The holy grail of company building is finding product-market fit. But what most people don’t tell you is that once you’ve found it, you then need to ramp up your business and operations exponentially to continue delivering value to customers.
The unlock to this is to build your executive team, since the best growth-stage executives serve as beacons for talent. But one of the hardest yet most critical aspects of scaling is to find the right leaders at the right time.
In this podcast, a16z cofounder Ben Horowitz and Ali Ghodsi, cofounder and CEO at Databricks, discuss leadership transitions, including when (and how) to fire, how to separate a good executive from a great one, and the CEO’s role in finding and hiring the right people.
Ben: How do you know when you’ve outgrown an existing leader?
Ali: When you’re asking other people, “What do you think?” Or, when you’re starting to have thoughts like, “Is this the right person or is it not the right person?” You’re done.
Ben: I always find if you give somebody a task and they get super emotional, they’re done. “I can’t handle anything else.” When you can’t even process it, then it’s gotten away from you.
Another one I find is leverage. If you have somebody who’s really doing the job, then what you always find, as a CEO, is they’re teaching you about how the function should expand, how it should grow. If you’re giving them more ideas than you’re getting out, then that’s probably not going to work.
Ali: I agree with that, but that’s a high bar. If they’re still adding value, they work, and they make the company better, you might want to keep them. This is the kind of leverage where you’re saying, “This person just takes care of that thing and they’re so good at it. I’m just trying to keep up. Can you keep me in the loop on how you even do this thing? I’m learning, I’m taking notes.” That’s phenomenal, we should strive for that.
Ben: But when you pay a guy all that equity and all that money, that’s what you expect, right?
Ali: I agree with that. That’s what you strive for. But then what happens is it turns out they are like that, but they’re a terrible communicator. Or they’re an amazing communicator and they’re super awesome about it, but they just blab forever. They’ll have weaknesses, big weaknesses.
Ben: Yeah. But you always take the weakness against the magnitude of the strength, right?
Ali: Yes. Exactly.
Ben: I also find that there are many causes for people running out of gas. It could be that you promoted them and they continued to do their old job, but they never actually figured out what the new job was, or the company just outgrew them. Or sometimes there’s an actual personal issue, like a drug problem or they’re getting divorced. Something happens and the person is no longer the person you hired and had for a while. That one is always very confusing to me because you thought you knew who they were, but they’re not that anymore. They’re something else.
Ali: I also think confidence is important. Once the executive feels like it’s not working and they’re on the back foot…
Ben: They spiral.
Ali: Yeah. They spiral. And it’s very hard to turn it around, to get back to it.
Ben: Well, and if they lose the team, it doesn’t matter. The one thing that’s always true is if the team doesn’t believe in the executive anymore, then it doesn’t matter. You can say whatever you want to me, but I still have to fire you because nobody’s following you.
Ali: You’re almost better off starting anew somewhere else.
Ben: Yeah, as opposed to wrecking your reputation by continuing here.
Ben: So, is there a time when you give somebody a chance to grow?
Ali: I think, as you said, they have to have a superpower that you have identified. They can come up with an amazing product, they’re amazing communicators, or they can really get the team to execute. Then the question is, can you just put them in a position where you can accentuate that strength and then…
Ben: Fill in the gaps.
Ali: Yeah. Patch up.
Ben: The other mistake I think a lot of companies make is, in engineering, in product, and so forth, the knowledge of how your company works is really, really valuable. But in sales and marketing, the knowledge of how other people’s companies work is actually more valuable. If you take somebody who only knows your company and they have to go learn the world, you’re harming everybody in the company. If you’re going to pay somebody to do that, go pay somebody who knows the world. Go buy the knowledge or go buy the acceleration. I don’t really care how much potential your internal smart MBA who doesn’t have any experience has, the idea that they’re going to run worldwide sales for you, if you’ve got a killer product and get that done fast, is probably wrong.
Ali: I think it’s because the people with the wrong background are trying to figure out the other side. You typically have tech CEOs and founders who are really good at tech. They’re smart. Maybe they have an engineering degree, so they’re wondering, “Well, how hard can sales or marketing be?”
Ben: It turns out it’s very hard.
Ben: So, then if you have somebody who runs out of gas, do you fire them? Do you level them?
