The a16z Show - a16z Podcast: Teams, Trust, and Object Lessons

Episode Date: April 2, 2016

Some of the best management books are actually military books, argues Ben Horowitz. There's just a certain mental toughness and focus that that experience gives you, adds Dick Costolo based on his observations. So how then do you build trust on a team in a company, when it's not (literally) life or death as it is in the military? When giving someone a public "object lesson" -- the equivalent of Sun Tzu's chopping someone's head off -- could mean losing talent ... or being more tyrant than leader? How do you tell the difference? This conversation -- between Horowitz and Costolo (entrepreneur, former CEO of Twitter, comedian and consultant on the HBO show "Silicon Valley") -- took place before a group of 25 veterans who participated in the Breakline education and hiring program (one week of which was hosted at Andreessen Horowitz) for veterans shifting into careers in the tech industry. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to the A16Z podcast. I'm Michael Copeland. Costello and Ben Horowitz talk about leadership in front of an audience of military veterans and active duty soldiers on this segment of the A16Z podcast. What Silicon Valley can learn from the military's approach to leadership and how that applies and doesn't to building today's technology companies. Does leadership, does it transfer from one venue to another? So in this case, from the military to Silicon Valley. Well, I hope so because like all my favorite management books are military books. So there's like the art of war. There's the Colin Powell book, My American Journey.

There's the Black Jacobin, so the Toussaint-Lovature book. The problem with leadership in general is the easy thing to do is generally the wrong thing to do. So you sort of slide into that. And the great thing about the military leadership books is like everybody's going to die if you do that. Whereas in like companies. It's not actually life and death. One of my favorite son Sue stories, which is I actually didn't even tell this story because it's so violent.

But there is a, you know, they're doing calisthenics. And during the calisthenics, two of the guys are talking. And you're not allowed to talk in calisthenics. So he just walks over to guys talking, tells him to stand up, takes out a sword and cuts off his head. No more talking in calisthenics. You have to have like that work. Not that you should do that in a company.

Speeches don't do anything, but like an object lesson like that, cut his head off. They're like, okay, like everybody learned that. And nobody's ever going to forget it. You give an all-hand speech, nobody's going to remember it tomorrow. And so, you know, these kinds of things are super powerful. And it is like it's a pretty straight translation in that way. For me, I had several folks in my company who were leaders in the military.

And they were the most mentally tough people in the company. I remember the night of the IPO, you know, the stock was at like 47, and we had priced it at 16 on the S-1, like, two weeks earlier. And I got up in front of everybody and said, listen, we took us seven years to get from zero to 16. And now here we are two weeks later, and it's 47. It's not 47 because the company got three times more awesome in the last two weeks, right? So just remember, it's going to go down. Right. But that's okay because we priced it at 16 two weeks ago. So we're, it's great. It's at 40, it's at 47 now. But it might be 16 again. Just remember, that's not mean, it's, that's not bad,

just as the fact that it's 47 today is not based on we got that much more awesome in two weeks. So I thought, well, great, like I've prepared them. You know, I've inoculated them to have in the inevitable stock going down. And, of course, he's shaking his head because he knows exactly how it goes. The moment the stock goes down, everyone's like, oh, my God, what's wrong? You know, what do we do wrong? And, you know, Dave Lagaki, who is a CEO and Anthony Nodo, my CFO and Russ Lerraway on my sales team was in the Marines. were three of the people who are like, you know, yep, we get it. We're staying focused. We know

exactly what we have to do. They were great with their team. They didn't lose people on their teams. They didn't have any churn. So I always look for people like that who I knew were going to be mentally tough and be able to deal with, you know, the ups and downs of the company. And that goes for private companies as well, as Ben knows. I mean, half the time you're like, oh, my God, this is the best day of, you know, this is, the company's going amazingly well, and two days later, like, everything's ruined. We're going to be out of business in a week, and just had need people who are mentally tough. You know, I got up one day at all hands and showed just a picture of Michelangelo's David. And I said, all during the Renaissance, these Renaissance artists portrayed

