The Hard Thing about Hard Things

Posted by Andrew Savikas on March 8, 2017

There’s a lot of books written by CEOs that are filled with advice about what to do, but not many talk about what it’s really like mentally and emotionally to be a CEO, especially the profound sense of loneliness that comes with the job. Ben Horowitz’s The Hard Thing About Hard Things was the first business book I read after becoming a CEO that realistically described what it’s like (especially for someone doing it for the first time):

This means that you will face a broad set of things that you don’t know how to do that require skills you don’t have. Nevertheless, everybody will expect you to know how to do them, because, well, you are the CEO.

Much of the book is an extended pep talk for founder CEOs struggling with the demands of a high-growth startup environment, where each day can bring a new existential threat to a still-fragile firm:

If there is one skill that stands out, it’s the ability to focus and make the best move when there are no good moves. It’s the moments where you feel most like hiding or dying that you can make the biggest difference as a CEO. In the rest of this chapter, I offer some lessons on how to make it through the struggle without quitting or throwing up too much.

And having weathered quite a few such existential crises as a CEO himself, Horowitz’s pep talks rise above just rah-rah motivation and read more like a cold splash of water on the face:

There are always a thousand things that can go wrong and sink the ship. If you focus too much on them, you will drive yourself nuts and likely crash your company. Focus on where you are going rather than on what you hope to avoid.

While much of the advice is aimed squarely at founder CEOs, there’s plenty of value for non-founder CEOs and leaders, again with much of it about managing the mental and emotional challenges that come with the responsibility of running a company of any size:

If you run a company, you will experience overwhelming psychological pressure to be overly positive. Stand up to the pressure, face your fear, and tell it like it is.

The most difficult days of my own career have been the ones that involved telling people who worked for me that they were being let go, and so I found his advice spot on about why dealing well with layoffs as CEO is so important:

The message must be “The company failed and in order to move forward, we will have to lose some excellent people.” Admitting to the failure may not seem like a big deal, but trust me, it is. “Trust me.” That’s what a CEO says every day to her employees. Trust me: This will be a good company. Trust me: This will be good for your career. Trust me: This will be good for your life. A layoff breaks that trust.

A second running theme in the book that comes primarily from his context as a startup CEO but also applies to larger and more mature organizations is the complex and challenging interplay among product development (innovation), sales, and customer needs:

“How can we walk away from requirements that we know to be true to pursue something that we think will help?” It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage. Sometimes only the founder has the courage to ignore the data; we were running out of time, so I had to step in: “I don’t care about any of the existing requirements; I need you to reinvent the product and we need to win.” Nine months later, when we released our new product we could now win any deal. Armed with the new product, Mark Cranney, head of sales, went to war.

And he really nails another behavior pattern that pops up all the time when you’re depending on a large company to move forward on something critical (like a big sale or a partnership deal or even an acquisition discussion). Here his company was dependent on a deal with a large customer for survival:

An early lesson I learned in my career was that whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project. An engineer might get stuck waiting for a decision or a manager may think she doesn’t have authority to make a critical purchase. These small, seemingly minor hesitations can cause fatal delays. I could not afford any hesitation, so I scheduled a daily meeting with [the team, even ] though they were now based in Plano. The purpose was to remove all roadblocks. If anyone was stuck on anything for any reason, it could not last more than twenty-four hours—the time between meetings.

And whether it was through mentors, investors, co-founders, or employees, Horowitz reinforces how important it is to bring as many smart people in as you can when you’re dealing with complex problems and challenges that may well threaten the survival of the company. The decision may ultimately fall to the CEO, but that makes it even more critical to gather a range of perspectives and as much help as you can before any decisions are made:

Don’t put it all on your shoulders. It is easy to think that the things that bother you will upset your people more. That’s not true. The opposite is true. Nobody takes the losses harder than the person most responsible. Nobody feels it more than you. You won’t be able to share every burden, but share every burden that you can. Get the maximum number of brains on the problems even if the problems represent existential threats.

