$46B of hard truths: Why founders fail and why you need to run toward fear | Ben Horowitz (a16z)

Ben Horowitz:The worst thing that you do as a leader is you hesitate on the next decision the thing that causes you to hesitate is both decisions are horrible probably one of my bigger ones on that was we went public with $2,000,000 in trailing twelve months revenue at eighteen months old that's obviously a bad idea but the truth of it was the alternative was going bankrupt and that's a worse idea

Lenny Rachitsky:It's very difficult and painful to be a CEO to be a founder in spite of that so many people wanna start companies

Ben Horowitz:Psychological muscle you have to build to be a great leader is to be able to click in the abyss and go okay that way is slightly better we're gonna go that way if everybody agrees with the decision then you didn't add any value cause they would have done that without you so the only value you ever add is when you make a decision that most people don't like

Lenny Rachitsky:You are famous for writing one of the most popular pieces of literature for product managers

Ben Horowitz:What I was trying to get out in good product manager bad product manager was the job is fundamentally a leadership job and it's a tricky leadership job because nobody is actually reporting to you

Lenny Rachitsky:There's always this kind of sense that the PM is not the mini CEO how dare you call yourself that I actually think that's exactly what the PM is

Ben Horowitz:It doesn't matter if you write a good spec or you have a good interview or you do this or do that what matters is that the product wins

Lenny Rachitsky:Today my guest is Ben Horowitz Ben is the Z in a16z the world's largest venture capital firm with over $46,000,000,000 in committed capital they're investors in OpenAI Cursor Andriel Databricks Figma basically every generational tech company he's also the author of two New York Times bestselling books The Hard Thing About Hard Things and What You Do Is Who You Are Ben is endlessly fascinating he started a rap group when he was younger he started his career as a product manager and wrote the now famous good product manager bad product manager piece in our wide ranging conversation we cover a ton of ground and Ben shares stories and insights that he's never shared anywhere else a huge thank you to Shaka Sanghor Ali Goetzi and Adam Neumann for suggesting topics for this conversation if you enjoy this podcast don't forget to subscribe and follow it in your favorite podcasting app or YouTube it helps tremendously and if you become an annual subscriber of my newsletter you get a year free of 15 incredible products including a year free of lovable Replit Bolt n8n Linear Superhuman Descript Whisperflow Gamma Perplexity Warp Granola Magic Patterns Raycast Chat PRD and Mobin check it out at Lenny'snewsletter.com and click product pass with that I bring you Ben Horowitz today's episode is brought to you by DX the developer intelligence platform designed by leading researchers to thrive in the AI era organizations need to adapt quickly but many organization leaders struggle to answer pressing questions like which tools are working how are they being used what's actually driving value DX provides the data and insights that leaders need to navigate this shift with DX companies like Dropbox Booking.com Adyen and Intercom get a deep understanding of how AI is providing value to their developers and what impact AI is having on engineering productivity to learn more visit DX's website at getdx.com/lenny that's getdx.com/lenny this episode is brought to you by Basecamp Basecamp is the famously straightforward project management system from 37 signals most project management systems are either inadequate or frustratingly complex but Basecamp is refreshingly clear it's simple to get started easy to organize and Basecamp's visual tools help you see exactly what everyone is working on and how all work is progressing keep all your files and conversations about projects directly connected to the projects themselves so that you always know where stuff is and you're not constantly switching contexts running a business is hard managing your projects should be easy I've been a longtime fan of what thirty seven signals has been up to and I'm really excited to be sharing with you sign up for a free account @basecamp.comslashlenny get somewhere with Basecamp

Lenny Rachitsky:Ben thank you so much for being here welcome to the podcast

Ben Horowitz:Alright thank you Lenny excited to be here

Lenny Rachitsky:I'm even more excited to have you here I wanna start with a question that a close friend of yours suggested I ask you Shaka Singh Hor so Shaka he's like we could do an hour just on how interesting this guy is and the face

Ben Horowitz:He's there on Joe Rogan that he he's very okay

Lenny Rachitsky:So we're not gonna do that just to give a glimpse he he was in prison for nineteen years he was in solitary for seven years he led a huge prison gang you wrote you wrote about him in your book as a great exemplar of great culture in the prison gang that he ran so interesting but something that he learned from you that he told me I need to ask you about is about success and how to be successful and how it's not what people think and he said that you learned this lesson from a pilot what is that story what is that lesson

Ben Horowitz:You know it's kind of I mean I I'd say it's a long life lesson the the pilot story is I actually you know I ask people like silly questions sometimes when I meet them and so you know I met this gentleman who was a pilot and you know it was right around the time JFK Junior crashed his airplane and and ultimately died and I asked him I was like you know like what happened because there's always you know the story in the press and I know this from them writing about me or anything is it's always what's the best narrative not what's true so you can never kind of actually find out what happened you just find the like the best story version of what happened and you know the story in the press was all about oh he wasn't trained on instruments instrumentation was flying at night I wanted to know was that right the pilot said well he said really it's like all plane crashes are a series of bad decisions and none of the decisions by themselves is that bad but when you add them up it's bad so the first decision was he needed to get wherever he was going and that was the priority and in flying that can't ever be the priority you know because there are conditions there are things that happen and then the second one was well like his timing of when the sun would go down was wrong so he thought he'd be flying in sunlight and he wasn't and then you know once he got up there it was you know when the plane was you know going down kind of making it go up was a bad decision because he was upside down and like you know so so it said I can't remember all the things but this guy had like 17 steps you know 17 bad decisions in a row and the big thing for me that that I felt was really true is it's you know one decision leads to another and so you know if you can break you know psychologically you can take the sunk cost then that gets you out of a lot of bad paths and then you know a little good decision may be difficult but you have to believe it's gonna lead to the next one and you know a lot of successes about that you know it's a it's a small thing a small thing that's hard to do that doesn't seem to have a high impact but it leads to the next small hard to do thing and then eventually you get an outcome so so that was kind of the concept but

Lenny Rachitsky:So the lesson there is just success is just a bunch of little things it's not this like oh I got here in a big yeah

Ben Horowitz:If somebody were to write a story about me they would be like then Ben did this really smart thing and blah blah blah you know happy ending but yeah it really wasn't like that I don't think it's like that for you or anybody and it you know I spent a lot of time with Shaka on you know how because because it's always your own psychology that you know gets you and one of the kind of most insightful things he said to me is you know because he's in most people who are in solitary for seven years that's it you're insane like you're never coming back from that it's just an impossible thing but if you like study his story he actually kind of really was massively self improved coming out of solitary which is you know like and he wouldn't recommend that for anybody just to be clear it wasn't solitary but what it was you know as he changed in solitary he was able to change a big set of beliefs that he had about himself that kind of got him out of that and the thing that his conclusion from it which I thought was really interesting he's like look I was in prison for nineteen years I was in solitary for seven I come out I can't rent an apartment I can't vote I you know I can't get a gun I can't do like like no rights none of that was anything compared to what I did to myself and I think that's very true for CEOs in general and people in general is that like all the things that you perceive that are happening to you that are bad you know be it like the systems against you or somebody undercut you or racism or sexism or this or that or the other is very small compared to like it means a lot if you believe it you know if you believe what people say about you if you believe what they did to you then then that destroys you but if you if you go like that's not me you can overcome almost anything and that's you know he's got a new book out on that anyway that that I think is very good because that's the you know I'd say more than anything that's a key to success

Lenny Rachitsky:Something you it's like if you look at all the writing you've done it's essentially about the struggle and pain and suffering of being a cr you know your first book is the hard thing about hard there's a lot of talk these days about just how important struggle is and how valuable it is to go through struggle Jensen's big on this you know he talks a lot about just you have to go through pain and suffering to be a great leader

Ben Horowitz:Yeah yeah but you don't really have a choice you know like that that's true

Lenny Rachitsky:There's something that I saw you share that I love which is running towards fear versus running away from fear something that you tell all your leaders to work on easy to hear hard to do we don't like doing things that are scary running towards things that are scary why is this so important why is this something people need to learn to do