David and Goliath as the moment after David chopped off Goliath's head. You know, the Virokio and Donatello-Bron statues are he's standing on top of his head with the sword, and Caravaggio's got this bloody, you know, painting where he's chopping off his head. And Michelangelo chose to portray him just before he's about to throw the rock at him. And he's got the sling over his shoulder and the rock in his hands. And he's focused, you know, and his muscles are sort of tense. And I said, you know, Michelangelo chose to portray him in the moment between conscious choice and decisive action. He knows what he's got to do. And now he's got to go do it, irrespective of all the other noise. I said, just keep that in mind when the media comes in and

says, this is what you're doing wrong and you should be doing this. And the people who had been in the military and military leaders were the best at helping relate that story to their teams. People talk about wartime CEOs and peacetime CEOs. Is that a real thing or is it just gradations of war? Well, I started that, you know, with the peacetime CEO, war time CEO blog post, I think. And I actually got it from my friend Bill Campbell, who used to kind of talk about it to me a bit. I think that the thing is management books are written almost entirely from a perspective of peacetime. And so that was the thing that I was trying to get out. They're designed to make it like simple. And so then a lot of the things stylistically that come out of it, like one of the things that you always get in management books, is never, ever, ever,

berate anybody in public. But then you read about guys like Steve Jobs and Andy Grove all day long. They're berating people in public. And like they were the most successful. So like what's going on here? It does get down to look, there are times when you need so much precision that like if you're going to lose somebody in the whatever war for talent because they got their feelings hurt, well, that's just going to be how it's got to be. Because you need to teach that Sun Su object lesson like somebody's getting their head chopped off for the good of whole because like the army's got to stay discipline you know that is kind of the wartime mentality now like if you do that all the time and you're doing it in peacetime then like nobody's going to want to work for you and and like so that that is a real thing and you do want to look you want to develop people

and give them a chance to make mistakes and not like create environment of so much fear that people are afraid to talk and and all these things are important but at the same time there are situations where you're really going to lose a company if people don't do what they're supposed to do. And so you've got to treat those that way. So yeah, I do think there are both. Yeah. Sometimes you're both at the same time inside the company, right? With, remember times at Twitter where with the sales team, I could focus on, all right, this is really good. This engine's really working. It's going well, let's focus on, you know, building better leaders and let's focus on how can we improve the way we're working with resellers, you know? Meanwhile, over in

product, you know, I'm like, what's the matter with the, the, thing taking like four weeks instead of, you know, that was supposed to be out yesterday, etc. Right. Dick, the team that you described at Twitter were, like, they stayed focused. They didn't lose anyone when the stock was falling. What engenders loyalty and commitment in Silicon Valley? How can you build teams that have your back and will stick together?

This is going to sound probably trite, but I'll explain it. Trust. You know, the best leaders tell everyone on their team the same thing, and they don't manage by trying to be liked. They manage by, you know, telling everyone the truth and being honest and direct with them. And the reason that those several teams didn't lose people is because those leaders at that point told them, hey, you remember the night of the IPO when Dick gave us this talk. It's we're going to go through this rough patch.

All companies do. The media is going to beat the shit out of us for the next two months. Come and ask me if you have any questions. It's going to get really tough. The stock might even go down a lot further. And so people are like, okay. And then when that happens, they're like, okay. you know, Russ later, Russ told me that might happen, and he's still coming in every morning,

and we're still focused on the same three things. Instead of the leader who tells people what they want to hear and tells Brian something slightly different than what he tells Kathy, and, you know, and, oh, people are sad. Maybe I'll tell them, I'll try to get them promoted next time, and, you know, and those are the people that they leave that meeting happy, and two months later, they realize that their leader's just been creating misery for them, and they leave. So clarity of message, consistency of message, or just being, truthful. Yeah, telling people

what they need to hear, even if it's hard for them to hear it, and they don't agree with it, that's the way you build trust with your team, you know, and they leave the room maybe unhappy in that moment, or sad in that moment, but later on they realized, okay, well, you know, Russ told me that three months ago, and here we are.

