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

Hard Choices for Leaders

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 million in trailing 12 months revenue at 18 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.

Good vs. Bad Product Managers

Lenny Rachitsky: It’s a very difficult and painful to be a CEO, to be a founder. In spite of that. So many people want to start companies.

Ben Horowitz: The 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’s slightly better. We’re going to go that way. If everybody agrees with the decision, then you didn’t add any value because they would’ve done that without you.” So the only value you ever add is when you make a decision that most people don’t like.

Introducing the Guest

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.

A Lesson in Success

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 works.

Running Toward Fear

Lenny Rachitsky: Today my guest is Ben Horowitz. Ben is the Z in A16Z, the world’s largest venture capital firm with over 46 billion in committed capital. They’re investors in OpenAI, Cursor, Andrel, 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 Senghor, Ali Goetze, and Adam Newman 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, DScript, WhisperFlow, Gamma, Perplexity, Warp, Granola, Magic Patterns, RateCast, ChatPRD, and Mabin. Check it out at lennysnewsletter.com and click Product Pass. With that, I bring you Ben Horowitz.

To learn more, visit DX’s website at getdx.com/Lenny. That’s getdx.com/Lenny.

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Ben, thank you so much for being here and welcome to the podcast.

Ben Horowitz: All right, thank you Lenny. Excited to be here.

Early CEO Roadblocks

Lenny Rachitsky: I’m even more excited to have you here.

I want to start with a question that a close friend of yours suggested I ask you, Shaka Senghor. So Shaka, he’s, we could do an hour just on how interesting this guy and the things he’s done.

The Essence of Leadership

Ben Horowitz: Three hours on Joe Rogan that day. He is very-

Who Shouldn’t Start a Company

Lenny Rachitsky: So we’re not going to do that. Just to give a glimpse, he was in prison for 19 years. He was in solitary for seven years. He led a huge prison gang. 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: I mean, I would say it’s a long life lesson. But the pilot story is I actually, I ask people silly questions sometimes when they meet them. And so I met this gentleman who was a pilot and it was right around the time JFK Jr. crashed his airplane and ultimately died. And I asked him, I was like, “What happened?” Because there’s always 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 actually find out what happened, you just find the best story version of what happened.

And the story in the press was all about, “Oh, he wasn’t trained on instrumentation was flying at night.” And I wanted to know is that right? And 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 because there are conditions, there are things that happen. And then the second one was, “Well, 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 once he got up there, it was when the plane was going down making it go up was a bad decision because he was upside down. And so it was like, I can’t remember all the things, but this guy had 17 bad decisions in a row. And the big thing for me that I felt was really true is it’s one decision leads to another. And so if you can break psychologically, you can take the sunk cost, then that gets you out of a lot of bad paths. And then a little good decision may be difficult, but you have to believe it’s going to lead to the next one. And a lot of success is about that. 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 that was kind of the concept.

Mission First or Opportunity?

Lenny Rachitsky: So the lesson there is just success is just a bunch of little things. It’s not this, “Cool, I got here in a big thing.”

Ben Horowitz: If somebody were to write a story about me, they would be like, “Then Ben this really smart thing and blah, blah, blah, happy ending.” But it really wasn’t like that and I don’t think it’s like that for you or anybody. And I spent a lot of time with Shaka on how, because it’s always your own psychology that gets you. And one of the most insightful things he said to me is, because most people who are in solitary for seven years, that’s it. You’re insane. You’re never coming back from that. It’s just an impossible thing. But if you study his story, he actually really was massively self-improved coming out of solitary, and he wouldn’t recommend that for anybody, just to be clear. It wasn’t solitary. But what it was was he changed, in solitary he was able to change a big set of beliefs that he had about himself that got him out of that.

And the thing that his conclusion from it, which I thought was really interesting, he’s like, “Look, was in prison for 19 years. I was in solitary for seven. I come out, I can’t rent an apartment, I can’t vote, I can’t get a gun, I can’t do, 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 all the things that you perceive that are happening to you that are bad, be it the systems against you or somebody undercuts you or racism or sexism or this or that or the other is very small compared to … It means a lot if you believe it. If you believe what people say about you, if you believe what they did to you, then that destroys you. But if you go, “That’s not me,” you can overcome almost anything. And he’s got a new book out on that anyway that I think is very good because that’s the, I’d say more than anything, that’s the key to success.

The Databricks Story

Lenny Rachitsky: If you look at all the writing you’ve done, it’s essentially about the struggle and pain and suffering of being a CEO, your first [inaudible 00:09:59] to Hard Thing About Hard Things. 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. He talks a lot about just you have to go through pain and suffering to be a great leader.

Investing in Databricks & Ali’s Rise

Ben Horowitz: You don’t really have a choice. 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?

Leverage in Management

Ben Horowitz: Well, so the biggest mistake that you make, the worst thing that you do as a leader, there’s things in your control and there’s things out of your control and hesitation, that’s generally the most destructive. And I go through all the ways that it’s destructive, but it’s extremely bad. And the thing that causes you to hesitate is both decisions are horrible. It’s that 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.” That’s not actually what happens to you as CEO.

What happens to as CEO, it’s like, “Okay, if we rearchitect, this product, the architecture is not actually get us to where we need to go. I kind of know that. But if we rearchitect it, we’re going to probably miss all the features, miss the quarter, have trouble raising money, shudder, et cetera. So that’s really bad. And then not rearchitecting is really bad, and so I’m just going to try to and avoid this subject because I don’t even want to deal with either of those.” And that’s the worst thing, because if action is the better choice and that’s good. And then if you don’t make an explicit decision, then the whole company’s going to get nervous because they know that the architecture is whack and you got to fix it.

And probably one of my bigger ones on that was we went public with $2 million in trailing 12 months revenue at 18 months old. That’s obviously a bad idea. I mean, 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.

And if you look at that time, March of 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 getting good at making a decision that everybody’s going to go, “Wow, that was insane, Ben.” The Wall Street Journal wrote a whole long story about how stupid I was. And then Businessweek wrote a story called the IPO From Hell. That was the name of our idea, the IPO from hell, which was accurate in a sense.