Ben Horowitz:Well so the biggest mistake that you made there the worst thing that you do as a leader like there's things in your control and there's things like out of your control and hesitation is you know that that's generally the most destructive and then I might go through all the ways that it's destructive but it's extremely bad and the thing that causes you to hesitate is you know both decisions are horrible right like there is like it it's not business school where you're going through a case study and if you had done that then the company would have gone this way but if you had done that it's a great success like that's not actually you know what happens to you as CEO what happens to you as CEO it's like okay if we rearch it you know like this product is the architecture is not gonna actually get us to where we need to go I kinda know that but if we re architect it like we're gonna probably miss all the features miss the quarter have trouble raising money you know etcetera etcetera so like that's really bad and then not re architecting is really bad and so I'm just going to try to like avoid this subject because I even want to deal with either of those and that's the worst thing because if we are you know if action is the better choice then you know that's good and then if you don't make an explicit decision then the whole company is going to get nervous because they know that the architecture is whack and you gotta fix it and you know like one of my bigger ones on that was you know we went public with $2,000,000 in trailing twelve months revenue at eighteen months old right like in the like that's obviously a bad idea I mean like there's no question that wasn't a bad idea but the truth of it was the alternative because of where the private markets were was going bankrupt and that's a worse idea if you look at that time you know March 2001 when we went public you just look at the number of CEOs that hesitated on that and didn't do it and went bankrupt it's a lot and so that's you know that getting good at making a decision that everybody's gonna go wow that was insane Ben like and Paul like the the Wall Street Journal wrote a whole like long story about how stupid I was and then Business Week wrote a story called the IPO from Hell that was the name of like our idea the IPO from Hell which like was accurate in a sense but so like that's really bad but it wasn't as bad and this is why it's so scary to make that decision because you know that's gonna happen I knew those stories would get written like there was no question yeah and that's the kind of muscle so like if you think about it like the psychological muscle you have to build to be a great leader is to be able to like lick in the abyss and go okay we're going that way slightly better we're going to go that way and it's very hard to do I would say it's a thing people struggle with and it began something should I fire the head of sales so I don't wanna have that conversation like and then I'll have to replace him and then like there's gonna be a bad PR story and then and and and and and and you can kind of quickly calculate all the bad stuff that's gonna happen if you do it but if you don't do it that's probably gonna be much worse and you know kinda that's why you have to run towards the pain and darkness

Lenny Rachitsky:What is the advice you share with founders because as you said it's very hard to do this just like how what helps them actually get better at this is it just Ben being by their side telling them this is how it is is there anything else you can

Ben Horowitz:No no no no no like I would say this is one where I can't really coach you to be good at this like I can point it out and like so that you recognize that you were slow or whatever but it's kind of like I always like it when I talk to them it's like football like you know you have a really fast great athlete but if they don't trust their eyes if they don't run to the ball when they see it if they think oh maybe that was a fake then they're that step slower and then they're not they they'll never be as good and CEOs are like that you know if you don't trust what you see and you don't run at it then like you're just not gonna be good and it it's hard to get CEOs not to hesitate but like one thing that the thing that does help is you know they look at it and I look at it and you know and I kinda confirm no that that is as it appears and you know sometimes they're afraid of the conversation so that one I can help with so you know a CEO might be afraid like they wanna do something but they they don't know how to say it they don't know how to have the conversation with the employee so I can walk them through that you know I I had an instance where the CEO said hey you know like I need your help then my CTO he's an asshole and I was like okay you know like great I said but you're not gonna fire him because I know he's a good CTO or are you asking me should you fire him he said no no I don't wanna fire him and I was like so you're asking me what to do because you don't know how to have that conversation with him about being an asshole without him quitting like that's what you're saying and he goes yeah that's the problem and so I go like why is he an asshole and he says well he's an asshole because you know the other day he made like a very junior young woman in our finance organization cry and I was like oh that that's kind of yeah I got you I said like this is what I would say to him I'd say I just shut him down and I would say look you're a really good director of engineering because you do a great job of managing the team get the products out all that but like you're not really a CTO because to be a CTO you have to be effective with other parts of the organization you can't just be like effective only with engineering and so you know and making like somebody cry like she's never going to do anything you want you you you lost all effectiveness with all the fine minutes by doing that and so if you wanna get good at that I'll help you I'll work with you on it but if you don't I'm gonna have to hire a CTO at some point because like obviously I need that and you know and then he's like oh okay I can have that conversation you know I can't have the conversation that hey you're an asshole because I don't want them to quit but I can have the conversation that's more specific and a lot of kind of getting people not to hesitate is just getting them over that and so so often like and I would say you know early in a CEO's career a lot of it is just not knowing how to have the conversation

Lenny Rachitsky:There's also I imagine an element of I just wanna be liked I don't want people to hate me you have this great line that you wanna be liked and respected in the long run not the short run

Ben Horowitz:They that's that's tricky because it's so by the way I have to deal with this in the in the firm too and you know like you know people wanna be entrepreneur friendly I'm like that's not friendly you know respectful but you gotta be able to tell them the truth in a way that you probably don't tell most of your friends the truth because your friend you know like look anthropologically we want people to like us like it's just so that you know they don't throw us to the lion or whatever like that that's just kind of a thing so you say tell people what they wanna hear but in dealing you know in a in a company level and a you know in a context of you're on the board of somebody's company you gotta be able to tell them what they don't wanna hear that's the most important thing you're gonna say and yes they're not going to like it when you say it there's no question but over time like it could save the company all the most important things I've said are things that I've said to CEOs that they did not want to hear you know and then like if that's what leadership is about it's making if everybody agrees with the decision then you didn't add any value because they would have done that without you so the only value you ever add is when you make a decision that most people don't like and that's where leadership comes in because you know that's where it's got to get to and that's the thing that takes practice I think when Jensen talks about you gotta get to near death to get yourself to do that that's true it's hard to build that if everything's going great and I and I would tell you like the CEOs who kind of had an easy run of it for their like let's say they just launch a product and it's an instant hit it's very hard for them to develop that muscle compared to the ones that built a company like Jensen where he like you know gutted it out for multiple decades before they had big success

Lenny Rachitsky:Clearly it's very difficult and painful to be a CEO to be a founder in spite of that so many people wanna start companies so many people like dream of having their own company what do you who is not right to start a company like what advice do you share with folks that are thinking about starting a company that may not understand just what they're about to get into

Ben Horowitz:Yeah so it's funny so there's a couple of things know John Reed who is the CEO of Citigroup when I when I started as CEO said to me something I never forget he said Ben the only reason to start a company is because you have an irrational desire to do so because it's not worth the money and I was like wow he doesn't even quantify how much money and this guy's running Citi so he's a very numbers banking guy and he didn't quantify it and I remember when we sold Loudcloud for $1,600,000,000 I remember thinking wow that wasn't worth the money so I think if you're doing it for the money that's a very bad reason and it'll be extremely difficult to get you an outcome you really have to have an irrational desire to do something larger than yourself to kind of improve the world in some way that you know somehow like that is your purpose and if if you don't feel that then then you'll never get through it it's just too many too many bad things happen along the way

Lenny Rachitsky:So then how do you think of founders that are kind of looking around for ideas that kind of brainstorm that look for you know market opportunities versus come from I have this mission I gotta do this thing in the world

Ben Horowitz:If you have a you know and my business partner Mark always talks about that so like if you have a product that forces you to build a company that is a great case of it right like okay you built something and the world wants it and you need a company to deliver it that's gonna you know you already have the right product and so that's very helpful I think there are cases of people I think Hewlett Packard was kinda built that way that they're like okay like we gotta build technology you know it's that abstract we gotta build some technology for the world know and then they started with well like what do you need you know to they called it the next bench thing what does the engineer sitting next to me need the next engineer on the bench was so to kinda how they define the first set of problems so it can work the other way but like I think the thing that is in common is like it's just a very abstract idea that like you'd have to build something that's gonna be important that like is gonna you know people are gonna like working there people are gonna benefit from the products like you you have to have some like weird concept other than oh this is gonna be successful and I'm gonna make a lot of money I think that's I think you're way better off taking sucks off for meta and just doing that like that's a way better deal

