20VC a16z's Ben Horowitz on How To Create An Environment of Trust with Founders, How and Why Creating Shocking Rules Is So Impactful To Culture & What The Samurai, Shaka Senghor and Toussaint Teach Us About Company Culture Building

In the 2500th episode of the "20 Minutes VC" podcast, host Harry Stebbings celebrates completing his initial dream guest list with the appearance of Ben Horowitz, co-founder of Andreessen Horowitz. Horowitz shares his journey from CEO of Opsware to venture capitalist, emphasizing the importance of supporting founders in becoming effective CEOs, leveraging their innovative mindsets. He discusses his books "The Hard Thing About Hard Things" and "What You Do Is Who You Are," revealing insights into building resilient company cultures and adapting to macroeconomic volatility. The episode also touches on the significance of trust within teams and between founders and board members, the role of shocking rules in cementing company culture, and the challenges of integrating new cultural elements as companies evolve. Throughout, Horowitz underscores the critical impact of culture on a company's long-term legacy.

• The podcast has recorded over 2500 episodes.
• The host had a list of four venture capitalists (VCs) he wanted on the show: Brad Feld, Josh Kopelman, Bill Gurley, and Ben Horowitz.
• Ben Horowitz completes the list of desired guests.
• Ben is a co-founder and general partner at Andreessen Horowitz, a leading venture firm.
• Andreessen Horowitz's portfolio includes Facebook, GitHub, Slack, Lyft, Coinbase, and others.
• Ben is the author of "The Hard Thing About Hard Things" and "What You Do Is Who You Are."
• Ben was previously the co-founder and CEO of Opsware, acquired by Hewlett Packard.
• Ben worked at Netscape Communications, overseeing the directory and security product line.

"But when I started before the very first one, remember, I did not know one single VC when I started. But I wrote the names of four VCs I most wanted to have on the show. Brad Feld, Josh Kopelman, Bill Gurley and Ben Horowitz."

The quote shows the host's initial aspirations and the significance of having Ben Horowitz as a guest, completing the list of desired guests for the podcast.

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The quote highlights the benefits of using Airbase for spend management and endorsements from other companies.

• Ben Horowitz and his partner, Mark, were entrepreneurs before founding Andreessen Horowitz.
• They noticed a gap in the market for supporting founders to become CEOs.
• Venture firms were adept at replacing founders rather than helping them grow into CEOs.
• Andreessen Horowitz was designed to provide skill sets and networks to founders.
• The firm's architecture supports founders to become CEOs and build their networks.

"Well, you know, it was an idea that came from Mark and myself. Mark, my partner in the firm, our experience being entrepreneurs and the big aha that we had, or kind of belief that there was a hole in the market was if you were a founder, kind of an inventor who was building a company, we always kind of felt you were probably the best person to build that company."

The quote explains the founding philosophy of Andreessen Horowitz, focusing on empowering founders to lead their companies effectively.

• Ben Horowitz has witnessed the booms and busts of the market.
• He believes that macroeconomics can significantly impact even the best businesses.
• The unpredictability of macroeconomics makes it hard to analyze and anticipate.
• Companies should be built to withstand bad economic conditions, with a strong balance sheet if they are spending more than they earn.
• Macroeconomic downturns can happen suddenly, making it crucial to prepare in advance.
• The financial crisis exemplified the risk of macroeconomic turns.

"Well, I think I just have a very keen awareness that macroeconomics matter. And no matter how good your business is, it can definitely be impacted by kind of a change in macroeconomics."

This quote emphasizes the importance of being aware of macroeconomic factors and their potential impact on businesses, regardless of their individual strengths.

• Ben's first book provided insights into becoming a CEO.
• His upcoming book focuses on culture building within organizations.
• Trust and trust-building are central themes in his new book.

"But in terms of macro volatility, you've seen the booms and busts of many a market. I've never worked through one. Josh Kaufman said on the shirt made him more conservative. How did seeing the macro volatility impact your investing mentality today, do you think?"

The quote transitions to a discussion about how Ben's experience with market volatility has influenced his investment strategies and views on building resilient companies.## Creation of Trust

• Trust is essential for efficient communication and leadership.
• Leaders must balance optimism with transparency about mistakes and company issues.
• Admitting flaws and learning from mistakes is crucial to maintain trust.
• Trust is built on the understanding that leaders grow and improve over time.

"You want people to trust that you're the right leader and you're going in the right direction, but you're going to make mistakes."

This quote emphasizes the importance of trust in leadership while acknowledging that leaders are not infallible and will make mistakes.

"I said, look, guys, I said, you're probably sitting here going, okay, we got to the wrong sales strategy, and now we're going to new sales strategy. And you're probably going, well, like, if the guys who drove us into that wall, why aren't they us into a new wall?"

Ben Horowitz illustrates the need for trust in leadership by discussing how to address past mistakes and the rationale behind new strategies to maintain team confidence.

• The strongest board member should establish trust with the CEO.
• The CEO must prioritize the company's interest over personal job security.
• Understanding each other's intentions is key to a trustful relationship.

