Book Summary: The Hard Thing About Hard Things

The first thing to know about The Hard Thing About Hard Things is that it doesn’t fit the mold of the general business advice book detailing steps on how to start up and run a great company. Instead like the title indicates, this book discusses the things we don’t want to think about regarding being a CEO of a company. It’s admirably honest, humorous, and detailed and reveals the uncertainty and tough dilemas one has to prepare for.

Summary:

Perhaps the most entertaining section in this book is actually the first couple of sections. In these early chapters, Horowitz details some key moments in his upbringing and his chaotic journey from his work at Netscape through his sale of Opsware. It reads more like a memoir in these sections and is a first hand account of the crazy highs and lows (probably more often lows) and paranoia that occurs with trying to successfully run a business. By being so brutally honest, Horowitz endears himself to the writer as someone who’s not going to sugarcoat anything as he delves into his mistakes and his tough decisions.

After the rise and crashing fall of Netscape, Horowitz cofounded Loudcloud with the tech industry star Marc Andreessan (cofounder of Netscape). Horowitz goes into very specific detail about his thinking and paranoid mental state from its rapid growth and employment size through the stock market crash and the desperate times that followed.

Once he was able to salvage Loudcloud and reemerge as Opsware, not all became nice and easy. From the lows of having a $0.35 stock price to somehow selling the company to HP for $1.6 billion, his story as CEO seems almost like a drama show made for TV. If you ask me, it didn’t seem all that fun to go through.

I learned very quickly from his story that nothing can prepare a person for being a CEO and being solely responsible for the success’ and failures of a company and its people. Some decisions have to be made with no good possible outcome. All you can do is do what you believe is best and be upfront and honest as a leader. What helps is properly organizing the best structure to help when things go haywire.

After detailing his story, the book becomes less narrative and more “How to…” based on things he learned. Here are some broad recaps of a few of these sections.

Firing executives and laying people off

When this sort of things happens, it’s never because the company is doing well. In general Horowitz recommends to always tell it like it is. Trust is of the upmost importance. He says that, “healthy company culture encourages people to share bad news.” Trust makes it easier to address and solve problems. Regarding layoffs, they can break morale and a companies culture, and is a sign of doom. In a broad sense, he recommends being swift, awknowledging that company performance is to blame, training the managers on how to handle the layoffs, addressing the company exactly what’s happening, and being present for the employees that remain. For firing an executive it is important to know why you are firing an executive and making sure those reasons are correct (he details specifically the sorts of things to look for). It is important to be decisive and clear when meeting with the executive and preparing company communication. Obviously it goes into insane detail in the book but that’s about as succinct as I can cover it.

Take care of people, product, and profits in that order

When a company does well, the people will be happy because of all the benefits that come with a company doing well. Where taking care of the people makes a difference is when the company inevitably hits chaos and there is no reason for the people to stay other than the fact that they like the company and will sacrifice to try and help save it. This makes people the most important asset. Furthermore, being a good company is an end in it of itself. To facilitate this, companies should emphasize training, one on one communication, reducing management debt (short communication with long term reprecussions), and knowing exactly what to want in building an HR department. He goes into other things like the difficulties of potentially hiring from a friends company, potential trouble in bringing big company executives into a small company, and how to hire someone for a job that you yourself have never done.

Handling Politics and Company Culture

Horowitz describes why politics can be disruptive to overall company culture, employee happiness, and productivity. No CEO one wants politics and thus when politics happen, it is likely by accident. Nevertheless, minimizing politics feels unnatural as it goes against the ideals of being a very open company. Politics can minimized through having good HR and hiring process, having a strict process in place for political issues including stuff like promotions and performance evaluations, and being wary of “he said, she said” issues that can arise in the office. Horowitz highly values communication architecture for enhancing the openness of company culture while at the same time being able to address politics immediately. This is why he values one on one meetings within his company struture. Finally, he describes how one should go about building a company structure that is right for them as well as how to handle scaling issues and the misconceptions about scaling like the scale anticipation fallacy.