Ali: I definitely think that you can put people in new roles, and they can succeed in them.
Ben: But there’s circumstance, right? I’ve got an early team and everybody’s doing everything in the beginning. People are taking on roles that are eventually going to be bigger than them. If I hired a high-end VP of marketing and gave her or him a point and a half equity and a big salary, I can’t level them, can I?
Ali: You can. I think it’s going to be hard to put them in a new role and remove all their equity. It’s too hard to take those away. But what I have done is, if the person is not amazing at running a big team, they’re really a Super IC.
I often see Super ICs who went into management, and it doesn’t need to be on the tech side. You find them in all kinds of roles. They’re just so good that eventually they started managing, but they’re not actually good people leaders. Eventually, their team is just doing random things and they don’t care because they’re busy Super ICing and doing the work of 2 or 3 people themselves. In those cases, I’ve been able to take them out and say, “Hey, look, I’ll give you a fancy title. You move over here and do the Super IC stuff. You’re extremely valuable because, honestly, you’re better than most of these people that you used to manage because you’re a Super IC. But don’t try to lead a team of 200 people because you’re not actually leading them.”
Ben: So, the use case that you think works is switching them back. You’re saying, look, you do great work, so we over-promoted you to something that you’re not good at. Let’s put you back to what you’re good at and I’ll still pay you a lot of money and give you a good title.
But you can’t lie to yourself if you do that. It’s easy to lie to yourself and say, “Well, this person has some great strengths, so I don’t have to fire them. I can just put them in this other thing and overpay them.”
Ali: There’s also a failure mode I’ve seen, which is you move a person to a new role and then they start checking out.
Ben: Or they’re worse. They’re actively disengaged.
Ali: Well, at least you’ll know. But the person you like but who’s disengaged and phoning it in is the hardest one. I think you have to do a hard thing about hard things. There’s really no option but to have the conversation. And they know. You pull them and say, “Look, you’re checked out. It’s not working. We tried it, let’s move on.” I have found in those cases they all sort of feel ashamed and are like, “Yeah, I know. I’ve been phoning it in.”
Ben: That’s an important kind of part of it. That gets us to the next thing, which is, how do you have the conversation? The mistake I see CEOs make when they have the conversation, particularly with engineers, is to be correct.
Ali: Stick to the facts.
Ben: Stick to the facts.
Ali: Let’s enumerate the facts.
Ben: Well, the indisputable facts about why you should be…
Ali: Why you’re wrong, why you’re bad.
Ben: Why you suck.
Ali: Why you’re losing your job. You’re a bad person.
Ben: Which is the worst starting point of all.
Ben: Ironically, you think you’re being objective and factual. What you’re really being is emotional, defensive, and afraid of the actual truth. The actual truth when you fire somebody is that mistakes were made. If you’re being objective, it’s always partially your fault. If you’re honest, it’s usually more than half your fault.
Start from a place of the truth, which is what you’re talking about. “Hey, you’re not putting in an effort” is always much better than, “Let me tell you all the places where you came up short.” If you start the conversation there, they have no choice but to get very defensive and say, “Well, I don’t agree with that.” If you thought you were right, you might even get squeezed into not finishing the firing. You have to just start from the place of most honesty: “Look, 1) this is a done decision, and 2) it’s my fault, too.” Or, if you’re not ready to fire them and you want to know why their work sucks, just say, “Hey, here’s what I’ve observed. What’s going on?”
Ali: That’s just a normal 1-on-1 where you’re like, “Hey, what’s going on with this thing?”
Ben: Things happen in those conversations. You find shit out and it could actually help. I was talking to an entrepreneur the other day, and he starts in on me with the exact thing that you always start in: “I’m struggling with being a CEO. I want to be empathetic, but am I tough enough?” And I’m like, “Who are you talking about firing?”
Ali: You’re not being tough enough.
Ben: There was a super talented guy who was slacking off. I said, “Just start it there. Don’t put so much pressure on yourself to go right to firing him. Just find out what’s going on with this guy.”
