I think really good companies, the very best companies, tend to have founders and CEOs who ask pretty aggressive questions. Zuckerberg, Larry Page, those guys who have kind of gotten all the way to the mountaintop. They're pretty blunt. If you're running away from the truth to preserve feelings, that's a very dangerous thing in a tech company. And the kind of corollary to that is it's really important that bad news travels fast. That if something's wrong, as CEO you find out about it, and so you need that bluntness.
Everybody, today's guest is Ben Horowitz of A16Z fame. A few reasons I wanted to have him on. First, I wanted to get the behind-the-scenes look on why Andre passed on HubSpot back in the day. And there's a funny story behind that. He's seen so much. He's backed some amazing CEOs and some CEOs that went down in dust. Like, what do they have in common? What are the great ones? What do they do? What do they like? What's the patterns there? And the same with the ones who failed. I read his book like a hundred years ago when I was running HubSpot. I thought it was really good. I think he published it in 2014. I wanted the updated, you know, what's changed since he wrote The Hard Thing About Hard Things back in the day. The convo I think is really good. One of the things I've always liked about Ben is he is completely unfiltered and gets after it. I think there's a lot of nuggets in here. I'll come back at the end and give you my summary. You probably don't remember when we first met. Can I tell you about it? It stuck in my mind. Kind of a long story. HubSpot pitched you on the series D.
Okay, I remember that. Yeah.
Three of us came in for the pitch. Our very newly hired COO JD Sherman, myself and my co-founder Dash. And we walked in the room. We had a nice welcome because there's a guy that worked for you that was your sales guy named Mark Cranny that was a former colleague of mine. And then we had just written a book called Inbound Marketing. And two of your marketers had the book. So we're like, 'This is a hometown. We got this.' Okay. But we sat down and JD sat here and I sat here and Dash sat here. I remember it like it was yesterday and we started with intros. JD barely got a sentence out of his mouth like, 'Wait, you're the COO, tell me about your background.' You spent like 15 minutes on JD. You spent like 15 minutes on JD and then went to me and then about 15 minutes on me like, 'You're such a knucklehead. Why did you hire a COO?' And then Dash. Anyway, you guys passed as did everyone. Two weeks later, I read your book and I saw in the book that you're not a fan of the idea of hiring a COO. So, I guess my question, and by the way, I think chips on the shoulder are really valuable. You put a chip, a ginormous chip on JD Sherman's shoulder.
And it was incredibly beneficial. How do you feel about CEOs, COOs these days? You same same thing or change your mind?
Well, no. I mean, I think that generally when a company is small, flatter is better. In the early 2000s it was a very popular construct and it was kind of Mr. Outside, Mr. Inside, that kind of thing. You know, if you're really scaling and you're not kind of wrestling with product market fit, like it can work for a time on a product cycle, but when you hit the end of the product cycle, it's, you know, so much about a company, a tech company is kind of the communication architecture and it just makes that worse generally. It's a little like two people in charge. Not to say it can't work and, you know, it depends on the definition of COO and if COO is really just a big title for the sales guy, like that's fine. You know, COO in the sense that I'm running the company and you're like Mr. Thought Man Outside, I think that's not a great thing for a startup. Yeah.
You've invested in tons of CEOs at this point. Coached tons. What like what are you looking for? What's like a major green flag, red flag? How's it changed over time? Like what's your filter on a CEO? Founder CEO. So, you're looking at the company and the market, but the person, not the co-founder, the CEO.
The thing about founder CEOs is that there's definitely not what I would consider like a canonical one. So, if you look at Mark Zuckerberg and Ali Ghodsi and Elon Musk, they're all like extremely different types of people. So, you know, you try not to get into like anything about the look and feel or sound or like, you know, are they very extroverted or are they very introverted or this kind of none of that I think matters. There's a few things in common. One is, you know, anybody great really thinks for themselves. So, they don't feel like they're reading the room or influenced by what I'm going to say or anything like that.
And you could probably figure that out during the pitch, you think?