So that’s really bad, but it wasn’t as bad, and this is why it’s so scary you make that decision that’s going to happen. I knew those stories would get written, there was no question. And yeah, that’s the kind of muscle. So if you think about the psychological muscle you have to build to be a great leader is to be able to look in the abyss and go, “Okay, 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 want to have that conversation. And then I’ll have to replace them. And then there’s going to be a bad PR story. And you can kind of quickly calculate all the bad stuff that’s going to happen if you do it. But if you don’t do it, that’s probably going to be much worse and that’s why you have to run towards the pain in darkness.

When to Replace Founder CEOs

Lenny Rachitsky: What is the advice you share with founders? Because as you said, it’s very hard to do this, just 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 share?

CEO Confidence & a16z Design

Ben Horowitz: No, no. I would say this is one where I can’t really coach you to be good at this. I can point it out so that you recognize that you were slow or whatever. But it’s kind of like I always liken when I talk to them, it’s like football. You can 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’ll never be as good. And CEOs are like that. If you don’t trust what you see and you don’t run at it, then you’re just not going to be good. And it’s hard to get CEOs not to hesitate. But look, the thing that does help is they look at it and I look at it and I confirm, “No, that is as it appears.”

And sometimes they’re afraid of the conversation. So that one I can help with. So A CEO might be afraid, like they want to do something but 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. I had an instance where the CEO said, “Hey, I need your help, Ben. My CTO, he’s an asshole.” And I was like, “Okay, great.” I said, “But you’re not going to 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 want to fire him.” And I was like, “So you’re asking me what to do? You don’t know how have that conversation with him about being an without him quitting. That’s what you’re saying?” And he goes, “Yeah, that’s the problem.”

And so I go, “Well, why is he an asshole?” And he says, “Well, he’s an asshole because the other day he made a very junior young woman in our finance organization cry.” And I was like, “Yeah, I got you.” I said, “Look, this is what I would say to him. I’d say I just sit them down and I would say, ‘Look, you’re a really good director of engineering because you do a great job at managing the team, get the products out, all that. But 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 effective only with engineering. And making somebody cry, she’s never going to do anything you want. You lost all effectiveness with all of finance by doing that. And so if you want to get good at that, I’ll help you. I’ll work with you on it, but if you don’t, I’m going to have to hire a CTO at some point because obviously I need that.’” And then he was like, “Oh, okay, I can have that conversation. 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 getting people not to hesitate is just getting them over that.

And so often, and I would say early in a CEO’s career, a lot of it is just not knowing how to have the conversation.

Most Counterintuitive Startup Lesson

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

Ben Horowitz: Yeah, that’s tricky. By the way, I have to deal with this in the firm too, and people want to be entrepreneur friendly. I’m like, “No, it’s not friendly. Respectful. But you’ve got to 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, look anthropologically, we want people to like us. It’s just so they don’t throw us to the lion or whatever. That’s just kind of a thing. So you say tell people what they want to hear, but in dealing at a company level in a context of you’re on the board of somebody’s company, you’ve got to be able to tell them what they don’t want to hear. That’s the most important thing you’re going to say.

And yes, they’re not going to like it when you say it, there’s no question. But over time it could save the company. And all the most important things I’ve said are things that I’ve said to CEOs that they did not want to hear. And that’s what the leadership is about. If everybody agrees with the decision, then you didn’t add any value because they would’ve 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 luck, you’ve got to 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 would say the CEOs who had an easy run of it for their, let’s say, they just launched a product that’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 gutted it out for multiple decades before they had big success.

Good vs. Bad Product Managers

Lenny Rachitsky: Clearly, it’s very difficult and painful to be a CEO, to be a founder. In spite of that so many people want to start companies. So many people dream of having their own company. Who is not right to start a company? 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. John Reed, who was the CEO of Citigroup 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 Citigroup.” So he is a very numbers, banking guy and he didn’t quantify it. And I remember when we sold LoudCloud for $1.6 billion, I remember thinking, “Wow, that wasn’t worth the money whatsoever.”

So I think if you’re doing it for the money, that’s a very bad reason and it will be extremely difficult to get you an outcome. You really have to have an irrational desire to do something larger than yourself to improve the world in some way that somehow that is your purpose. And if you don’t feel that, then you’ll never get through it. It’s just too many bad things happen along the way.

The PM as Team CEO

Lenny Rachitsky: So then how do you think of founders that are looking around for ideas that brainstorm, that look for market opportunities versus come from, “I have this a mission, I’ve got to do this thing in the world.”

Ben Horowitz: My business partner Mark always talks about that. So if you have a product that forces you to build a company, that is a great case of it, right? Okay, you built something and the world wants it and you need a company to deliver it, you know, already have the right product. And so that’s very helpful.

I think there are cases of people, I think Hewlett-Packard was built that way, that they’re like, “Okay, we’ve got to build technology,” it was that abstract, “We’ve got built in technology for the world.” And then they started with, “Well, what do you need?” They called it the next bench thing. What does the engineer sitting next to me need? The next engineer on the bench? So how they define the first set of products.

So it can work the other way, but I think the thing that is in common is it’s just a very abstract idea that you have to build something that’s going to be important that people are going to like working there, people are going to benefit from the products. You have to have some weird concept other than, “Oh, this is going to be successful and I’m going to make a lot of money.” I think way better off taking Zuck’s offer at Meta and just doing that. That’s a way better deal.

Investing in Adam Neumann

Lenny Rachitsky: Along these lines, something else Shaka suggested I 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 want to invest and it was more about helping them think bigger. What happened there?

Ben Horowitz: So there were six of them, they were six HD student, well, and Jan Stoicka (phonetic) who was their professor. And Jan was this super genius, but when I met with them, they were like, “We need to raise $200,000.” And I knew at the time that what they had was this thing called Spark and the competitor was something called Hadoop. And Hadoop had very well-funded companies already running towards it and Spark was open source, so the clock was ticking.

And I think they didn’t quite know what they had. And then there’s also a thing always, although I wouldn’t say Jan has this mentality, but professors in general it’s a pretty big win if you start a company and you make $50 million. You’re a hero on campus. That’s a pretty cool thing to have done. And so I’m always a little nervous about a company that comes out of academia thinking too small anyway.

And so I said, “Look, I’m not going to write you a check for $200,000. I'll write you a check for$10 million because this company, you need to build a company. You need to really go for it if you’re going to do this, otherwise you guys should stay in school.” And they were all graduating right then, so that was kind of that. And Ali actually was VP of engineering at the time, and it was a while before I made him CEO and that was very good luck on my part because I had no idea that they had a guide that good inside the company who could become CEO when I invested. That was just, God smiled on me and gave me that one.

