Why I Don’t Love (But Recommend) The Hard Thing About Hard Things

A year ago a friend and fellow founder whom I’ve been mentoring mentioned Ben Horowitz’s book, The Hard Thing About Hard Things, which is maybe the 10th time someone has recommended it as a good business book for entrepreneurs. I picked it up, got through maybe 10 pages, and then dropped it. I don’t know, I could get into Horowitz’s story or voice. He sounded bro-y.

A few months later, bored, I picked it up a second time and powered through. (By this time 20+ people had recommended it.) To be clear I didn’t love it. I think there are dozens of other business books more useful to founders; and for every business book we consume I think we ought to chow through three great novels, a history, and a book of philosophy or science—you know, actual important stuff. Anyway, Horowitz has a few smart things to say. Here’s my take.
Firstly, a little background. Horowitz had the great fortune to be an early employee at Netscape where he fell in with Marc Andreessen. Together they built Loudcloud, a Dot com hosting business, and then spun out an Opsware, a software company that he ran for a decade or so before selling to HP. In 2009 he rejoined Andreesen and founded Andreessen Horowitz, now a16z, one of the most successful Silicon Valley VCs of all time.

Horowitz’s M&A Experience

When they were trying to sell Loudcloud Andreessen and Horowitz had two bidders, IBM and EDS, which was great. But, neither was super hungry and pushing the process along. As many smart M&A people have said to me, time kills all deals. I know. I’ve lost several to lethargy. Horowitz knew this and needed to get things moving, so he sought advice from one of his board members, famed talent exec, Michael Ovitz, who has some sage advice:

“Gentlemen, I’ve done many deals in my lifetime and through that process, I’ve developed a methodology, a way of doing things, a philosophy if you will,” opined Ovitz. “Within that philosophy, I have certain beliefs. I believe in artificial deadlines. I believe in playing one against the other. I believe in doing everything and anything short of illegal or immoral to get the damned deal done.”
They took Ovitz advice, called both suitors, told them that they would be selling the company to someone within 8 weeks and they either needed to move ahead or drop out. They ended up selling to EDS.

Kill Your Darlings

Another cool story. As Opsware grew it came to a point where it needed to revive some old software it had written to automate servers years earlier. The problems were that the code was old and had never been very good in the first place. Should they rewrite it or acquire a competitor with a better product? Often in a case like this a CEO or team gets very defensive about its own product and looks at it with rose-colored glasses. But Horowitz and his team decided to take a good look at the competition and found a competitor with a killer product but very low valuation. They bought it for $33m. Three months later they licensed that piece of software to Oracle for $30m, which was 90% of the acquisition cost. The lesson here isn’t that it’s always better to buy than build. It’s just that you need to check emotion at the door and ask what you’re not doing.

Other quick takes. Horowitz has some good hiring and firing advice, in particular about how to demote a close friend who is the wrong fit for a job, in which he touts a radical transparency approach similar to that espoused by Ray Dalio.

On Culture

Horowitz is a bit of a naysayer against the idea that cultural fit is paramount, and he shares a story where he had to hire a head of sales and found someone who was a genius sales person who didn’t fit the culture of the company. He took it on himself to deal with the fit. I don’t agree that this is a universal. Probably it works better in sales, which can sometimes be a silo and less collaborative than other roles. Also, Horowitz probably got lucky. In my experience culture is huge. In today’s labor market it’s probably more important than ever.

Horowitz is at his best when he talks about training. “Training is, quite simply, one of the highest-leverage activities a manager can perform.” He then gives a solid numerical example: “Consider for a moment the possibility of your putting on a series of four lectures for members of your department. Let’s count on three hours preparation for each hour of course time—twelve hours of work in total. Say that you have ten students in your class. Next year they will work a total of about twenty thousand hours for your organization. If your training efforts result in a 1 percent improvement in your subordinates’ performance your company will gain the equivalent of two hundred hours of work as the result of the expenditure of your twelve hours.”

He’s also very good on politics and how it can creep into a company insidiously. He gives the example of an executive who comes to the CEO and asks for a raise. The CEO might react in way that she thinks is sensitive: by listening closely and promising to look into it. But, this actually incentivizes political behavior. Everyone else will get the message that the squeaky wheel gets the grease, and that promotions and raises are made based on agitating for them not on performance review. Instead you should cut off the employee. “Actually, we have a very clear process of compensation review, let’s follow that.”

So, am I convert to the Hard Things About Hard Things? I guess so. I don’t love the writing, and I think Horowitz is wrong about some things. But, he’s also right about a lot. Net result? I’ve recommended the book myself several times since finishing it. So, there you go.