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Insights from the top two startup books recommended by founders

Earlier this year, we interviewed over twenty founders and CEOs of online businesses to understand their most pressing challenges and the resources they’ve found most helpful. Among the questions was one regarding the most impactful books they feel every other founder should read.

The two books that were by far most recommended were The Hard Thing About Hard Things by Ben Horowtiz and High Output Management by Andy Grove. With such high founder recommendations, we wanted to share some of the key takeaways and actionable questions from both of these books.

The Hard Thing About Hard Things

Building a Business When There Are No Easy Answers by Ben Horowitz, Cofounder and General Partner of Andreessen Horowitz

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Source: Amazon

“The hard thing isn’t setting a big, hairy, audacious goal. The hard thing is laying people off when you miss the big goal. The hard thing isn’t hiring great people. The hard thing is when those “great people” develop a sense of entitlement and start demanding unreasonable things. The hard thing isn’t setting up an organizational chart. The hard thing is getting people to communicate within the organization that you just designed. The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.” - Ben Horowitz, The Hard Thing About Hard Things

At a glance

In this brutally honest book, Ben Horowitz chronicles his story from first-time founder to going public to selling Opsware (formerly Loudcloud) to becoming a venture capitalist.This book is packed with insights, but perhaps the most valuable lesson could be summarized in one sentence:

Founding and growing a company is really hard with no easy answers or guaranteed recipes for success, but the experience and bits of advice from other founders who’ve been there before (and screwed up) can help with the hard things.

Unlike many formulaic business books, this one isn’t about the silver bullet to success or how to avoid screwing up. It’s about what to do when you do screw up.

Key Takeaways

The struggle is real as a founder. The struggle itself isn’t failure, but it can lead to failure. The key is to not quit.

“Perhaps the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong.”

Take care of the people, the products, and the profits - in that order. Taking care of the people is certainly the hardest of the three, but if you don’t do it, the other two won’t matter. Build the kind of “good” company where people enjoy coming to work. Ironically, this 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, so it always pays to create a good company where the team is treated well.

Be honest and direct in your communication, especially with difficult news. Founders often lean towards one of two extremes: becoming too positive (always looking on the bright side, often taking things too personally) or rationalizing bad news (not taking things personally enough). The team deserves to know the true reality of the company. Hiding facts erodes trust and can actually dampen morale.

“A healthy company culture encourages people to share bad news. A company that discusses its problems freely and openly can quickly solve them. A company that covers up its problems frustrates everyone involved.”

Know whether you’re in peacetime or wartime and lead accordingly. One is focused more on expanding and maximizing current opportunities while the second is laser focused on completing a critical mission. These two different settings require drastically different management styles and approaches.

When you have to let people go, be quick, candid, and present. Sharing candidly with the whole team the reason for the layoff (company/market/product performance vs individual performance) helps soften the bad news and builds trust with the remaining team members. Use decisive language (i.e. avoid wording like “I think…” or “We might…”). The sooner people are told, the better. Then be present to answer questions and talk to people once you’ve given the news. The people who remain need to know that you’re there, you care, and the company is moving forward.

Questions to spur action

Here are a few questions to help you process and implement the ideas in this book.

What would I do if the worst case scenario happened? Don’t stop at asking “what is the worst case scenario?” Rephrasing the question to something actionable is a much better alternative than just accepting your worst case scenario. The simple existence of an alternative, plausible scenario is often all that is needed to keep hope and your company alive.

“People always ask me, “What’s the secret to being a successful CEO?” Sadly, there is no secret, but if there is one skill that stands out, it’s the ability to focus and make the best move when there are no good moves.”

What am I not doing? The things you are not doing are the things you should actually be focused on. Instead of reviewing what you’re currently doing and trying to marginally improve those things, think about the things you’re not doing in the market but could or should be. What does the market need, but doesn’t realize yet?

If our company isn’t good enough to win, then do we need to exist at all? Every company must fight for its life at one point or another. If you find yourself running when you should be fighting, it’s time to ask this tough question and answer honestly.

How can I ensure team members receive adequate and ongoing training? “Being too busy to train is a moral equivalent of being too hungry to eat.” The primary reasons people leave a job (aside from economics) is because of a lack of guidance and development, they aren’t learning or developing new skills, and they aren’t receiving any feedback.