Instead of, wait, you told me that you'd talk to Dick about promoting me to senior director if I stayed here through this rough patch. Right. Ben, how do you view that, building that trust or building that commitment. I think that's right.

Look, a lot of it, you know, when you're in a place like Silicon Valley where there's a lot of competition for talent and people do have a fiduciary responsibility to their families to take the best opportunity for them, it is a little more nuanced than in most places. But I think Dick's getting at the thing, which is, you know, you got to remember when you go to work somewhere, you start to kind of a little bit become your environment, and particularly the younger you are, the more you become your environment. And so if it's a place where you feel like you're either not learning or becoming a worse person, like not the person you want to be, then that's when you really, even if you're a loyal person you're going to want to leave,

you know, and vice versa, if you feel like, okay, now look, I'm actually really learning how to be the person I always wanted to become because like this is the kind of leadership I have and this is how it's going. Then then that's going to make you stay. And a lot of that, you know, to Dick's point is, you know, like how loyal are you to your people? Are you committed to telling them the truth? Are you committed to their development? Are you going to really tell them when something's in their best interest or not in their best interest? Right. This is the horrible thing about being a leader. You kind of get the environment that you create. You get the people will behave the way you do. And so, like, your flaws get magnified in a really horrifying way if you don't

work on them. So, like, I think one of the most important things to get loyalty is, like, you've got to really work on yourself and make sure you're the type of person that somebody's going to want to work with. And if you do that, then, you know, that usually is the biggest thing you can do. If a military, ex-military, active military comes in and says, like, look, I want to go work for your new startup where I want to go work for one of our portfolio companies. companies, what are the positive and negative biases that sort of pop into your head? Or are you past that? I can tell you immediately what mine were. The positives were, this person will be, you know, I know they're going to come in. They're going to be mentally tough. They're going to work their ass off. MLB, like, not distracted by, like, nonsense. Like, oh, there's a bad, mean blog post about us in Business Insider. You know, I mean, you laugh, but you'd be, you know, surprised.

They don't fall into a pile. They're not going to run out of the room screaming. So that's great, and that's worth its weight in gold. The only negative that I can think of is in a couple specific cases for me, there was a lack of just domain expertise in the thing where I really wanted them to work, and they had to come up to speed on that. So I would look for areas where I thought, well, this person's going to be able to come up to speed on it.

and they'll be able to do it very quickly, and in fact, in both cases, they were incredibly successful. Yeah, I would say, so to me, and I think those are really right, to me, the biggest thing about having somebody who opted to go into the military and then has spent time there is when you look at a company, people are in your company for a variety of reasons. Like, they're doing it to get rich, or they're doing it for their image of changing in the world, or they're doing it to advance their career. and for the best company, like the very best work experience, the very best company is when they're doing it for each other. You know, and a lot of people come out of Stanford or, you know, Berkeley computer, so don't understand what that means. And don't understand what it means to do something bigger than yourself. But somebody's been in the Marines or, you know, and decided to do that. Like, you really know what that means.

and you know the power of it and, you know, what it means, not just in the job, but in life. And so having people in the company who can lead the company to that kind of thing, you know, to me is the number one reason why, you know, I would just rate that very highly. I think that from a cultural standpoint, that's the number one thing that I look for in a, in any kind of organization that I'm involved in because at the end of the day, that is what's going to matter. Ben, you addressed the graduating class from Columbia last year, and your basic message was don't follow your passion. Why crush everyone's dreams? What was that all about?

