Andreessen Horowitz Co-Founder Ben Horowitz on 'Bloomberg Studio 1.0'

[Music] [Music] he grew up in what he calls the People's Republic of Berkeley a liberal city on the east shore of the San Francisco Bay as a child he played football while reciting rap lyrics and solving equations in advanced calculus this ability to multitask and see the world through different prisms has helped him become an entrepreneur CEO of a tech company and eventually one of the most well known and respected investors on Sand Hill Road with Marc Andreessen by his side he's invested in some of Tech's biggest names in the last decade Facebook slack Airbnb lyft and dozens more I'm Brad stone in for Emily Chang joining me today in Bloomberg studio 1.0 ben horowitz co-founder of entries and Horowitz and the author of a new book what you do is who you are [Music] then books on corporate culture are not rare in the pantheon of business books but books on corporate culture that involve Haitian revolutionary a prison gang leader and an infamous Mongol general that's unique tell us a little bit about the inspiration for digging that far back in history profiling some unflattering portraits and using that to inform modern business lessons when you think about culture it's really complex it's a complex topic and so I'll just give you a like it kind of started all from my own like experience as CEO where I was like okay how do I be a good CEO so I asked all the old heads like the og CEOs like how do you do this what should you focus on and they're like Ben pay attention to culture and I'm like okay got it what's that how do I do that and stuff got very vague and I always wondered what what like why was it so vague how do you do it and it turns out that you know all these little things that your employees ask themselves like you know what do I like should I stay till five or till eight should I like return that phone call today or tomorrow should I like say at the Red Roof Inn or at the four seasons all that is dictated not by like your mission statement are you okay ours or all that it's by your culture now often the company's gonna have a website they're gonna be they're gonna be principals and there on the wall yeah is that culture that's what you believe is it that's not what you do and you know this is why what you do is who you are and this is what so key about that but so then you get into it further and you go well like culture is not every culture works for every company like every company is trying to do what it's trying to do and it needs a culture that supports that so like Apple doesn't need the Amazon culture the frugality because they're high doesn't fly coach yeah everywhere flying first-class well they're their campuses like you know they've got $5,000 doorknobs and stuff on the thing because like everything's got to be about like perfect design whereas Amazon is about low cost leaders so different cultures and too kind of got me into well like in order to write this book I really have to understand like who solved the very hard cultural problems and also make those examples from like really different things so you open your mind up you're not just like I'm in Silicon Valley I'm getting these people with stem degrees and so forth you have to think about your people from first principles what do they walk in with so Ben I want to take a step back and look at your own career you started a company loud cloud that became ops where he sold it to HP you started andreessen horowitz the venture capital firm in 2009 how much were you thinking about culture in those two situations yeah so I thought about it a lot at loud cloud and I wasn't very good at it at all you know like in retrospect which is you know part of the motivation for the book it was the hardest thing to master we got better at it out at Opsware but it was still not you know when you get into like how do you get exactly what you want to a culture that was much more difficult and I think that at Andreessen Horowitz like I'm the best of the three but you know it's still a very difficult thing to get right and I think that the if you know when people ask okay like why do you win and like how did you get to be like you know at the top tier so fast it's a hundred percent of cultural advantage in that win entrepreneurs deal with us it feels completely different than dealing with other venture capital firms and so that part has really worked to our advantage and and I'm it's the thing that I'm probably most proud about everybody who works here on but we're definitely far from perfect like so like and and I quite frankly I've never met an organization that's anywhere near perfect and building a good corporate culture you have to be harsh sometimes so you tell the story of Reed Hastings transforming Netflix from a DVD to a digital company and he stops inviting the DVD executives to meetings yeah like dozens of executives have the most coveted meeting and I'm sure they're not happy about that so so to what extent did CEOs need to you know to be tough and sometimes even cruel to create a good corporate culture well lucky I know I mean you know sometimes it's necessary yeah and you have to be careful right because are you like is the cruelness out of intent before I like to be sadistic or is it to demonstrate the priority or set the tone like here I find people $10 a minute for being late for a meeting it's like well that person you know like she had to go to the bathroom why are you like finding her like $80 like you know like people got to go you got to go but it's the cultural point is we really value the time that entrepreneurs have to spend building at companies and so we plan to do everything from like finish our phone calls to go to the bathroom to whatever and we