The interesting thing was he has the conversation and finds out it was a personal life issue. Once the guy admitted it, he was like, “You know what? Fuck this person I’m fighting with. I want to work here and go hard.” That conversation solved it with just a little bit of honesty. But to get to that honesty you have to start by being honest with yourself. If you don’t tell yourself the truth, if you lie to yourself, then there’s no way you’re going to get the truth out of the other person and get to the right answer.
There’s a question that you ask executives a lot, which is, “Have you fired somebody?” Why is that an important question? I think it’s important because if you don’t know how to do that, you don’t actually know how to get to the truth.
Ali: It gets harder and harder. The bigger the company gets, the more political and more difficult it becomes. You have more regions, more countries, more people, more functions, and they’re professional execs who know how to manage up.
Ben: Then you take it all personally. This is my company. I built this. It’s all fucked up. I don’t want to get to that truth just like you don’t want to get to the truth about yourself—and the CEOs who can’t do that always eventually fail.
Ali: For me—and you said it—the number 1 thing I try to do in the conversation if I’ve decided this is done and we’re parting ways, my first question is usually, “How do you think it’s going?” In 50% of the cases they’ll say it’s not going well. From there, it’s much easier to take it to the next level. “It’s not working. We’ve tried it for a while. We’ve tried all kinds of things; it’s just not working.” Instead of saying, “Hey, here are the things you’re doing wrong,” just start with, “Is it working?
If they’re not there, then step number 1 is just to get them there to realize that it’s not working. “Look, it’s not working. Marketing is not doing a great job or sales is not, or engineering is not humming and we’re missing the SLAs. There are outages left and right, and there are a lot of people involved; it’s not just your department.”
Ben: Well, phrasing is important. “It’s not working, how is it going?” Not, “how are you doing?” As soon as it gets personal the defensive people put up their guard.
Ali: Yeah. And I’ll put it out and I’ll say, look, “We’re having outages left and right. This is going to be a really hard problem to fix. You’ve been at it for 6 months; we’ve been at it for 6, 12 months and it’s increasing. If anything, it’s getting harder. I know it’s not just engineering, it’s other departments. Sales are promising things and customers are doing things, or it could be in any department that you could have this conversation.” They’ll eventually say, “Yeah, it’s tough. It’s left and right outages, we don’t have the right people. I’m not getting any help from sales.” Then you’ve gotten them to a place where you can say, “Look, I think we can bring in someone that can actually fix this. Someone who can bring in the right people, or has dealt with nasty outages like this, or who can actually sell to these really big conglomerates. Wouldn’t that be the right thing for the company?”
I try to abstract this away from them. It’s not about you. It’s just what’s best for this company. Once we’ve accomplished this, I’ve seen many execs turn to me, and they actually will say, “Okay, I get it. But what about me and my career or my path?” Then I can say, “Okay, that’s a separate thing. We’re going to take care of you.”
Ben: Actually, you bring up a really good point. This is something a lot of CEOs don’t do. It’s so important that when you talk about your expectations for an executive, it’s not what you and your people can do. It’s what you and your people can do in the context of the organization. That means working with your peers so effectively that you get what you need. If you can’t do that, then I’ve got to decide am I keeping your peer or am I keeping you. Because that is the requirement. I think a lot of CEOs get themselves into trouble because they give executives a pass on that. “Oh, no, it’s my job to make you guys work together.”
Ali: This is a great point. Someone in legal may say, “the sales team is giving away liability and indemnification. There’s nothing I can do.” You see these execs doing that, right? But the right leader, the right head of legal, will not tolerate that. They will actually pick up the phone and tell the salesperson, “Hey, here’s the framework I’ve been using. We’re going to have an escalation if it’s indemnification above this limit. If it’s a liability of this sort this is what’s going to happen.” They push the whole organization in that direction, whereas the leaders that aren’t making the cut, they just…
Ben: They let it fester until it explodes.
Ali: It festers. The organization gets abused, and they can’t actually achieve anything. Then they say, “Look, it’s not my fault. Look at these other departments. They’re the ones doing it to me.” That’s when you know that, no, the right leader will not let these other departments do that.
Ben: When you get them all the way there and they go, “Okay, what about me?” What’s your philosophy on the package: comp, references? Reid Hastings, in his book—which I argued with him about after he wrote it—said they sent an email at Netflix saying, “We fired this guy.” How do you think about all that?