“…even with all the advice and hindsight in the world, hard things will continue to be hard things. So, in closing, I just say peace to all those engaged in the struggle to fulfill their dreams.”

High Output Management

By Andrew Grove, Former Chairman and CEO of Intel

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Source: Amazon

At a glance

Andy Grove doesn’t waste any time explaining the process and structure for improving your performance (or ‘output’) as a manager. Written on the premise that everything can be modeled in a repeatable production process, this book breaks down the universal components and shows how to track and achieve high-quality results.

He provides practical advice for key managerial duties such as structuring a team, making decisions, reviewing performance, setting objectives, motivating employees, and more.

Key Takeaways

Managers leverage their time to increase output with three primary duties: 1) information gathering and giving, 2) decision-making, and 3) nudging or following up. Done well, these activities lead to relevant and timely training, effective delegation with follow-up, and efficient workflow. Done poorly, these activities delay decisions, create unnecessary interruptions, and result in unfinished or dropped tasks. Having between six to eight direct reports is the ideal team size for a manager to be most effective with these tasks.

”A manager’s output = the output of his organization + the output of the neighboring organizations under his influence.”

Make progress toward long-term plans by setting short-term objectives and key results (OKRs). Remember that planning is an integral part of any managerial role and involves studying the environment, knowing where you are, and finding a hypothetical path to meet demand. Objectives (sub-goals for long-term plans) and key results (measurable milestones indicating progress toward objectives) should be cascaded throughout the company to keep everyone focused and working towards the overall, long-term plan.

“Measurement against a standard makes you think through WHY the results were what they were.”

Manage team members based on their level of “task-relevant maturity.” There’s not a single best management style since what is most effective depends on who you’re managing. “Task-relevant maturity” (TRM) is an individual’s degree of achievement-orientation (i.e. their readiness to accept responsibility, training, and experience). High TRM requires minimal direction and increases managerial leverage while low TRM needs task-oriented direction specifying what, how, and when. But be careful not to “…confuse people’s task-relevant maturity with their general competence.”

“Because it is easier to monitor something with which you are familiar, if you have a choice you should delegate those activities you know best.”

Training and motivation are a manager’s job. Providing scheduled, ongoing training is the highest impact activity a manager can do to increase the output of the organization. When a manager provides training for their direct reports instead of outsourcing it, the instruction is more relevant and expectations are clearly defined for each role. This sets employees up for success and makes it easier to evaluate performance.

“Insufficiently trained employees, in spite of their best intentions, produce inefficiencies, excess costs, unhappy customers, and sometimes even dangerous situations.”

Level (be direct and honest), listen, and leave yourself out of performance reviews. When you write and deliver employee evaluations, include only what is directly relevant both with praise and criticism. Then listen carefully to ensure the individual thoroughly understands what was shared and why. Keep any of your challenges, fears, or insecurities out of the review.

Questions to spur action

Here are a few questions to help you process and implement the ideas in this book.

What leading and trending indicators should you track to ensure you hit your objectives? Avoid focusing exclusively on activity and instead track leading indicators - metrics that evaluate input and predict output. These indicators are even more impactful when paired with the right trending indicators (sometimes called lagging indicators) - metrics that show output over a specific time period (e.g. week, month, year).

What decision is needed? By when? Who should be consulted? Who decides? Who ratifies or vetoes? Who needs to be informed? The biggest challenge to good decisions is that people don’t speak their mind freely.

If you say “yes” to this project, what other projects will you be saying “no” to? “Remember too that your time is your one finite resource, and when you say “yes” to one thing you are inevitably saying “no” to another.”

What small problems should you be fixing right now? “A common rule we should always try to heed is to detect and fix any problem at the lowest-value stage possible.”

Is this meeting necessary? If yes, what format will be most efficient and effective? Broadly speaking, there are two main types of meetings: process-oriented and mission-oriented. The first type (process-oriented) is typically scheduled and focused on information exchange. This includes one-on-ones, staff meetings, and operation reviews. The second type of meeting (mission-oriented) is ad hoc, focused on a specific output and requires a champion to moderate the meeting efficiently. Be clear at the outset what type of meeting you’re having to best leverage everyone’s time.

“If you want to work and continue to work, you must continually dedicate yourself to retaining your individual competitive advantage.”

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