Well, you can figure out if they're not that during the pitch for sure. And then, you know, do they have like truly original thinking on things? So, and then, you know, from a leadership standpoint, I really like the Colin Powell definition, which is, you know, leadership is ability to get people to follow you, if only out of curiosity. So, so I think, well, would I want to work for this person? Like, how interesting are they? And if you don't have that right, you're not going to bring in the super high-end talent, which is, you know, it's kind of a momentum thing. If you can't hire the very, very top talent, then you're not very unlikely to be a great company. It's kind of, you know, how good is your talent density and all that kind of thing. So, we just had our CEO offsite and I got into not an argument, but discussion with Shawn Maguire, one of our partners.
Yeah. He's very outspoken.
Very outspoken. And he got up and he said, 'What we should be looking for are these founders that won the chess olympiad or the math olympiad in high school and surrounded by other of those folks.' And he was very articulate on it, made a good point. A lot of people shook their head and I thought about it and I was like, 'Well, HubSpot's no Tesla, but it did pretty well.'
And my co-founder and I, we're Sloan people, not, you know, and then we hired crap tons of people from Northeastern and I was like, it worked out pretty well. And then I just think like early in the cycle maybe you need those PhDs and those, you know, chess champions, math champions, but as it moves up the stack because Salesforce and ServiceNow kind of look like us. Do you have a take on my disagreement with Shawn?
Well, I think it depends a little on the era and the market. So if you look at HubSpot, right, like it was a marketing sales idea as much as it was a technological idea. So you have to have great people on that side who tend not to be math olympiads. And so for that company, I don't think that's right. For other companies, that's right. The other thing is, you know, Math Olympiad is very specific. The very best companies are founded by exceptionally smart people. There's no question about that. I agree with him on that angle of it. You know, like how smart is Elon? Extremely smart. Was he math Olympiad? Probably not. Like I don't think so. But just like raw horsepower is pretty important. Like Larry Page is probably, you know, one of the smartest people in the world. That ends up mattering if you're going to build something Google-sized. It's very hard to imagine that without somebody like Larry Page who could even think of something that big.
Yeah, you've worked with a lot of CEOs. Who's the best?
Probably the best one that I personally work with right now is Ali Ghodsi at Databricks. You know, he's a PhD in computer science. He's extremely smart. So he kind of meets the Shawn Maguire test, but he's like an exceptionally good, you know, for an enterprise software CEO, he's exceptionally good at go-to-market, able to compete with Snowflake, which was a very, very good go-to-market organization. And then he's just absolutely paranoid. The only person I ever known as paranoid as Ali, I mean, I guess Elon is this level of paranoid, but Andy Grove was this level of paranoid.
He wrote a book about it.
Yeah. Exactly. You know, I think some of that comes from him being, you know, he's a refugee. He grew up in Iran and then when the Ayatollah came in, he had to flee to Sweden. Hopefully that's correcting now finally after all these years. But you know that having everything taken away from him really informed his psychology in a way that's I'd say very beneficial for a founder.
Okay. I work with a lot of founders. Their companies are growing fast and I'm kind of new to this. What's the pattern of mistakes these folks make on the way up? What are the common traps?
So look, I think the universal one is kind of starts with, it's kind of confidence in a way, kind of in a word, but it starts with the fact that nobody knows what they're doing as you probably have experienced yourself. You have an idea, you invent something, you know how to run a company? No idea. And so you start, you know, building the company and you make a lot of mistakes. Those mistakes are extremely damaging. You feel terrible about it because you hired all the people, you sold them on this great idea, then you make a mistake and everybody gets hurt. And if you've not kind of been in a position like that, which almost no founder has, it can be like highly psychologically challenging. And you see people react to it in two very dangerous ways. One is they overly defer. So, okay, I hired a lot of smart people. I'm going to be very open to their input on all the decisions to the point where I'm not really making the decision myself. I'm kind of doing a poll. But nobody other than the CEO has the context to make that decision. Nobody kind of sees the whole picture. And so that can lead you into not only bad decisions but a very dangerous political environment where people go, 'Oh, there's a vacuum here. I can step into it.' And then the second thing that you see often is just hesitation. I don't know what the right answer is. I have a suspicion. I'm like 52-48 on it, but I'm afraid of making mistakes, so I'm going to not decide. And then the other kind of hesitation is, well, I'm going to avoid it. Like I see something bad. I really need to fire the head of sales. What is the press going to say? What is my board going to say? What is this going to be? And you're thinking about everything that you should not be thinking about rather than can this person do the job. And those things are really what cause founders to fail at the CEO job. That lack of confidence, that hesitation. You know, when I talk to CEOs, I'm like, look, if you were like a linebacker in the NFL and you were really fast, but you didn't trust your eyes, you would get cut because you wouldn't get to the ball carrier in time. And if you don't trust your eyes as CEO and go run at the problem and make the decision, you're going to fail. You're going to like that's what's going to get you replaced.
