Lecture 15 - How to Manage (Ben Horowitz)

So when Sam originally sent me an email to do this course, he said, "Ben, can you teach a 15-minute course on management?" And I immediately thought to myself, wow, I just wrote a 300-page book on management, so that book was entirely too long. And I, I didn't actually have time to collapse the 300 pages into 50 minutes. So like Mark Twain, I didn't have time to write a good short letter, so I'm going to write a long letter. But in this case, I'm going to teach exactly one management concept. So, one long thing.

And this management concept though, is the thing that I see CEOs mess up more consistently than anything else, and from when they're very, very early to when they're very, very big as a company. It's the easiest thing to say, and the most difficult to master. And, the concept in musical form, whoops, pardon me, very sensitive. But musical form. This is from Sly And The Family Stone. "Sometimes I'm right."

So. No difference what group I'm in. So that's, that's the musical version of today's lesson. For those of you, you are musical, you can leave now.

In management concept form, basically it's this. When you're making a critical decision, you have to understand how it's going to be interpreted from all points of view, not just your point of view and not just the person you're talking to, but to people who aren't in the room, everybody else. In other words, you really have to be able, when making critical decisions, to see the decision through the eyes of the company, and the company as a whole, which means you've got to kind of add up every employee's view, and then incorporate that into your own view. Otherwise, your management decisions are going to have very weird side effects and potentially very dangerous consequences.

And it's a really hard thing to do, because at the point when you're making a decision, you're often under a great deal of pressure. So let's get into the agenda. So I'm going to cover a kind of four cases. First, I'm going to cover demotions, which is a very emotional thing. Then raises, which is also an emotional thing. Then we're going to evaluate one of Sam's blog posts. Which is news to Sam, so I figured out I'd tease him since he invited me to do a 50-minute management class, after I wrote a 300-page book.

And then I'm going to talk about history's greatest practitioner at this, and I'm wearing a shirt with him on it, and kind of how he used it to do something he has done, had ever done before in human history and has never done since in human history. But basically complete mastery of the technique I'm going to talk about.

So, first business example. You've got an executive, and do you demote or do you fire him? And this comes from an actual conversation, an actual real-life situation that I was working on with a CEO. And so, the basic situation was this. He had a great executive, or like an executive who, just a great effort. Like, he hired him. He was working harder than anybody else in the company, doing you know, like, everything he was supposed to. Everybody liked him, because he worked so hard, and like was a general smart person. But he was just in over his head knowledge-wise. He did not have the knowledge and the skills to basically do what the company needed him to do or, like, really compete against the competition, so he couldn't actually keep him in the job.

But he's a great guy. And you know, so the question is, well, should I fire this person? Or can I just move him into a lower role and bring in a person above him? And then, like, you know, that would be real cool. So, let's look at how you kind of make that decision.

So you, in this case, this was the CEO, so you as a CEO. So, one like, look, it's really hard if somebody comes to work everyday, like at, you know, 6 a.m., and is like working till 10 p.m. And like doing it, like, harder than anybody in the company. It's really hard to just say, well, sorry, like, nice effort, but you don't get an A for an effort. You get an F because I fired you.

Nobody nobody wants to have that conversation.