The AI Bubble

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-

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 quote, “You don’t make people great. You find people that make you great, that make the company great, that you learned 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 understand, he had just become CEO. So I was teaching him, he had been VP of Engineering and CEO is different. And I’ll get into why and what I mean by leverage.

So I actually wrote a post about this with a little Wang 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, be better engineering managers. That’s very doable.

But if you’re a CEO, what do you know about being CFO? Like what do you know about being VP, HR? What do you know about any of these jobs except maybe VP of engineering?

And so the idea that you’re going to take somebody who isn’t world-class at marketing and make and you 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 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, it’s not like you don’t do any of it, but it is very, very small compared to it. So I like to make things just very stark. So you get what I’m saying? I don’t like to hedge it.

And then managerial leverage means it is very simple. It’s okay. If I have the ideas about what your department should do next. If I 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 more than I’d have if you weren’t there otherwise I could just manage a team.

And that’s the point when you feel like you’re not getting leverage. When you got to go say, “Hey, why aren’t we doing this? Why aren’t we doing that?” That’s when you got to 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 him to have great careers and all that, but he does not hesitate. If he’s losing leverage, he’ll make a move.

Future of AI & Investment Trends

Lenny Rachitsky: Kind of going back to the origin story of A-Sixteen-Z something you guys were really big on was helping founders stay COs become great COs, not replace them with professional COs.

I want to flip this question on you. When does it actually make sense to replace CO? When are people not going to make great COs?

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.

So if you invent a product, you kind of recruit a team so forth, all of a sudden you’re CEO, but you don’t run a big organization, you don’t know how to do that. 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. 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 scrub the product. 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 as we talked about, hesitation is very dangerous because one, 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, very political, because people are vying for power inside your little screwed up company.

And so now you’ve got a political dysfunctional organization and that’s generally where, okay, the founder probably can’t run this thing anymore. That’s how it happens.

So most of what we do as a firm is to try to help people with that confidence problem and there’s a whole series of ideas that we have around that, but you kind of have to somehow climb the confidence and the competency curve together. It’s very hard to do and particularly 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. Sometimes it’s better to have CEOs who are like C minus students.

App Moats: Custom Models vs. Data

Lenny Rachitsky: Why is that?

Ben Horowitz: Yeah, a little facetious. Well, it’s just good to be used to failing. So I think I wrote this, but the median on the CEO kind of test is like 18. It’s not like 90. And so you got to be comfortable getting a lot of D minuses because the D minus is fine, 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. Okay, you got through it, keep going. And match, that’s a lot of the thing that we try to do CEOs.

Founder Opportunities in the AI Era

Lenny Rachitsky: Yeah, it comes back to your core, I don’t know, message through your first book is just how much you’ll fail and how much you’ll struggle and how much paid you’ll go through as CO.

Ben Horowitz: Yeah, yeah, and I mean a lot of why I wrote that book was just to nanalyze it. I think what happens is, particularly when I wrote it, and I think it’s come back and been true now, is the way the narrative gets written on all these successes is like, “Ph, 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 that’s not at all how it happens and I’ve spent enough time with everybody from Mark Zuckerberg to Sam Altman and so forth, that they all go through that same thing that who has your struggling company go through? You screw a lot of things up and they have massive consequences, but you have to maintain your confidence.

Importance of US AI Leadership

Lenny Rachitsky: Actually, I was at a storytelling event last night and I was chatting with someone that I 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.

Power Concentration & Institutional Evil

Ben Horowitz: And the feeling, look, if you think about organizational design or goals and objectives or OKRs or whatever management technique, you need a basic eighth grade education to do any of that stuff. It is not that complicated. The difficult part is the feeling that you have when you have to do it is very, the hard thing of matter a reorg is you’re redistributing power, so you’re going to have people really fricking mad at you because somebody’s losing power if you do it correctly. And that person may be a really good employee. Dealing with that is the hard thing. Knowing how the organization should work to make communication better, it’s not that complex.

The Paid in Full Foundation

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 now.

Ben Horowitz: Oh yeah. I spent a lot of time with Brian and after COVID, it all kind of clicked for him and then he did that he and that good talk on founder mode and so forth. But the reason that was so articulate is he had screwed every one of those things up and he hired LT and all this stuff, and these are very senior people and he wanted to defer to them, but you can’t defer as the CEO because you know what Airbnb should be doing. He may know what finance should do, but you know what Airbnb should do and this kind of thing. And then it gets really wild when you can’t defer decisions as the CEO. You got to understand what people are saying and go, “Now we’re going to do this.”

Connections to Hip-Hop

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. They’re really hard to learn without doing and often without paying the consequence. Even I, like I make mistakes. 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, I’m finally dealing with something that I had put off for a very long time.” And he said, “Why’d you put it off?” I said, “Because things were going too good. I didn’t have to deal with it. “And he was like, “Yeah.” He said, “I know that.” I’d say Ali is 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 mistakes. So, it is just tough.

Final Advice for CEOs

Lenny Rachitsky: You said that one of maybe the main reason founders fail the 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?

A Personal Life Motto

Ben Horowitz: 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 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, the day you stepped into the job.

And so we have 600 people at the firm and why is that? Well, most of them are building that network for you, so you can call any CEO or anybody in Washington or 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 we have a lot of people in the firm like myself, who you can talk to on a CEO to CEO basis, as opposed to an investor to CEO, and just kind of feel that. Early in the firm days, we used to do this thing. I think I’m going to bring back in some form this thing called the CEO barbecue. And it was like a lot of people have these events where 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 what they said wasn’t really applicable and that kind of thing.

So I said, “Why don’t we just have a barbecue?” I would barbecue. We get everybody in my backyard because was 500 people at the peak, which is why at the stuff I couldn’t cook that much, that kind of stuff. And then we’d have Larry Page and Mark Zuckerberg and Kanye West, and so you’re a CEO in there with portfolio. You’re like, “Wow, 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, I feel like I am somebody. And okay, I might not be 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. But the whole idea was always like, “Okay, do you feel like you can do it?” Because that’s half the battle?

