The Hard Thing About Hard Things, page 16
ONCE THEY ARRIVE
Bringing senior people on board can be fraught with peril, as I have outlined in the sections “Why It’s Hard to Bring Big Company Execs into Little Companies” and “Hiring Executives: If You’ve Never Done the Job, How Do You Hire Somebody Good?” (see pages 119 and 124).
Equally difficult is managing them effectively once they come on board. Senior people pose several important challenges:
They come with their own culture. They will bring the habits, the communication style, and values from the company they grew up in. It’s very unlikely these will match your environment exactly.
They will know how to work the system. Because senior people come from larger environments, they usually develop the skills to navigate and be effective in those environments. These skills may seem political and unusual in your environment.
You don’t know the job as well as they do. In fact, you are hiring them precisely because you don’t know how to do the job. So how do you hold them accountable for doing a good job?
In order to prevent the internal degeneration mentioned earlier, it’s important to be aware of the above issues and then employ appropriate countermeasures to make sure they don’t metastasize.
First, you should demand cultural compliance. It’s fine that people come from other company cultures. It’s true that some of those cultures will have properties that are superior to your own. But this is your company, your culture, and your way of doing business. Do not be intimidated by experience on this issue; stick to your guns and stick to your culture. If you want to expand your culture to incorporate some of the new thinking, that’s fine, but do so explicitly—do not drift. Next, watch for politically motivated tactics and do not tolerate them.
Perhaps most important, set a high and clear standard for performance. If you want to have a world-class company, you must make sure that the people on your staff—be they young or old—are world-class. It is not nearly enough that someone on your staff can do the job better than you can, because you are incompetent at the job—that’s why you hired them in the first place.
Be careful not to set a low bar because you have not done the work to know what good is. For example, I’ve seen many a young CEO excited about her company’s competency in marketing and PR because she got a bunch of positive stories on her launch. That’s not a high PR standard. Anybody can get reporters to write nice things about a sweet, cuddly baby of a company. Only world-class PR people can deal with gangly, pimple-ridden, teenage companies. World-class PR people can turn around negative stories. World-class PR people can turn chicken shit into chicken salad. Turning chicken shit into chicken salad requires long-term, trusted relationships, deep know-how, and the confidence to make use of both appropriately. PR kids don’t have any of the three.
One excellent way to develop a high standard is to interview people who you see doing a great job in their field. Find out what their standard is and add it to your own. Once you determine a high yet achievable performance bar, hold your executive to that high standard even if you have no idea how they might achieve it. It’s not your job to figure out how to create an incredible brand, tilt the playing field by cutting a transformational deal, or achieve a sales goal that nobody thought possible—that’s what you are paying them to do. That’s why you hired them.
Finally, you’ll need your new executive to be more than just a goal achiever. She will need to be well rounded and part of the team. Bill Campbell developed an excellent methodology for measuring executives in a balanced way that will help you achieve this. He breaks performance down into four distinct areas:
1. Results against objectives Once you’ve set a high standard, it will be straightforward to measure your executive against that standard.
2. Management Even if an executive does a superb job achieving her goals, that doesn’t mean she is building a strong and loyal team. It’s important to understand how well she is managing, even if she is hitting her goals.
3. Innovation It’s quite possible for an executive to hit her goal for the quarter by ignoring the future. For example, a great way for an engineering manager to hit her goals for features and dates is by building a horrible architecture, which won’t even support the next release. This is why you must look beyond the black-box results and into the sausage factory to see how things get made.
4. Working with peers This may not be intuitive at first, but executives must be effective at communicating, supporting, and getting what they need from the other people on your staff. Evaluate them along this dimension.
AW, MAN, YOU SOLD YOUR SOUL
Hiring the first senior people into your company may feel like selling your soul, and if you are not careful, you may well end up selling the soul of your company. But if you want to make something from nothing, you have to take risks and you have to win your race against time. This means acquiring the very best talent, knowledge, and experience even if it requires dealing with some serious age diversity.
ONE-ON-ONE
After I first wrote about one-on-ones, people flooded me with feedback about one-on-ones. About half the responders chastised me, saying that one-on-ones were useless and that I shouldn’t put so much emphasis on them. The other half wanted to know how to run more effective one-on-ones. It seems to me that both groups are likely talking about two sides of the same coin.
