itself dictate the necessary management style. A company may need a Leader for Peace or a Leader for War.

Peacetime is characterized by the company having advantages over competitors in the target market. In addition, most often in this situation, the market is growing, so that the leader can only increase his advantage.

A good example of a peaceful strategy is Google’s policy to provide consumers with a faster Internet. Google’s cloud services are already popular, and a faster Internet connection will make them even more common.

In addition, “peaceful” leaders often encourage creativity in their work. Google allows its employees to spend 20% of their work time on their own independent projects, some of which later turn into successful products of the company.

In wartime, the situation is completely changing. Macroeconomic shifts, new competitors, technological changes threaten the very existence of the company. The leader of the “war time” bears a huge responsibility: it depends on his decisions whether the company will survive or die.

Think of Andy Grove, who led Intel in the 80s, when more than 80% of the company’s employees were engaged in the production of storage devices. The excellent semiconductor products of Japanese companies forced Grove to make a difficult decision to change the direction of development. The company took up microprocessors, and that was the right choice.

You Can Learn How to Superbly Manage a Company, but at First You Will Be Uncomfortable

Leaders ─ mysterious creatures. When a board or venture investor tries to evaluate a leader, they tend to fail.

Perhaps they are asking themselves: are they born a good leader or can this be learned?

The truth is that the leader “grows up” at work. To manage the company, you need to develop the characteristics and skills needed for a particular job. Therefore, it is almost impossible to predict in advance whether the leader will be successful. Nevertheless, good leaders demonstrate some common traits that it would be useful to adopt.

For example, you should always be yourself, stay true to yourself and your style.

Take for example the author of the book: he uses curses when communicating with employees. Therefore, he introduced a rule according to which you can swear if it does not bother and does not frighten others.

Another skill that needs to be developed is the ability to give feedback correctly. It is recommended to use the principle of a sandwich: to insert the most difficult/unpleasant topic between two more positive comments. Keep in mind that senior executives may find this approach too insincere, so it’s best to use it with downstream employees.

And the last and most important quality that a leader should develop in himself: you need to learn how to feel comfortable doing unpleasant things. Like boxers whose training begins with leg dexterity training, successful leaders must learn to perceive their unnatural work as something completely normal.

For example, you may experience discomfort when evaluating someone else’s work, especially if you have not much experience in this area. But such a task is an integral part of company management, so the manager must get used to its implementation.

Selling a company will require you to overcome subjective and objective obstacles.

Many entrepreneurs dream someday to sell their company and retire. But when they receive an offer to buy, they begin to doubt, because Feel deeply connected with a living organism created by their own hands.

How do you know if you need to sell a company?

First, you must understand that in the technology industry there are three types of company purchases.

In the first type of purchase, the company’s talents and / or technologies are acquired. The transaction amount is about 5-50 million US dollars.

In the second case, the buyer is driven by the desire to receive products of the acquired company, which he himself intends to sell in a more or less unchanged form. Such a deal costs from 25 to 250 million US dollars.

The third type of takeover is aimed at the entire business of the acquired company. These are huge deals in which the buyer wants to get the organization in full. An example of such a transaction is the sale in 2007 by the author of a book by Opsware Hewlett-Packard for $ 1.65 billion.

In fact, any kind of takeover of your company is difficult to accept from an emotional point of view and is not easy to justify from a point of view of the mind.

It will be psychologically difficult for you, not only because it will seem like you are selling your dream, but also because you are giving away a source of stable income.

Do not let emotions cloud your brain when making a decision. From the very beginning, explain to the shareholders the new tasks and prospects of the company so that no one has the impression that you are liquidating the business.

If the reason for the sale was the state of your personal finances, make sure that as a company manager you get a decent salary.

From a rational point of view, you will also have doubts about the appropriateness of the sale.

The choice always depends on the specific situation, but the simplest rule is that you should not sell if you have the advantage of entering the large market early that you hope to develop. It is difficult to evaluate for yourself; you will need a quality examination.

The Final Words

Doing business ─ hard and lonely work. You will feel the greatest pressure, work will affect all aspects of your life. This is a real fight. Fortunately, this struggle gives rise to power.

When looking for financing for your company, remember that you need to find one suitable investor who agrees to invest in your business. No need to waste time and effort chasing inappropriate investors. Instead, focus on who you think is most likely to invest.

Doing business is a real struggle. Fortunately, this struggle gives rise to power.

Practical tips:

  • Find the right investor. For starters, let him be alone – do not spray.
  • Act like racers: concentrate on the road and your actions, not on the obstacles.

 

Why You Should Read “The Hard Thing About Hard Things”

  • To become a great manager or a successful founder
  • To understand how to effectively manage a business.
  • To hire and fire employees effectively.

This book is available as:

AudiobookeBook | Print