Hard times are coming
And this is how you can prepare for them
The Hard Thing About Hard Things is in the top #10 books of all entrepreneurs I talked to or seen on their list.
Why? Because Ben is straightforward. He acknowledges the fact that there’s no perfect business, and no matter how much you plan, you’ll screw up somewhere along the way.
Plus, he sold his company for $1.6 billion in cash in 2007.
But that’s a marginal note 😉.
In today’s newsletter, I am going to share the 5 top lessons from the book.
5 Key Takeaways
Tell it like it is. Tell your employees the truth and give the problem to the people who can not only fix it, but who will also be personally excited and motivated to do so.
Spend zero time on what you could have done. Devote all your time to what you can do. Because in the end, nobody cares; just run your company.
Don’t quit. Both the hero and the coward feel the same fear. The difference is what they do in the face of that fear.
Take care of People, Products and Profits (in that order).
If you’re going to eat shit, don’t nibble.
The first part will be a bit different than the rest because it is very close to me.
CEOs should tell it like it is
Have you ever worked in a company where people talked non-stop about the state of the company? Well, I have. Let’s call the company B.
The first startup I worked in was during the heights of 2021 euphoria, when VCs wanted to see growth and they couldn’t care less about the bottom line.
And B was bleeding money. The company gave the product for free, just to show growth.
Then, at the end of 2021, the beginning of 2022, the money stopped arriving.
The VC wind has shifted from growth to cash flow. The stock market crashed.
And B, the company I worked in, was in huge trouble.
Salaries came late, pensions were unpaid, and people talked about it non-stop.
Not only did they talk, people stopped showing up and working.
From a team of dedicated 30, we went to a team of not-caring 20 in a few months.
And the executives? They were “optimistic” and told us that everything was okay and that we were very close to being cashflow positive.
Long story short, the company has gone bankrupt and blamed the government for it.
Why did I tell you this story?
Because the CEO is the first one to shout when a crisis occurs.
People know or they will soon enough. And then they will be mad at the company for hiding such important information about their future.
Bad news travels fast; good news travels slow.
Plus, instead of hiding, you can harness all your people and direct them toward a solution rather than trying to hide and solve it yourself.
Take care of People, Products and Profits (in that order)
“Great vision without great people is irrelevant”
-Jim Collins, Good to Great
If things are going well, being a good company doesn’t matter.
But when things go south, that's when being a great company truly counts.
In B, it was the exact opposite.
People were left with no salary or pension, only to grow the product and make the business profitable so investors would be happy.
Compare the situation to a ship with people who need to make it move.
You can improve the ship’s engine and make it look better.
But if you have no people to operate it, it’s nothing but a good-looking piece of metal.
That’s why it’s important to remember that things always take a turn for the worse at some point. It's an inevitable part of business and life. Being a good company becomes the difference between surviving those hard times or succumbing to them. It becomes an end in itself.
What does it mean to be a good company, you ask? It means prioritizing people over everything else. Your team, your clients, and then, your product. Only when you have a happy, engaged, and dedicated team can you create products that make a difference.
And only great products can lead to profits that sustain and grow the business. This cycle starts and ends with people. Remember, a motivated team can turn a good product into a great one, and a great product into a successful business.
Spend zero time on what you could have done
“The main thing is to keep the main thing the main thing.”
- Stephen R. Covey, The 7 Habits of Highly Effective People
Dwelling on past mistakes is like walking through life with your eyes fixed on the rearview mirror.
Don’t get it wrong, you should reflect on the past and learn from it.
Otherwise, you’re doomed to repeat them. The key, however, is in how we use these reflections.
Instead of allowing our past missteps to define our current actions or paralyze our decision-making, treat them as lessons to make better choices now.
Look, when things go wrong, nobody cares. The media don’t care, your board doesn’t care, your investors don’t care, your employees don’t care, and even your mama doesn’t care. Nobody cares.
You are in charge of fixing them right now.
Whether you are the owner or a leader in the company, you are the one who needs to handle the problems.
It also applies to blaming.
In times of crisis, if you are looking for someone to blame, you fall for the same trap.
So instead of asking “Where and who screwed up”, ask “What can we do differently next time”?
Don’t quit
“Pain is temporary. Quitting lasts forever.”
- Lance Armstrong, It's Not About the Bike: My Journey Back to Life
Every entrepreneur will face at some point moments of doubt and fear. And the easiest choice is to throw the towel and excuse it with “I’ve done what I could”.
This point is what separates the successful ones. The ability to push through these feelings.
Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers. They all say, “I didn’t quit.”
People who watch you will judge you on what you do, not how you feel.
Nobody, besides you, knows how you feel.
Every time you make a hard decision, you become a bit more courageous.
Every time you make an easy decision, you become a bit more cowardly.
If you eat shit, don’t nibble
“Remember, Ben, it’s always darkest before it plunges into total darkness.”
-Marc Andreessen to Ben Horowitz, The Hard Thing About Hard Things
Life tends to serve us some unpleasant situations, to say the least, especially in the unpredictable path of running a business.
And it's tempting to take half measures, to nibble around the edges in hopes of mitigating the problem. Yet, more often than not, it doesn't lead to any solution.
Quite the opposite. It prolongs the suffering and inevitable decline, and can even make it worse.
The solution? Decisive action.
Look, if things are bad, then things are bad and hurt is on its way.
It’s either you choose how to handle it right now or let life and other people handle it for you.
Just like in life. It’s either you choose your hardships, or life will serve them in the least expected time.
Conclusion
“A person's success in life is measured by the number of uncomfortable conversations they're willing to have.”
-Tim Ferris, The 4-Hour Workweek
This book gives you practical tools and examples to identify the situations where you need to take the lead and have hard conversations and decisions.
And for any engineer out there, I would highly recommend you give it a chance.
What we enjoyed reading this week
How a developer bought a SaaS for $2000 and increased ARR to $7000 in 2 months by
When Should You Do QA? (and why sometimes you shouldn’t) by
How an AI sales representative product grew from $0 to $2M ARR in six months by
Thank you, Orel, for the summary. I haven’t had the chance to read it yet, but I’ve added it to my reading list.
The story about your CEO’s excessive optimism seems like a classic case of managing expectations totally wrong.
I read this book years ago, long before I became an engineering manager, and I really enjoyed it at the time! Reading your summary makes me realize how much of my management philosophy is rooted in the belief that people matter, that transparency is paramount, and that quitting is for other people. If I fail it won't be because I gave up. Thanks for a great reminder of a fun read!