The Hard Things about Hard Things
Building a Business When There Are No Easy Answers
Chapter 1 - From Communist to Venture Capitalist
Chapter 2 - "I will survive"
"Most important rule of raising money privately: Look for a market of one. You only need one investor to say yes, so it's best to ignore the other thirty who say "no"."
"If you are going to eat shit, don't nibble." - Dave Conte
Chapter 3 - This Time with Feeling
""How can we walk away from requirements that we KNOW to be true to pursue something that we THINK will help?" - It turns out that is exactly what product strategy is all about - figuring out the right product is the innovator's job, not the customer's job. The customer only knows what she thinks she wants based on her experience with the current product. [...] Innovation requires a combination of knowledge, skill, and courage."
"All decisions are objective until the first line of code is written. After that, all decisions are emotional."
Chapter 4 - When Things Fall Apart
"It's the moments where you feel most like hidding or dying that you can make the biggest difference as a CEO."
"The Struggle is not failure, but it causes failure. Especially if you are weak. Always if you are weak. Every great entrepreneur from Steve Jobs to Mark Zuckerberg went throught the Struggle. [...] The Struggle is where greatness comes from."
- "Don't put it all on your shoulders."
- "There is always a move."
- "Play long enough and you might get lucky."
- "Don't take it personally."
- "If you want to be great, this is the challenge. If you don't want to be great, then you never should have started a company."
CEOs Should Tell It Like It Is
- Trust - "In any human interaction, the required amount of communication is inversely proportional to the level of trust."
- "The more brains working on the hard problems, the better."
- "A good culture is like the old RIP routing protocol: Bad news travels fast; good news travels slow."
"A healthy company culture encourages people to share bad news."
The Right Way to Lay People Off
1. Get your head right
2. Don't delay
Be clear in your own mind about why you are laying people off - "The message must be "The company failed and in order to move forward, we will have to lose some excellent people." Admitting to the failure may not seem like a big deal, but trust me, it is. "Trust me." That's what a CEO says every day to her employees. Trust me: This will be a good company. Trust me: This will be good for your career. Trust me: This will be good for your life. A layoff breaks that trust. In order to rebuild trust, you have to come clean."
3. Train your managers
4. Golden rule: "Every manager must lay off his own people."
- Explain briefly what happened and that it is a company rather than a personal failure.
- Be clear that the employee is impacted and that the decision is nonnegotiable.
- Be prepared with all of the details about the benefits and support the company plans to provide.
5. Address the entire company (prior to executing the layoff)
"The message is for the people who are staying. The people who stay will care deeply about how you treat their colleagues." (but don't apologise too much)
6. Be visible, be present
Preparing to fire an executive
1. Root cause analysis
- you did a poor job defining the position in the first place
- you hired for lack of weakness rather than for strengths
- you hired for scale too soon (you need someone who can do the job for the next eighteen months)
- you hired for the generic position
- the executive had the wrong kind of ambition
- you failed to integrate the executive
- the job fundamentally changed due to fast scaling
2. Informing the board (better via individual phone calls than in full board meeting)
- get their support and understanding for the difficult task that you will execute
- get their input and approval for the separation package
- preserve the reputation of the fired executive
3. Preparing for the conversation
- be clear on the reasons
- use decisive language
- have the severance package approved and ready
4. Preparing the company communication
- informing: first direct reports, then other executives, then rest of the company
- interim plan: executive search, reorganisation, internal promotion, CEO interim
Demoting a Loyal Friend
Should you do it at all?
How do you break the news? - embarrassment & betrayal
- use appropriate language
- admit reality
- acknowledge the contributions
Lies that Losers Tell
Some Familiar Lies - post-rationalisation
Nobody Cares - "Nobody cares; just run your company."
Chapter 5 - Take Care of the People, the Products, and the Profits - in that Order
A Good Place to Work
"In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally."
- Being a good company doesn't matter when things go well, but it can be the difference between life and death when things go wrong.
- Things always go wrong.
- Being a good company is an end in itself.
Why Startups should Train their People
Andy Grove' High Output Management - "Most managers seem to feel that training employees is a job that should be left to others. I, on the other hand, strongly believe that the manager should do it himself."
Good Product Manager / Bad Product Manager
Is it Okay to Hire People from your Friend's Company
"Many companies employ written or unwritten policies that name companies where it is not okay to hire without CEO (or senior executive) approval."
Why it's Hard to Bring Big Company Execs into Little Companies
- What will you do in your first month on the job?