I think I'd listen to the whole speech. Look, when you're in college, people that give you this advice, follow your passion, and it's actually difficult advice because, like, one, you know, my passion when I was 20 years old was to be a rapper. And, you know, that's great. But, like, I didn't really have the talent. And so, you know, is that really the thing that I should be doing? And then, you know, the other thing is, like, what you love at 20 isn't necessarily what you love at 25 or 30 and so forth.

And so the point I wanted to make to them was, you know, follow your contribution. Like, what do you feel like where you can really make a difference? difference and do that, and you'll end up really liking it. And it's a little bit of a false thing, because people who are super successful go, yeah, I'm totally passionate about my work. But it didn't start that way, right? They're passionate because they're successful. They're great at it. They love doing it. If they sucked at it, they wouldn't be passionate about it. And so, like, my passion wasn't to be a venture capitalist, but I love doing it because I'm good at it. And then I always thought follow your passion was the most self-centered, like, advice like ever.

It's like, oh, it's all about me. What do I love to do? You know, like, well, like, how about, you know, what you can contribute to others and what you can do for the world? And the biggest thing that I've learned as I've gotten older is that the biggest secret to life is what you contribute means a lot more than what you get. I mean, you went from, you followed your passion, but it seems like you found your passion to building companies and running that. Well, look, if I had auditioned for Saturday Live and gotten in, I would have done that, you know, but I didn't get in. So, you know, it's a hard audition. You know, like, it's a hard audition. They rejected Jim Carrey. But if a bunch of people didn't get in at the time, I just happened to have, you know, Tina auditioned and didn't get in around the same time.

But, you know, she was like, I don't have anything else I'm going to do. I'm doing this. So I got to figure it out. and I had my computer science degree to fall back on and loved doing that too, so I went back to technology. Does everyone in technology have to be an entrepreneur at some sort of core, or are there roles where it's not necessarily entrepreneur at the heart of things? It's better if most people aren't entrepreneurs than too many generals. It's not enough soldiers.

I mean, like, I don't know. No, I totally agree. I'd rather have somebody who's not an entrepreneur a lot of times. Yeah. It's good to have people who are entrepreneurial. in your company, but if, you know, entrepreneur, really entrepreneurs, people who are great entrepreneurs have, like, and have amazing short-term memory loss. Like, they're just like, even going back and starting this company now that I'm starting, I'm like, oh, God, I forgot what

like, and even though I've done it four times, I was out in the lobby of our office the other day, I said, God, I forgot what a pain in the ass, like setting up XYZ is. And, you know, my sister's like, you've done this like five times. How can you not remember? I was like, I just keep, I forget, you know, and then you start over and you're like, well, this is going to be amazing. And you have to do all that stupid stuff again. And so I think there are few of those people and probably more doing it than should. And there's plenty of room for great leaders in Silicon Valley who aren't entrepreneurs. As leaders, I want to ask you this first, Ben and you too, Dick, but when people start calling for your head, media, investors, employees, it's happened to you, I know. What's happening? Both of us. Yeah, I was going to say. How do you process that and then how do you get through it?

You just got to focus on the mission. I mean, like, it is what it is. You know, like people aren't. If as a leader, everybody likes what you do, you're not a politician. Like, you're running for president at that point. You get paid to make the decision that's unpopular, right? Like, if everybody knows the direction the organization should go in, then they don't need you. right it's when you do something that people think oh that's the wrong direction and they don't like

that's going to be the actual important work that you do and so there are going to be times when the people who don't like that are investors or people in the press and if you look at any of the really outstanding CEOs they've all gone through that that's just how it is and you can't worry about and then the other thing for me and I was lucky and that I had a board that I really trusted and I said to the board on probably too many occasions. But I, like, I would say to, I might say to Mark was on my board. I'd say, Mark, like, if you need to fire me, you don't even have to sit me down and tell me I'm fired. You just, like, tap me on the shoulder and, like, we didn't have the conversation. Like, I'm done. If you think I'm not the best person to run this company,

