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Summary:

When things go well, it doesn’t matter if your company is a good company. But when things go wrong, it can be the difference between life and death. Things always go wrong. Ben Horowitz explains why being a good company is an end in itself.

Ben Horowitz

It’s just another %&$! day for Dre, so I begin like this

No medallions, dreadlocks or black fists

Just that gangsta glare with the gangsta raps

—Dr. Dre, “Let Me Ride”

At Opsware I used to teach a management expectations course, because I deeply believed in training. In it, I made it clear that I expected every manager to meet with her people on a regular basis. I even gave instructions on how to conduct a one-on-one meeting so there could be no excuses.

Then one day while I happily went about my job, it came to my attention that one of my managers hadn’t had a one-on-one with any of his employees in more than six months. While I knew to “expect what I inspect,” I did not expect this. No one-on-one in over six months? How was it possible for me to invest so much time thinking about management, preparing materials and personally training my managers and then get no one-on-ones for six months? Wow, so much for CEO authority. If that’s how the managers listen to me, then why do I even bother coming to work?

I thought that leading by example would be the sure way to get the company to do what I wanted. Lord knows the company picked up all of my bad habits, so why didn’t they pick up my good habits? Had I lost the team? I recalled a conversation I’d had with my father many years ago regarding Tommy Heinsohn, the Boston Celtics basketball coach at the time. Heinsohn had been one of the most successful coaches in the world, including being named “coach of the year” and winning two NBA championships. However, he had gone downhill fast and ended up with the worst record in the league. I asked my father what happened. He said, “The players stopped paying attention to his temper tantrums. Heinsohn used to yell at the team and they’d respond. Now they just ignore him.” Was the team now ignoring me? Had I yelled at them one time too many?

The more that I thought about it, the more I realized that while I had told the team “what” to do, I had not been clear about “why” I wanted them to do it. Clearly, my authority alone was not enough to get them to do what I wanted. Given the large number of things that we were trying to accomplish, managers couldn’t get to everything and came up with their own priorities. Apparently, this manager didn’t think that meeting with his people was all that important and I hadn’t explained to him why it was so important.

So why did I force every manager through management training? Why did I demand that managers have one-on-ones with employees? After much deliberation with myself, I settled on an articulation of the core reason and I called up the offending manager’s boss — I’ll call him Steve — and I told him that I needed to see him right away.

When Steve came into my office, I asked him a question: Steve, do you know why I came to work today?

Steve: What do you mean, Ben?

Me: Why did I bother waking up? Why did I bother coming in? If it was about the money, couldn’t I sell the company tomorrow and have more money than I ever wanted? I don’t want to be famous, in fact just the opposite.

Steve: I guess.

Me: Well, then why did I come to work.

Steve: I don’t know.

Me: Well, let me explain. I came to work, because it’s personally very important to me that Opsware be a good company. It’s important to me that the people who spend 12 to 16 hours per day here, which is most of their waking life, have a good life.  It’s why I come to work.

Steve: OK.

Me: Do you know the difference between a good place to work and a bad place to work?

Steve: Umm, I think so.

Me: What is the difference?

Steve: Umm, well …

Me: Let me break it down for you. 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. It is a true pleasure to work in an organization such as this. Every person can wake up knowing that the work they do will be efficient, effective and make a difference both for the organization and themselves. These things make their jobs both motivating and fulfilling.

In a poor organization, on the other hand, people spend much of their time fighting organizational boundaries, infighting and broken processes. They are not even clear on what their jobs are, so there is no way to know if they are getting the job done or not. In the miracle case that they work ridiculous hours and get the job done, they have no idea what it means for the company or their careers. To make it all much worse and rub salt in the wound, when they finally work up the courage to tell management how fucked up their situation is, management denies there is a problem, then defends the status quo, then ignores the problem.”

Steve: OK.

Me: Are you aware that your manager Tim has not met with any of his employees in the past six months?

Steve: No.

Me: Now that you are aware, do you realize that there is no possible way for him to even be informed as to whether or not his organization is good or bad?

Steve: Yes.

Me: In summary, you and Tim are preventing me from achieving my one and only goal. As a result, if Tim doesn’t meet with each one of his employees in the next 24 hours, I will have no choice but to fire him and to fire you. Are we clear?

Steve: Crystal.

Was that really necessary?

You might argue that no matter how well managed a company is, it will fail without product/market fit. You might argue further that horribly managed companies that achieve massive product/market fit succeed just fine. And you would be right on both accounts. So was it really necessary for me to make such a dramatic speech and threaten one of my executives?

I think it was for the following three reasons:

  • 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 itself an end.