Ali: I disagree with that. I think from then on, you owe them. You’re the one that made the mistake of hiring them, so be as generous as possible, within reason. You have a company to run and you have fiduciary duty, but as much as you can and if in the big scheme of things, if it’s not going to hurt the company, it doesn’t really matter.
Be as generous as you can possibly be, both in terms of taking care of them compensation-wise, but more importantly, I think being there for them psychologically. Finding them the next job, being a reference for them, helping them as much as possible—I think that goes a long way. And actually, you’d be surprised. You can have a great relationship with these folks for many years to come. “Put it on your CV as long as you like, and if you need a reference, I’m here.” Be as generous as you can be with compensation. There’s fairness, there’s equity, and there’s fiduciary duty, but I found you can be more generous. People are very, very stingy in these kinds of situations.
Ben: There’s a couple of things about that. One is, if you are more supportive and generous and you know you’re going to have a relationship afterwards, it’s easier to fire the next one because it wasn’t a dramatic horrible event. As my old friend Bill Campbell used to say, “Ben, you have to take his job. You do not have to take his dignity. That is not necessary.” I think that that just goes a long way also for the people who are still in the company because…
Ali: They see how you treat them.
Ben: Absolutely. No matter how bad an executive is, they have some supporters and some people who like them.
Ali: It’s nuanced. There are two sides to the coin.
Ben: That executive is going to talk to them and it’s going to matter how you treated them.
Ben: We started at the end of the process. “You’ve got to fire the guy.” Let’s talk about bringing them in. How do we stop them from getting fired?
If you bring in a new exec, how do you help ensure their success? The failure rate on that is pretty high and retrospectively, people almost always call it fit. But fit isn’t entirely determined by the hire. It’s what happens after you hire them. How do you think about solving that?
Ali: I literally give them the article that you published, On Micromanagement by Ben Horowitz. You battle Marc Andreessen who says you have to delegate, you have to respect the people, you hire them, they do the job, you stay away. You say no, you have to micromanage them. I actually give them that article and I just tell them, this is what we’re going to do next.
Ben: He called it micromanagement; I call it training.
Ali: I give it because I think it’s an expectation thing. If you start micromanaging a person that’s new in your organization, or training them as you called it, some people might be offended. “Hey, I don’t like this. What am I getting into? This is a new relationship, and you’re going to be breathing down my neck like this 24/7? I’m not sure this is a good thing for me.” They get freaked out. The article says, “Hey, it’s just a transitory thing. It’s a normal thing. Everybody here went through it. We’re going to do it here too.” That just sets the stage.
Ben: Yeah, so they don’t feel like they’re being singled out.
Ali: In fact, some people might be like, “Hey, you’re actually not that bad. After reading that article, I thought you were going to be all over…”
Ben: You set the expectation very high.
Ali: Exactly. Then I think stay as close as you can to them. A weekly 1-on-1 is not going to cut it. You’ve got to call them every day. When I have a new executive, I call them every day. Do we have a scheduled time? No, I just call them. A lot of times they’ll notice I’m just shooting the shit. I don’t have an agenda. But we’re getting to know each other so we can build up trust and…
Ali: Yeah, and context. There’s so much shared in those calls and you’ve had so many interactions with them, after a couple of months you’re going to feel more like you know this person. I’ve had so many interactions. I really know Ali. I know how he thinks and all his weaknesses and strengths.
Ben: I think the point that you make is fundamentally important because what I always get from CEOs is, “Well, how do I manage a CFO? I don’t know how to set up a proper control structure or whatever it is that a CFO does. How do I manage guys who are doing jobs that I’ve never done?” You hit on it, which is they know their function better than you, but they don’t know Databricks better than you. Nobody knows Databricks better than you. You’ve made every flipping hire, every good and bad architectural decision, and the product, you’re aware of every customer that blew up, you know the comprehensive history of the place, and then you know all the people and what they’re good at and what they’re not good at. Somebody coming from the outside doesn’t have any of that. They know zero.
Ali: Exactly. You’re like a large language model trained on trillions of trillions of text documents.
Ben: Yes, you don’t even know what you know.
Ali: Many, many years of everything, every little detail, all the context why, how it went wrong, how it went right. What to do, what not to do.
