The Hard Thing About Hard Things By Ben Horowitz: Summary and Notes
“The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.”
Related Books: Zero to One, ReWork, High Output Management, The Making of a Manager
The Hard Thing About Hard Things Short Summary
The Right Way to Lay Off People
Take Care of the People, the Products, and the Profits In That Order
Why It’s Hard to Bring Big Company Execs Into Little Companies
The Fine Line Between Courage and Fear
Peacetime and Wartime CEOs
Solving the Accountability Vs Creativity Paradox
The secret behind successful CEOs is the ability to focus and make the best move when there are no good moves. When faced with the Struggle:
Don’t put it all on your shoulders. While you may not be able to share every burden, share every burden that you can. Get the maximum number of brains for the problems that your company is facing
It’s chess, not checkers. There is always a move to be made
Play long enough and you might get lucky. If you stay long enough in the technology business, you might get the answer that is impossible today
Don’t take it personally. Everyone makes mistakes so don’t be too hard on yourself
Why CEOs should be transparent about their company’s problems:
Trust. Without communication, trust will break. As the company grows, trust becomes its biggest challenge
The more brains working on hard problems, the better. The company will lose if (all) employees do not work on pressing concerns
Culture. Employees are normally aware of the issues that kill companies way before the companies go under. A good corporate culture encourages them to speak their mind
Laying people off the right way serves the interests of the company because it provides for continuity. To lay people off the right way:
Get your head right. Focus on the future and not the past
Don’t delay. Once you have decided that you are going to lay people off, make the decision as fast as possible. This will ease the pain on both sides
Be clear in your mind about why you are laying off people. Don’t sugarcoat the decision for the layoff just say it plain and simple- “the company failed to hit its plans”
Train your managers. Managers should fire their own people and inform them of the reasons behind the firing
Address the entire company. The CEO needs to address the company in a message that provides context and that covers for the managers
Be visible, be present. People want to see whether you care about firing them. Stick around and engage them
Executives are easier to dismiss because they have probably been on the other side of the conversation. But it can still be difficult. To fire an executive:
Root cause analysis. Find the real reason why the executive needs to go. Perhaps you scaled too fast, failed to integrate the executive, or you hired for weakness rather than for strengths. It is your job to justify why the executive is no longer needed
Inform the board. Inform the board to get their approval, to preserve the reputation of the fired executive, and to get their understanding of the obviously difficult decision
Prepare for the conversation. Tell the executive of the decision as quickly as possible. Script and rehearse what you need to say and don’t misspeak
Prepare company communication. Notify others of the change in management as soon as possible
When dealing with a friend, it is important to understand that they may feel embarrassed and betrayed when they are demoted.
Try to dissuade them from feeling this way by being very clear in your mind why you must make the decision.
At the same time, you must decide on their best role in the company. The obvious decision is to make them work under the new boss.
When it comes to telling them of the decision, use appropriate language, admit the reality, and remember to acknowledge their contribution.
Taking care of people means making your company a good place to work. When organizations grow in size, important work can often be overlooked and hard-working employees can go unnoticed.
Happy employees deliver great products. A good place to work values employees and their contributions. They know that if they get their work done, good things will happen for them and for the company.
On the other hand, in poor workplaces, people spend most of their time fighting organizational boundaries, infighting, and broken processes. Their job mandates are not clear and they have no way of knowing whether they are getting their jobs done.
People are the most important asset and that’s why you need to train them. Here are some reasons why companies need to train people:
Productivity. Training increases employees’ productivity
Performance management. When you train an employee for the job, they know what to expect
Product quality. Training ensures product quality especially where new hires are concerned
Employee retention. Employees can leave a company if they aren’t learning anything new
“Good product managers know the market, the product, the product line, and the competition extremely well and operate from a strong basis of knowledge and confidence. A good product manager is the CEO of the product. Good product managers take full responsibility and measure themselves in terms of the success of the product.”
Big company executives face two mismatches:
Rhythm mismatch. Big company executives are used to things moving faster
Skillset mismatch. Running a big company requires different skills than those needed to build and run a company
To overcome these two problems, screen for mismatches during the interview process and take the integration as seriously as the interviewing process.
