Photo by Kelli McClintock on Unsplash
“Everybody has a plan until they get punched in the mouth.”
– Mike Tyson, former world heavyweight boxing champion: WBA, WBC, and IBF
While failure in business may not be a literal punch in the mouth, it can feel that way (or worse). Everyone goes into business with plans on how to build the perfect product, team, customer base, and recurring revenue stream. These are the fun parts of starting up a business. What doesn’t typically get much forethought, however, is what to do when things don’t go to plan. The inability to respond appropriately has been the downfall of many promising startups and sometimes even leads to legal trouble. Successfully overcoming challenges means going through them, not around them; that’s what makes Ben Horowitz’s The Hard Thing About Hard Things: Building A Business When There Are No Easy Answers a valuable antithesis to most business books.
The Hard Things
Ben Horowitz writes from experience in his book The Hard Thing About Hard Things (THTAHT). Having experienced Loudcloud’s startup and growth as an infrastructure-as-a-service provider and a managed web hosting provider before the tech-heavy dot-com crash, he had to learn to lead a company through layoffs, financial pressure, failed strategies, demanding boards, and existential threats when the bubble burst. Loudcloud had to be radically restructured just to survive, with its cloud-service business sold and the remaining software business leading to the company’s rebranding as Opsware, an enterprise data center automation software company. At its height in June 2000, Loudcloud received a valuation of $700 million. After the crash, it sold off parts for a fraction of that amount, surviving as Opsware, which eventually became a success and was acquired by Hewlett-Packard for $1.6 billion, seven years after Loudcloud’s peak.
In the book, Horowitz focuses on what he calls The Struggle, the period when a business isn’t performing as expected, and the owner begins questioning every decision that brought them there. The default reaction is to assume that all successful entrepreneurs simply know what to do, as if it is an intrinsic instinct to make the right choices that lead to riches. The Struggle is anchored in the belief that this is a misconception and that, in fact, the opposite is actually true. In most important business decisions, there is no obvious right answer, only measured choices and responses.
Peacetime and Wartime CEOs
The choices you make will vary depending on what stage of your business’s struggle it is currently facing. Peacetime is when decisions can focus on business growth and optimization with a long-term perspective. Wartime, however, is when the hard things take center stage, and the obstacles become the way. A wartime leader must focus on survival, taking decisive action, and eliminating threats. Recognizing which front you find yourself on will help you shape your role as your business’s leader. That guidance will help you make the tough decisions when needed, without the prospect of scruples or regret shaping your choices.
Loyalty vs Responsibility
One of the hardest roles for any business leader is people management. While some faults may be overlooked when times are good, the margin for forgiveness during hard times is almost non-existent. While most business owners start a business with a focus on doing the right thing as operational canon, loyalty to people can become a quagmire that can sink a business if not rectified in a timely manner. No one wants to fire an employee, demote a manager, or remove someone from a role who was there when the business started. However, loyalty to the few should never outweigh the responsibility to the entire organization. Adopting this credo will help you when decisions must be made for the organization’s benefit.
No Silver Bullets
When a business is struggling, the urge to find a single brilliant strategy to save it is strong. However, THTAHT stresses that there are no silver bullets. There are no magic answers. Most business books would have you believe that if you follow their simple strategy, business will be easy. Horowitz chooses to prepare you for the hardships, instead, that are inevitable as a business owner. His experience lends credibility to his suggestion that survival usually comes from a series of difficult decisions, relentless execution, and a willingness to adapt when the original plan no longer works, in good times and in bad. The path forward is simply to make the tough decisions with the desired intent as the end goal.
Being a business owner is never easy, even on the best days. Yet few new business owners fully understand that when they begin their entrepreneurial path. Ben Horowitz does his best to share his experience, pulling no punches, so you can build a plan that can survive those first shots you may experience. Responding to the time your business is in, being responsible to the whole rather than loyal to the few, and being prepared to do the hard work a business leader needs to do are the keys to withstanding the hard things in business. If you can steel yourself against those, then you can thrive during the good times.
Do you need help preparing for the hard things in business ownership? We have resources we can refer you to. Give us a call.