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Dec 18, 2020
Business Insider An icon in the shape of a person's head and shoulders. It often indicates a user profile. Log in US Edition Registration on or use of this site constitutes acceptance of our Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification. Good Courtesy of Andreessen Horowitz An important part of entrepreneurship is building a sustainable company culture. That's according to Ben Horowitz, the cofounder and general partner at the venture-capital firm Andreessen Horowitz. In an interview with Business Insider, Horowitz also shared his thoughts on hiring for culture fit, Uber's cultural missteps, and why Andreessen Horowitz gives feedback to every founder it declines to invest in. Andreessen Horowitz was designed as a venture-capital firm in which investors could support entrepreneurs beyond just writing them a check. Investors would also help catapult startups to success by sharing lessons based on their experience and by introducing founders to influential leaders in their network. When they launched their namesake firm in 2009, the founders Ben Horowitz and Marc Andreessen had previously run the software company Opsware, which they sold to Hewlett-Packard for $1.6 billion in 2007. They'd also tried their hand at angel investing, which is when they started thinking about how investors could better partner with entrepreneurs. Today, Andreessen Horowitz (a16z, for short) manages $10 billion in assets. Perhaps you've heard of some of its investments , which include Facebook, Airbnb, Lyft, and Instacart. In the meantime, Horowitz, whose LinkedIn profile lists his job title as "Horowitz" at Andreessen Horowitz, has written two books: " The Hard Thing About Hard Things ," his candid guide to entrepreneurship, published in 2014, and " What You Do Is Who You Are ," which debuts Tuesday. The new book — perhaps more timely than even Horowitz anticipated, given the internal drama at WeWork — outlines the importance of building a sustainable company culture. In each chapter, Horowitz juxtaposes a historical event, like the 18th-century slave revolt in Haiti, and a contemporary business story, like Uber's moral crisis, to illustrate a key lesson about company culture. (Unsurprising to anyone familiar with Horowitz's extracurricular passions , several chapters include epigraphs from popular rap songs.) Business Insider recently spoke with Horowitz about the difference between experienced and inexperienced founders in getting investors onboard, how to find out right away if someone will add to your company culture, and what really led to WeWork's downfall. The following interview has been edited for length and clarity. Shana Lebowitz: I want to start by talking about something that a lot of our readers at BI struggle with, which is the decision to become an entrepreneur and leave behind a stable career. In the book you describe this moment when you realized you couldn't work for someone else. You'd been a CEO and now you were working at HP. [Horowitz was cofounder and CEO of Opsware, which Hewlett-Packard acquired for $1.6 billion in 2007. After that, Horowitz became a vice president and general manager at HP.] Was there a single experience that prompted this realization? Ben Horowitz: I was just too old. You get to a point and it's like, "Nobody can't tell me nothing." I already felt like I knew too much, at least about running an organization. And whether I did or not, it didn't matter, because that's how I felt. So I got myself to a point where I was unmanageable. But I definitely wasn't like that when I was young. When I was younger I was much more — I don't want to say open-minded, but I felt like I knew a lot less. So I was happy to get some guidance. I guess it's different when you're old and when you're young, when you're just out of school. At that point [when you're young], the only real reason to become an entrepreneur would be that you have an idea that is almost irrepressible. You feel like you have to pursue it. It's so important because if you don't have that, it's hard to get people to follow you because you don't have any experience and you don't have the know-how that they lack. So you're building yourself around the idea. Whereas if you're later in your career, then people could learn a lot from you personally. And so you could get away with perhaps not as strong an idea and still build the team. So it's a little different. I wouldn't do what I did if I was 20. But when I did it, I was kind of ruined for working for people at that point. Lebowitz: I'd love to dig in a little bit deeper on what you said, that if you're relatively young and early in your career, the only real reason to become an entrepreneur is because you have this idea. Whereas if you're a little bit older and more advanced in your career, people are more inclined to follow you because they feel like they can learn from you. Is this something that you and your partners at Andreessen Horowitz think about when you're evaluating founders who pitch you? Horowitz: Oh yeah, definitely. Because here's the thing. All entrepreneurship isn't technology entrepreneurship. But technology entrepreneurship is tricky in that there are no local tech companies, right? They're all global. So you're going to be competing at that level, not just for customers but for talent. And so one of the first questions is: OK, why would the 21st or 22nd [engineer] join your company? In the beginning, you can [build a company] through your friends, or that kind of thing. There are people who just want a very big percentage of the company [in an equity grant]. But once you get a little further into it, it's not that big a percentage of the company. And so it's got to be just massively compelling. And if you're 22, it's probably not going to be you yourself because you probably haven't accomplished anything at that point. Compare it to other places somebody could go, where they could work for Mark Zuckerberg or Larry Page or something like that. So at that point it really does have to be the idea. 