it's not a problem for me. Because I'm not, this isn't about me. This is about the company. And I'm a big shareholder. I want it to succeed. Don't even worry about it. Just give me a nod, and I'm gone. And I think that's how you have to feel as a leader, right? You're trying to totally agree. Yeah. I mean, I had the exact same conversation with my board many times. You know, long before the IPO, like, hey, listen, when it comes time for, don't ever have any conversation behind my back about it. Just come tell me you're not the guy anymore. And I'll, like, listen, I'll be cooperative and you're not going to get any degree from me about severance. I'll just go, great. Thanks. It's been an amazing experience. And I'll be super supportive of

whatever you want to do next. And if you don't have that attitude about it, you're just going to be, you know, then you're just going to be miserable and you're not going to be able to lead because you're going to be constantly thinking, well, what would the board be happy if I do? Right. And you can't, it's no way to just create misery for everybody, most of all yourself. And what you're describing both of you, it's not like you have to be thick-skinned. You just need to be, one, truthful and engaged in the right way, it sounds like to me. Well, it hurts your feelings. Like when somebody says you're like the worst, ever, if you're an egomaniac out of control or you have no strategy. I've hurt your feelings.

I have a great story about that. And then like, your friends send you the article. They're like, hey, Ben, you're like, what do you think of that? I was like, what the fucking thing I think of about that? It's true. I would, I got to the point where I was ignoring that stuff. And then a friend of mine would say, wow, did you see this? And look at him. Jesus, why did you send that to me? It's horrible. My daughter texted me one day at the end of 2014. She's like, hey, dad, bad news, good news. What's the bad news? She's like, the bad news is Yahoo! My daughter's 17 now, 16 at the time. 15 at the time. She sends me this text and says,

the bad news is Yahoo Finance says you're one of the five worst CEOs of 2014. I was like, okay, what's the good news? She goes, you're number five. I want to shift a little bit to the U.S. military and kind of what happens coming out of it from a company creation standpoint. Then Israel has this incredible company formation machine that starts with the military. You work on teams together, and it seems like every other team starts their own company. Well, everybody in the country of Israel is in the military. I wouldn't take the military process to be the company building.

It's just like if you're an entrepreneur and you're from Israel, you're in the military. Kind of a tautology there. But they do go out and they like start companies together. Well, so it is. I'm just wondering what's missing here. Is there an opportunity? I think there's definitely a lot of relevant things that come across. But the other thing that is kind of more important is systems thinking, like, how do systems

work, be it a technical system, an organizational system, a company. And that's what you need. You know, as CEO from a leadership perspective, you need people who think about it in a systems context. One of the things about being in the military is it's a. system that's evolved over centuries and the knowledge that's gone into, how it's organized, how instructions come down, how they're kind of validated and followed and so forth. You can't be part of that and not think, okay, if we take this action, then there's these consequences we know

about. There's these unintended consequences, you know, like how does that move through and like how are people affected? So that is all, I would say, just very, very valuable. I think there are things that go kind of cross anyone with a military background. Like there is no leadership, real leadership training for sure in college here. And typically not even in business school, there's no leadership training or no meaningful leadership training. And in the military, that is kind of a real fundamental part of the experience. And so that tends to be very useful because, as Dick will tell you, one of the reasons Dick and I started spending a lot of time together was just how necessary management training is here because nobody has

it and nobody knows what they're doing. And so if you don't teach it in your company, you're going to have a really poorly run company. And so to have people who come in with an orientation around that is super powerful. And then there's all, you know, there are, you know, to the extent that you have technical training, that's also incredibly valuable in Silicon Valley for sure. Yeah, one of the things you, I remember you telling me, which most people in management roles in Silicon Valley don't implement is make sure everybody understands what you understand. If I had to summarize Ben's management course, it's make sure everybody understands what you understand. And people coming in from the military have that perspective much more deeply ingrained in them

than 95% of people who are in management roles in Silicon Valley. I would even do things like ask a director of engineering. Are you sure everyone on the iOS team knows what the top three? Yeah, 100%. We're all on the same page. Uh-huh. Go down there at 9 p.m. at night or 10 p.m. at night. Go up to a couple of the iOS engineers.