And look, having been in and 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 want to go there. And because as we’ve said, founders can get to the next product and that’s something that almost no professional CEO is able to do. There’ve been rare cases, but very rare.

Three Albums, One Business Lesson

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, the common startup wisdom keeps changing. One of the early ones that was wrong, and Brian articulated it, and then now I think a little bit of what people have gone to is also wrong.

So the first idea that was wrong was like, okay, build a team of senior executives as soon as you get product market fit as fast as possible and they can scale the thing. And I think that you got to build that team slowly and deliberately, kind of pace to your ability to integrate and then manage them. Because if you bring in a bunch of senior people and you don’t know really how they match to your company or how that function works or so forth, then you’re going to start deferring. And once you start deferring, it’s going to get out of control very fast because they’re going to build empires, they’re going to get political, they’re going to 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 in that, look, somebody who knows how to do something can really accelerate your thing. So very early on, one of the founders, great founder Arsalan at Databricks was running sales. And I’m like, “Oli, you’re going to have to hire somebody who knows sales because Arsalan’s, PhD in computer science. I like that, but that’s probably not where you’re going to have to start if you’re going to catch these guys before they take Spark and use it against you.”

And I sat down with Arsalan and I explained why. I said, “Look, a lot of what sales, there’s a lot of knowledge in how to build a worldwide sales organization; maybe knowledge of customers, territories, territory splitting, rep profiles. There’s just a litany of stuff that you really can only learn by doing trial and error and you don’t know anything. And so you’re phenomenal. Let’s get you. And 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 in founder mode.” That’s also a mistake. So there’s a lot of, it’s more subtle than you think, and it’s more complex than you think. And so you kind of have to get all the way to the truth. And these little snippets of advice that he sees good, because they watch some fucking podcasts, are all fucking stupid.

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.

We were at a board dinner. One of the CEOs says to me, he goes, or one of our CEO says, “Hey Ben, that thing you told me a while ago about don’t be CEO at home.” He said, “I was doing that and I stopped and it really helped me.”

And then the other kind of VC said, ” Yeah. You got to unplug some time.” And I said, I was like, “What the fuck are you talking about? He’s CEO. He’s not unplugging. He’s getting shit all the fucking time. He’s got to deal with that. 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 hear something from somebody who, but if you haven’t done it, you don’t even know what that means. And so then you then trying to transfer the advice to the next guy, that’s not going to work. So anyway, but he was very innocent. I just don’t want to kind of speak bad of him, but that’s how it sounds, right? But that’s not what it is.

Lenny Rachitsky: That’s an amazing story. So the advice partly here, is just don’t believe everything you see on Twitter and little sound bites of advice.

Ben Horowitz: I think actual CEOs know it. And that’s kind of how people in my profession going to get a bad wrap. Because giving advice, 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 15 years ago and it’s probably not relevant today for PMs. I present this nearly as an example of a useful training document.”

Still people link to it. I actually just link to it 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 and there is no training for it. So everybody kind of figures it out as they go. And depending on what’s being emphasized, they’ll get wrapped around the axle on if it’s an enterprise company, well pitching to customers or I need to be really good with the press, or I need to be really good at writing the product requirements document or that kind of thing.

And those are all these tasks, but none of those were the job and 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.

So it’s like this influence, how do I get people to do what I want even though I’m not paying them. I can’t fire them. I can’t promote them, and so forth, which is kind of the essence of real leadership because if you start to rely on promotion and firing and so forth for authority, then you’re never going to 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. 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 put that all together and deliver the thing.

And all the other things are tasks that you may or may not need to do. I don’t know if you need to do them, but the thing is, 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 the mindset, be the leader, I think the details of any kind of thing that was kind of task specific was really for my group a Netscape in 1996, whenever the hell I wrote it.

So as a kind of document I wrote out of frustration. But I am glad that the people still like it, and I think leadership in general is undervalued, underestimated. It’s the most powerful thing. And most of the great companies, Jensen is a great example. 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 he drives it forth 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 a-

Ben Horowitz: It was kind of before blogging took off, so it is just an internal thing and I published it later. I was just getting so mad. And by the way, my product management team at the time was very good, very talented people. They just were not getting that concept. So like David Wyden said, Coastal Ventures, Raghu Raghuram, who wanted on to be CEO of VMware, the team was like that team, but they were driving me crazy. And so I was like, “I can’t yell at people anymore. I have to explain to myself.” And so it’s a good thing if you find yourself yelling at people, you probably haven’t explained what you want, was the other big takeaway from that.

Lenny Rachitsky: Did you ever think that piece would be so long-lasting? And so, I don’t know, popular?

Ben Horowitz: I didn’t even know. I thought it was kind of like aggressive when I wrote it. You could tell I was mad. I called a Good Product Manager, Bad Product Manager. It’s like bad dog, bad, bad, bad product manager. That was kind of the emotion I had. So, it is kind shocking some of the things that you write.

I would say that that’s and kind of creative, and you probably know this. The idea is that you have the things that you write in five minutes end up being much better than things you write in five weeks. And I find in talking to musicians or writers or everybody has that same experience. The thing that you’ve already synthesized so much that you just have to write it out, 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 CO. Their kind job is to think like the CEO within the team.

Ben Horowitz: People get mad because everybody, this is the whole challenge of management in general. People get jealous over stewardship. But from the perspective of the PM, 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 wrench. And you have to get all the way to there and work backwards from that and you can’t do that without leadership because it is about, okay, we want to build that. And you’re not necessarily the person who comes up with every idea or this or that, or that. You’re just the keeper of the vision.

And that’s true for CEOs too. You don’t want every idea in a company coming from the CEO. I think it’s a misunderstanding of 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 it gives, every order does every. That’s not the way it works.

The way it works is there’s somebody who’s got to consolidate, 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 so that it is a CEO, kind of function. Now, it doesn’t mean I’m better than you, it just means that…

… kind of function. Now, it doesn’t mean like I’m better than you. It just means that that’s what I’m doing.

Lenny Rachitsky:

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Let’s talk about AI. I’m very proud of us. It’s been almost an hour. We haven’t even mentioned AI. 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 has some really interesting insights about how AI is impacting hiring.