Lenny Rachitsky:Along these lines something else Shaka suggested to ask you about apparently there's a story where the CEO of Databricks asked you for $200,000 in the early days and you said no and it's not because you didn't wanna invest and it was more about helping him think bigger what happened there

Ben Horowitz:So there were six of them they're six PhD students while and in Jan Stoiker who is professor and Jan is a super genius but you know they you know when I when I met with them they were like we need to raise $200,000

Ben Horowitz:I knew at the time that what they have is this thing called Spark and the competitor was something called Hadoop and Hadoop you know had very well funded companies already running towards it and Spark was open source so like the clock was kicking and you know and I think they didn't quite know what they had but I and then there's also a thing always although I I wouldn't say Jan has this mentality but professors in general like it's a pretty big win if you start a company and you make $50,000,000 like you're a hero on campus like that's a pretty cool thing to have done and so I'm always a little nervous about kind of a company that comes out of academia thinking too small anyway and so I said look I'm not gonna write you a check for $200,000 I'll write you a check for $10,000,000 because like this company you need to build a company you need to really go for it if you're gonna do this otherwise like you guys should stay in school and and they were all graduating right right then so that was kind of that and Ali Ali actually was VP of engineering at the time and it was a while you know before I made him CEO and that that was very good luck on my part because I had no idea that they had a guy that good inside the company who could become CEO when I invested like that that was just you know God smiled on me and gave me that one

Lenny Rachitsky:So speaking of Ali I actually asked him what to ask you about and he immediately shared this story I don't know if you remember this in your first one on one with him after you made him CEO he was struggling with a bunch of low performers because he was coming in to lead the company and he was trying to turn things around trying to coach them trying to level them up and your advice to him was you don't make people great you find people that make you great that make the company great that you learn from not the other way around and there's something that he called managerial leverage what is that all about what's the lesson there

Ben Horowitz:Oh yeah yeah so like understand he had just become CEO so I was teaching him he had been VP of engineering and CEO is different and and I'll get into why and and what I mean by leverage I actually wrote a post about this with a little Wayne quote where I think the quote was the truth is hard to swallow and hard to say too but I graduated from that bullshit now I hate school and that was always my feeling about this particular idea was look if you're VP of engineering you can develop people you can teach them to be better engineers you can teach them to be better engineering managers that's very doable but if you're a CEO what do you know about being CFO what do you know about being you know VP HR what do you know about any of these jobs you know except maybe VP of engineering right like and so the idea that you're gonna take somebody who doesn't who isn't world class at marketing and make them world class and you don't know anything about marketing is a dumb idea it just doesn't work and then the company can't afford for you to be spending time on that because they need you to make very high quality fast decisions they need you to set the direction for the company and they need you to have a world class team and so like that and it's a very hard lesson if you've been VP of engineering because if you're a good VP of engineering you do develop your people but as a CEO like it's not like you don't do any of it but it is very very small you know compared to it so I like to make things just very stark so you you get what I'm saying I don't like to hedge it and then managerial leverage means just it is very simple it's okay if I have the ideas about what your department should do next if I you know am kind of pushing you to kind of move your organization forward then that's no leverage what's leverage is if you're telling me what you should do and how you can push the company forward that's leverage then I'm getting kind of more than I'd have if you weren't there otherwise I could just man a fucking team and that's the point when you feel like you're not getting leverage when you gotta go say hey why aren't we doing this why aren't we doing that that's when you gotta make a change and by the way he's unbelievable at that as good as anybody I've seen as a guy who's not callous as a CEO he really cares about the people who work for him he really wants them to have great careers and all that but he does not hesitate like if he's losing leverage he'll make a move

Lenny Rachitsky:Kind of going back to the origin story of a16z something you guys were really big on was helping founders stay CEOs become great CEOs not replace them with professional CEOs I wanna flip this question on you when does it actually make sense to replace a CEO when are people not gonna make great CEOs

Ben Horowitz:There's a very consistent thing that happens which is when somebody doesn't make it and it kind of starts with confidence is the way I would put it like if you invent a product you kind of recruit a team so forth all of a sudden you're a CEO but you haven't run a big organization you don't know how to do that like most founders are like that and so if you don't know what you're doing you're going to make mistakes and they all make a lot of mistakes and then when you make those mistakes they're very expensive you know like they could cost you to do a down round or they could cost you to lose a company or they could cost you a customer or you you scrub the product like they're very high impact and not just on you but everybody who you talked into joining you and so that kind of motion can really cause you to lose confidence and then if you lose confidence what happens is you hesitate on the next decision and you know as we talked about like hesitation is very dangerous because one like it it locks up the company but even worse what happens is if you have senior people working for you they get very nervous and they feel like they need to jump into that void and make the decision for you and that's when it gets political like political because people are like vying for power inside your little you know screwed up company and so now you've got a political dysfunctional organization and that

Ben Horowitz:You know like that's that's generally where like okay the founder probably can't run this thing anymore is you know that's how it happens so you know most of what we do as a firm is to try to help people with that confidence problem and there's like a whole series of ideas that we have around that but that's you know you kind of have to somehow climb the confidence and the competency curve together it's very hard to do and you know particularly like if you're an engineer and you're used to getting things right or if you've been a straight A student or something like that it's very disconcerting most of time it's better to have like CEOs who are like C minus students

Lenny Rachitsky:Why is that

Ben Horowitz:Yeah a little facetious well it's just good to be used to filling so I think I wrote this but like the median on the CEO kind of test is like 18 it's not like 90 and so you gotta be comfortable getting a lot of D minuses because the D minus is fine you know as long as you don't get the F as long as you don't run out of cash as long as you don't lose all thing you know okay like you've got through it keep going you know and that's that's a lot of the the thing that we try to do as CEOs

Lenny Rachitsky:Yeah it comes back to the your core I don't know message through your first book is just how much you will fail and how much you will struggle and how much pain you'll go through as CEO

Ben Horowitz:Yeah yeah and you know like I mean a lot of why I wrote that book was just to normalize that I think what happens is you know particularly you know when I wrote it and I I think it's come back and been true now is like the way the narrative gets written on all these successes is like oh they came up with a genius idea and then they built this company and they hired all these smart people and it was all great but like that's not all how it happens and I've spent enough time with like everybody from like Mark Zuckerberg to Sam Altman and so forth that like they all go through that same thing that you who has your struggling company go through like you screw a lot of things up and they have massive consequences but you have to kind of maintain your confidence

Lenny Rachitsky:Actually I was at a storytelling event last night and I was chatting with someone that ran into there and told her I was chatting with you today and she said how meaningful your first book was to her as a founder exactly as you said normalizing that it's very hard and painful and this is just the way it is

Ben Horowitz:Yeah and the feeling look I mean like if you think about organizational designer goals and objectives or OKRs or whatever management technique like you need like a basic like eighth grade education to like do any of that stuff it's not that complicated the difficult part is the feeling that you have when you have to do it it's very like the heart can get better a reorgase you're redistributing power so you're gonna have people really freaking mad at you cause somebody's losing power if you do it correctly and that person may be like a really good employee dealing with that is the hard thing like knowing how the organization should work to make communication better it's not that complex

Lenny Rachitsky:Yeah I think about I was at Airbnb for a long time and just thinking of Brian who I don't know even know if he had a job before Airbnb

Ben Horowitz:Oh yeah even know I spent a lot of time with Brian and he after covid he it all kinda clicked for him and then he did that he and Bob that could talk on founder mode and so forth but the reason that was so articulate is because he had screwed every one of those things up you know he hired LT and you know all this stuff and you know these are very senior people and you know he didn't he want us to defer to them but you can't defer as a CEO know because you know what Airbnb should be doing he may know what fucking finance should do but you know what Airbnb should do and this kind of thing and that then then it gets really wild when you like you can't defer decisions as a CEO you gotta like understand what people are saying and go no we're gonna do this

Lenny Rachitsky:And this again comes back to the point of you have to go through the struggle and pain and failure to learn those lessons