are on time to that meeting and that's more important than how unfair that particular fine was for that person as I was reading the book I kept wondering our great cultural creators creators of corporate culture are they are they educated or is it instinctive like for example did did Bezos and did Reed Hastings and Netflix study this or did they just have a sort of implicit understanding of how to build these cultures yeah I do know that one of the reasons I wrote the book is I don't know what you would study like it's tricky I mean I ended up studying to sound over chair right like so who you write about like how do you turn a slave army guys who didn't even wear clothes you know into like an army that could defeat Napoleon like how do you do that that was just like an incredible question and of course Toussaint was obsessed with culture like it was he liked every aspect of if his thought process always went through this cultural lens you know as a leader you can pick up on things like that and understand these these examples but I think you know look a lot of it is kind of naturally understanding how people are going to behave if you you know if you do this then they're gonna act like that but to saut that's interesting because he's not perfect right he he becomes a slave later himself yeah he asks his soldiers to be monogamous and and he is not and the and the title of the book is you know who you are is what you do and so you know there's a little bit of a contra in there that sometimes good cultural leaders are not perfect themselves 100% and I mean you know I mean like even like with Jeff Bezos right like you know here's a guy who is a great cultural leader and then all of a sudden like he's in the tabloids and it's crazy and you're like what-what happened Jeff but like that they were humans I don't think there's anybody that's a hundred percent in ten and that's what a you know like the the difference between people who get you know massively criticized for their cultural flaws and people who get you know super praised is a lot thinner than you might think on a lot of these things but you know it's what you do organizationally right like what does every person do how do they all behave and you know is that who you want to be or is that far from what you want to be and I think that and the other thing is the changes in evolves like over time like you can have a good culture and lose it I don't feel like Silicon Valley was the worst or even necessarily on the bad side but I do think we have a lot of inexperienced egos [Music] so I want to talk to you a little bit about modern Silicon Valley and some of the ways that your book applies we're arguably coming to an end of a business cycle here you we might call it the unicorn side but you know a lot of the big companies have gone public there are a couple there that are coming Airbnb a Palantir a lot of the companies that I've gone public recently are underwater from there and from their stock price their IPO price what was there do you think there was a cultural problem in Silicon Valley over these last two e ten years of amazing growth that caused like weird IPO price particularly maybe in the in the venture capital community and the in the global finance community well that caused weird valuations well I think it was more of that there's been a shift which is you know from kind of where a huge class of companies that would have been public now stay private longer and this is kind of starting with the regulations in late 90s and through sarbanes-oxley these reg FD all these kinds of things that just made it much less attractive to be a public company than it used to be so people stay private longer the problem with the private markets from a capital market standpoint is they're very illiquid they don't trade very often and so the pricing kind of mechanism makes it really a different thing then and then you have these incentives from like you know firms like ours where you take money and you've got to invest it and so I think it's more you know it's less to do with the companies and more to do with the investors and I think that the criteria that the private market investors have been using or clearly not the same as a public market and then you have new entities like soft bank which are private investors that seek to replicate you know the complete function of the public markets and you know so they're pricing distortion so I guess I would say and broadly I was sort of wondering if you felt like the the community here in Silicon Valley has learned from the cultural mistakes the past and you do devote some time in the book a tuber and you've leveled some criticisms against uber before we should say that ten trees and Horowitz is an investor and liftin actually we should also say that a Bloomberg LP which are in sub Bluebird television has invested in entries before it's fun so clear that but what surprised me about your discussion of uber in the book is that you know not only did you you know take issue with Travis kalanick attempt to define a corporate culture for uber but his successor dhara comes in rewrites the cultural values and has one that says do the right thing period yeah you thought that that was a little too ambiguous yeah no for sure I mean appalled like first of all like with Travis as I point out like he was you know 98% fantastic on culture like one of the best CEOs we've had here and then you know in the way phrase head in the book is like he had a great code but he had a bug in the code and that bug ended up being like I'm really it's harder to fix bugs and culture that it isn't code oh yeah yeah yeah because do you got to deal with all the humans that have picked up that that bug and so you know he'd had a lot of strengths