It resonates with me. At HubSpot, we had all kinds of debt, culture debt, product debt. We had decision debt at times I would call it.
Yeah. Decision debt is the worst debt by the way because it paralyzes a company.
We had, I had it. So I fell in your trap. And the way it kind of worked was I would see the company slowing down and just like a lot of debate and a lot of just stuff on my desk. And then once every like four, five, six months be like, I need to make some decisions. And then once I made some decisions, it just kind of everything just started moving and flowing. So I felt that very much.
What other mistakes have they made? Talk about the team building. Like you've hired a lot of VP of sales. Like people mess up their VP of sales hires all the time.
More than anything else. Yeah. More than anything else. So kind of more generically, hiring executives is also something you don't know how to do, right? Like it's a lot of times you don't even know what the job is. Like what is a CFO? What's a control structure? You know, what are these systems they speak of? And people go into hire them like with that level of knowledge and think they can like smell it out from talking to a person. And it's a little like trying to hire a Japanese interpreter and you don't know Japanese. Like they're all going to sound pretty good. And it's going to be very hard for you to distinguish. So preparation I would say is very important in terms of, okay, have you spoken to enough CEOs? Have you asked them like what's the difference between a good CFO and a great CFO? Like, you know, how would you hire this person? What would you ask them? What would you want to see? You know, these kinds of things and just understand the job. I always say if you have a chance, just try to do the job yourself, act in that role so that you can get a feel for what the challenge is in your company. And it's also, right, like you don't want a generic CFO, you want one for your business. Then when you get into sales, so the problem that we have all the time is we have engineers running the company and then they're hiring a head of sales. You could not be culturally different between like an engineer and a head of sales. The main thing is like right down to how they talk to you. So engineers, if you ask them a question, 100% of them will try and think of what is the correct answer to that question. That's how they think about it. If you're a salesperson, your first thought isn't what's the answer. It's why the hell are you asking me that question? Right? Because that's a clue. And so, you know, if you ask an engineer like, 'Does your product have this feature?' The answer is yes or no. If you ask a sales guy, it's like, okay, what competitor was in here that planted that trap for me? What's their weakness and how do I get to that? And so, if you have an engineer talking to a good sales guy, it's going to upset them because they're often not going to answer the question. They're going to try and figure out why they're being asked that question. And so then, the guys who are good at the job get rejected. Yes. Because you don't like them. And then the people who are terrible at it, those are the ones that end up getting hired. Mark Cranny used to say, you know, these CEOs, they just want to take a guy who failed the engineering test, put a clean shirt on him, and like make him the head of sales. And there's a real truth to that. It's funny. I had this conversation with Sujay when he was at Dropbox. He goes, 'How do I like deal with the fact that our engineers are upset that we're going to pay the sales guys commissions?' You know, by the way, guaranteed they're going to be upset. Yeah. And I said, 'Well, it's very simple. Tell them if they want to make commission, then they can grab a bag and sell some software. And if they don't hit their number, you're going to fire them. And if they want that job, they can get a commission, but otherwise, you know, shut the hell up.' You know, he said, 'Oh, okay. I never thought of it that way.' I was like, 'Look, the other question you can ask him is, do you have engineers that like on the weekend might write some software for fun, like as a hobby?' And he goes, 'Yeah.' And I said, 'I guarantee you don't have a single sales guy on the weekend who's selling software as a hobby.' Like that is not a fun job. There has to be, it's a prize fight. There is no fight without a prize. And I think that the whole mentality, the whole cultural difference between like what founders are and what salespeople are is so vast that, you know, somebody's got to have a conversation with them about like, okay, what are you really looking for? Because otherwise you're just going to get somebody who's not good at sales.