"You both need the CEO to be company first, and you to be the strongest member of the board and the CEO and you to kind of understand each other's intents."

Ben Horowitz explains that for trust to exist between the CEO and the board, both parties must prioritize the company's interests and have a clear understanding of each other's intentions.

• Board members should consider the impact of their statements on the entire company.
• Avoid speaking just to impress; understand the potential reactions and effects on company operations.

"Things carry more weight when they're coming from the board. So you want to think about the effect of what you're saying, not what you're saying."

Ben Horowitz advises that board members should be mindful of the weight their words carry and the implications they have on the company's culture and operations.

• Shocking rules must be surprising and prompt questioning.
• They reinforce the cultural values and reasons behind company practices.
• Such rules can influence behaviors and attitudes beyond specific directives.

"Probably the key thing on a shocking rule is that it has to surprise people."

Ben Horowitz emphasizes that for a rule to be effective and culture-shaping, it must be unexpected enough to make people question and understand its deeper purpose.

"If you're on time, you're late."

This quote exemplifies a shocking rule that reinforces the importance of attention to detail and punctuality in company culture.

• Shocking rules can become a talking point and reflect a company's values.
• These rules can demonstrate respect for processes and punctuality.
• They can also establish an equal footing in professional relationships.

"We find people basically, if you're on time, you're on time, but if you're late, it's $10 a minute for a meeting with an entrepreneur."

Ben Horowitz shares a specific example of a shocking rule at Andreessen Horowitz that enforces punctuality and respect for entrepreneurs, emphasizing the firm's cultural values.

• Adapting culture or bringing in outside leadership is necessary when there are gaps or needs within the company culture.
• External leaders can introduce the necessary DNA for new business ventures.
• The timing for cultural adaptation is when the company lacks certain cultural elements critical to success.

"Well, I think if you have elements in your culture that you're missing or elements that you need in the culture that you don't have, then that tends to be the time."

Ben Horowitz explains that the need to adapt company culture or bring in outside leadership arises when there is a deficiency in the current culture that needs to be addressed for the company's progress.

"Everybody in the industry knew that Google didn't have enterprise DNA."

This quote highlights the importance of having the right cultural attributes for specific business goals, using Google's lack of enterprise culture as an example.## Cultural Integration in Organizations

• Organizations may need to bring in outside leaders with different cultural DNA to augment their existing culture.
• It's not necessary to discard the old culture but to integrate new elements that are needed for growth and scale.
• Historical examples, such as Toussaint Louverture during the Haitian Revolution, illustrate effective cultural integration.
• Louverture preserved the strengths of slave and tribal military culture while incorporating European military strategies to scale his army.
• The integration of cultures can be complex and may require careful consideration of which elements are more essential at different stages.

"And so at that point, you need to bring in outside leaders at a very senior level that have that in their DNA."

This quote emphasizes the importance of introducing leaders with different cultural backgrounds to complement and enhance an existing organizational culture.

"But he incorporated kind of lieutenants from the French, the Spanish and the British to add European military culture to what he was doing because he knew what he had was incomplete."

The quote explains how Louverture strategically integrated different cultural elements to strengthen and scale his military forces.

"So you get to that scale. You need cultural things that you wouldn't have had in a tribal army."

This quote highlights the necessity of adapting and expanding cultural practices to meet the demands of growth and scale within an organization or movement.

• Hiring executives requires a different approach than hiring for other positions due to the specialized nature of executive roles.
• Team members from other departments may not have the expertise to evaluate an executive candidate for a specific role.
• It's crucial to understand what the company needs at the time of hiring an executive.
• Cultural fit is essential, and unique interview questions can reveal if a candidate aligns with the company's culture.
• The hiring of Mark Cranny at Ben Horowitz's company demonstrated the need for urgency and military precision in their culture, which was lacking.

"But with an executive, that kind of policy can get destructive very fast, because typically, the head of HR, the head of engineering, the head of marketing, don't know anything about what it means to run a global sales organization."

This quote explains the challenges of the hiring process for executives and the importance of having a clear understanding of the role and its requirements.

"And so it was a little bit, you know, one of my favorite things from that was actually, which I learned from him years later, was the interview question that they asked at PTC."

The quote introduces the concept of using specific interview questions to assess cultural fit for executive candidates.

"What would you do if I punched you in the jaw right now?"

This provocative interview question is an example used to determine a candidate's compatibility with a company's confrontational culture.

• Leaders must make decisions that demonstrate their priorities to create a sense of urgency for cultural change.
• Historical figures like Toussaint Louverture made decisions that clearly communicated priorities and created urgency.
• In a business context, leaders like Reed Hastings have made bold moves, such as focusing on streaming over DVDs, to signal a shift in company priorities.
• Demonstrating priorities through actions can instill urgency in employees and align them with the company's vision.

"You have to make decisions that demonstrate priorities."

This quote underscores the role of leadership decisions in showcasing priorities and fostering a sense of urgency within an organization.

"That's a really shocking, crazy thing. But it clearly demonstrated the priority and set the urgency around that."