'What would you do if I punched you in the face?' How to see if a job candidate has what it takes to survive at your company Lebowitz: When you look at the founding teams at your portfolio companies, what are the biggest mistakes you see them making when it comes to hiring or building company culture? Horowitz: I'll start with company culture. I think the biggest mistake, or the most common mistake, is you mistake what you want in the culture with what you have. One of the quotes from the book is from "the way of the warrior" [Bushido, the code created by samurai in ancient Japan], where they say a culture is not a set of beliefs. It's a set of actions. When you're running an organization, you might think that what I say in the company values or what I say in all-hands meetings, that's going to be the culture. But it really is not. Often the culture is driven by the people who aren't there when you're talking to somebody. So you'll be talking to somebody directly and they'll want to do something that may be off-culture and you think nobody's looking, but everybody is looking and that will impact the culture and impact people's behavior. A statue of the Chinese military general Sun Tzu. Wikimedia Commons/Hinio I have an example in the book from " The Art of War " [the Chinese general Sun Tzu's military treatise], where you have two people not paying attention during drills and he [Tzu] of course beheads them, but the point is that he wasn't talking to them; he was talking to everybody else. And everybody else needs to know that if you don't pay attention during drills, everybody's going to die. And so this is really important, and a lot of culture is like that. The mistakes tend to be ones where you think that belief translates into action even when you're not there. That's not true. And that's why it's so complicated, by the way, because it's very hard to get people to behave in a certain way when you're not there. That is what culture is. Hiring is more nuanced when it comes to culture. I think there's a couple of things that people have historically gotten wrong. You always hear, 'Hire for culture,' but there's at least three problems with that. One is, it's pretty hard to tell somebody's culture in an interview. You will see signs sometimes, but usually to get a read on that is difficult. Secondly, culture is not fixed; it changes. So the real question isn't, "Do they have your culture?" It's, "Can they adapt to your culture?" Part of that is being clear on what exactly your culture is before they come aboard. The third thing is, there are times when your company is missing something culturally and you need to hire that from the outside, particularly into a leadership position. I talked about this in the book with Toussaint Louverture, bringing in French and Spanish and British soldiers into the slave army because he needed those cultural aspects to make it go. [Louverture led a slave revolt against European colonists in Saint-Domingue, which is now Haiti.] And I think that happens a lot in the corporate world as well. Lebowitz: I'm interested in this idea that it's more difficult than it seems to hire for culture . You mention in the book an anecdote about a job interview that Mark Cranney [the former executive vice president of worldwide field operations at Opsware and former operating partner at Andreessen Horowitz] had at a previous employer. The guy interviewing him said, "What would you do if I punched you in the face?" Horowitz: Yep. That's a very good indication of what their culture was, by the way. Lebowitz: You said [in the book] that this was a very extreme example of a well-designed cultural interview. What exactly is a cultural interview? Are there specific questions you should ask the candidates to suss out whether they can adapt or add to your company culture? Horowitz: "What would you do if I punched you in the face?" is a great cultural question on several levels. The first thing is, the guy who asked it clearly indicated this is what our culture is like. That's how extreme we are on this kind of stuff. And in the answer, he was basically testing for can you deal with a confrontational culture in the extreme? Can you deal with me asking you what would you do if I punched you in the face? Now? There's many potential right answers and many wrong ones to that question. The way Mark answered it, saying, "Is that a test of my courage or my intelligence?" was a great way to answer. In that sales culture, what they're looking for is the courage to ask the uncomfortable question. Because often in a sales situation, a customer will hit you with something that's very difficult. A criticism that's going to make you uncomfortable. And not only do you have to be willing to deal with that, you have to be willing to turn around and ask them something that might make them uncomfortable. So you can get the truth, like, "Do you really have the budget for this?" So by asking such a confrontational question, you get at the essence of the cultural character of the interviewee. The question Ben Horowitz asks everyone interviewing for a position at his firm Lebowitz: Are there less extreme versions of this question during an interview? Have you ever used these types of questions when you're interviewing people? Horowitz: Yes. For example, here, a big cultural principal that we have is we don't publicly attack any entrepreneur. Period, for any reason. You'll