Finally, Horowitz delves deeper into leadership but more in a sense of how to lead when you don’t even know what your doing. One thing he said that I really liked was how if CEO’s were graded out of 100 on a curve, the average would probably be a 22 which can be rough given that CEO’s are usually people accustomed to achieving. He really dives into the mental and emotional aspects of how to be a CEO leader rather than talking just about the steps to be a great leader.

In Depth

Ones and Twos

The concept of Ones and Twos really intruiged me and articulated observations that I have had regarding how we look at founder executives like Steve Jobs and Bill Gates versus how we see professional executives. In general, internal candidates for CEO outperform external executives that are brought in by a wide margin. Horowitz believes that this stems from internal executives having more knowledge. This knowledge isn’t about how to be a good executive, it more so knowledge about the company itself including its people, its culture, and its product. This is nearly impossible for external executives to fully grasp when coming in. Nevertheless, internal candidates also fail. Horowitz believes executives need to know what to do and also get the company to do what the he/she knows. It is hard for people to be a natural at both and so people generally fall into just one group hence the concept of ones and twos.

Ones like gathering information from all their sources and then making decisions. They are comfortable making decisions when there isn’t tons of information and love strategy. However, ones can get bored of the daily execution of this strategy and the whole process of goal setting and structure. Most founders are generally ones. When ones fail it’s often because of poor execution. This is where being a two comes in handy.

Twos like the process of making the company run smoothly and like very clear goals and stable direction so that they can follow through with the execution. Twos like discussing strategy but struggle with the strategy thinking process itself. Twos need to be working on getting the objective done while a one could spend a week gathering information just to come to make one decision. A two would be paranoid about all the things they’d be missing out on making sure run smoothly. Twos make things run smooth but can slow down work by indecisive decision making..

While people are naturally one or the other, people can learn to become competent in the other, which good CEOs need to do as people who have to do both. This concept of ones and twos integrates itself into the structure of a company where the CEO is often best suited for a natural one because of the big decision making while employing twos and functional ones on the staff to make sure these decisions are executed. Having another one on the staff can be counterproductive because they may want to go their own path.

This makes successsion when a CEO steps down interesting. Since the team is mostly twos, do you now promote a two to become a CEO. Microsoft did this by making Steve Ballmer CEO and they ended up missing the whole smart phone revolution as a result. Another option is to dig deeper into the company to find another one at a lower level of the organization. However, this makes it hard to convince the board and other executives of this decision. Going external is generally less effective as discussed before. So what to do? There’s no easy answer. The choice is yours.

Personal Review

Obviously by the way I’ve been writing this, it’s pretty evident that I highly recommend this book. This book had been highly recommended to me and it exceeded my expectations. I could talk about the content in this book for hours (I’ve already vastly exceeded the word limit here).

I think just by reading the first couple sections about his career is honestly good enough to get many lessons without even diving into very specific topics he later covers. It’s great not because it’s one filled with instructions on how to run business correctly. It’s great because it’s an honest book about solving problems and making decisions that we don’t envision ourselves making. Most books focus on peacetime CEO’s but this book gives some great tips on how to handle being a wartime CEO. The subjects and tips are very specific and articulate and I like his writing style and examples he uses.

The gripes I have about this book probably stem toward the later part of the book where it does become more wishy washy stuff about how to be a great leader with flowery quotes and what not because that can be found in other books. Nevertheless, his honesty in his writing makes his points hit home.

But if your looking for quotes and advice, this book is filled with amazing quotable material that I highlighted. I’ve been told for awhile to go and read this book and I’m very glad I have and I recommend it to others as well.

One thought on “Book Summary: The Hard Thing About Hard Things

  1. Great post! I’m so happy that you enjoyed reading the book. I haven’t had the chance to read it yet, but after reading your review, I’m adding it to my list! I liked the part where you talked about the importance of trust, especially when the business isn’t doing well. I think a lot of companies tend to cover up the hard times, but it seems that the best way to handle the situation can often involve being upfront about how the company is doing. Looking forward to seeing you in class!

    Like

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