Ben Horowitz:Yeah no I mean they're really hard to learn without kind of doing and without often like without paying the consequence and I you know like even I like I make mistakes I I was having conversation with Ali the other day and I was like he's like how's it going Ben and I was like well you know like I'm finally dealing with something that I had put off for you know a very long time and he said why did you put it off said because things were going too good I didn't have to deal with it and he's like yeah he said I know that like I'd say Ali is you know one of the if not the kind of best private company CEO out there and he's making a mistake and I'm making a mistake so like it's just tough

Lenny Rachitsky:You said that one of the maybe the main reason founders fail CEOs is they lose confidence and you had some ideas that you guys have to help founders work through that are there a couple you can share how you help

Ben Horowitz:Yeah yeah so we do a lot of things on that so the kind of design of the firm is about confidence so the first thing is well what would give you well like if you can get stuff done so what if I could give you a network that's as good as Bob Iger's network day one like the day you step into the job and so we have 600 people at the firm and why is that well of them are building that network for you so you can call any CEO or anybody in Washington or you know kind of any executive or that kind of thing and get them on the phone and they'll talk to you and you can kind of deal with that thing and then that just makes you feel like a CEO and then you know we have a lot of people in the firm like myself who you can talk to on like a CEO to CEO basis as opposed to an investor to CEO and just kind of feel that early in the firm's days used to do this thing I think I'm gonna bring back in some form this thing called the CEO barbecue and it was like you know a lot of people have these events where like you know they bring in speakers and this and that and the other and I always felt like those were one they were too many days and then sometimes you know the what they said wasn't really applicable and that kind of thing and so what I said why why don't we just have a barbecue and like I would barbecue we get everybody in my backyard almost 500 people at the peak which is why I had that kind of stuff because I couldn't cook that much food after that and then you know we'd have Larry Page and Mark Zuckerberg and Tanya West and so you're a CEO in there a profile and you're like wow like I must be important I'm here with all these guys and we're just hanging out having a drink eating barbecue and so then when I go back to my company like feel like I am somebody and like okay I might not be like perfect at all this but I am really a CEO I was at the CEO barbecue for crying out loud and that kind of thing and so you know that that's but it's all the whole idea was always like okay do you feel like you can do it because that's yeah that's half the battle and look having been in and you know every CEO has been in a position where they feel like well maybe I shouldn't be the one running this thing maybe it's just too big for me and that's a bad you don't you don't wanna go there and because as as we've said founders can get to the next product and that's something that almost no professional CEO is able to do like there have been rare cases but very rare

Lenny Rachitsky:So clearly you've worked with a lot of companies a lot of founders let me kind of zoom out a little bit and ask you this question what's the most counterintuitive lesson you've learned about building companies that goes against common startup wisdom

Ben Horowitz:Well you know the common startup wisdom keeps changing you know like one of the early ones that you know was wrong and kind of Brian articulated it and then now I think a little bit of what people have gone to is also wrong so the the first idea that was wrong was like build a team of like senior executives you know as soon as you get product market fit as fast as possible and they can scale the thing and I think that you gotta build that team slowly and deliberately kind of pace to your ability to man integrate and then manage them because if you bring in a bunch of senior people and you don't know really how they match your company or how that function works or so forth then you're gonna start deferring and once you start deferring it's gonna get out of control very fast because they're gonna build empires they're gonna get political they're gonna do all that kind of thing so that was bad advice you kind of have to do it in a measured way I think that founder mode I think a lot of people have taken to never hire anybody with experience and that's also bad advice and that look somebody who knows how to do something can really accelerate your thing so very early on one of the founders great founder Arasalan at Databricks was running sales and I'm like Ali like you're gonna have to hire like somebody who knows sales because Arasalan's PhD in computer science like I like that but then that that's probably not where you're gonna have to start if you're gonna catch these guys before they take spark and like use it against you and you know and I sat down with Arsalan and I explained why I said look you know lot of what sales there's a lot of knowledge in how to build a worldwide sales organization may be knowledge of customers territories territory splitting rep profiles like there's just like a litany of stuff that you really can only learn by doing trial and error and you don't know anything and so like you're phenomenal like let's get you and he's still he's a very senior executive in the company now but we need somebody who knows that and the idea that there are companies that go okay we're just not going to hire that because we're in founder mode that's also a mistake so then there's a lot of it's more subtle than you think and it's more complex than you think and so you kinda have to get all the way to the truth and these little snippets of advice that VCs give because they watch some fucking podcast are all fucking stupid like it's just there's a lot of depth to these things you have to know the answer to the next question the next question and the next question and it does drive me crazy one of the funnier things that happened along these lines just to show you how little you know as an investor about what it means to be CEO one of the we were at a board dinner one of the CEOs says to me he goes or one of my we one of our CEOs says hey you know Ben like that thing you told me a while ago about don't be CEO at home he said like I I I I was doing that and I stopped and it really helped me and then the other kind of VC said yeah you know you gotta unplug sometime and I said I was like what the fuck are you talking about he's CEO he's not unplugging like he's getting shit all the fucking time like he's gotta deal with that like that was not what I meant I was like you can't go home and boss your family around that's what I meant you know like so so it's the the you hear something from like somebody who but if you haven't done it you don't even know what that means and so then you kind of then trying to transfer the advice to the next guy that's not gonna work so anyway so but it's you know like he he was very innocent just don't wanna kinda speak bad of him but like that's how it sounds right but that's not what it is

Lenny Rachitsky:That's an amazing story

Lenny Rachitsky:So the advice partly here is just don't believe everything you you see on Twitter and little sound bites of advice

Ben Horowitz:Yeah

Ben Horowitz:Yeah I mean like and I think actual CEOs know it and that's kind of how like people in my profession gonna get a bad rep because like giving advice that that's not something that you know but something that you heard is very dangerous I think

Lenny Rachitsky:So speaking of advice that you've shared that might be out of date now you are famous for writing one of the most popular pieces of literature for product managers there's a lot of PMs that listen to this podcast called good product manager bad product manager and if you actually go to that post today at the top you say this document was written fifteen years ago and it's probably not relevant today for PMs I present this merely as an example of a useful training document still people link to it I actually just link to it as an as just like this is something every PM needs to read what is it that you think people should maybe not take away from it and what do you think people still should take away from that piece

Ben Horowitz:Yeah so the reason I wrote it when I wrote it was that I had a lot of product managers and one thing about product management is it's a job that's completely different at every company like and there is no training for it so like everybody kinda figures it out as they go and depending on like what's being emphasized like they'll get wrapped around the axle know like if it's enterprise company okay well like you know pitching to customers or like I need to be like really good with the press or I need to be really good at writing you know the product requirements document or that kind of thing and none of the those are all like these tasks but none of those were the job and what I was trying to get out and good product manager bad product manager was the job is fundamentally a leadership job and it's a tricky leadership job because nobody is actually reporting to you so it's like this influence how do I get people to do what I want you know even though I'm not paying them I can't fire them I can't promote them and so forth and which is kind of the essence of like real leadership because if you start to rely on promotion and firing and so forth for authority then you're never gonna be good at being CEO or anything so I wanted them to get into the mindset of okay your actual job is to get a product into market that customers love that's better than anything that anybody else in the world puts in market like that's your job and so to accomplish that job you need engineering to understand you with clarity you need to understand engineering with clarity you need to have a really good view of the market and the competitors and the technology and so forth and you need to kind of put that all together and deliver the thing and all the other things are tasks that may or you may or may not need to do I don't know if you need to do them but like the thing is you know you have to be the leader you've got to get the thing done and so what I think it's still good on is that like the mindset like you know be the leader I think the details of it of any kind of thing that was kind of task specific was like really for my group at Netscape in like 1996 whenever the hell I wrote it so it was know it was a kind of document I read out of frustration but I am glad that the people still like it and I think leadership in general is under undervalued underestimated it's it's the most powerful thing and and most of the great know great companies Jensen is a great example like what a phenomenal leader he is not just of Nvidia but of the whole industry and he doesn't have authority over the industry but like he drives it forward and that's why the good product manager bad product manager is so important because that thing if you learn how to do it that's the thing

Lenny Rachitsky:I didn't realize you wrote that initially as just an internal document and then you made

