fab.u: cool dude + venture captialist ben horowitz writes a MUST read for business-builders everywhere…

THESE are halcyon days in Silicon Valley and other hives of entrepreneurship around the world. Barely a week goes by without some newly minted billionaire hitting the headlines and some bizarrely named young company getting an eye-wateringly high valuation from financiers. But for every starry success there will be a multitude of failures, and it is easy to forget that the job of an entrepreneur is often nasty, brutish and in danger of being cut short by impatient investors, rebellious co-founders and other hazards.

 

Nobody knows this better than Ben Horowitz. One of the Valley’s most prominent venture capitalists, Mr Horowitz was previously the chief executive of a prominent startup and personally experienced what he dubs “the Struggle”. This is the terror that strikes young bosses when their beautifully crafted business plans are shredded by aggressive competitors or a lousy economy. Short of new ideas, cash and confidence, many young leaders throw in the towel rather than battle on.

 

Mr Horowitz thinks that this is a waste and that, if they were given better advice, more entrepreneurs could turn things round and go on to build great companies. The problem is that too many management books and courses focus on telling people what they should do right, but rarely offer any detail about how to rebound when they inevitably screw up. And the advice they give about what to do right is sometimes badly wrong.

 

For a number of years, Mr Horowitz has written a popular blog in which he offers opinions on how to manage businesses in posts sprinkled with lyrics taken from songs by rappers and hip-hop artists such as Jay-Z, Drake and Kanye West. Plenty of the topics that he covers in “The Hard Thing About Hard Things” were aired there first, and the book assembles them into a handy compendium.

 

But what makes it a compelling read is its first few chapters, where Mr Horowitz provides a blow-by-blow account of his own struggle as the boss of Loudcloud, a cloud-computing firm that he created with several people including Marc Andreessen, who is now his partner in the venture firm Andreessen Horowitz. Loudcloud launches just before the dot-com bubble bursts in 2000, leaving its leaders scrambling to keep it afloat as boom turns to bust.

 

Mr Horowitz remains upbeat in public as the company loses some big customers and misses shipping dates. Belatedly, he realises he is only making matters worse because his sunny demeanour discourages workers from being frank about the startup’s problems and hunting for solutions to them. His financial controller recommends being forthright with investors as well as staff. “If you are going to eat shit, don’t nibble,” he says, in a phrase that should be immortalised in corporate-finance textbooks.

 

Desperate for fresh capital, Mr Horowitz manages to take Loudcloud public, only to see its prospects darken again in the aftermath of the 2001 terrorist attacks in America. The firm’s largest competitor, which was worth $50 billion just over a year earlier, goes bankrupt, adding to the gloom. And its largest customer, Atriax, an online foreign-currency exchange, collapses too.

 

Determined to save his company, Mr Horowitz sells some assets to EDS, a tech behemoth, but keeps the software that automates the tasks of running a computing cloud. This becomes the heart of a renamed firm, Opsware, which prospers until a rival called BladeLogic starts pinching customers. Once again, Mr Horowitz finds himself in “wartime” mode and drives his team harder than ever to repel BladeLogic’s challenge. There is no silver bullet: instead Opsware matches and then beats BladeLogic’s offerings one by one. This works, and Opsware goes on to be bought by Hewlett-Packard for $1.65 billion.

 

Throughout all this, Mr Horowitz learns plenty of lessons about managing a company, which he proceeds to recount in the rest of the book. These range from what is the most important skill of a successful CEO (“the ability to focus and to make the best move when there are no good moves”) to whether startups should devote precious time and money to staff training (yes, because one of the main reasons great people leave jobs is that they feel they are not learning anything).

 

The book has other noteworthy recommendations, such as the importance of creating a company culture through specific behaviours. At Andreessen Horowitz, for example, employees are fined $10 a minute if they arrive late for meetings with visiting entrepreneurs. “We wanted the firm to respect the fact that in the bacon-and-egg breakfast of a startup,” writes Mr Horowitz, “we were with the chicken and the entrepreneur was the pig: we were involved, but she was committed.”

 

Not all his advice is compelling, but there is more than enough substance in Mr Horowitz’s impressive tome to turn it into a leadership classic. And the lyrics he sprinkles through the book help drive his messages home. “I move onward, the only direction. Can’t be scared to fail in search of perfection.” Perhaps Jay-Z should be offered a guest lectureship at Stanford Business School.

via theeconomist.com

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