Ben Horowitz: Adam is probably the single most controversial investment that we ever made. We got called everything from stupid to sexist to racist to this and that for literally just funding that. And I think it’s going to end up being one of the best investments we ever made. He’s doing a phenomenal job there. There’s an important principle in that which 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’s something I learned somewhat from Shaka, which is you don’t judge a person by the worst thing that ever happened to them. We’ve all had bad things happen to us. We’ve all made bad decisions. Most of them, they don’t make a miniseries about.

And so to judge them on that, you want to judge people on what they do well, not what they screwed up, because that’s where you see the talent. If you look at what Adam did well, it’s truly spectacular. Everybody knows WeWork. Name a more important commercial real estate brand than WeWork. You can’t. And so what an accomplishment. And there were so many things that went into that and so many things he did right.

And then if you kind of 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, yeah, 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 him, is just that it’s a big mistake. And I credit Mark because Mark is the one who called him up originally, and just said, “Hey, Adam, what are you doing?” Because we watched what you did at WeWork and we thought it was pretty impressive.

And so I think that that’s probably the biggest secret there. Judge 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 hand wringing about the one fucking thing they don’t know how to do. Because look, everybody’s uneven.

Lenny Rachitsky: What you’re describing, essentially, this is the job of an investor, is to find an underappreciated asset and invest or before something people don’t see.

Ben Horowitz: Venture capital is really about investing in people. You have ideas as an investor, but 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. So you kind of have to make the judgment on the person. And how you do that is really, really important. And one of the things we emphasize inside the firm is, look, we’re investing in strength, not lack of weakness. I want to know how good, are they world-class? Do they have a world-class strength? And can that beat anybody? And look, everybody’s flawed. And so let’s help them deal with the flaws and surround them with people who can handle that and put the right person on the board who can talk to them.

You know Mark’s on the board, I go to all his board meetings because I’m the one who’s good at killing a guy who’s that confident when he’s like, “Okay, that’s not your best idea.” That’s good role for me. But that’s how you deal with that. You don’t throw them away and go, “Oh, okay, we don’t want to be called names. So we’re not going to invest in Adam Neumann after we built WeWork. That’s crazy.

Lenny Rachitsky: That’s also why you guys invested in Cluely, I imagine similar.

Ben Horowitz: Yeah, yeah, no, that’s right. I mean, look, if you look at what those guys did, that was some high level marketing genius too, and that’s really something. Plus the product is awesome.

Lenny Rachitsky: I’m going to 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, that’s saying a lot. I’m curious just how you that it-

Ben Horowitz: What is it saying? First of all, I should qualify this by saying I am 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 what is it in his interest to say it? Well, if it’s a bubble, then the one thing you should invest in is him and not all these guys chasing after him.

I would say 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 entrepreneurs chasing this are idiots.” They love them. The press are generally haters, and so it’s just red meat for the haters, which was 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 going to say won’t be as smart, but it will…

I don’t really have an ax to grind here. I mean, I could have an ax to grind and say, “Okay, 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. In that you need 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 The Economist, I think with Steve Blank in 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 1,400 articles saying that we were in a tech bubble, and I mean where prices were then compared to where they are now.

But I knew because everybody was saying it was a bubble, it wasn’t a bubble. I knew that. The prices were higher, but the reason the prices were higher was we’re getting to a global market. AI prices are higher than prior prices, but if you look at the revenue growth and numbers, we had not seen anything like it. Sam’s product worked so amazingly, we’d never seen that before. Not even Google, not anybody. And so that’s real.

And we have companies that went from zero to 800 million in a year and that kind of thing. I would say there’s a basis for the prices going up, first of all. I think the thing that’s right about what Sam is saying is the landscape is early, really early. The technology is very immature. As amazingly as it works, there’s a long way to go to improve it. So it’s very possible 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’ll be a competitive change that either lowers prices or a new number one emerges or that kind of thing.

Yeah, that’s possible. But I wouldn’t characterize that as being a financial bubble in that if you go back to the great dot-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. How could you not fucking know that the internet was, of course it’s a big deal. But if you go back to 1996, at Netscape, we had 90% browser share and we had 50 million users. So there were 55 million people on the internet in total, and half of those were on dial-up.

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, but the investors kept pouring money in. And then eventually everybody went bankrupt because there was no revenue coming in. And 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 the unit economics didn’t work, the businesses didn’t work. These businesses are all working, and they’re being priced appropriately for how they’re growing. So that’s not in effect. The thing that you could say is, “They’re not going to keep growing like that,” and so forth. And I’m not sure about that. The products, like I said, are working so much better than any technology product that we’ve ever built has worked. It’s just mind-blowing how good this stuff is. And so, I don’t know, if I had to bet, I would bet not a bubble. I think there’ll be some dislocation. I think always in venture capital, if you’ve got a run like this, then the great company and the crap company both get funded. But that’s just venture capital. That’s not a bubble.

Lenny Rachitsky: Four founders starting companies these days. When you look into the future of the AI industry, say in five, 10 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 there is obviously a real estate power cooling play. I think that’s a little outside of hardcore technology investing that we do. But there’s another layer which is take a given open source model, who can run it the cheapest with the lowest latency? And that’s going to be extremely valuable, whoever has that. And Google has been historically very good at that and so forth, and 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, without much product progress, raise at least $ 2 billion because that’s basically what it’s going to 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. Mary’s one of those, Fei-Fei is one of those, but that’s the kind of class of person you need. And there’s whatever. There’s certainly less than 10 of those in the world. And so that’s kind of an important area, but a small area. And then I think the application layer is going to be very, very interesting. And I think that if you look at Sam, he’s making most of his money off ChatGPT, almost all his money off ChatGPT now. And Chat GPT, like it or not, it’s got a real moat. It’s very hard to knock it off. It’s perched.

Everybody’s taking a shot at it, people, great distribution like Google and Elon and Zuckerberg and everybody. And 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. The thing that people got very wrong is this whole thin wrapper around GPT, that’s really wrong. In fact, here’s how wrong it is. Back in the ’80s, that same phrase was used, but it was thin wrapper around an RDBMS-

Lenny Rachitsky: Database.