Ben Horowitz:A it public kind of before blogging took off it's just an internal thing and I published it later it was I was just getting so mad you know and then by the way my product management team at the time was like very good very talented people they just didn't they they just were not getting that concept so you know like David Wyden said Coastal Ventures Raghuram who was went on to be CEO of VMware I mean like the team was like that team but they were driving me crazy so I I just was like I can't yell at people anymore I have to like explain to myself and so it's a good thing if you find yourself yelling at people like you probably haven't explained what you want Lucy had a big takeaway from that

Lenny Rachitsky:Do you ever think that piece would be so long lasting and so I don't know

Ben Horowitz:Not sure no I thought I I didn't even know like I thought it was kind of like aggressive when I wrote it like you could tell I was mad because I called it good product manager bad product manager it's like bad dog bad product manager was kind of the emotion I had you know it's it's kinda shocking as some of the planes that you write I I I would say that that's know I'm kinda creative and you probably know this like the ideas that you have the things that you write in five minutes end up being much better than things you write in five weeks you know and I I find in talking to you know musicians or writers or anybody everybody has that same experience like the thing that you've already synthesized so much that you just have to write it out is that's the best stuff

Lenny Rachitsky:There's something that you mentioned there in your answer about the PM being the leader there's always this kind of sense that the PM is not the mini CEO how dare you call yourself that I actually think that's exactly what the PM is they're basically the closest to the CEO their kind of job is to think like the CEO within the team

Ben Horowitz:Yeah people get mad you know like you you because everybody you know like this is the whole challenge of management in general like people get jealous over stupid shit but like from from the perspective of the PM like it doesn't matter if you write a good spec or you have a good interview or you do this or do that like what matters is that the product range and you have to get all the way to there and kind of work backwards from that and you can't do that without leadership because it is about okay want to build that and you're not necessarily the person comes up with every idea or this or that I mean you're just the keeper of the vision you know and that's true for CEOs too like you don't mind every idea in a company coming from the CEO like that's I think it's a misunderstanding what a CEO is is why people don't like that they don't know what a CEO is but a CEO isn't the one who has every idea gives every order does every that's not the way it works the way it works is there's somebody who's gotta consolidate you know get all the good ideas prioritize them decide which good ideas we're going to do and then get everybody on the same page so that they have very high fidelity understanding of what that is and you know so that it is a CEO kinda function now it doesn't mean like I'm better than you it just means that like that's what I'm doing

Lenny Rachitsky:This episode is brought to you by Miro every day new headlines are scaring us about all the ways that AI is coming for our jobs creating a lot of anxiety and fear but a recent survey for Miro tells a different story 76% of people believe that AI can benefit their role but over 50% of people struggle to know when to use it enter Miro's innovation workspace an intelligent platform that brings people and AI together in a shared space to get great work done Miro has been empowering teams to transform bold ideas into the next big thing for over a decade today they're at the forefront of bringing products to market even faster by unleashing the combined power of AI and human potential guests of this podcast often share Miro templates I use it all the time to brainstorm ideas with my team teams especially can work with Miro AI to turn unstructured data like sticky notes or screenshots into usable diagrams product briefs data tables and prototypes in minutes you don't have to be an AI master or toggle yet another tool the work you're already doing in Miro's canvas is the prompt help your teams get great work done with Miro check it out at miro.com/lenny that's mir0.com/lenny let's talk about AI I'm very proud of us it's been almost an hour we haven't even mentioned AI

Lenny Rachitsky:I think that's a record okay so I asked Adam Neumann WeWork founder now Flow founder someone you work closely with now what to ask you about and he said he had some really interesting insights about how AI is impacting hiring

Ben Horowitz:Yeah

Ben Horowitz:You know Adam is probably the single most controversial investment that we ever made like we got called everything from stupid to sexist to racist to this and that for like like literally just funding that and I think it's gonna end up being one of the best investments we ever made he's doing a phenomenal job there but there's an important principle in that which kind of we do as a firm which I think is not widely done but I would love it if people copied it which is and it is something I learned you know somewhat from Shaka which is you you don't judge a person by the worst thing that ever happened to them like we've all had bad things happen to us we've all made bad decisions most of them they don't make a mini series about right and so like to judge them on that you wanna judge people on what they do well not what they screwed up and yeah because that's where you see the talent and if you look at what Adam did well it's truly spectacular you know like WeWork everybody knows how WeWork is it's like it's the name a more important commercial real estate brand than WeWork like can't and so like what an accomplishment and then yeah and there were so many things that went into that and and yeah so many things he did right and then if you kinda look at really unravel the things that went wrong most of it was like a combination of inexperience and nobody around him that would tell him the truth and so like that and you know maybe he wasn't good at listening to the truth either at the time but to throw away a guy on that which is by the way the world was so mad at us for not throwing him away for believing in them it's just that it's a big mistake and you know I credit Mark because Mark is the one who called him up originally and just said hey Adam what are you doing because like you know we watch what you did at WeWork and we thought it was pretty impressive and so I think that you know that that's probably the biggest secret there it's not really about AI but I think that looking

Ben Horowitz:Al Davis once said coach players on what they can do and I think that's very true judge people on what they can do coach people on what they can do help them take their strengths and use them as opposed to over focus on their weaknesses and just you know hand ring about the one fucking thing they don't know how to do because look everybody's uneven

Lenny Rachitsky:What it's like what you're describing essentially this is the job of an investor to find an underappreciated asset and invest or before something people don't see

Ben Horowitz:Yeah and I mean I think that it's know like capital is really about investing in people right like you know that you have ideas as an investor but like what you really are ultimately betting on is the entrepreneur and the entrepreneur's idea because the initial idea isn't where they end up usually it changes a lot with everybody we invest in you know you kind of have to make the judgment on the person and you know how you do that is really really important and one of the things we emphasize inside the firm is look like we're investing in strength not lack of weakness like I wanna know like how good it like are they world class do they have a world class strength and you know can that beat anybody and like everybody's flawed and so like let's help them deal with the flaws and you know surround them with people who can handle that and put the right person on the board who can talk to them like I go to all Adam's board meeting even though Mark's on the board I go to all his board meetings because I'm the one who's good at like killing a guy who's that confident when he's like okay that's not your best idea like that's a good role for me but that's how you deal with that you don't you know throw them away and go oh okay like we don't wanna be called names so we're not gonna invest in Adam Neumann after we built WeWork that's crazy

Lenny Rachitsky:It's also why you guys invested in Cluey I imagine similar

Ben Horowitz:Yeah controversy yeah yeah no that's right like I mean like if you look at what those guys did that was like some like high level marketing genius too and you know that that's really something plus the product is awesome

Lenny Rachitsky:I'm gonna bring us back to AI something that a lot of people are talking about right now while we're recording this is this potential huge bubble we're in with AI Sam Altman said we're in a big bubble which is you know that's saying a lot I'm curious just how you