Ben: Having watched executives fail, the number 1 thing they fail on is they don’t have the context. They’ll come in and in the first 3 months, they’ll start working on whatever made sense at their last company. They’re like, “Well, you hired me for what I did there, because that’s where I came from.” Then everybody who works for them and around them says, “Wow, Ali, he paid this guy all this money, gave him a giant equity package, and he came in and he did nothing.” Once the team does that, that’s it, it’s over right there. You have to guard against that by giving them the context and that daily conversation. That is essential. It doesn’t have to go for 5 years. It goes for maybe 30 days.
Sometimes a conversation can be just, “Hey, what are you going to do tomorrow?” What I always find is if you ask an executive what they’re going to do tomorrow and they’re new, they’ll always say at least 1 thing that makes no fucking sense at all. So you just go, “No, don’t do that.”
Ali: “By the way, that’s a great thing that you want to do tomorrow. We have a huge fire right here. It’s going to burn up the whole house. Why don’t you help us put out this fire instead?”
Ben: “And by the way, if you put out the fire, everybody’s going to consider you a hero because that thing was on fire before you got here.”
Ali: But they’re like, “I don’t even know. Where is that? Which floor is that? What fire is that? I didn’t even hear.” “Oh, you don’t know. This is the biggest dumpster fire we’ve had here. It’s on the third floor. Go there and look.” “Oh, tell me more about it.” “Oh, here, let me tell you the history of how that happened.”
Ben: Yeah. And then, “Let me tell you exactly how to fix it because I know that one, I just haven’t had the time to do it.” That gets them off to the right start. That’s how I always find you teach somebody the organization because they go, “I’m going to go work on this.” And they’re like, “Oh, well, you need to talk to Ed because like Ed knows all about that.” “Oh, I didn’t even know who Ed was.”
Ali: But why Ed? He’s not C-level. He’s just a random dude…
Ben: Who you would never know about unless I told you. You would waste months trying to figure out what Ed knew. I think that’s what people miss. Andy Grove used to call it task-relevant maturity, which is classic Andy-complicated. But if you dig into it, that’s exactly what it is. You’re a great sales exec. I don’t need to train you how to do that, but I need to train you on the tasks that are relevant to us until you’re mature. Then we don’t have to talk every day. That’s really what micromanagement means.
Ali: Let me go back. You said something really, really important. I actually think this is extremely important. When you hire a new exec, they come in and usually the organization, it’s not just you, everybody’s looking, “Who is this new guy or girl?”
Ben: Oh, yeah. Everybody’s looking.
Ali: Everybody’s looking.
Ben: “Because I know we paid him a lot of money. And I don’t make that much money.”
Ali: Exactly. You’re sizing them up, you’re looking up and down. What are they doing here? What are they going to do here? I think it’s super important like getting that first win and it’s…
Ben: It’s got to be in the first 2 to 4 weeks.
Ali: Quickly. Get that quick win. And similarly, if it’s a big trip up and fall, then a big splash, people are like, “Oh, my God. Who is this person? What do you think?” And they all will talk to each other.
Ben: Once it’s socialized, it’s a very rare bird that will back off the position they took during that socialization.
Ali: People are watching. That quick first success is important, which then means don’t do 8 things.
Ben: Right. Do the thing.
Ali: Let’s get them 1 simple win. It’s your job as a manager to hand that to them on a silver platter. It’s still going to be hard. Trust me. New company, new people, everything is different. Get them to get that first win.
Ben: It’s funny because I once had an executive who had read Stephen Covey’s 7 Habits of Highly Effective People. He’s like, “What I’m going to do first is: I’m going to seek to understand and then be understood. I’m going to spend like a month just talking to everybody.”
Ali: Good luck.
Ben: I was like, you’re going to be fired in a month if you do that. I’ll help you understand.
Ali: I’ve actually found that new people come in, especially the ambitious ones, and they’re like, “I have so much to add here. I don’t know where to start, but we have 8 things we have to fix. I’m going to fix X, Y, Z, A, B, C. I’m going to fix all of these things.” That’s when you have to stop them and say…
Ben: Which one is the most important?
Ali: Yeah. “Let’s get 1 win here. We’re focused on 1 win.”
Ben: 1 win this week. Another win next week.