What are the top three priorities of what you guys are working on? You know, this guy's got, you know, X, Y, and Z prime. And this guy says, no, no, no, it's A, B, and, you know, four. And so that's how most people manage in Silicon Valley. Let's open it up to questions from you guys. So we're coming from the military institution where there are good leaders and bad leaders, and we all have anecdotal experiences with that. But the very nature of what we did required mission accomplishment.

So if there was a bad leader, we rallied, you kind of worked around it. And the bad leader wasn't always aware that they were a bad leader. But here there's this environment, right? If you're a bad leader, I mean, there's not that same level of commitment to your company. Right. I'm going to go somewhere else where I'm recognized as this is meritocracy. Right. So then they leave.

And then the bad leader is like, well, everyone left. was it the market or was it that I was a bad leader and then, you know, their career can decide. What I was hoping that you could provide insight on for us was highlighting when that objective lesson is really required because we all know that like there have been times that we've needed to pull that out. But in our institution, that's also like a sign of marketing. That's like a bravado brand that you kind of bring to the table, like the first day of prison. Like I'm going to talk the deepest and talk the loudest and that means I'm a good leader. Could you provide some insight on maybe the strategies you've seen where that's necessary to break people in public?

But then kind of when it's where we lack is trying to read people as people who come from completely different backgrounds and different experiences and how to really motivate them to do what they need to do and stay loyal to you. Generally, like these tools, you always want to do anything as a leader because it's effective. not because, you know, it's your personality or it makes you feel good about yourself or whatever to, like, yell at somebody or so forth. So I think that if you go into a meeting and you go, look, it's really critical in this company that, for just a simple example, meeting starts on time, like, we're going to be precise, we're going to work hard, we're going to be respectful of each other and not waste each other's time by coming into a meeting 30 minutes late or something. then, you know, one of my favorite stories is Andy Grove at Intel, who is like, and he's running Intel, Intel's a gigantic company, and he's in the meeting, and somebody walks in five minutes late, and he looks at them and he says, all I have in this world is time, and you're wasting it. That is like, how could you make anybody feel smaller? His purpose there was to, one, to let everybody in that room know how important it was to be on time, but then also say it in a way that was so colorful, even I heard it, and I even,

work at Intel, right? And so that kind of spread. So that's like an instance of doing something that was very effective and got people highly disciplined. And there was a ton of kind of intel stories like that. He would get to work early in the morning and if your desk was messy, he'd write you up. Like Andy Grove would write you up and tell you'd clean up your desk. But it was just all around, you know, we are making, we're in a precision business, we've got to be on time, we've got to be organized and that kind of thing. And so if that's what you want, You've got to teach in those kinds of object lessons. That's different than having a bad day and losing it on somebody where they had a different opinion than you,

where they challenged you or your decision and said, well, why are we doing it this way and you just explode at them? That's terrible because now people aren't going to tell you the truth. Right. So you get a different outcome. So you have to think about what your behavior, what is the end result of your behavior when you do something like that in public? And that's the kind of that's the leadership. That's the discipline of the leader to make sure that you're being effective and getting what you want and teaching the lessons you want known

and not getting unintended consequences because you can't control yourself. You're acting like an idiot. And it's a fine line, right? It actually looks the same to everybody, but it's not the same. I would always tell my managers and leaders, you have to help people understand why we must achieve, what we must achieve. you can't just tell them what they have to do. Well, Leanne says that we're out of time.

So I want to thank Dick and Ben. Thank you guys so much. And you guys have been great. Thanks. Thank you, everybody.