Ben Horowitz:think so where the is case it what what is it saying so you gotta like first of all I should qualify this by saying I'm an investor and Sam's a CEO so CEOs have to have much more purpose when they talk investors just have to be entertained so you got to give Sam credit for like what is it in his interest to say it well like if it's a bubble then the one thing you should invest in is him and not all these guys chasing after him so that I I would say like that's very smart and then the other thing that's smart about it is there's nothing that you can say to the press that will make them love you more than saying all investors and like entrepreneurs chasing this are idiots like they love them because you know the the press are generally haters and so it's just like red meat for the haters which is also super clever so I think whether even he believes that or not that was a super smart thing to say so I'll just put it there whereas what I'm gonna say won't be as smart but it will I I don't really have a an axe to grind here I mean I could have an axe to grind and say okay like let's get all the other investors out I'll say it's a massive bubble but what I would say about that is so the first thing the one thing about bubbles is anytime everybody thinks it's a bubble it's not a bubble because in order for it to bubble you need capitulation and that you need kinda everybody to believe it's not a bubble because then the prices really go out of control but as long as there's people who think it's a bubble then it's hard for that to happen and it's funny I had this debate in in the economist I think with Steve Blanken like 2011 or '12 when everybody thought it was a tech bubble if you can imagine that which it absolutely was not but because there were like 1,400 articles saying that we were in a tech bubble and yeah I mean you know where prices were then compared to where they are now but I knew because everybody was saying it was a bubble went a bubble like I knew that the prices were higher but the reason the prices were higher was we're getting to global market AI prices are higher than prior prices but if you look at the revenue growth and memories we've not seen anything like it the products are work Chad Cheeks Sam's product worked so amazingly we've never seen that before like not even Google not anybody and so like that's real and you know we have companies that you know went from 0 to 800,000,000 in a year and that kind of thing and so it's not a I would say there's a basis for the prices going up first of all now will the I think the thing that's right about kind of what Sam is saying is the landscape is early really early the technology is very immature as amazingly as it works you know there's a long way to go to improve it so it's very possible you know when you have that much technological change that the positions that these companies have achieved with their high revenue isn't sustainable and that there will be a competitive change that either kind of lowers prices or a new number one emerges or that kind of thing and so the yeah that's possible but I I I wouldn't characterize that as being like a financial bubble in that like like if you go back to the great.com bubble that everybody is always waiting for it to happen again which I was CEO during the thing that happened there was very different which is it was the internet and every smart investor knew that the internet was a big deal like how could you not fucking know that the internet was a of course it's a big deal but like if you go back to 1996 at Netscape we had 90% browser share and we had 50,000,000 users so there are 55,000,000 people on the internet in total and half of those were on dial up so and then to build a product like Evite the greeting card company had 300 engineers that's how hard it was to build this stuff and so the math didn't work and the math didn't work on any of those ideas and but the investors kept pouring money in and then eventually you know everybody went bankrupt because there was no revenue coming in and like when they figured that out then nobody would invest in anything and of course then everybody realized well the internet was actually real and Paul Krugman didn't know what he's talking about and like it was going to be a big thing and then Facebook and Google and all these things emerged but the thing that made it a bubble was like the unit economics didn't work the businesses didn't work like these businesses are all working and they're being priced appropriately for how they're growing so that's not an effect so the thing that you could say is they're not going to keep growing like that or like and so forth and I'm not sure about that like like the products like I said are working so much better than any technology product that we've ever built has worked like it's just mind blowing how good this stuff is and so I don't know I I if I had to bet I would bet not a bubble yeah there I think there will be some dislocation I think companies that I think they're always in venture capital if you've got like a run like this then the great company and the crap company both get funded but you know that's just that's just venture capital that's on a bubble

Lenny Rachitsky:For founders starting companies these days when you look into the future of the AI industry say in five ten years how do you think things will play out slash where do you think the biggest opportunities remain where are you guys looking to invest most

Ben Horowitz:In infrastructure I think that like there is obviously like a real estate power cooling play I I think that's a little outside of you know kind of hardcore technology investing that we do but there's another layer which is like who can run you know take a given open source model who can run it the cheapest with the kind of lowest latency and that's going to be extremely valuable like whoever has that and Google has been historically very good at that and so forth but Sam is really trying to build that now with Stargate and so I think that's going to be a very important layer of value I think that on the foundation model side you have to be very selective as an investor so in order to compete in foundational model world our basic rule of thumb is you have to be able to you know without much product progress raise at least $2,000,000,000 because that's basically what it can cost you to train something that gets you competitive enough to make money and there are just very few founders like that so Ilya is one of those you know Mary is one of those Fei Fei is one of those but like that's the kind of class of person you need and there's you know whatever there's certainly less than 10 of those in the world and so that that that's kind of like an important area but a small area and then I think the application layer is gonna be very very interesting and I think that you know if you look at Sam like he's making most of his money off ChatGPT almost all his money off ChatGPT now and ChatGPT is like you know I it looks like it's got a real like it or not it's got a real moat it's very hard to knock it off it's perched there's a lot you know everybody's taking a shot at it people great distribution like Google and you know Elon and Zuckerberg and everybody and like that thing just keeps going like it is so I think the applications are both more complex and kind of stickier than people thought they were originally like so the thing that people got very wrong is this whole thin wrapper around GPT like that's really wrong in fact here's how wrong it is back in the eighties there that same phrase was used but it was thin wrapper around an RDBMS

Lenny Rachitsky:A database

Ben Horowitz:Yeah yeah yeah so it meant companies like Salesforce were basically just a kinwrapper and I think that that's kind of the mistake people made so like we're in at this company Cursair and if you look under the covers in Cursair they've built like 14 different models to really understand how a developer works a high end like a real developer and they have that those models have tons and tons of interactions with how people talk to their friend Cursory about how they should design their programming and so forth and that's like real that's not that's not just a thin layer on a foundation model and I think there are many many applications like that and and so I I think there's gonna be a lot of opportunity at the application layer there's gonna be some opportunity at the foundation model and of course you can invest in Sam you can invest in Anthropic and so forth and as well but there will probably be like a very small number of companies at that set and then a almost unlimited number of companies at the application layer and then you know as the technology advances we'll of course see more things with embodied AI I mean already you know autonomous cars are working like really well now after a long long long long time since I get they think Sebastian when the the challenge in 2006 when he drove the self driving car across the country and here we are twenty years later and now they're deployed so that was a long time robots I think is a harder problem than self driving cars so we'll see how that goes but yeah there's certainly a lot in that world as well

Lenny Rachitsky:Wow okay there's a lot to this answer something that no it was exactly what I was looking for the cursor example it's something that comes up a lot on this podcast in the application layer specifically the thought that the way to win in this space and to build a moat is as you said build your own modelhave proprietary data that you build through people using your product thoughts on that

Ben Horowitz:Yeah I mean I think that ends up just being what's required so it turns out that the universe is long tailed and is fat tailed and humans are very fat tailed in terms of human behavior human conversation and so forth so to get to the real meaning of it and to get to the kind of essence of the problem you know in any domain turns out to be I think more complex than we thought and so I like the early things and you know people were running around saying okay there's gonna be one big brain to rule them all on these kinds of things that's kinda not played out yet and and in fact like you look underneath the covers you have LLMs which have generalized pretty you know like in fascinating ways but they've kind of also asymptoted in that you know we have run out of data for the most part and so if you look at the GPT-five LLM compared to the GPT-four zero one and how much more it costs to train and so forth like it's you know it's definitely not going linear anymore on the other hand the reinforcement learning side has been linear but it doesn't generalize so if you build a great programming model it may be an idiot at math and so that I think is just very different than what people would have said three years ago and I think that's kind of you know that there's not something that's both scaling and generalizing yet and you know maybe we'll get there but that certainly opens the door to something that's more user friendly that's more effective in any number of domains than just the basic foundation model infrastructure now those models are incredibly important in there and I think OpenAI is probably 80% of the revenue in AI or something like that now like it's massive so that foundation model is really really important and then like the basic consumer app is really really important that just answers whatever the hell you wanna know like those things are like very very real but I do think you know particularly and then if you get into like enterprise stuff and then it's no longer internet data it's their data that becomes very different like Databricks is having a lot of success there because okay well once you're inside a company guess what like you care about access control that's hard with an AI world you know it gets trained on some stuff how does it know who has access to that information who doesn't and so forth you have semantic issues so if you look at an enterprise fine 10 enterprises they all have a different definition of what a customer means like you would think customer is a basic thing well is it a department at AT&T is it AT&T is it like a person at AT&T is it like what the hell is the customer and it turns out to be very very very meaningful particularly if you're trying to figure out like important things like churn and this and that and third so like that kind of stuff matters it's a I would just say like the problem space is a lot bigger than you can just attack with a basic foundation model you know currently you know maybe that will change and like if that changes then certain prices will have in retrospect look way inflated and others will look too low but

Ben Horowitz:That is TBD

Lenny Rachitsky:So a big takeaway from this is that there's still tons of opportunity for founders to start companies building AI products

Ben Horowitz:I think so I mean can solve so many everything that we couldn't solve with software can solve now almost so it's a really big world and it's funny you know like because we're investors in Waymo and one of the things when you get into like what took so long to make Waymo's so safe like they are now it wasn't the things that everybody reported on the podcast it wasn't sleet and you know heavy rain and it was people it was like the human who was driving 75 in the 25 zone it was very hard for the AI to anticipate because it was rare but important and the number of rare important crazy shit that humans do is very high and I think that that goes for all of AI so to make things work really well you have to understand this very kind of fat tail of human behavior