Ali: Exactly. And then on the daily call to remind them, “Hey, how’s that dumpster fire on the third floor? Did you put it out?”
Ben: What’s the impact a new executive has on an organization and its culture? What do you want it to be, and what do you not want it to be?
Ali: Well, I think companies quickly form a culture and, fortunately or unfortunately, the more successful they are, they become a little bit arrogant. Companies typically are not super open to massive change. Companies don’t like someone coming from outside and saying, “This is amateur hour. We’re going to do things quite differently because I come from this really big company and I’m going to show you how we did it over there.” They’re name-dropping that company in every other sentence and you can see people like, I don’t want to hear about Amazon anymore and don’t bring that to this meeting.
Ali: “This is not Amazon. It’s not Google.” I really think that the first thing, honestly speaking, is just fit in. Just become part of the team. Get those quick wins that we mentioned earlier, become part of the team. Once you’ve been here and people respect you, only once you really rock it, you can start saying, “This process is taking 8 days. I think there’s a way we could shorten it to 4 days.” Or, “I think if we tried this thing, we could improve our hiring in engineering. Or do we want to maybe do a business review on the biggest deals every quarter? Do we want to try that out?” I think you have to become part of the organism and you have to succeed in it to change it. Otherwise it’s very hard from the outside.
Ben: How about the other side though? Let’s say you need a pretty sharp cultural change. You guys did at Databricks early on when you were very engineering-centric. You needed a sales organization and you brought in a sales leader. You could have, as CEO, stopped him from bringing what was a large dose of enterprise software culture into what was a more academic, technology-oriented culture. How did you stop the company from just rejecting it because that was so different?
Ali: Like I said earlier, companies get arrogant and they don’t want to change. One thing that really helps you is failure.
Ben: Yeah. You guys weren’t selling.
Ali: It humbles you and you realize, I need help. I need a helping hand. I’m drowning here. Databricks had huge success through 2015. We had done a great job with the open source software and it was an awesome company, but we had problems with the revenue, and it was clear that the product-led growth, PLG, we believed in—we called it Zero Touch at that time—was not working. You couldn’t just build it and they come. They weren’t swiping their credit cards left and right and paying us. We could not do a deal that was bigger than $20 or $30K. It was just impossible. We needed a big change, so we needed to embrace it. I think one important thing is that the CEO has to embrace it.
I knew we had a problem. We had not been able to, me included, fix the problem. In 2016, we knew that the shift had to happen. It was still a give and take. I was a little bit like, do I really want to? To my CRO’s credit, that first year, I told him, “We’re still going to do a lot of PLG because PLG is still our future. We’re also going to do the thing that you’re going to bring in that you know really, really well. But don’t forget PLG. It’s super important.” He went at it for 1 year. At the end of that year, suddenly half of our revenue was enterprise. It was very clear. He’s right. This PLG thing is just overrated for the kind of business we have in the kind of market we are in, so then I embraced that change.
We put up a gong that we would hit when we closed a deal. I embraced it, and the engineers loved it so much that they would steal it and go hit the gong. I would say, “Hey guys, you can’t do that, this is when we close a big deal.” So they said, “Well, this is a big deal. We just developed software.” I told them, “Yeah, but you’re like eroding the whole gong, hitting that thing like every 10 minutes just because you’re happy.” We had a great thing. Then at all hands, we actually really tried to embrace the culture change. For the first time, we spent 50% of the meeting looking at sales deals we did and having the salesperson present how they did it. We motivated both sides. We said, “Look, we’re doing transformational change with software that’s going to change the world, but these organizations are not ready to accept data and AI. The people that are going to help us get that software in the doors of the large enterprises are the sales folks, so let’s embrace it.”
Ben: When executives come in and they are good, sometimes they’ll want to bring in a small piece of culture that is just incompatible. I think that that can be very insidious if you’re not careful. There are certain things that you believe in as a company that you’ve drilled into everybody. If you bring in an executive who doesn’t want to do it and you don’t make them assimilate, then you basically destroy that whole piece of things.