A third major component of the book is essentially an homage to Andy Grove’s superb High Output Management, and complements the high-level advice with detailed, practical tactics for dealing with the day-to-day work of being a manager, something many startup CEOs have little experience with. For example, here’s his advice on running regular one-on-one meetings with staff:

Have the employee send you the agenda in advance. This will give her a chance to cancel the meeting if nothing is pressing. It also makes clear that it is her meeting and will take as much or as little time as she needs. During the meeting, since it’s the employee’s meeting, the manager should do 10 percent of the talking and 90 percent of the listening. Note that this is the opposite of most one-on-ones.

While that advice comes straight out of Grove’s playbook, Horowitz adds more great stuff to the subject directly from his own experience

Some questions that I’ve found to be very effective in one-on-ones:   If we could improve in any way, how would we do it?  What’s the number-one problem with our organization? Why?  What’s not fun about working here?   Who is 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?

(I’d add one more to that list, though I can’t recall the source: “What is getting in the way of you doing your best work?”)

He also offers some great advice on one of the other key management duties: hiring and firing:

Training starts with a golden rule: Managers must lay off their own people. They cannot pass the task to HR or to a more sadistic peer. You cannot hire an outsourcing firm like the one in the movie Up in the Air. Every manager must lay off his own people.

It is really hard to lay someone off, but a manager needs to participate in that wrenching experience so that they understand viscerally one potential consequence of their decisions. But that’s not the main reason that it’s a good rule to have, the main reason is that while it’s hard to lay someone off, it’s way harder to get laid off, and that’s the reason managers need to do this for themselves, as Horowitz explains beautifully:

Why can’t the more confrontational managers just handle this task for everyone? Because people won’t remember every day they worked for your company, but they will surely remember the day you laid them off. They will remember every last detail about that day and the details will matter greatly. The reputations of your company and your managers depend on you standing tall, facing the employees who trusted you and worked hard for you. If you hired me and I busted my ass working for you, I expect you to have the courage to lay me off yourself.

He has great advice on hiring at the executive level, especially on understanding the differences between executive work at small companies compared with large ones (often the place young companies go to look for “seasoned” help):

Running a large organization requires very different skills than creating and building an organization. When you run a large organization, you tend to become very good at tasks such as complex decision-making, prioritization, organizational design, process improvement, and organizational communication. When you are building an organization, there is no organization to design, there are no processes to improve, and communicating with the organization is simple. On the other hand, you have to be very adept at running a high-quality hiring process, have terrific domain expertise (you are personally responsible for quality control), know how to create process from scratch, and be extremely creative about initiating new directions and tasks.

Even “seasoned” executives often punt on spending time really thinking about what they need in a role or want in a candidate, often just handing it off to HR to pull up the most recent job description and send it off to a recruiter, leaving them unprepared to make a thoughtful assessment once they’re fact-to-face with a candidate:

Far too often, CEOs hire executives based on an abstract notion of what they think and feel the executive should be like. This error often leads to the executive not bringing the key, necessary qualities to the table.

And having seen that happen myself, I loved Horowitz’s tip on how to force people to get really granular when defining expectations for the skills needed in a role:

When describing the skills, avoid the generic characterizations such as “must be competent at managing a P&L” or “must have excellent management skills.” In fact, the best leveling tools get extremely specific and even name names: “should be a superstar recruiter—as good as Jenny Rogers.”

But I thought his best advice around hiring executives was about on-boarding, something I’ve struggled with in the past. His advice resonated when I thought about the times in my own career that it’s gone either very well (or very poorly), and I especially agree with the point about “forcing them to create”:

Aggressively integrate the candidate once on board. Perhaps the most critical step is integration. You should plan to spend a huge amount of time integrating any new executive. Here are some things to keep in mind:   Force them to create. Give them monthly, weekly, and even daily objectives to make sure that they produce immediately. The rest of the company will be watching and this will be critical to their assimilation.   Make sure that they “get it.” Content-free executives have no value in startups. Every executive must understand the product, the technology, the customers, and the market. Force your newbie to learn these things. Consider scheduling a daily meeting with your new executive. Require them to bring a comprehensive set of questions about everything they heard that day but did not completely understand. Answer those questions in depth; start with first principles. Bring them up to speed fast. If they don’t have any questions, consider firing them. If in thirty days you don’t feel that they are coming up to speed, definitely fire them. Put them in the mix. Make sure that they initiate contact and interaction with their peers and other key people in the organization. Give them a list of people they need to know and learn from. Once they’ve done that, require a report from them on what they learned from each person.

