How to Manage

Ben Horowitz, Founder of Andreessen Horowitz and Founder of Opsware discusses the management technique of considering perspective of employees and all stakeholders in decision making.

The talk covers a single management topic, which allows him to go into more detail. He uses the example of Toussant L’Overture, leader of the Haitian slave rebellion and his unorthodox leadership style.

Ben Horowitz – @bhorowitz

Notes

• 2m46s – Agenda: Demotions, Raises, We evaluate a Sam Altman blog post, History’s greatest practitioner
• 3m15s – Do you Demote or Fire?
• Scenario: executive working hard, well liked, good culture, but not world class at his function
• Options: fire or demote (or?)
• Players: you, exec, every other employee
• need to understand what it means to fail; what is required to maintain your equity
• 8m35s – An Excellent Employee Asks You for a Raise
• Your Perspective: want to retain them; good work so “fair”; they will like you
• Employee’s Perspective: happy
• Every Other Employees’ Perspective: Unfair that I didn’t get; I did better work; Maybe I should quit
• Cultural Conclusion: every employee has a fiduciary responsibility to their family to ask for a raise
• Right Answer: evaluation process; all the right inputs; run as needed; no raises outside process
• 15m53s – Evaluate a Sam Altman Blog Post – vested options 90 day window to purchase
• for example, 10 million in options may require $2 million to purchase
• Quick History: up until APB opinion No. 25 stock option counting
• Your Perspective: want to be fair; don’t want employees locked in; want to reward people who are staying
• Perspective of Employee who Leaves: I worked for shares and should get; did you tell me truth when you hired me; if fired, got screwed 2nd time
• Perspective of Employee Who Stays: is it smarter for me to stay or leave; are my colleagues being treated fairly; does my loyalty matter?
• Situation Analysis: employee turnover in Silicon Valley around 10%; SV companies dilute at 6-8% per year when private for employee comp; if employee doesn’t exercise it goes back into pool
• Two Alternative Cultural Statements: we value strait-forwardness and fairness; we value growing the company
• 26m40s – History’s Greatest Practitioner: Toussaint L’Overture
• Toussaint’s vision was end slavery and make Haiti first class
• What to do with defeated enemy forces? Incorporate generals into slave army.
• What to do with defeated slave owners? End slavery, slave owners keep land but pay salaries, lower taxes on plantation owners.
• Conclusion: It’s not your perspective or the perspective of the person that you are talking to at the moment that matters. You must consider the people who are not in the room. They are the company. They are the culture.
• 37m40s – How do you go about firing executive and notifying company?
• It was failure at some level, you have to be honest. Number 1 cause is made hiring mistake in matching employee to company or role. Preserve their dignity when talking to rest of company.
• 40m15s – How to deal with stress of CEO?
• Keep your focus on what you can do not what happened to you or could happen.
• 41m51s – How did Toussaint get generals to work for him?
• Generals were shocked they weren’t killed and changed allegiance. Toussaint learned from Julius Ceasar.
• 43m22s – How do you get people who were against you on your side?
• Show them a better way. Mission has to be elevated. Have to be better.
• 44m25s – How your VC firm built culture differentiated from other VCs?
• Founder/inventor is special so we will build company and help founder/inventor into role of CEO. Partner’s are former founder/CEOs; build network that experienced CEO would have.
• 46m47s – How to put yourself in other people’s shoes?
• You have to pause yourself to think it over, not just answer off the cuff to avoid even little mistakes. “Kimchi prolbem”: the deeper you bury it the hotter it gets.

Additional Reading

• Making Yourself a CEO by Ben Horowitz
• A Good Place to Work by Ben Horowitz
• How to Minimize Politics in Your Company by Ben Horowitz
• Slide Deck
• Transcript

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