- How will your new job differ from your current job?
- Why do you want to join a small company?
Hiring Executives: If You've Never Done the Job, How do You Hire Somebody Good?
1. Know what you want (including acting in the role)
2. Run a process that figures out the right match
- write down the strengths you want and the weaknesses you are willing to tolerate
- develop questions that test for the criteria
- assemble the interview team
- backdoor and front-door references
3. Make a lonely decision - "Consensus decisions about executives almost always sway the process away from strength and toward lack of weakness."
When Employees Misinterpret Managers
"Management purely by numbers is sort of like painting by numbers - it's strictly for amateurs."
- Putting 2 in the box
- Overcompensating a key employee because she gets another job offer
- No performance management or employee feedback process
Management Quality Assurance
Chapter 6 - Concerning the Going Concern
How to Minimize Politics in your Company
The Right Kind of Ambition
Titles and Promotions
The Peter Principle
The Law of Crappy People: "For any title level in a large organization, the talent on that level will eventually converge to the crappiest person with the title."
When Smart People are Bad Employees
Senior Executive Performance (Bill Campbell):
- Result against objectives
- Working with peers
One-on-One - the employee's meeting
Programming your Culture
- Distinguish you from competitors
- Ensure that critical operating values persist such as "delighting customers" or "making beautiful projects"
- Help you identify employees who fit with your mission
Taking the Mystery out of Scaling a Company
- Figure out what needs to be communicated
- Figure out what needs to be decided
- Prioritize the most important communication and decision paths
- Decide who's going to run each group
- Identify the paths that you did not optimize
- Build a plan for mitigating the issues identified in step five
- Focus on the output first
- Figure out how you'll know if you are getting what you want at each step
- Engineer accountability into the system
The Scale Anticipation Fallacy
Chapter 7 - How to Lead When You Don't Know Where You Are Going
The Most Difficult CEO Skill
"If you don't like choosing between horrible and cataclysmic, don't become CEO."
The Fine Line Between Fear and Courage
Ones and Twos
Follow the Leader
- The ability to articulate the vision: the Steve Jobs attribute
- The right kind of ambition: the Bill Campbell attribute
- The ability to achieve the vision: the Andy Grove attribute
Peacetime CEO / Wartime CEO
Making Yourself a CEO
High-Frequency feedback so that feedback never becomes personal and to increase people's comfort about discussing difficult topics.
How to Evaluate CEOs
1. Does the CEO know what to do?
- Strategy - "A company without a [compelling] story is a company without strategy." (e.g. Jeff Bezos's 1997 3-page letter to shareholders)
- Decision making
2. Can the CEO get the company to do what she knows
- World-class team
- Ability for employees to get their job done
3. Did the CEO achieve the desired results against an appropriate set of objectives
Chapter 8 - First Rule of Entrepreneurship: There Are No Rules
Solving the Accountability vs. Creativity Paradox
The Freaky Friday Management Technique
Should You Sell Your Company
"Big enterprise companies can't generally succeed with small acquisitions, because too much of the important intellectual property is the sales methodology, and big companies can't build that)."
Initially, founding CEOs have a very little salary to align his interest with the company's success. When the company becomes proper business, it makes more sense for the CEO to be paid at market to prevent incentivising him to sell early for cash needs reasons.
Chapter 9 - The End of the Beginning
Recruiting and Hiring
- Do you sharply understand the skills and talents required to succeed in every open position?
- Are your interviewers well prepared?
- Do your managers and employees do and effective job of selling your company to prospective employees?
- Do interviewers arrive on time?
- Do managers and recruiters follow up with candidates in a timely fashion?
- Do you complete effectively for talent against the best companies?
- Do your benefits make sense for your company demographics?
- How do your salary and stock option packages compare with the companies that you compete with?
- How well do your performance rankings correspond to your compensation practices?
Training and Integration
- When you hire an employee, how long does it take them to become productive from the perspective of the employee, her peers, and her managers?
- Shortly after joining, how well does an employee understand what's expected of her?
- Are you using a 360 review process?
- Do your managers give consistent, clear feedback to their employees?
- What is the quality of your company's written performance reviews?
- Did all your employees receive their reviews on time?
- Do you effectively manage out poor performers?
- Are your employees excited to come to work?
- Do your employees believe in the mission of the company?
- Do you have any employees who are actively disengaged?
- Do your employees clearly understand what's expected of them?
- Do employees stay a long time or do they quit faster than normal?
- Why do employees quit?