Ben Horowitz: Yeah, yeah, yeah. So it meant companies like Salesforce were basically just a thin wrapper. And I think that that’s kind of the mistake people made. So we’re at this company Cursor, and if you look under the covers in Cursor, they’ve built 14 different models to really understand how a developer works, a high-end, a real developer. Those models have tons and tons of interactions with how people talk to their friend Cursor about how they should design their programming so forth. And that’s real, that’s not just a thin layer on a foundation model. And I think there are many, many applications like that. And so I think there’s going to be a lot of opportunity at the application layer. There’s going to be some opportunity at the foundation model, and of course you can invest in Sam, you can invest in Anthropic and so forth as well.

But there will probably be a very small number of companies at that set, and then a almost unlimited number of companies at the application layer. And then as the technology advances, we’ll of course see more things we can body to AI. I mean already autonomous cars are working really well now after a long, long, long, long time. Since I think Sebastian won the challenge in 2006 when he drove the self-driving car across the country. And here we are 20 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. No, that 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 model slash have 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, 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, in any domain turns out to be, I think, more complex than we thought. And so the early things and people were running around saying, “Okay, there’s going to be one big brain to rule them all on these kinds of things.” That’s kind of not played out yet.

And in fact, if you look underneath the covers, you have LLMs, which have generalized pretty in fascinating ways, but they’ve kind of also asymptoted in that we have run out of data for the most part. And so if you look at the GPT-5 LLM compared to the GPT-4.1 and how much more it costs to train and so forth, 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’ve said three years ago. And I think that there’s not something that’s both scaling and generalizing yet, and 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, and I think OpenAI is probably 80% of the revenue in AI are something like that now. It’s massive, and so that foundation model is really, really important. And then the basic consumer app is really, really important.

That just answers whatever the hell you want to know. Those things are very, very real. But I do think particularly, and then if you get into enterprise stuff and then it’s no longer internet data, it’s their data that becomes very different. Databricks is having a lot of success there because, okay, well, once you’re inside a company, guess what? You care about access control. That’s hard with an AI world. It gets trained on some stuff. How does it know who has access to that information and who doesn’t, and so forth. You have semantic issues. So if you look at an enterprise, find 10 enterprises, they all have a different definition of what a customer means. You would think customer is a basic thing. Well, is it a department at AT&T? Is it AT&T? Is it a person at AT&T? What the hell is the customer? And it turns out to be very, very meaningful, particularly if you’re trying to figure out important things like churn and this and that and third.

So that kind of stuff matters. So I would just say the problem space is a lot bigger than you can just attack with a basic foundation model currently. Maybe that will change, and if that changes, then certain prices will have, in retrospect, look way inflated and others will look too low. But 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. Everything that we couldn’t solve with software we can solve now, almost. So it’s a really big world. And it’s funny because we’re investors in Waymo, and one of the things when you get into what took so long to make Waymo so safe like they are now, it wasn’t the things that everybody reported on the podcast. There wasn’t sleet and heavy rain, 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, in 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. My personal view is 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, and particularly both culturally, but also just you can’t advance the world if you can’t tap into all of your resources. And so if you kind of take away motivation and these kinds of things, you get into trouble. And if you look at the kind of every country today, and this is by the way, so you want the right amount of decentralized power. 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 lesson of communism over the last hundred years is it turned out right. And 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 you use that stick, and that’s just the nature. It’s a system’s problem. It’s not a person problem. It’s not Stalin was evil, Ceausescu is evil. It was that system is evil. And-

Ben Horowitz: It was evil. It was like that system is evil. And that’s the saying with fascism. Be it Hitler or Mussolini, it doesn’t matter. That level of power is evil.

And 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 one of the things that if you look at the Declaration of Independence or the Constitution, the language is very important. It’s, “We hold these truths to be self-evident.”

What does that mean? It means it’s not my rule, it’s not 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 the power, because you’re under the law, not under the person. We see that now even with Europe, where 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 as well, 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. So the kind of transited property of bullshit is going to override.

And so it’s really important that we have at least 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 stays important and powerful in the world.

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, and the ones that industrialized first and best. And the ones that did became Communists, like Russia, China. They were slow on industrialization and they fell into this very fucking dangerous system.

Looking forward, that’s going to happen again, but it’s going to be AI. And so it is fundamentally important, not just to America, but to humanity, that America succeed at that. We don’t have to be the one winner or this or that, but we do have to be in that tier.

And 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. Don’t destroy the dollar. Don’t fall behind in AI. Don’t over-regulate it too early. Don’t do these things, please, because we need you to win, because we’re all counting on that.”

And I think it’s the most important work that we do. It’s why we’re so involved in policy and so forth. I think this is also going to be very, very true with crypto, which ends up being an incredibly important networking technology that complements AI. That work is, I would say, beyond for the money. Although we will end up making a lot of money with the right policies, so I don’t want to seem totally philanthropic on this, but it’s more important than that. It’s certainly more important than us succeeding or anything like 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 what I’d say is something from nothing. This is the greatness of entrepreneurship. You start with nothing and then you make something really important. That is also how Hip-hop started, where you have a bunch of kids who didn’t even have instruments, and they created something out of nothing. And the people in that world always talk about that.

And one of the really unfortunate things that happens is, the people 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 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 B. song, which I did call Rakim and ask him for permission to use the name, so we didn’t just take it. What we do is, we give essentially pensions to the old rappers, that enable them to kind of continue their work.

And then we have a big event go to paidinfullfoundation.org for tickets, which is amazing, where they get the award and they’re celebrated by all their peers and so forth. And it’s really phenomenal. Some of the awardees have been Rakim, Scarface from the Geto Boys, Roxanne Shante, Grandmaster Caz, Kool Moe Dee.

This year we’re honoring George Clinton for being sampled, Kool G Rap and Grand Puba, and also Jalil from Whodini. I can’t even describe how high impact it is on these guys. I think Rakim was touring close to 200 nights a year, and he got his award, and came out with his first album in 15 years and is doing amazingly well. All of a sudden everybody’s going, “Oh yeah, that’s the greatest rapper of all time.” They’re finally going back and remembering all the things he did. Roxanne Shante, nobody had mentioned her in years and years and years. I think six months after we gave her the award, the Grammys gave her a lifetime achievement award, which is amazing. It’s super high impact. It’s a great thing. As a Hip-hop fan, I say dream come true. It’s my only guilt.

Lenny Rachitsky: What’s the origin story of you and Hip-hop? I imagine many people look at you and wouldn’t imagine these records behind you, Nas gifted you. You are so deep into the community, just how did this all begin?