Okay, I'm the head of, I'm the engineer. I'm CEO of your brand new company. I'm likely to screw the hire up. What's your advice to me?
Yeah. Well, it's funny. So, one of the companies that both Sequoia and we were invested in is a company called Okta, which ended up doing very well. It's actually Pat Grady. I was on the board with Pat Grady on that one. Those guys. Yeah. And you know, the very first like big mistake that Todd almost made was hiring the head of sales. There were two candidates. One I forgot his name and the other was Adam Arents, who was a PTC guy. You know, we knew everything about Adam because, you know, he had worked for Cranny. You know, he had worked for McMahon. Like I knew everybody in the tree and I called them all and they were like, 'This is a guy.' And then this other guy, you know, I got front door references on him. And they came out okay. Like not great. But Todd wanted to hire this other guy. And the reason that he wanted to hire him was he was much more enthusiastic about Okta, whereas Adam was like, 'Well, I don't know about this company. Let me talk to some of your customers.' And so forth and that kind of thing. Yeah. And so, you know, the conversation I had with Todd was I was like, Todd, you don't want the sales guy all enthusiastic, you want them to be qualifying you. Because when you're selling, good sales guys don't just answer the damn questions are being asked. They qualify the customer. Do you really have the money? Do you really have the need? Do I really have a shot here or am I politically already boxed out? You need that. And I said, 'But beyond that, I got guys who owe me favors more than they owe Adam favors telling me he's great.' Yeah. And this other guy who all the guys owe him favors and don't owe me anything say he's a B. And so do not mess this up. I never forget it. And I don't talk to founders like this anymore because I'm more mature. But I said, 'Todd, I'm still working on that.' I said, 'Todd, look, if this hire doesn't work,' because we were in a lot of trouble at the time. You realize what's going to happen is this is the end of your company. Like, this is it. So, you got to be 100% confident because I'm telling you, you're wrong. And I have more experience at this than you and so forth. So, I really put pressure on him. And he hired Adam and, you know, it ended up really making the company. So, worked out. I have a bunch of questions. But, that's how important is like I think if we had hired the other guy, Okta would have gone bankrupt.
I have a couple questions on that. It sounds, well just the takeaway if I'm that engineer who's CEO I'm getting some traction hiring the head of sales it's one blind references really matter and two get a sales guy by the way it's the whole thing. Also who are you bringing with you? That's what I always ask who are you bringing with you. Okay you're bringing this, that, the other. Okay can I call them and find out if they're coming because any great sales leader has a big set of followers and anyone who's not great, nobody.
Nobody. Because the one thing sales guys are, they're savvy about the leader. Like I've never met even a mediocre salesperson who doesn't know who's a good leader.
Okay. You brought up PTC. You've hired people from PTC. I came from PTC. First of all, who's the equivalent of PTC now building on the sales leaders that are filling Silicon Valley? I can't figure that out. And two, what do you think it was about the PTC mafia that worked so well? And by the way, for listeners, PTC was a great, still a great company, but in the '90s it ripped and was fastest growing company in the world for a while. And we sold CAD CAM, we sold PLM software to manufacturers, hard sell, but we were very good at it. And the diaspora of PTC sales execs throughout Silicon Valley was very interesting and compelling.