Perhaps the CEO’s most important operational responsibility is designing and implementing the communication architecture for her company. The architecture might include the organizational design, meetings, processes, email, yammer, 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. While it is quite possible to design a great communication architecture without one-on-one meetings, in most cases one-on-ones provide an excellent mechanism for information and ideas to flow up the organization and should be part of your design.
Generally, people who think one-on-one meetings are a bad idea have been victims of poorly designed ones. The key to a good one-on-one meeting is the understanding that it is the employee’s meeting rather than the manager’s meeting. This is the free-form meeting for all the pressing issues, brilliant ideas, and chronic frustrations that do not fit neatly into status reports, email, and other less personal and intimate mechanisms.
If you are an employee, how do you get feedback from your manager on an exciting but only 20 percent formed idea that you’re not sure is relevant, without sounding like a fool? How do you point out that a colleague you do not know how to work with is blocking your progress without throwing her under the bus? How do you get help when you love your job but your personal life is melting down? Through a status report? On email? Yammer? Asana? Really? For these and other important areas of discussions, one-on-ones can be essential.
If you like structured agendas, then the employee should set the agenda. A good practice is to 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 it’s not the manager’s job to set the agenda or do the talking, the manager should try to draw the key issues out of the employee. The more introverted the employee, the more important this becomes. If you manage engineers, drawing out issues will be an important skill to master.
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?
In the end, the most important thing is that the best ideas, the biggest problems, and the most intense employee life issues make their way to the people who can deal with them. One-on-ones are a time-tested way to do that, but if you have a better one, go ahead with your bad self.
PROGRAMMING YOUR CULTURE
Ask ten founders about company culture and what it means and you’ll get ten different answers. It’s about office design, it’s about screening out the wrong kinds of employees, it’s about values, it’s about fun, it’s about alignment, it’s about finding like-minded employees, it’s about being cultlike.
So what is culture? Does culture matter? If so, how much time should you spend on it?
Let’s start with the second question first. The primary thing that any technology startup must do is build a product that’s at least ten times better at doing something than the current prevailing way of doing that thing. Two or three times better will not be good enough to get people to switch to the new thing fast enough or in large enough volume to matter. The second thing that any technology startup must do is to take the market. If it’s possible to do something ten times better, it’s also possible that you won’t be the only company to figure that out. Therefore, you must take the market before somebody else does. Very few products are ten times better than the competition’s, so unseating the new incumbent is much more difficult than unseating the old one.
If you fail to do both of those things, your culture won’t matter one bit. The world is full of bankrupt companies with world-class cultures. Culture does not make a company.
So, why bother with culture at all? Three reasons:
1. It matters to the extent that it can help you achieve the above goals.
2. As your company grows, culture can help you preserve your key values, make your company a better place to work, and help it perform better in the future.
3. Perhaps most important, after you and your people go through the inhuman amount of work that it will take to build a successful company, it will be an epic tragedy if your company culture is such that even you don’t want to work there.
CREATING A COMPANY CULTURE
When I refer to company culture, I am not referring to other important activities like company values and employee satisfaction. Specifically, I am writing about designing a way of working that will:
Distinguish you from competitors
Ensure that critical operating values persist such as delighting customers or making beautiful products
Help you identify employees who fit with your mission
Culture means lots of other things in other contexts, but the above will be plenty to discuss here.
When you start implementing your culture, keep in mind that most of what will be retrospectively referred to as your company’s culture will not have been designed into the system, but rather will have evolved over time based on your behavior and the behavior of your early employees. As a result, you will want to focus on a small number of cultural design points that will influence a large number of behaviors over a long period of time.
In his bestselling book Built to Last, Jim Collins wrote that one of the things that long-lasting companies he studied have in common is a “cult-like culture.” I found this description to be confusing because it seems to imply that as long as your culture is weird enough and you are rabid enough about it, you will succeed on the cultural front.
That’s related to the truth, but not actually true. In reality, Collins was right that a properly designed culture often ends up looking cultlike in retrospect, but that’s not the initial design principle. You needn’t think hard about how you can make your company seem bizarre to outsiders. However, you do need to think about how you can be provocative enough to change what people do every day.
Ideally, a cultural design point will be trivial to implement but have far-reaching behavioral consequences. Key to this kind of mechanism is shock value. If you put something into your culture that is so disturbing that it always creates a conversation, it will change behavior. As we learned in The Godfather, ask a Hollywood mogul to give someone a job and he might not respond. Put a horse’s head in his bed and unemployment will drop by one. Shock is a great mechanism for behavioral change.