Ben Horowitz: Well, 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 how that occurred, and how it went, and so forth.

I always say the very short story is, I was in New York at the birth of Hip-hop and when it really became big, ‘84 through ‘88. It’s just the most exciting thing to see a new art form pop out and the creativity and everything.

Once music becomes mainstream, I would say it’s very shaped by business. And in the early days, everybody’s just coming out with whatever idea they have and so forth. The early days of rock and roll were like that. The early days of jazz were like that.

Lenny Rachitsky: I see now even more why you guys brought on Erik Torenberg. Beyond his many talents, he’s also really big into rap himself.

Ben Horowitz: Yeah, that’s a good reminder. I need to make sure he gets to Paid in Full.

Lenny Rachitsky: Ben, this was incredible. 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 would just say, if you’re a CEO listening to this, then know that how you feel about yourself is going to end up meaning as much as anything, and take your time on that. Self-evaluation is … one of my favorite quotes is that when my old manager saw me, as select players know, “From this day on, no credit will be given for predicting rain, only credit for building an ark.”

And I think that’s more true for CEOs than anybody. You have to build the ark. It doesn’t matter if you predict you’re going to fail, you’ve still failed. It gets 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 ready?

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: So two that I learned a lot from, 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. 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, why did the West get ahead on the rest of the world? It kind of comes down to a weird anomaly with the Catholic Church, where they 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. And as 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.

It leads to 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 evolve into all these things.

And he kind of shows why and how. He does these psychological tests today with people from monogamous marriage culture, Western culture, and kin-based culture. And the psychology is completely different. He gives examples like if a person murders another person, is that still murder if that person who did the murder is your brother? And in Western society, yeah, that’s a murder. In kin-based culture, it’s not a murder. It’s just not.

And so that’s really different. And so morality is different, everything comes off of that. So it’s just a fascinating, fascinating book. So that’s one.

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. It’s not quite out, or maybe it’s releasing. It’s releasing next month, so I recommend it.

What it does is, it goes through how did he work his way out of prison and solitary confinement to his current psychology, and what are the techniques he used? They’re very powerful, very powerful ideas. CEOs always asks me, “How do you deal with it? How do you deal with it?” They’ll ask in a work-life balance. It’s like, “What are you talking about? No work-life balance for CEOs,” or particularly entrepreneur CEOs, come on.

But 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. That’s what I would recommend, if somebody’s wondering, how do you deal with all this pressure?

Lenny Rachitsky: I love this. Just the whole idea of Shaka being this help for CEOs, someone that killed someone, went to prison, led a prison gang. I just love that, how valuable his lessons-

Ben Horowitz: Prison gangs turn out to be really complicated things to manage. Sorry for getting into this, but the problem with running a prison gang is, you’re just dealing with people who all come from broken culture.

So in any organization, like the fundamental thing is trust. And so you’re bringing in a bunch of no trust people. And so again, it’s kind of like a military organization. It’s a gang. 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 I learned a lot from talking to him about it. So from a management standpoint, I would just say it’s an important kind of boundary case of how you build culture. He is very, very smart at that. Like I said, you have to look at people about their greatness, not the worst thing they ever did.

Lenny Rachitsky: I know it’s the 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 one of the things that he did that I thought was really smart is … Well, he did a couple of things. One is just a simple thing. He just made everybody eat lunch together in the gang, just to build rapport, relationship, trust, like it’s all one thing. We’re all together on that.

And I think particularly in the remote work world and so forth, people really underestimate how powerful just that idea can be. And then another thing he did is, he made morality … he had very specific things about, you had to be good to your word internally and externally.

So normally a gang, like I said, it’s kind of a kin-based culture thing. But it made it much more powerful when he said, “Look, you can’t do devious shit outside the gang either.” And he had a bunch of examples of that, that I went through in the book.

Like I said, because you’re building it from zero, you really have to take a hard line on things that I think people in companies don’t even take a hard line on. Is it okay to lie internally? Probably not. Is it okay to lie to a customer? Well, in some organizations it is, but in Shaka’s organization, that’s as big a penalty as lying internally. 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 for building-

Ben Horowitz: Yeah. It’s kind of the more advanced book. You kind of have to survive to want to care about dealing with the cultural issues. And so the survival book has a bigger audience.

Lenny Rachitsky: Amazing. We’re going to keep going with Lightning Round. Is there a favorite recent movie or TV show you have really enjoyed?

Ben Horowitz: Well on TV, I really like Slow Horses, which is the show about the MI6 cast-off guys. And then I haven’t seen a lot of movies lately, but I watched Sinners. I went to theater for Sinners. Just the cinematography is unbelievable, and the story is really original, and the acting is incredible, and the costumes are amazing. It’s just a great, comprehensive piece of work. The craftsmanship on that thing is just a lot beyond what most people making movies are doing these days, so I really enjoyed that.

Lenny Rachitsky: I hate scary movies, but I watched it and loved it.

Ben Horowitz: It wasn’t that scary.

Lenny Rachitsky: It wasn’t that scary, but still, it was zombies popping out of corners. That’s not my jam usually.

Is there a product you recently discovered that you really love? It could be a gadget, it 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 was like, “What is that?” And I just bought it for him too, because it’s so awesome. This thing makes coffee that it’s just perfect. There’s no bitterness. It’s completely clean. It’s amazing. The only problem with it is, I can’t drink coffee that it doesn’t make anymore. I don’t know if that’s a good thing or bad thing, but …

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

Ben Horowitz: Yeah.

Lenny Rachitsky: Two more questions. One, 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 effect on me is something my father said to me years ago, which is, “Life isn’t fair.” That seems 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. It’s just not fair.

There are all kinds of stuff that are going to happen to you, 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. 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 what should I do now, which is the real question, not how do I go back and get people to be fair? Nobody’s going to 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. It’s as an individual, if you want to make the world a better place, whatever, but 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 hate to save this one for last. 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 why?

Ben Horowitz: I think probably Follow the Leader by Rakim. And the reason is what we had kind of gotten into earlier, which is leadership. When he came out with that song, which was maybe the greatest Hip-hop song ever written, he’s telling people to follow him, follow the leader. And just to have the idea that he was the leader of the entire art form, not just his band, it is amazing idea. And then the way he expressed it was incredible. And then he’s got other great concepts in there that would give you … It’s hard to listen to that record and not have confidence.