There was a number of things about PTC, but one of the underrated things was the product wasn't that great. Particularly the windshields, the hoop didn't work. Yeah. Anybody can sell. So you like when you, you like to hire a sales guy that had a hard sale. You don't like to hire somebody who was like, yeah, he crushed his numbers but anyone could have sold that. Yeah. Like hire somebody selling Google AdWords. Like, you know what that job is? How much do you want? Okay. You're not going to build the... Okay. You see someone from Databricks though and they were a VP of Databricks. You're looking for a CRO in your new company. I'm not saying that's easy to sell, but they have a brand. They have like a lot of mojo. Is that someone you're looking for an early stage startup or no? Well, you know, I can't comment on that because, you know, Databricks is... Well, you know the analogy. Yeah. It's like the early days of Oracle, those guys were different than an Oracle salesperson today, right? And I think that like as it gets more established, it's harder to tell because you can survive on that. But I will say this. If you have a product that's complicated to sell, then that's when you get to the PTC level. The thing about PTC that was so amazing other than like the culture and the attitude. So there's a culture and the attitude and we talk about that which was unique and probably illegal today. I would say almost certainly illegal today. But the thing that I think is very replicable but only if you have a difficult product to sell is the discipline. And the discipline really came down to, okay, you're going into an account. You know there are competitors and how systematic are you about laying the traps for the competitors? You know, making sure you make a comprehensive technical case, a comprehensive business case, making sure that you've charted everybody in that organization who's in that decision process. And it was a very complicated decision process for PTC. Getting assurances that they're all like lined up and that's so complicated and requires so much courage and effort and competitiveness that that translates into anything. Whereas, look, if you're walking into an account and they're already predisposed to buy, you can skip steps. You can get away with it. You know, you just have to call in, show up, hey, I'm the, you know, salesperson from, you know, blah blah blah and, you know, away you go. You know, like right now, I think with OpenAI and Anthropic and so forth, it's like that. It's like everybody wants to buy AI. They're already predisposed to buy. Very, very different than who the hell are you? Oh, we're PTC. I never heard of PTC. Okay. Like now I'm in the door. Why should I buy this? I can't get it to work. Well, like let me walk you through how it's going to work. Like these kinds of things. Yeah, that's invaluable if you have that actually. So the Ryan Gabrisco, who's kind of the original head of sales at Databricks, we got him. I had never heard, like I had never heard of the company he was at, which was a public company. Imagine that. A tech sales guy that I had never heard of his company. And the company was literally selling FTP. Okay. But secure FTP. Okay. Like think about how good at selling you have to be to make your number as a public company selling that. Yep. And so this guy like obviously had the discipline forced upon him and he was extremely smart and that combination, you know, I'll take that all day. Yeah. You know, if you've got that and so you'd rather have, you know, a successful company is fine, but some kind of playbook that was harder to write, some product that was harder to build. And that's another big one is can you run a playbook? Are you somebody who like joined VMware when it was on fire and got a big position, but you ran the playbook that was set up for you? Or are you the person who wrote the playbook, who figured out how to sell this very complicated piece of software, who figured out how to lock out the competition to train the salesforce to discipline them to do all that kind of thing. That's a much harder find. And, you know, depending on the complexity, look if you've got an easy product then that's one kind of thing. If you've got a hard product that's another.
Some of my takeaways were I was the first basically BDR and worked and spent 10 years. It was in a lot of ways contrarian to the way people thought about selling. We sold an application, we sold it one way and then we moved into the platform business. Totally changed the way we sold. Very disciplined on both sides and very process-oriented, like really managed the process tightly. Yeah. So we were very good at that and just very tight on the profile of sales rep. Yeah. And that worked very, very well.
The profile, by the way, that's when I interview sales guys I always ask them...
What's the profile of your rep?
Yes. And it's amazing to me that guys who are very senior in very big jobs have sometimes very loose profiles, whereas the ones who really have to compete, it's extremely tight. What they're looking for is so specific and often surprising.
One of the things we just sticking on sales for a sec. One of the things we got right, got a lot wrong at HubSpot. One of the things we got right was the process to interview a rep. And what we found out was reps who are good learners did well inside of HubSpot. And so we got lots of resumes. We like people on their second sales job. Not their fifth, not their first or second. So they had done something.
And if they had gone to a half decent school, not Harvard, not MIT, state school, state school, B average. Yeah. Competitive athlete. If they could fog a mirror and they did those things, they came in and we didn't overthink it.
We came in for a half hour and the half hour was, 'Ben, welcome.' And I would give you a scenario and I would be the customer and I would say, 'Sell me HubSpot.' And I give you 12 minutes to sell me, like literally watch 12. I say, 'That's very good, Ben. Here's my feedback.' 12 minutes of feedback. 'Why don't you think about it and let's do it again.' And if the person internalized that feedback and sold it better the second time, 99% of the time we hired them.
Yeah. I thought that was... And it scaled really well.