When hiring a new executive for your company, run a process that figures out the right match, know what you want, and make the decision alone.
Do not give employees a task that they cannot possibly perform. That is the equivalent of crippling the army. Don’t focus too much on the numbers. Other metrics such as user experience also matter.
“Many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product. It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.”
Anything that you measure automatically sets a series of employee behaviors. So once you get the result that you want, you need to test the description of the result against the employee behaviors that the description will likely create.
Management debt: When you make short-term management decisions, there will likely be an expensive long term consequence. The three most popular types of management debts are:
Putting two in a box. This is the equivalent of duplicating roles within the company. It creates confusion
Overcompensating. When you pay an employee more than they are worth, it will come back to haunt you
Lack of performance management. When there is a vacuum of feedback, there is little chance that your company will perform optimally across the board
Characteristics of a great HR:
World Class process design skills. The head of HR needs to be a masterful process designer
A true diplomat. HR managers should improve relationships between employees rather than manage them
Industry knowledge. HR needs to know everything about their industry
Intellectual heft. HR should be in a position to advise the CEO on a number of issues
Understanding things unspoken. Good HR should know when things go wrong
“A CEO creates politics by encouraging and sometimes incentivizing political behavior—often unintentionally.”
When a CEO agrees to a pay rise but makes it confidential, the news will likely get out and other people will demand pay rises too.
Minimizing politics can be hard because it is counter-intuitive to the goals of being open-minded and encouraging employee development.
Nonetheless, office politics can be minimized by hiring people with the right kind of ambition and by building strict processes for political issues. To minimize politics:
Create a performance and evaluation structure that will deal with compensation issues
Have opportunities for employees to expand their scope of responsibility
Be careful with gossip within the company. Have a structured way of handling complaints
Titles matter because employees want them and, eventually, people need to know who is who.
“In business, intelligence is always a critical element in any employee, because what we do is difficult and complex and the competitors are filled with extremely smart people. However, intelligence is not the only important quality. Being effective in a company also means working hard, being reliable, and being an excellent member of the team.”
The heretic. Always complains and has an agenda rather than improving the company
The flake. Misses work for no particular reason and doesn’t take their responsibilities seriously
The jerk. A rude and condescending employee
To help preserve key values as the company grows
Company culture makes people want to work at a particular company or not
When looking to scale your company, get a mentor or an executive who already knows how to scale. When scaling, the first technique to implement is specialization.
No single organizational design is perfect. There are compromises for one design over another. If you want more communication in your design, make more employees report to one manager.
In the same vein, the more people are further out in an organizational design, the less they communicate. As a CEO, it is fallacious to evaluate people against the future needs of the company.
Managing at scale is a learned skill and not a natural ability. If you judge people in advance, it will retard their development. Give people time to grow.
What separates courage from fear is what you do and not how you feel. The coward and the courageous both fear getting hurt. They both fear failure and ridicule. Courage can be developed.
The greatest challenge that CEOs face is managing their own psychology. It helps to have people to talk to, get things out of the head and onto paper, and focus on the path ahead.
The ability to articulate a vision
Wartime CEOs are present when the company is trying to fend off an existential threat to their existence while peacetime CEOs are focused on market consolidation and expansion.
During peacetime, CEOs are called upon to broaden and maximize current opportunities. They should encourage broad-based creativity towards achieving a set of objectives.
Meanwhile, wartime CEOs have a singular focus on achieving a particular goal.
“The CEO must set the context within which every employee operates. The context gives meaning to the specific work that people do, aligns interests, enables decision making, and provides motivation.”
A CEO can be accurately measured based on the quality of their decisions. Great decisions from CEO’s show a measure of intelligence, logic, and courage.
As the CEO, you should hold people accountable for their actions. You need to do this even if you believe that your employees had the best intentions in mind. Dimensions of accountability:
Accountability for effort. If somebody is not giving the right amount of effort, they need to be checked
Accountability for promises. Employees have to live up to their promises
Accountability for results. If someone fails to deliver the results that they promised, they need to be held accountable