In his book, Hard Things About Hard Things, entrepreneur turned venture capitalist, Ben Horowitz, shows that, ultimately, any founder will have to confront “the struggle.” Whether it’s a product that doesn’t perform as expected, loyal employees that leave, unhappy customers, or venture capitalists that want to pull out, entrepreneurs will always face, at some point in their career, the “struggle.” And there is no recipe overcoming it. Everybody has to find their own way out. Founders may wonder why they started out the company in the first place.
Founding Loud Cloud
In this largely autobiographical book, Ben Horowitz talks about his own experience in founding Loud Cloud. The company was doing great :
- $10 million in client bookings
- hiring about 30 people a month.
But then, the.com crash hit hard with the NASDAQ falling by 10%. Suddenly, bookings fell short of forecasts while the company was in dire need of fresh capital. They considered going for private markets but found no capital there. So they started looking at public markets and an initial public IPO. BusinessWeek called their IPO, the “IPO from hell”. But in the end, they successfully raised capital. But unfortunately, the.com crash worsened and they had to lay people off. Plus, they decided to sell a part of the company so that they could focus on the software side of the business.
Making it through tough times
The author talks about how entrepreneurs can get through hard times.
- First of all, he mentions that founders shouldn’t shoulder everything and they should delegate to their best people.
- Second, he mentions that there’s always a move, much like chess. A situation may seem inextricable but, there’s always a possibility to be explored.
- Third, when times get tough, the author mentions that letting people off should never be outsourced to human resources. He mentions that layoffs should never be postponed as this can deteriorate corporate culture and create a sense of fear and panic within the company. He also says that laying people off should be presented not as an employee failure but as a company failure.
No recipes… just grit
On a broader level, Ben Horowitz suggest that founders put their people first, then their product and finally the profits. He refers to this as the “3P” rule.
This is helpful in running the company as there are no recipes for learning to run a company other than running a company. He insists that politics should be minimized and that much thought must go into building clear processes, job descriptions, roles and responsibilities. Finally, a good culture ought to be driving adequate behavior which means that founders should be thinking at what kind of behavior they are aiming to foster within the company.
A great leader, according to the author, needs to build a compelling vision of the future, but also instill the right kind of culture he’s. Finally, a leader is also somebody that ensures that the vision is achieved.
Should I sell or should I go?
The author finishes his book by talking about when to sell the company. Basically, this is perhaps the most critical question facing entrepreneurs. He suggests a look at two different questions:
- First of all, is the company targeting a larger market?
- Second of all, does the company stand any chance of becoming number one in their targeted market?
If the answer is no, to any of these questions, then, Ben Horowitz suggests that founders sell their company.
After selling his company to Hewlett-Packard at $1.6 billion valuation, Ben Horowitz went on to found a venture capital organization with his cofounder, Marc Andreessen. Today, he’s helping entrepreneurs develop skills in running a company and, in addition to capital, his firm also provides marketing, human resources, and business development on demand capabilities for startup portfolio entrepreneurs.
In his book, hard things about hard things, entrepreneur turned venture capitalist Ben Horowitz, mentions that there is no recipe for running a company other than running a company. Entrepreneurs, whatever their background, will be confronted, sometime in their career, to the struggle, much like Steve Jobs who was ousted of his own company or Mark Zuckerberg that had to face privacy concerns with Facebook. Whether the struggle takes the form of a product failure, unhappy customers, loyal that employees at leave, or venture capitalists that want to pull out, Ben Horowitz suggested the struggle confronts founders with this profound question: why that I started the company in the first place? To overcome the struggle, Ben Horowitz stresses that founders must not quit as there is always a move to be found, always a way out to be discovered. Whether it’s laying people off, or assessing when to sell your company, Ben Horowitz provides practical advice to entrepreneurs facing the most strategic and difficult decisions will be taking on their journey.
In this largely autobiographical book, Ben Horowitz talks about the difficulties he confronted and suggested there is no recipe for running a company. He does mention the major kinds of difficulties that entrepreneurs are facing and suggest that a willingness to keep pressing on is perhaps what counts most. This seems surprising to some extent considering that 80% of venture capital-backed startups fail. Is that because 80% of venture capitalist entrepreneurs failed to keep pressing on? Isn’t there another way of succeeding other than keep pressing on and never quitting? Are there any analytical tools to be found? Does everything have to do with pure willpower? Isn’t the need for willpower, serve in some measure, as a substitute for analytical thinking on why things may go wrong in the first place?