I think from a competitive, purely competitive standpoint, Stillmatic from Nas, that’s the one with Get Ur Self a Gun, that’s the one with You’re da Man. It’s like all of the idea of competition is encapsulated in that album, so that would be the other one.

And then Funk, One Nation Under a Groove, for sure. Because it’s like, how do you initiate people into a concept or an idea, and how do you infuse them? One Nation Under a Groove is all about joining the nation, and it’s so musically interesting and getting people to be part of that. [inaudible 01:36:58] If you asked me tomorrow, I’d probably have three other ones.

Lenny Rachitsky: Incredible. I’m going to go listen to these. Ben, final question, how can listeners be useful to you?

Ben Horowitz: If you get something that makes you better, please take it. If you need more advice on it, let me know. Look, my job is to help everybody build something great, so if you’re an entrepreneur, thank you for that.

Lenny Rachitsky: Also, check out Paid in Full, paidinfullfoundation.org, if you want to learn more about that nonprofit.

Ben Horowitz: Yes, 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.

Glossary

English	中文
a16z	知名风投公司 Andreessen Horowitz 的简称，保留原文
Adam Newman	Adam Newman（人名，保留原文）
Al Davis	Al Davis（人名，保留原文）
Ali	Ali（人名，保留原文，指 Ali Ghodsi，Databricks CEO）
Ali Goetze	Ali Goetze（人名，保留原文）
Arsalan	Arsalan（人名，保留原文）
AT&T	AT&T（公司名，保留原文）
Bob Iger	Bob Iger（人名，迪士尼前 CEO，保留原文）
Brian	Brian（指 Brian Chesky，Airbnb CEO，保留原文）
Ceaușescu	Ceaușescu（人名，保留原文）
Citigroup	花旗集团
Cluely	Cluely（公司名，保留原文）
Coastal Ventures	Coastal Ventures（投资机构名，保留原文）
Cursor	Cursor（产品/公司名，保留原文）
Databricks	Databricks（公司名，保留原文）
David Wyden	David Wyden（人名，保留原文）
Elon	Elon（指 Elon Musk，人名，保留原文）
Eric B.	Eric B.（人名，说唱歌手/制作人，保留原文）
Erik Torenberg	Erik Torenberg（人名，保留原文）
Evite	Evite（公司/产品名，保留原文）
Fei-Fei	Fei-Fei（指 Fei-Fei Li / 李飞飞，人名，保留原文）
Flow	Flow（公司名，保留原文）
founder mode	创始人模式
George Clinton	George Clinton（人名，音乐人，保留原文）
Geto Boys	Geto Boys（嘻哈组合名，保留原文）
Good Product Manager, Bad Product Manager	好产品经理，坏产品经理
GPT-4.1	GPT-4.1（模型名，保留原文）
GPT-5	GPT-5（模型名，保留原文）
Grand Puba	Grand Puba（人名，说唱歌手，保留原文）
Grandmaster Caz	Grandmaster Caz（人名，说唱歌手，保留原文）
Hadoop	Hadoop（开源分布式计算框架，保留原文）
Hitler	Hitler（人名，保留原文）
How to Be Free	《How to Be Free》（书名，保留原文）
Ilya	Ilya（指 Ilya Sutskever，人名，保留原文）
Jalil	Jalil（人名，说唱歌手，保留原文）
Jan Stoicka	Jan Stoicka（人名，原文注音不准，保留原文）
Jensen	黄仁勋（NVIDIA CEO Jensen Huang）
JFK Jr.	小肯尼迪
John Reed	John Reed（人名，Citigroup 前 CEO，保留原文）
Kanye West	Kanye West（人名，保留原文）
kin-based culture	亲缘文化
Kool G Rap	Kool G Rap（人名，说唱歌手，保留原文）
Kool Moe Dee	Kool Moe Dee（人名，说唱歌手，保留原文）
Larry Page	Larry Page（人名，保留原文）
Lenny Rachitsky	Lenny Rachitsky（人名，保留原文）
LoudCloud	LoudCloud（公司名，保留原文）
LT	LT（人名，保留原文）
Mao	Mao（人名，保留原文）
Mark Zuckerberg	Mark Zuckerberg（人名，保留原文）
Mary	Mary（人名，保留原文）
Mussolini	Mussolini（人名，保留原文）
Nas	Nas（人名，说唱歌手，保留原文）
Netscape	Netscape（公司名，保留原文）
Paid in Full Foundation	Paid in Full Foundation（基金会名，保留原文）
Paul Krugman	Paul Krugman（人名，保留原文）
Pol Pot	Pol Pot（人名，保留原文）
product market fit	产品市场契合度
Raghu Raghuram	Raghu Raghuram（人名，保留原文）
Rakim	Rakim（人名，说唱歌手，保留原文）
Roxanne Shante	Roxanne Shante（人名，说唱歌手，保留原文）
Salesforce	Salesforce（公司名，保留原文）
Sam Altman	Sam Altman（人名，保留原文）
Scarface	Scarface（人名，说唱歌手，保留原文）
Sebastian	Sebastian（人名，指 Sebastian Thrun，保留原文）
Shaka Senghor	Shaka Senghor（人名，保留原文）
Sinners	《Sinners》（电影名，保留原文）
Slow Horses	《Slow Horses》（剧集名，保留原文）
Spark	Spark（开源大数据处理框架，保留原文）
Stalin	Stalin（人名，保留原文）
Stargate	Stargate（项目名，保留原文）
Steve Blank	Steve Blank（人名，保留原文）
Technivorm Moccamaster	Technivorm Moccamaster（咖啡机品牌/型号，保留原文）
The Hard Thing About Hard Things	创业维艰
The Weirdest People in the World	《世界上最怪异的人》（书名，保留原文）
VMware	VMware（公司名，保留原文）
Wang	Wang（引用的说唱歌词作者，保留原文）
Waymo	Waymo（公司名，保留原文）
WeWork	WeWork（公司名，保留原文）
What You Do Is Who You Are	你所做的即你所是
Whodini	Whodini（嘻哈组合名，保留原文）
Writing My Wrongs	《Writing My Wrongs》（书名，保留原文）
Zuck	Zuck（指 Mark Zuckerberg，保留原文昵称）

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