Here are three examples:
Desks made out of doors Very early on, Jeff Bezos, founder and CEO of Amazon.com, envisioned a company that made money by delivering value to rather than extracting value from its customers. In order to do that, he wanted to be both the price leader and customer service leader for the long run. You can’t do that if you waste a lot of money. Jeff could have spent years auditing every expense and raining hell on anybody who overspent, but he decided to build frugality into his culture. He did it with an incredibly simple mechanism: All desks at Amazon.com for all time would be built by buying cheap doors from Home Depot and nailing legs to them. These door desks are not great ergonomically, nor do they fit with Amazon.com’s $150 billion–plus market capitalization, but when a shocked new employee asks why she must work on a makeshift desk constructed out of random Home Depot parts, the answer comes back with withering consistency: “We look for every opportunity to save money so that we can deliver the best products for the lowest cost.” If you don’t like sitting at a door, then you won’t last long at Amazon.
Ten dollars per minute When we started Andreessen Horowitz, Marc and I wanted the firm to treat entrepreneurs with great respect. We remembered how psychologically brutal the process of building a company was. We wanted the firm to respect the fact that in the bacon-and-egg breakfast of a startup, we were with the chicken and the entrepreneur was the pig: We were involved, but she was committed. We thought that one way to communicate respect would be to always be on time to meetings with entrepreneurs. Rather than make them wait in our lobby for thirty minutes while we attended to more important business like so many venture capitalists that we visited, we wanted our people to be on time, prepared, and focused. Unfortunately, anyone who has ever worked anywhere knows that this is easier said than done. In order to shock the company into the right behavior, we instituted a ruthlessly enforced ten-dollar-per-minute fine for being late to a meeting with an entrepreneur. So, for example: You are on a really important call and will be ten minutes late? No problem, just bring one hundred dollars to the meeting and pay your fine. When new employees come on board, they find this shocking, which gives us a great opportunity to explain in detail why we respect entrepreneurs. If you don’t think entrepreneurs are more important than venture capitalists, we can’t use you at Andreessen Horowitz.
Move fast and break things Mark Zuckerberg believes in innovation and he believes there can be no great innovation without great risk. So, in the early days of Facebook, he deployed a shocking motto: Move fast and break things. Did the CEO really want us to break things? I mean, he’s telling us to break things! A motto that shocking forces everyone to stop and think. When they think, they realize that if you move fast and innovate, you will break things. If you ask yourself, “Should I attempt this breakthrough? It will be awesome, but it may cause problems in the short term,” you have your answer. If you’d rather be right than innovative, you won’t fit in at Facebook.
Prior to figuring out the exact form of your company’s shock therapy, be sure that your mechanism agrees with your values. For example, Jack Dorsey will never make his own desks out of doors at Square because at Square, beautiful design trumps frugality. When you walk into Square, you can feel how seriously they take design.
WHY DOGS AT WORK AND YOGA AREN’T CULTURE
Startups today do all kinds of things to distinguish themselves. Many great, many original, many quirky, but most of them will not define the company’s culture. Yes, yoga may make your company a better place to work for people who like yoga. It may also be a great team-building exercise for people who like yoga. Nonetheless, it’s not culture. It will not establish a core value that drives the business and helps promote it in perpetuity. It is not specific with respect to what your business aims to achieve. Yoga is a perk.
Somebody keeping a pit bull in her cube may be shocking. The lesson learned—that animal lovers are welcome or that employees can live however they want—may provide some societal value, but it does not connect to your business in a distinguishing way. Every smart company values its employees. Perks are good, but they are not culture.
THE POINT OF IT ALL
In the later section “How to Evaluate CEOs” (see page 235), I describe the CEO job as knowing what to do and getting the company to do what you want. Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time.
TAKING THE MYSTERY OUT OF SCALING A COMPANY
If you want to build an important company, then at some point you have to scale. People in startup land often talk about the magic of how few people built the original Google or the original Facebook, but today’s Google employs twenty thousand people and today’s Facebook employs more than fifteen hundred people. So, if you want to do something that matters, then you are going to have to learn the black art of scaling a human organization.
Often board members give entrepreneurs two bits of advice regarding scale:
1. Get a mentor.
2. Find some “been there, done that” executives who already know how to scale.