I remember when I was at Opsware, we had been through so much. I said: maybe nobody gets rich on this thing, but nobody’s going to have a bad work experience here. I was very hard on that. I was like everybody’s getting a performance review. I don’t care, you’re writing your reviews. [Mark] Cranney [former head of sales at Opsware] comes in and he’s like, “Ben, fuck you. I don’t need to write reviews.” So he didn’t write the review and I withheld all the raises, equity re-ups, everything for his organization. I was like, nobody can get any. Everybody else in the company got their equity and their money and he’s like, “Why has my team got nothing?” I was like, “You haven’t written your reviews.” The interesting thing about it, to his credit, his reviews were the best reviews.
Ali: Well, they’re competitive, right?
Ben: Yeah. They’re very competitive.
Ali: I hired an amazing CRO, Ron [Gabrisko], who took us from 0 to billions. One of the things I heard them say in one of the meetings was, “They’re like…damn, it’s SPD.” I was like, “What’s SPD?” They were like, “No, no, nothing. I didn’t say anything.” Then I started thinking, what is SPD? Oh, it’s the sales prevention department. I was like, “What the hell is that?” And they said, “The whole company’s the sales prevention department. They’re trying to prevent us from doing our job of closing these deals. That’s why engineering can’t build the features.” And I said, “Hey, I have zero tolerance for that.” I went to Ron, I went to all the people, and said, “Don’t ever use that phrase here. It’s zero tolerance.” The big companies form cultures like this, where the different departments…
Ben: Well, us against them. Right?
Ali: The different departments hate each other more than they hate the enemy, so they end up fighting with each other. I said, “No, we’re a small company. We’re working together.” And to their credit, they said, “100%. I’m not going to use that phrase. We’re all in it together.”
Ben: We touched on this a little bit, but what are the most common ways that a new leader fails?
Ali: One is too much of “this is not the right way to do things.” It’s destructive. Or too much copy-pasting what they saw in their previous company.
Ben: Actually, the copy-paste is also an interesting thing in the hiring process because this is where people also make mistakes. They’re like, “Well, do I really have to hire an enterprise software guy to run my enterprise software?” Yes.
Ali: Yes, you do.
Ben: Because whoever you’re hiring is going to copy-paste to some degree. You need that. You’re buying the domain expertise, you’re buying the stuff that you don’t know. If you go and hire an enterprise sales guy who’s selling Google AdWords, he’s 100% going to fail.
Ali: I think when you hire someone, you want them to have seen or done the thing that you need now. This is how I think a lot of people fail or how you hire a lot of wrong people. You need to figure out sales. You hire a guy who’s been closing $10B for some big company. He’s so good, he managed 10,000 salespeople. You have 10 salespeople. That’s great but that’s not going to work. Really make sure that they’ve seen the scale you’re at and they’ve done that phase.
Ben: And really did it. Not were around the ball, but had the ball.
Ali: Exactly. Then there’s the people that are like, this person is a perfect culture match. I think they’re great, they can come in and do this, but we have about 500 salespeople and this person has done 100. Have they ever done 500? No. Well, once they worked for a company with 40,000 people for 3 years. That’s not going to translate to the challenges you have right now at this particular stage. There’s a difference between just running the existing programs in a large company and creating the programs.
Ben: The way I think about it, it’s almost like an organizational founder. The person who works at a company isn’t the person who built the company. The person who works in an organization is not the one who built it. They really do need to have built it. The ride-along is not the same.
Ali: Otherwise, those people are just purely blatantly trying to copy-paste. They were in a huge organization. They were one of the cogs and they just saw that big cog and they’re saying, “We need a wheel that big and we need to copy-paste it over here.” But we don’t even need it. We can’t even fit a wheel that big in here.
Ben: Can he run a playbook or can he write a playbook? It’s amazing when you actually interview for that. “Tell me what you did at your last company. Exactly. How is it built? How was it constructed? Now, imagine like you’re here. How would you write this playbook?” That’ll screw people up if they’ve not done it, right? If they only saw it, it’s a very tough question for them.
Which, by the way, we found Ron on that question. Even though he came from a company we’d never heard of selling a product that didn’t make any sense, the way he answered that question for us is how he got into the Databricks interview process. He was the most left-field candidate, but he ended up being the best candidate.