Yeah. Yeah. Yeah. Right. Can they... How good are they at listening? This is by the way, that's the other I think mistake people make. They look for somebody who's good at talking. You really want somebody who's good at listening. Yeah.
Um, while important, subtle difference. Yes. Okay. While we're on this type of thing, you were the recipient of maybe my favorite email in the history of emails. May I read it to you?
And the background of this was you had a big product launch coming. You were excited about it and you had a press tour coming up in a couple weeks and Marc Andreessen front-ran it and you sent him an email. I guess we're not going to wait until the 5th to launch a product. Yeah, Ben. And the response to Ben Horowitz from Marc Andreessen: 'Apparently, you don't understand how serious the situation is. We're getting killed, killed, killed out there. Our current product is radically worse than the competition. We had nothing to say for months. As a result, we've lost over three billion in market cap. We're now in danger of losing the whole company. And it's the server management's fault.' And then I love the ending: 'Next time, do the [__] interview yourself. [__] off, Mark.'
Are we out of the [__] off era?
Uh, from Marc. Everyone, like, this is emails that we get at a16z.
Oh yeah. And are we too soft now?
You know, Elon's not soft. Nope. And I think there's some of that. Like I don't think it's quite at a16z level. So in Cranny's interview with McMahon, I think McMahon said to him, 'What would you do if I hit you in the face right now?' And I think Cranny's response was, 'Well, first of all, you better knock me out.' And then McMahon says, 'Well, like, but what would you do?' He says, 'Is this a question? Are you testing my intelligence or my courage?' And yeah, and that kind of thing.
They said my first... You went and asked somebody that in an interview. My first interview, I walked in with my suit on and Harrison, who was the original head of sales, says, 'I wouldn't wear that suit to a [__] fight.'
I think really good companies, the very, very, vague, very, very best companies tend to have founders and CEOs who ask pretty aggressive questions. Zuckerberg, Larry Page, those guys are pretty... who have kind of gotten all the way to the mountaintop, they're pretty blunt. And I think, look, I think that's important in that one of the most critical things in a company culturally is, you know, one, you give direct feedback and like you can have it out. Like, you know, like Marc was wrong on that feedback to me, I was right, but like it's important that he'd be able to say that and then it's important that I'd be able to stand up to it. Otherwise the truth doesn't come out. Like you've got to, like, if you're running away from the truth to preserve feelings, that's a very dangerous thing in a tech company. And the kind of corollary to that is it's really important that like bad news travels fast. Yeah. That, you know, if something's wrong that as CEO you find out about it and so you need that bluntness.
Uh, Andy Grove used to call it constructive confrontation.
And he was, by the way, that's another one where, uh, one of my favorite Andy Grove anecdotes was, um, somebody was late to a meeting, you know, and then this is when Intel was a monster and Andy was God and all that kind of thing and they come in late to the meeting and he just looks at them and he goes, 'All I have in this life is time and you're [__] wasting it.' You know, which is like the meanest thing you could ever say to somebody, but particularly as a company grows, you need to reset the culture. Like if it's starting to fray at the edges, you can't just let that go. And by him saying that, you know, it might crush that person's feelings, but everybody's telling that story to the point where I heard it, I didn't work for Intel, right? And that's a culture setter. Like we're not [__] late to meetings here. Like that's not what we do. And that's, look, not every company has that culture but if you have that culture you need to maintain it.
Kind of speaking of that, I coach all these CEOs. Well, one thing I've noticed is Paul Graham wrote that founder mode memo. It strikes me as relatively standard operating procedure now. It's really...
Well, yes, although there's a part that's wrong to it. Okay. Or there's a part that I would say is a little misleading to it, you know, and I think it came originally from Brian Chesky. Sure. And so Brian, like, so there's part that's very right about it which is, um, what happened to Brian is he hired like extremely senior people. Yeah. Uh, and then he did the thing that, you know, we talked earlier, which he overtly deferred. Yeah. And then that created politics, um, all kinds of like weird stuff. And then he kind of after took the company back by going into quote founder mode and just was like, 'I'm being much more dictatorial.' And I think that that part is all correct. I think the danger with the idea is people are taking it to the point where they're going, 'Well, I don't want to hire any senior people.'