The quote provides an example of how decisive actions by leaders, such as Reed Hastings' focus on streaming, can create a sense of urgency for change within a company.

• Reflecting on potential downfalls can guide the building of a strong and resilient company culture.
• The concept is similar to the samurai code of Bushido, where keeping death in mind at all times ensures that actions are meaningful and honorable.
• This mindset encourages meticulousness and pride in work, which can be a cultural strength.
• Considering the long-term legacy of a company or venture can influence the development of its culture.

"Meditating on company downfalls will enable you to build your culture the right way."

The quote suggests that contemplating potential failures can help shape a culture focused on long-term success and integrity.

"The first principle of being a samurai is you must keep death in mind at all times."

This quote draws a parallel between the samurai philosophy and the importance of being mindful of the company's mortality to ensure the cultivation of a proud and meticulous culture.## Importance of Company Culture

• Company culture significantly influences how employees feel daily.
• The product of your culture is reflected in the emotional response of your team.
• Cultivating a positive culture is essential for a successful work environment.

"what was it like to work there? How did that make me feel every day for the people who know had like, what was it like for them? How did it make them feel? Because that's going to be the product of your culture, and you don't really get to that unless you think about the end."

This quote emphasizes the importance of considering the daily experiences and feelings of employees as a direct outcome of the company's culture, highlighting the need for thoughtful cultural development.

• Ben Horowitz's favorite book is "The Black Jacobins" by C.L.R. James.
• The book is a leadership study based on the Haitian revolution, emphasizing cultural transformation.

"And favorite, I think my favorite all time book might be the Black Jacobins, which is the story of the Haitian revolution by C.L.R. James. It's the most fascinating leadership book that I've ever know."

Ben Horowitz shares his favorite book, "The Black Jacobins," which he considers a fascinating leadership book due to its focus on cultural transformation during the Haitian revolution.

• Ben Horowitz is motivated by his belief in the importance of business and technology.
• He aims to contribute to solving world problems by inventing better ways of doing things.
• The construction of companies, particularly tech, is critical for societal living standards.

"And so any contribution I can make in helping people do that better, that's just a very worthwhile use of my time."

Ben Horowitz expresses his motivation to help improve the process of building companies, which he sees as a valuable use of his time due to the impact on society.

• Marketing a venture capital firm was initially seen as taboo.
• Andreessen Horowitz's decision to market itself was criticized before it became a successful trendsetter.

"It was almost like a sin to market your venture capital firm, but it worked."

Ben Horowitz reflects on the counterintuitive yet successful decision to market Andreessen Horowitz, which was initially met with criticism.

• The intersection of technology with government regulations presents new challenges.
• There are differing global perspectives on tech-related issues like privacy and biotechnology.
• Adapting to these complexities is an ongoing challenge for venture capital firms.

"That's added a level of complexity that we've never had to deal with. So it's something that is quite a challenge."

Ben Horowitz discusses the complexities and challenges arising from the increasing intersection of technology and government regulations, which venture capital firms must now navigate.

• Being a CEO does not automatically equip one to teach others to be CEOs.
• Experience in a role does not translate directly into mentorship abilities.

"Just because you've been a CEO doesn't mean you know how to teach somebody how to be a CEO."

Ben Horowitz acknowledges the gap between having personal experience as a CEO and the ability to effectively teach others to assume that role.

• Ben Horowitz is proud of the distinct culture at Andreessen Horowitz.
• The firm's culture is recognized by entrepreneurs for its professionalism and respect.
• The focus on the entrepreneurial process is valued more than outcomes.

"We have a way of doing things that I'm very proud of, that's super professional, highly respectful, and really is about the entrepreneurial process even more than the outcome."

This quote highlights Ben Horowitz's pride in the unique and professional culture of Andreessen Horowitz, which prioritizes the entrepreneurial process.

• The venture capital industry must adapt to changing trends and technologies.
• Andreessen Horowitz plans to continue expanding into new areas like bio and crypto funds.
• The firm is focused on staying ahead of the curve in anticipating the future of tech.

"So, like when we started, the big trends were cloud computing, social networking and mobile, and for the most part, getting to the end of their cycles. Maybe not cloud computing as much. And so we always have to think about what's next."

Ben Horowitz talks about the need for venture capital firms like Andreessen Horowitz to evolve with technological trends and prepare for the future by exploring new sectors.

• Harry expresses his admiration for Ben Horowitz and thanks him for participating in the podcast.
• Ben Horowitz is appreciative of the opportunity to join the podcast.

"Thanks very much, Harry. I'm glad to finally be on the podcast."

Ben Horowitz thanks Harry for the opportunity to be on the podcast, indicating his pleasure in participating.

• Ben Horowitz's new book is recommended, with its release date mentioned.
• Harry promotes his Instagram and invites listeners to engage with behind-the-scenes content.
• Airbase, Clearbank, and Terminal are introduced as valuable services for businesses and startups.

"Also, his new book comes out on the 29 October. That really is a must, as you heard today, some incredible elements to that."

This quote is Harry promoting Ben Horowitz's upcoming book, suggesting it contains valuable insights for readers.