never see us get on Twitter and go, "Wow, that idea's really stupid, they're never going to make any money, they're selling dollars for 85 cents," or all these things that VCs will tend to do. The reason is we believe in the dream and we support the entrepreneur and we're always going to talk about entrepreneurs in that light. I might ask somebody, "What do you think about what Adam did at WeWork?" Or something like that. That would be a little bit like: How much empathy do you have for the entrepreneur and how much do you just want to show how smart you are by crapping all over them? Lebowitz: Have you actually asked people you're interviewing for positions at Andreessen Horowitz, "What do you think of Adam Neumann at WeWork?" Horowitz: Yes. Lebowitz: Can you share an example of what the person could say that demonstrated empathy versus trying to seem smart? Horowitz: If they demonstrated empathy, they'd go: "He did an unbelievable thing in that he built something that almost nobody has done, which is he built a consumer brand in commercial real estate. What other consumer brand in commercial real estate is there? If you're renting off this space, who do you know other than WeWork? And he told that story so beautifully that he was able to raise a gigantic amount of money and fund this incredible growing operation." Now, obviously, mistakes were made, but at least put into context what the strengths were, as opposed to, "that thing was a fraud from the beginning." Or somebody might describe it, who didn't really think about what [Neumann] did build, only thought about what they read in the newspaper. How WeWork's relentless optimism helped it succeed — and then paved the way for its downfall Adam Neumann, the former WeWork CEO. Jackal Pan / Getty Lebowitz: WeWork is an example of a very high-profile company whose company culture has been widely criticized in the recent past. What do you think allowed those cultural problems to emerge at WeWork? Horowitz: Oftentimes a cultural strength ends up being — if you're not careful, it can be a weakness. With WeWork — and I don't know the company that well — they had this wonderfully optimistic culture that they could do anything. They were going to change the nature of business. So a very big mission and a very big vision. And beyond that, they were able to not just raise a lot of money but bring in amazing talent. Superstar engineers. That was a strength. I think that the weakness was the optimism was so relentless that they let small problems become forest fires. I'm sure somebody at some point said at the rate we're burning cash, we could run into a real problem. But if you're totally optimistic, you'll be like, it's no problem. We'll just raise more money or, or what have you. And so these kinds of things sometimes work together. Lebowitz: I wonder what your advice is to early-stage company founders today who want to get ahead of those issues, like letting your strengths become your weaknesses. Horowitz: I talked about this a bit in the book. It's really important to at least try to anticipate how a culture might be weaponized against you or lead to a bad situation and what you can do to medicate that or define the virtue in a way that provides clarity. One of my favorites is from the way of the samurai, where they say politeness without honesty is empty. Right? You can be nice to somebody, but if you don't mean it, then there's nothing. The thing is not to be dishonest and overly polite and not tell people the truth, because that's just empty. That stops people from taking something too far. You contrast that with Stewart [Butterfield] at Slack. Early on in Slack, empathy was a big part of the culture. They just said empathy, but they didn't define it in a way that people understood clearly enough. So people turned it around and said, well, if you're giving me feedback, you're not very empathetic. That's a classic version of that. When you're talking about behavior, you really have to get all the way to exactly what you mean as opposed to just a high-level definition. No one ever talks about 'how good Uber was on so many aspects of their culture' Travis Kalanick, the former Uber CEO. (AP Photo/Paul Sakluma, File) Lebowitz: In the book you also talked about how Uber had this hyperfocus on competitiveness at all times. That may have worked against them eventually. Can you talk more about that and what we can learn from that particular instance? Horowitz: This is one of the things that doesn't get talked about enough, how good Uber was on so many aspects of their culture. I would say Travis [Kalanick, Uber's cofounder and former CEO] did one of the better jobs in Silicon Valley of constructing the culture. It was very unique. It was super well-defined. They trained people on it. They did a lot of things right. But competitiveness and winning were so heavily emphasized, incredibly heavily emphasized, and there wasn't really a counterbalance to that. And as the company grew, it got interpreted in ways that ended up being destructive. The most famous one is the HR manager who got the sexual-harassment complaint from Susan Fowler , including the actual texts where she was being harassed. And the manager said, "Well, that manager is a high performer, so we're not going to do anything." There's no way that that instruction would have come from the CEO. I don't care how bad your culture is. Nobody's that ridiculous. Having talked to people about it, [I learned that] Travis was super mad when he found out about it because he's like: "Look, we're a meritocracy. That's not OK to harass employees." But because the culture was so strong on winning, that was the interpretation. Toussaint Louverture led the 18th-century Haitian slave revolution.