Managerial Leverage: Find People Who Make You Great

Situation

Ali Ghodsi had recently been promoted from VP of Engineering to CEO of Databricks
He was struggling with how to handle low-performing team members in his new role
As a former engineering leader, his instinct was to coach and develop these underperformers
The company needed to accelerate growth and improve execution during this leadership transition

In their first one-on-one meeting after Ali became CEO, Ben Horowitz gave him critical advice about leadership leverage
Ben explained the fundamental difference between being a VP of Engineering and being a CEO:
- As VP of Engineering, developing people is appropriate and expected
- As CEO, you can't develop people in functions where you lack expertise (marketing, finance, HR)
- The company needs the CEO to make high-quality decisions quickly and set direction
Ben introduced the concept of "managerial leverage" to Ali:
- Low leverage: CEO constantly pushing ideas and direction to executives
- High leverage: Executives bringing ideas and pushing the company forward
- When you're not getting leverage from an executive, it's time to make a change
Ben made the advice stark and unhedged to ensure Ali understood the message clearly

Ali implemented this approach despite his natural inclination to develop people
He became decisive about replacing executives who weren't providing leverage
According to Ben, Ali became "unbelievable at that, as good as anybody I've seen"
Ali maintained his empathy and care for people while making necessary leadership changes
Databricks continued its growth trajectory, eventually becoming one of a16z's most successful investments
The company grew from a small academic project to a multi-billion dollar enterprise

Leadership requirements change with role: What works as a functional leader doesn't work as CEO
CEOs can't develop expertise in every function: Attempting to coach people in areas where you lack expertise wastes time and reduces effectiveness
Seek leverage, not control: Great executives should bring ideas to you, not just execute your ideas
Decisive action trumps development: For C-level roles, replacing underperformers is often better than attempting to coach them
Balance empathy with decisiveness: Ali maintained his care for people while making tough decisions
Focus on strengths, not weaknesses: Find people who make you and the company great rather than trying to fix people's fundamental weaknesses
Recognize the CEO's time constraints: The company needs the CEO focused on high-impact decisions, not remedial coaching