I think you know and then Derek came in and you know kind of corrected the bug which was like a very very difficult job but in terms of like getting back to the strength of that culture it was a lot more vanilla and I think do the right thing period is a great example of that and that like in business like the difficult thing about ethics is what does that mean in business it's like well is the right thing to a promise that I'd hit this number to my investor when I took the money is that the right thing to if that number is it the right thing to make sure I tell the exact truth to the customer so they're not confused on things like which is more the right thing and unless you're explicit about ethics and what you mean by it exactly is very very unlikely to land in the way you want it to land have you had examples in your portfolio companies where you've been disappointed in the cultural stewardship of your founders of course in example well I don't want to I don't want to name names but like so you know I had a conversation with one of one of our founders you know they they had I would just say like a loose culture that you know looked like it was gonna lead to harassment all kinds that I said and I said you know something when I entered the business we used to wear like suits to work and they said really and I was like do you know why we were so suits to work it's like no idea I was like so we would know we were at work we didn't think we were at home where we could like get drunk like you know talk loosely you can't this is work you got to let people know their work you know that's not okay so I've had many of these conversations over the years but you know that's like you know you're 22 years old or whatever you started a company you have a great invention what do you know about any of this kind of thing and so that's why the book I mean I think that looked in defense of everybody not just in the portfolio but way beyond the portfolio I haven't I spoken to CEO who doesn't want to take culture seriously but you know knowing how to do that as a whole nother and it tends to come last on the list of priorities when it's liberate i right exactly it has Silicon Valley gotten better particularly with the trials of this last batch of startups I look I think that I I don't think it was like that bad relative to I mean certainly relative to like the media mr. Harvey Weinstein I mean these guys we'd have anybody had bad I don't feel like Silicon Valley was you know the worst or like even necessarily on the bad side but I do think we have a lot of inexperienced CEOs and I think that because of that people haven't had the knowledge the toolset to kind of create the culture that they wanted in technology in order to get to diversity the right way you have to be able to see the talent you have to see what people come from different backgrounds can do that you may not be able to do yourself [Music] what does corporate America have to learn from Shaka Senghor yes he spent 19 years in a maximum-security prison for committing a murder yeah well like a lot of it starts with day one like new employee orientation in prison so like he comes out of quarantine him and like the other newbies are basically in the rec area and one prisoner walks up to another one and stabs him and Shaka says to me he's like well when that happened we're all looking at each other like what is this and I had to ask myself he said could I do that because I can do that at that point and that's what I needed to do to survive in prison and so I'm thinking wow that's exactly how people actually walk into work you know they come in and they're like well what do I have to do to succeed how is that guy how are the people who are ahead behaving because that's how I'm gonna behave I'm gonna adopt that and being able to understand that example was just powerful but then he you know he climbs up the ladder like learns how to do the you know like literally changed he's out one of the most powerful gangs in the state prison system yeah yeah and you know he had to ask himself and it was really interesting thing because when people read his book they're like oh it's a story of redemption missing that another but like he didn't find Jesus none of that happened it was much more like a classic leadership thing as like oh now I'm in power okay what's next my whole life was climbing the career ladder now he climbed it in prison and now I'm in charge and like who do I really want to be who do I want this organization to be and then that process was really amazing how he changed himself and what did he do was this gang that you feel like are fundamentally good leadership values well I think look you know if you if you're going to changing a culture takes real courage you have to confront people on their very core beliefs about like what's going on and you know in that case like here you're talking about like a like a pretty violent society that's concluded they want to go like this way and you know culture requires that kind of leadership to move it into a different direction another unorthodox example in this very unorthodox business book is Genghis Khan yes the Mongol leader I had to Google this he killed 40 million people well I think those numbers are exaggerated but he is praised for loyalty and inclusion for inspiring not just in his own troops but for the people that he conquered yes loyalty to his cause and I felt at some point you know in reading it that it was a little like complimenting kim jeong-hoon for his fashion sense right he did somethings well but you know he's not but but tell me why what what the what the what what lessons we should take from studying Genghis Khan yeah so look I think inclusion was one of the things I wanted to cover because