While that seems like (and is) a lot of work, the reason he advocates for it is that once someone gets past that early acclimation stage, the unfortunate reality is that a CEO will likely have very little time for much coaching or training:

As CEO, you can do very little employee development. One of the most depressing lessons of my career when I became CEO was that I could not develop the people who reported to me. The demands of the job made it such that the people who reported to me had to be 99 percent ready to perform. Unlike when I ran a function or was a general manager, there was no time to develop raw talent. That can and must be done elsewhere in the company, but not at the executive level. If someone needs lots of training, she is below standard.

There’s another HR-related technique Horowitz suggests for promotions that at first sounds like he’s advocating a surprising layer of bureaucracy (especially for a startup), but he redeems it admirably with the last sentence:

One way to level across groups is to hold a regular promotions council that reviews every significant promotion in the company. When a manager wishes to promote an employee, she will submit that employee for review with an explanation of why she believes her employee satisfies the skill criteria required for the level. The committee should then compare the employee with both the level’s skill description and the skills of the other employees at that level to determine whether to approve the promotion. In addition to ensuring fairness and level quality, this process will serve to educate your entire management team on the skills and accomplishments of the employees being submitted for promotion.

And above the level of the individual employee decisions a manager makes (hiring, firing, promoting), Horowitz provides a refreshing perspective on that perennial headache for any leader at an organizational level, which is the org structure itself:

The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts. For example, if you put product management in the engineering organization, you will optimize communication between product management and engineering at the expense of communication between product management and marketing. As a result, as soon as you roll out the new organization, people will find fault with it and they will be right.

The practical managerial advice Horowitz offers makes the book worth buying for any current (or aspiring) manager. But the book really shines when he shares a (sometimes brutally) honest look at the often-messy realities of being a CEO. If you’re doing it right, you’re surrounded by people who are much smarter than you (your board members, investors, and executives), especially within their respective domains. Yet time and again you will be the only person with a broad enough perspective to make the best decision:

CEOs possess a different set of data, knowledge, and perspective than anybody else in the company. Frequently, some of the employees and board members are more experienced and more intelligent than the CEO. The only reason the CEO can make a better decision is her superior knowledge.

Here Horowitz describes something that great CEOs already do to gather that superior knowledge, though they may not realize how or why they’re doing it:

In order to prepare to make any decision, you must systematically acquire the knowledge of everything that might impact any decision that you might make. Questions such as:   What are the competitors likely to do?   What’s possible technically and in what time frame?   What are the true capabilities of the organization and how can you maximize them?   How much financial risk does this imply?   What will the issues be, given your current product architecture?   Will the employees be energized or despondent about this promotion? Great CEOs build exceptional strategies for gathering the required information continuously. They embed their quest for intelligence into all of their daily actions from staff meetings to customer meetings to one-on-ones. Winning strategies are built on comprehensive knowledge gathered in every interaction the CEO has with an employee, a customer, a partner, or an investor.

But while the CEO may be the best person to make the decision in the end, again Horowitz emphasizes how important it is to bring other people into the decision process, if only because it forces you to explain your thinking, which by itself can lead to a better choice:

Get it out of your head and onto paper. When I had to explain to my board that, since we were a public company, I thought that it would be best if we sold all of our customers and all of our revenue and changed business, it was messing with my mind. In order to finalize that decision, I wrote down a detailed explanation of my logic. The process of writing that document separated me from my own psychology and enabled me to make the decision swiftly.

(In my experience, that’s at least 50% — probably more—of the value in any regular CEO report up to the board or executive report up to the CEO: getting the report writer to organize and explain their thinking helps them as much or more than the report’s intended audience.)

While The Hard Thing About Hard Things is a great book, and worth reading for any current or aspiring CEO, Horowitz himself ultimately acknowledges that in the end there’s no shortcut to truly understanding what the job of CEO really requires:

(S)adly, the only way to learn how to be a CEO is to be a CEO. Sure, we might try to teach some skills, but learning to be a CEO through classroom training would be like learning to be an NFL quarterback through classroom training. Even if Peyton Manning and Tom Brady were your instructors, in the absence of hands-on experience, you’d get killed the moment you took the field.

The Hard Thing about Hard Things is available from Kobok.

Book cover image for The Hard Thing about Hard Things