Lenny Rachitsky:Along this AI thread something that is really important to you clearly something you talk a lot about is the US being successful in AI and leading the world in AI why is this so important why is something you spend a lot of time on

Ben Horowitz:It starts with I think my view of the US and its role in the world so my personal view is like it's very very very important not for society to be completely fair because it's not going to be completely fair or completely equal because we've never had one that's been completely equal but it's important that everybody have a chance at life know and particularly

Ben Horowitz:You know kind of both culturally but also just like you can't advance the world if you know you can't tap into all of your resources and so if you kind of take away motivation and and these kinds of things you you get into trouble and if you look at the kind of every country today and and this is by the way so you want like the right amount of decentralized power you know you don't want it to be completely concentrated concentrated power makes it very very difficult for everybody to have a chance this is the big kind of lesson of communism over the last hundred years is it turned out right and and you know we still have politicians selling it this way today it's like oh it's power to the people no no no it's power to you because you're removing all power from the private sector and installing it into the government and then you're putting yourself in charge of the government and so i become extremely powerful and this is why it didn't matter if it was mao or pol pot or ceausescu or stalin everybody died because when you give anybody that much power nobody has a chance there is no incentive there's no carrot there's only stick and so use that stick and that's just the nature it's a systems problem it's not a person problem it's not stalin was evil ceausescu was evil it was like that system is evil and that's a check saying with fascism right be it hitler or mussolini it doesn't matter like that level of power is evil the us does the best job systematically it's the best system it's got all kinds of issues it's got problems people always try to defeat it but you know one of the things that

Ben Horowitz:You know if you look at kind of the declaration of independence or the constitution like the the language is very important you know it's we hold these truths to be self evident what does that mean it means they it's not my rule stop the president's rule it's god's rule and so those rules are above the president and then you work in that context and that distributes power because you're under the law not under the person and we see that you know now even with europe where europe is kind of the leaders are going well i have a rule it's you can't say certain things or i'll throw you in jail and the kind of shield they hide behind is well like we have to keep the kids safe but if you say something that i don't agree with and the kids hear it they're not safe right like so you the the the kind of transitive property of bullshit like is gonna override and so it's really important that we have at least like one society and as flawed as we are as flawed as the us is it's still the best and you can see it by the number of new company creations the number of new ideas that come out of here and so forth it's really really important that the us kind of stays important and powerful in the world and we know from the last century if you look at the last century who were the countries that had economic power military power cultural power they were the ones that industrialized yeah and the ones that industrialized first and best and the ones that did became communist right like you know russia china like they they were slow on industrialization and they fell into this very fucking dangerous system

Ben Horowitz:Looking forward that's going to happen again but it's going to be ai and so it is kind of fundamentally important not just to like america but to humanity that america succeed at that you know like we don't have to be the one winner or this or that but we do have to be like in that tier and you know as i go around the world and travel i can't tell you everybody and then everybody was getting by the way very very worried about us earlier and they say look we need you to succeed you know don't destroy the dollar don't like fall behind in ai don't overregulate it too early don't do do these things please because we need you to win like because we're all like counting on that and and i think it's it's the most important work that we do it's why we're so involved in policy and and and so forth i think this is also you know very gonna be very very true with crypto which ends up being an incredibly important networking technology that complements ai and and so that's i yeah and that you know that work is i would say beyond for the money like that's although like we will end up making a lot of money with the right policies like so i don't wanna like seem totally philanthropic on this but but it's more important than that it's it's certainly more important than us succeeding or anything like that that that the country succeed

Lenny Rachitsky:Speaking of philanthropic and other passions of yours something that i don't think most people know about you and i think will give them another insight into how interesting you are you run an organization called paid in full which is incredibly cool talk about what that's about why this is so important to you

Ben Horowitz:Our ethos as a firm is kind of well i'd say is something from nothing this is a greatness of entrepreneurship you start with nothing and then you make something really important and that is also how hip hop started where you have like a bunch of kids who didn't even have instruments and they kind of created something out of nothing and the people in that world always talk about that and you know one of the really unfortunate things that happens is the people kind of who invent the art form and certainly in the case of hip hop don't get anywhere near the kind of proportional benefit of their invention and a lot of the guys people have forgotten about or are kind of struggling to make ends meet and so forth so what we created was this thing called the paid in full foundation named after the rakim eric bissong which i did call rakim and ask him for permission to use the name so read it to us taken and what we do is we give essentially pensions to the old rappers that enable them to kinda continue their work and then we have a big event go to paidinfullfoundation.org for free tickets which is amazing where they kinda get the award and they're celebrated by all their peers and so forth and it's really phenomenal but so some of the awardees have been rakim scarface from the ghetto boys roxanne shante grandmaster kaz kool modi this year we're honoring george clinton for being sampled cool g rap and grandpubba and also jalil from houdini it's just it's very i can't even describe how high impact it is on these guys i mean i think rakim was touring close to 200 nights a year and he got his award and came out with his first album in fifteen years and is doing amazingly well all of a sudden you know everybody's going oh yeah that's the greatest rapper of all time it's like they're finally going back and remembering all the things he did roxanne chantay i mean nobody had mentioned her in years and years and years and i think six months after we gave her the award the grammys gave her a lifetime achievement award which is amazing so it's a super high impact it's a great thing you know as a hip hop fan i say dream come true so it's finally built

Lenny Rachitsky:What is what's the origin story of you and hip hop i imagine many people look at you and wouldn't imagine you you these records behind you nas gifted you you're so deep into the community just how did this all begin

Ben Horowitz:Well so there's i actually wrote a blog post on it called the legend of the blind mc which i think would be if you're really interested it's worth reading but it is kind of a story of me becoming a rapper and and like how that occurred and how it went and so forth but you know like i always say the very short story is you know i was in new york when it at the birth of hip hop and where it could birth when it really became big kinda eighty fourth or '88 and yeah it's just the most exciting thing yeah to see a new art form kinda pop out and the creativity and everything you know once music kinda becomes mainstream i would take it's very shaped by business and like in the early days there's no yeah everybody's just coming out with whatever idea they have and so forth and so there's the early days of rock and roll were like that the early days of jazz were like that so

Lenny Rachitsky:I see now even more why you guys brought on eric thornburg beyond his many talents he's also really big into rap himself

Ben Horowitz:Yeah yeah yeah i need to that that's a good reminder i need to make sure i guess the pin for ben

Lenny Rachitsky:This was incredible

Ben Horowitz:Yeah

Lenny Rachitsky:Is there anything else that you want to leave listeners with or share before we get to our very exciting quick lightning round

Ben Horowitz:Yeah i mean would just say if you're a ceo listening to this know that like how you feel about yourself is gonna end up meaning as much as anything and so like take your time on that don't don't

Ben Horowitz:You know like self evaluation is the one of my favorite quotes is that one of my managers told me is failures no there nope from this day on no credit will be given for predicting rain only credit for building an arc and i think that's more true for ceos than anybody you know you have to build the arc like it doesn't matter like you predict you're gonna fail you've still failed it doesn't it it you nothing so what you have to do is figure your way out of it and spend all your time on that

Lenny Rachitsky:Well with that we've reached our very exciting lightning round i've got five questions for you are you

Ben Horowitz:Yes sir

Lenny Rachitsky:First question what are two or three books that you find yourself recommending most to other people not including your own books