Ali: I remember there was a question we had for him. He was like, “I need to invest in sales enablement and teach people to sell this product.” We said, “Well, we don’t have time for that. We’re a very fast-growing company and we want to hit these targets. We don’t have time for enablement. We’re going to grow so fast and hire so many people that there are just no resources.” We thought he was a big company guy and he was going to come in and bring in all these different processes. He said, “Okay, if you want to grow that fast, then I need to do way more sales enablement than I said.” “So wait, that didn’t make any sense.” And he said, “No, because we have all these new people you want to hire. They’re clueless. They’re going to show up here at the elevator and they’re just going to look around and say, ‘What am I selling here?’ We’ve got to enable them. So, we have to double down even more on enablement.”
Ben: Yeah. So, double that budget. If you had hired a guy who only knew how to read a playbook, he would have agreed with you 100%.
Ali: Do the 5 whys. Just keep asking. Why do you do that? Why do you do enablement? Who runs enablement? What kind of enablement? What do they do there? Just keep asking them why. The people who tap out in the interview process are like, “Oh, that’s a good question. I don’t know the answer. I have to figure that out.” You can see that it’s very surface level. They’ve kind of seen it somewhere and now they’re trying to copy-paste it over here. They’re probably not going to be able to build it. Whereas builders really can tell you, “Where do we start? How many hours do we have?”
Ben: “I don’t have time.”
Ali: Exactly. There’s a depth because he’s done like enablement 15 ways, so keep going deep, deep, deep. Don’t put up with surface-level answers or just one-shot answer questions. Go many, many, many levels deep. That’s when you can see how deep they are in the subject area.
Ben: Well, closing thoughts. Any other kind of final thoughts on hiring, integrating, firing executives, dealing with executives?
Ali: Start your searches early. Any search for a person has a trade-off. The trade-off between the quality of the person and how fast we get them. If I take forever I can find the best person. Or I can quickly close the search and immediately find someone, but it’s going to be a terrible person. Mistakes are costly. I say mistakes take between 1.5–2 years. It takes 6 months, the jury’s out. Nobody wants to fire someone within 6 months of hiring someone. You’re taking 6 months, then you need to have this conversation. You need to reach an agreement. You need to…figure out what it is you need to do.
Ben: Procrastinate because you don’t want to have the conversation.
Ali: Procrastinate. Exactly. You need to ask 100 people whether I should or should not. Then once you’ve let the person go, now you have to start a new search. Guess what? The second time you’re more nervous. Now you don’t trust yourself and your own instincts because you screwed up last time. Then when you hire the new person, you finally trust yourself. Now, you have to ramp the new person to get them back in. You lost 2 years.
How do you avoid that mistake? Start early so that you can kiss a lot of frogs. Do a lot of homework and back door references to really make sure that you’re nailing it.
Ben: That makes a lot of sense. I would say the other thing, particularly for new CEOs is, how do you know what’s good? How do you know what’s a good head of sales or what’s a good CFO? Well, the best way to know is to actually talk to a bunch of CFOs, ask them how they know it’s good. What’s the difference between a good CFO and a great CFO? How do you know that? How do you interview for that? Like all those kinds of things, that knowledge, you know, you learn a lot from interviewing candidates.
Ali: A lot.
Ben: If you start early and you’re not even filling the position, then you can ask them whatever you want. Then that ends up being basically the script to figure out what it is.
Ali: That’s a great point. I’ve seen CEOs who say, “I’m going to have my assistant do the backdoor reference checks. I don’t have time for the executive recruiting meeting this week, I’m delegating this. But once we get to the final stages, I’m going to pick.” If you are new and you don’t really know what a great CFO, CRO, or VP of engineering looks like, you should be immersing yourself, spending all the time interviewing everyone, doing backdoors on everyone, and doing dinners with people you can’t get.
Ben: Well, and is your assistant going to say to the backdoor, “Is this the best CFO that you’ve ever seen? Oh, he is not. Who is it? Oh, can you give me her number?” They’re never going to do that.
Ali: Spend the energy, spend the time. This is one of the most important decisions you could ever make as a leader in your company. Spend the energy. You can’t spend too much time on this.
Ben Horowitz is a Cofounder and General Partner at the venture capital firm Andreessen Horowitz.
Ali Ghodsi is a cofounder and CEO of Databricks, the AI infrastructure for the enterprise.