I think it's something that people get very confused on so a lot of you know and a lot of it is driven by how you want people to see you not what you do but how you want people to see you so it's like well if I have this many women this many minority underrepresented minorities and I get the gold star you know like I'm okay and that's what I want the gold star but that's without thinking about okay culturally how did you recruit those people how did you get them in and what is it going to be like for them to work there once they're there are they going to be first-class citizens or did they did you like run them through the side door so now they're not even treated correctly and so you know and how effective is that going to be how effective are they going to be how effective are you going to be at as an organization if you run it that way and Genghis Khan is actually interestingly the prototype for bringing people in really seeing them for their talents and he did this you know he would get the best engineers from China and so forth and and you know the most courageous guys from the other tribe and he would really even though they were from different cultures different backgrounds he would not only see who they were but then when he brought them in he treated them so much like his own that he would adopt the kids into his own family so he would literally make them part of his family so they were like completely first class citizens and that enabled all kinds of military strategy that was unmatched because everybody else was very hierarchical he was completely a meritocracy and he was really able to see the talent and I think that in technology in order to get to diversity the right way you have to be able to see the talent you have to be able to see what people come from different backgrounds can do that you may not be able to do yourself and that that's why and you write a master of inclusion the erosion seeing that is more important than good intentions and then just appointing a diversity officer inside your company you although you guys do have portfolio companies that do that so what do you hope Silicon Valley which has struggled with diversity can take from this yeah so I look I think that it gets a deeper understanding and they you know with the diversity officer there then you know I talked about this but you know I had this conversation with my friend Steve Stoute and he's like Ben I used to run Sony urban music and I was like that's great Steve I knew that yeah and he's like yeah but you're not listening to me I ran Sony urban music but it was really sunny black music but they made me call it urban music because calling it Sony black music would have been racist and I was like wow that's kind of weird and he's like now what was really done was that like because it was called Sony urban music I can only market in cities like no black people lived in like the country and I was like wow that's really dumb and he's like no you're not listening to me I was Sony urban music I had Michael Jackson what white people don't like Michael Jackson it wasn't black music it was music and I was like snap that's exactly what we do with talent in Silicon Valley right we have urban talent you know okay we're gonna run we're gonna force a certain kind of talent that we don't understand through another door called the diversity door and then we're not going to actually let it be all it can be and the epilogue to that story is as soon as they got rid of the whole industry distribution structure and urban music and all that and it went to streaming like black music hip-hop music is like 95 percent of the top hundred and so they had restricted the whole thing they had limited the whole talent thing by creating this special talent group and I think we do a lot of that here and so a lot of the point of that chapter is well like how do you get away from that and how do you make it just Talent not even talent been used one other major example in the book the the Japanese samurai and how they contemplate death as a way to focus themselves and find meaning and I was wondering and you kind of suggests that maybe entrepreneurs contemplate the the death of their company's offering if you do that if you have you meditate upon the the disastrous end of this venture capital firm entries and Horowitz so I do you know like and you know with the samurai it comes from this place of okay do this like it's the last time you're gonna do it and if this was the last time you ever you know and it's everything from like take a bath but like did you do it right to this day like Jeff and Japanese craftsmanship is you know I would say best in the world on like a million different crafts it's crazy how good they are at things and it comes from this kind of cultural idea and I think for us it really is about and I talked to I teach new employee orientation here and I say look you know what you're going to remember isn't like what deals we did or this and that the other you're gonna remember what it felt like to work here how when we worked with companies how that made them feel whether that made them better or worse whether that made them like more anxious and arbitrary or like better leaders and so everything that we do you got to keep that in mind like when this is over what was it like so yeah I adopted and I'm the samurai and I think it's I think it's a powerful way to think about your job and when you wake up and like okay if this is the last day we do this how we're gonna do it Ben Horowitz author of what you do is who you are thanks for joining us [Music]

Channel: Bloomberg Technology

Views: 7,493

Rating: 4.7818184 out of 5

Keywords: Bloomberg

Id: r5Kt4pJZ18U

Length: 24min 4sec (1444 seconds)

Published: Thu Jan 16 2020