Ben Horowitz:Yes so two that i learned a lot from are one is the weirdest people in the world which it's a kind of big history book but through an anthropological kind of cultural lens and it's really fascinating it explains an awful lot about how society works and how little changes in the rules completely change the culture one of the things that he basically endeavors to explain okay why did the west get ahead on the rest of the world and it kind of comes down to like a weird anomaly with the catholic church where they've kind of enforced monogamous marriage and it turns out that the natural state of humans is polygamy but the problem with polygamy is there's no cooperation among men which is a problem a result and then everything is secret so there's no sharing of knowledge because it's all kept in the family in what he calls kin based culture at least it's something called kin based culture and even recipes won't be shared if you're in a kin based culture because it's a secret so you can't build science you can't build cities you can't build big companies so because the west kind of enforced broad monogamous marriage early it was able to kind of evolve into all these things and he kind of shows why and how and he does these psychological tests today with people from kind of monogamous marriage culture kind of like western culture and kin based culture and the psychology is completely different and he gives examples like if a person murders another person is that still murder if that person who did the murder is your brother in western society yeah that's a murder in kin based culture it's not a murder it's just not and so like that's really different and so like morality is different like everything kinda comes off of that so it's just a fascinating fascinating book so that's that's one

Ben Horowitz:I'd I'd tell you you know another book that i recommend a lot is shaka's book his first book writing my wrongs he has a new book that i think is better which is called how to be free so i'm gonna start it's not quite out there maybe it's releasing it's releasing like next month so i recommend it what it does is it goes through like how did he work his way out of prison and solitary confinement to his current psychology and what are the techniques he used it's they're very powerful very powerful ideas so i think that like you know ceos always ask me like how do you deal with it like how do you deal with it you know and they'll ask him like work life balance or like and it's like what are you talking about i know work life balance for ceos or particularly like entrepreneur ceos like come on but like what do you do do you meditate do you do this or that but he kind of goes through the things that you really ought to do so that that's what i would recommend if somebody's wondering like how do you deal with all this pressure

Lenny Rachitsky:I love this just the whole idea of shaka being this help for cos someone that killed someone went to prison led a prison gang i just love that valuable

Ben Horowitz:This turn out to be really complicated things to manage enough sorry for getting into this but the problem with running prison gang is you're just dealing with people who all come from broken culture right like so in any organization like the fundamental thing is trust and so you're you're bringing in a bunch of no trust people and so you can't and like and it's kind of like a military organization it's a gang and if you think about a military operation if you don't have trust people don't trust the order then you're completely dysfunctional so how do you build trust from zero is a very interesting problem and he's a genius at that by the way and you know i learned a lot from kinda talking to him about it so like that from a management standpoint it's a i would just say it's an important kind of a boundary case of how you build culture and so he is very very smart at that i mean did you show kind of have to like i said you you have to look at people about you know their greatness not not the worst thing they ever did

Lenny Rachitsky:I i know this is a lightning round but can you just share one example of something he did that was like wow that's a really good lesson someone trying to create a good culture that worked for him

Ben Horowitz:Yeah so like one of the things that he did that that i thought was really smart is well i did a couple of things one is just like a simple thing was he just made everybody eat lunch together in the game just to kind of build rapport relationship trust like it's all one thing we're all together then i think you know like in like remote work world and so forth people really underestimate how powerful like just that idea can be and then you know another thing he did is he he made kind of like morality you know he he had kind of very specific things about you know if you you you had to be good to your word internally and externally and so normally a gang you want like you know like i said it's kind of a kin based culture thing but it made it much more powerful when he said look like you you can't do devious like shit outside the gang either and he he had a bunch of examples of that that i went through in the book but it's a very like like i said because you're building it from zero you really have to take a hard line on things that i think people and companies don't even take a hard line on like is it okay to lie internally probably not is it okay to lie to a customer well in some organizations it is but like in shaka's organization that's as big a penalty as lying internally and these things i think end up being really important

Lenny Rachitsky:We're going to link to this book this is what you do is who you are this is your second book that fewer people know about and this is one of the stories you tell and just what the lessons are

Ben Horowitz:Yeah kind of a more advanced book like I think people don't you kinda have to survive to wanna care about dealing with the cultural issues and so the survival book has a bigger audience

Lenny Rachitsky:Amazing okay we're gonna keep going with lightning round is there a favorite recent movie or TV show you have really enjoyed

Ben Horowitz:Yeah so on TV I really like Slow Horses which is like the show about the MI6 castoffs guys and then I haven't seen a lot of movies lately but I watched Centers I went to the theater for Centers and it's I mean just the cinematography is unbelievable and the story is really original and the acting is incredible and the costumes are amazing so it's just like a great kind of comprehensive piece of work like people have the craftsmanship on that thing is just a lot beyond what most people making movies are doing these days so I I I really enjoyed that

Lenny Rachitsky:Mhmm yeah I hate scary movies but I I watched it and loved it

Ben Horowitz:Yeah it wasn't that scary

Lenny Rachitsky:It wasn't that scary but still you know zombies popping out of corners

Ben Horowitz:Yeah

Lenny Rachitsky:Yeah it's not not not my jam usually

Ben Horowitz:Yeah

Lenny Rachitsky:Is there a product you recently discovered that you really love it could be a gadget could be clothes could be something else

Ben Horowitz:I bought a coffee machine called the Technivorm Moccamaster which is freaking incredible in fact a friend of mine saw it and I was like what is that and I just bought it for him too because it's so awesome people like this thing makes coffee that it's just like perfect like there's no bitterness it's completely clean it's amazing like you try only problem with it is I can't drink coffee that it doesn't make anymore which mhmm I don't know if that's a good thing or bad thing but boy

Lenny Rachitsky:That might be that might come out someday in the AI future

Ben Horowitz:Yeah yeah

Lenny Rachitsky:Two more questions one do you have a is there a life motto that you often come back to find really useful in work or in life

Ben Horowitz:The thing that I would say has had the biggest impact on me is something my father said to me years ago which is life isn't fair and that that seems like really really simple but I think that the thing that defeats people more than any other thing that I've seen just in life is the expectation of some fairness you know like it's just not fair and there are like all kinds of stuff that are gonna happen to you that and happen to everybody that don't happen to other people that are completely unfair but it doesn't matter because that's the way it is and as soon as you get that idea out of your mind then you can just deal with it like oh yeah of course it's not fair but I'm gonna what should I do now which is the real question not how do I go back and get people to be fair because nobody's gonna be fair it's not fair it's the nature of it if you think about it for more than five seconds you'll realize that and I think a lot of you know and it's as an individual like you wanna make the world a better place whatever but for as an individual do not expect anything to be fair it'll only defeat

Lenny Rachitsky:Final question this comes from Shaka actually he gave me so many great suggestions I had to save this one for last okay so the question is if you had to build a business curriculum from two hip hop albums and one funk album what would they be and what

Ben Horowitz:I think probably Follow the Leader by Rakim I thought that was so and and and the reason is kind of what we had kind of gotten into earlier which is leadership so when he came out with that song which was like you know maybe the greatest hip hop song ever written you know he's telling people to like follow him you know follow the leader and just to have the idea that he was the leader of the entire art form not just you know his band it isn't like amazing idea and and then the way he expressed it was incredible and then he's got he's got other great concepts in there that would give you like it's hard to listen to that record and have confidence I think from a competitive purely competitive standpoint still Matic from Nas I mean that's one with Ether that's the one with Get Yourself a Gun that's the one with You to Man it's kind of like all of like the idea of competition is kind of encapsulated in that in that album that that would be the other one and then funk oh for one Nation Under a Groove for sure One Nation Under a Groove because it's kind of like this is how do you initiate people into like a concept or an idea and and write how do you infuse them like One Nation Under a Groove is all about joining the nation and like it's so musically interesting and and kinda getting people to be part of that that was probably I don't if you ask me tomorrow I'll probably have three other ones

Lenny Rachitsky:Incredible I'm gonna go listen to these Ben final question we're how can listeners be useful to you

Ben Horowitz:If you get something that makes you better please take it if you need kind of more advice on it let me know but look my job is to help everybody build something great so if you're if you're an entrepreneur Tom thank you for that

Lenny Rachitsky:Also check out paidinfullfoundation.org if you wanna learn more about yes that please

Ben Horowitz:Yeah definitely we would love to have you

Lenny Rachitsky:Amazing Ben thank you so much for being here

Ben Horowitz:All right awesome thank you Lenny

Lenny Rachitsky:Bye everyone thank you so much for listening if you found this valuable you can subscribe to the show on Apple Podcasts Spotify or your favorite podcast app also please consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show at lennyspodcast.com see you in the next episode