What it Takes to Run a Tech Startup – Insights from Ben Horowitz

9 Dec

Dreaming of founding and running your own Tech company but unsure what it takes? Considering joining a hot startup and wondering if it will still be around in a year? You should read “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers” by Ben Horowitz.

I assembled a list of Ben’s insights on how to build a successful business. Some may be eye-opening, some may be just reinforcing what you already know. Nevertheless it’s a very useful checklist to reflect upon weekly if not daily.

On the role of the CEO:

  • I describe the CEO job as knowing what to do (“One” – strategic thinking) and getting the company to do what you want (“Two” – operational processes). While being a great CEO requires both skills, most CEOs tend to be more comfortable with one or the other. ”Ones” end up in chaos and “Twos” fail to pivot when necessary. If a CEO ignores the dimension of management she doesn’t like, she generally fails.
  • The only thing that prepares you for running a company is running a company. This means you will face a broad set of things that you don’t know how to do that require skills that you don’t have.
  • The enemy of competence is sometimes confidence. A CEO should never be so confident that she stops improving her skills.
  • The peacetime CEO does not resemble the wartime CEO. Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.
  • To be a good CEO, in order to be liked in the long run, you must do many things that will upset people in the short run. Evaluating people’s performance and constantly giving feedback is precisely what a CEO must do.
  • A company without story is usually a company without strategy. The CEO ensures that the company story is clear and compelling.
  • A CEO can most accurately be measured by the speed and quality of the decisions he makes. Great decisions come from CEOs who display an elite mix of intelligence, logic and courage. (Courage because every decision that a CEO makes is based on incomplete information. Knowing this, you must continuously and systematically gather knowledge in the company’s day-to-day activities so that you will have as much information as possible when the decision point arrives.)
  • Great CEOs constantly assess whether they are building the best team. Your engineers, marketing, HR, sales people deserve a world-class management team. That’s the priority.

On the need for domain expertise and hands-on contributions:

  • Content-free executives have no value in startups. Every executive must understand the product, the technology, the customers, and the market.

On the importance of communication:

  • Sometimes an organization doesn’t need a solution; it just needs clarity.
  • As a company grows, it’s biggest challenge always becomes communication.
  • Perhaps the CEO’s most important operational responsibility is designing and implementing the communications architecture for his company. The architecture might include organizational design, meetings, processes, email, Yammer, Slack, and even one-on-one meetings with managers and employees. Absent a well-designed communication architecture, information and ideas will stagnate and your company will degenerate into a bad place to work.

On corporate culture:

  • Sometimes the right policy is the one the CEO can follow.
  • Political behavior almost always starts with the CEO.
  • Dogs at work and yoga aren’t culture.

On leadership:

  • Nothing motivates a great employee more than a mission that’s so important that it supersedes everyone’s personal ambitions.
  • Hiring senior people into a startup is kind of like an athlete taking performance drugs. If all goes well, you will achieve incredible new heights. If all goes wrong, you will start degenerating from the inside out.
  • There is no such thing as a great executive. There is only a great executive for a given company at a specific point in time.

On organizational structure:

  • The primary purpose of the organizational hierarchy in a company is decision-making efficiency

On selling the company:

  • You need to answer two questions:
    • 1) is the market much bigger than exploited to date?
    • 2) are we going to be number one?
  • If the answer to either 1) or 2) is “no”, you should consider selling
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