The difference between life and death

When things go well, the reasons to stay at company are many:

  • Your career path is wide open because as the company grows lots of interesting jobs naturally open up.
  • Your friends and family think you are a genius for choosing to work at the “it” company before anyone else knew it was “it.”
  • Your resume gets stronger by working at a blue chip company in its heyday.
  • Oh, and, you are getting rich.

When things go poorly, all those reasons become reasons to leave. In fact, the only thing that keeps an employee at a company when things go horribly wrong — other than needing a job, which isn’t so applicable in the current macro environment — is that she likes her job.

Things always go wrong

There has never been a company in the history of the world that had a monotonically increasing stock price. In bad companies, when the economics disappear, so do the employees. In technology companies, when the employees disappear, the spiral begins: the company declines in value, the best employees leave, the company declines in value, the best employees leave … Spirals are extremely difficult to reverse.

Being a good company is an end itself

When I first met my friend Bill Campbell, he was chairman of Intuit, on the board of Apple and a mentor to many of the top CEOs in the industry, including Steve Jobs and Jeff Bezos. However, those things did not impress me nearly as much as his time running a company called GO Corporation. GO essentially attempted to build an iPhone in 1992. The company raised more money than almost any other venture-capital backed startup in history and lost nearly all of it before selling itself for nearly nothing to AT&T in 1994.

Now that probably doesn’t sound impressive. In fact, it probably sounds like a horrible failure. But I’d met tens of GO employees in my career, including great people such as Mike Homer, Danny Shader, Frank Chen and Stratton Sclavous, and the amazing thing was that every GO employee that I’d ever met counted GO as one of the greatest work experiences of their lives. The best work experience ever despite the fact that their careers stood still, they made no money and they were front-page failures. GO was a good place to work.

This made me realize what an amazingly effective CEO Bill was. Apparently, John Doerr thought that too, because when Scott Cook needed a CEO for Intuit, John recommended Bill even though Bill lost a ton of John’s money at GO. And for years, everyone who ever came in contact with GO employees knew what Bill was about. He was about building good companies.

If you do nothing else, be like Bill and build a good company.

Ben Horowitz is co-founder and general partner of Andreessen Horowitz. He was a co-founder and CEO of Opsware (formerly Loudcloud), which was acquired by HP, and he ran several product divisions at Netscape. He serves on the board of such companies as Capriza, Foursquare, Jawbone, Lytro, Magnet, NationBuilder, Nicira, Okta, SnapLogic and Tidemark. He blogs at http://bhorowitz.com/.

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  1. Really insightful article. Most people it seems are completely clouded by only thinking about the bottom line, and this was a very refreshing point of view.

  2. Is there a way we can get to lay our hands on the training? thx

  3. Peter D. Csathy Friday, August 17, 2012

    AMEN! Great post. Find your passion. Work with a passionate team. Set them loose (but give them context). And, the rest will follow ….
    Peter Csathy
    CEO
    Sorenson Media

  4. This is the kind of shit employees wouldn’t put up with in a better economy

  5. Wow… how awful. Honestly, and having the nerve to quote Dre for an epigraph. Telling, I think.

    In my nearly two years at Netscape, I was no-one. I happen not to recall Ben Horowitz there. But I met Marc Andreesen a few times, who always struck me as being an affable mensch; an intense young man, but with real and natural human empathy.

    Prescribed daily one-on-one meetings? Not a good place to work.

    “Me: Now that you are aware, do you realize that there is no possible way for him to even be informed as to whether or not his organization is good or bad?

    Steve: Yes.”

    I think that Horowitz and “Steve” shared a basic lack of understanding in this (or Steve pretended to.) Anyone who directly manages workers and relies entirely on artificial means for gaining insight into their workers and organization probably should not be managing people.

    During many years as a worker, at times I reported to managers who were simply ill-suited to their role. They were, variously, excellent technicians or businesspeople, but they had no ‘people skills’. These individuals were typified by their lack of human empathy.

    Judging by the public record of his commercial success, and by this post of his, I doubt neither that Ben Horowitz is a brilliant businessman nor that, lacking empathy and the insight it grants, he has no natural ability to manage people.

  6. Incredible post and I can understand why you are generally considered to be one of the best VCs.

    I have worked at several software companies in the Valley where company culture and staff development was neglected. Some of the things I have learned from these experiences are: to provide specific feedback as soon as you can, take an interest in your employees success and personal lives, help with career development and really listen to their questions/concerns.

    So now I meet with my staff every morning to check-in with everyone and make sure everything is OK. I don’t end the meeting until all the issues raised are addressed. It is time consuming but the investment I have put into the team is definitely worth it.

  7. Reblogged this on Lobarb's Blog and commented:
    Great article !!
    Da leggere per tutti gli imprenditori si perde troppo spesso contatto con la gioia di fare impresa e il clima e’ il primo campanello di allarme..

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