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Ben Horowitz on what most leaders get wrong about corporate culture

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  • Ben Horowitz is the cofounder of VC firm Andreessen Horowitz. His new book “What You Do Is Who You Are” focuses on how a company can build a culture that supports its business.   
  • According to Horowitz, many companies misunderstand culture. It’s not about whether you allow dogs in the office or what kind of snacks you have. A company’s culture is how the people within it make decisions, reply to emails, and generally, their day-to-day actions when no one is looking.
  • In his book, Horowitz says to encourage a wanted behavior, you have to make a shocking rule that is memorable and clear in purpose. Leading by example is not enough. He explains how he wanted Andreessen Horowitz’s culture to value entrepreneurs and not keep them waiting when they come in for meetings as many VCs do. To make this clear they charge employees a late fee of $10 for every minute they keep entrepreneurs waiting.
  • Horowitz says that many aspects of Silicon Valley culture, like casual dress codes, still exist, but everyone has forgotten why. This was pioneered by Intel cofounder Bob Noyce who knew that the best engineers were just as important as the top executives. Noyce instituted a casual dress code to ensure the engineers were being heard by removing the hierarchy that fashion often creates in the workplace.
  • Horowitz also shares one of the investments he’s most excited about and why he is still bullish on blockchain.
  • Click here for more BI Prime stories.

Ben Horowitz is a founding partner of venture capital firm Andreessen Horowitz. He sat down with Business Insider’s Sara Silverstein to discuss his new book, diversity in corporate leadership, and his outlook for crypto. Following is a transcript of the video. 

Sara Silverstein: So you have a new book, “What You Do Is Who You Are,” and you do a great job of defining what corporate culture really is and what it isn’t. Can you help me understand that?

Ben Horowitz: Sure, and this was a struggle that I had as CEO because everybody is like, “Ben, pay attention to your culture.” I’m like, “Great, how do I do that?” That was basically the end of the advice so it was kind of, okay, you’ve got to figure it out. And it turns out that a lot of what you kind of will get from an HR consultant or whatever it turns out to be, almost the opposite of what you want. So they’ll be like, “Well, have an offsite and everyone will pitch in on the values and then you can put in people’s performance reviews.”

But culture ends up being all the things that people do when you’re not there and when you’re not looking so it’s, “Oh, did they return that phone call today or next week or not at all?” “Did they show up to the meeting on time?” “Did they work until five o’clock or eight o’clock?” You know, in a business deal was it about the price or about the partnership?

And all these kind of little behaviors that you have, which okay, put it in the performance review, you don’t know if they made that — you don’t know if they returned the phone call, you don’t even know if they got the phone call and so that’s what culture ends up being, it’s all the kind of things that you do. And so the reason for the title of the book comes from the Bushido [the code created by samurai in ancient Japan] which says, “A culture is not a set of beliefs, it’s a set of actions.” And the book is about how do you get the actions to be what you want them to be.

Silverstein: And how do you get the actions to be? If it’s not going to an offsite and writing down a list of rules, how do you pick what the rules are that define those priorities and how do you get people to follow them?

Horowitz: It’s very subtle, it’s little things that move the culture and I like that term move the culture as opposed to set the culture because you’re not really dictating it.

So I’ll give you just a little example that we use at the office. So one thing that all venture capitalists kind of aspire to or say they are, they all value the entrepreneur, we love the entrepreneur, we respect the entrepreneur, we respect their process. But then if you get into the actual dynamic of the business, what happens is, “oh, you need money? I have money, you got to come to see me and then I’ll decide if I’m going to give you the money.” And so then at that point, who’s the big person, who’s the little person? And then you see it in their behavior, they show up 30 minutes late, it’s kind of legendary if you’re an entrepreneur. They’re not going to invest in you, they just ghost you, they don’t even respond, so we had that theoretical problem when we started the firm, in that we wanted to respect the entrepreneurial process and how hard it was, but how do you do that?

And so I set a little trick which was a rule that kind of upset and shocked people which is if you’re late for meeting with an entrepreneur, you pay a fine, $10 a minute. And oh, you had to go to the bathroom? You’re five minutes late, great $50. Oh you had a really important business call, you’re 10 minutes late, $100. And they’re like, “Ben, why am I paying you to work here? That doesn’t seem fair.” I’m like, “Because I need you to understand how hard it is to build a company and I need you to understand so much that you plan to be on time. And I know that business call was important, I know you had to go to the bathroom, but if it was your wedding you wouldn’t have been late.” So it’s gotta be that important to you and so that kind of thing, every time they go to a meeting people have to think about that, why am I on time? Oh, I’m on time because it’s really hard to build a company.

Silverstein: And for every company, a different culture might be more appropriate than another, can you give me examples of cultures that work very well for specific companies and wouldn’t work for others?

Horowitz: Sure, well like Amazon, who has one of the strongest cultures in the technology business, has this thing about frugality. And they set it so hard like in the old days when you got to Amazon you got a desk that was made out of a door and some two by four, we can’t even afford desks, that’s how cheap we are. And that really went with their strategy of being the low price, basically the low-cost provider always. So the promise to their customers was if you go with Amazon, you don’t have to price check because we’re going to be lowest.

Apple Park

Apple Park in Cupertino, California.

YouTube/Matthew Roberts


Contrast that with Apple, they just built a five billion dollar campus and I don’t know what the doorknobs costs but they’re probably 1000s of dollars, that kind of thing. Why is that? Well, they’re all about high design, beautiful products, these kinds of things. They’re never going to have a cultural value of frugality, it won’t make sense for them.

And you know, Apple’s products are a lot more beautiful than Amazon’s products and Amazon’s products are a lot cheaper.

And so which one do you want and your culture has to support your business strategy and that’s why every culture isn’t right for every company. And there’s not, it’s not a good culture or a bad culture, it’s a cohesive culture that achieves the goal that you want.

Silverstein: A lot of your examples come from Silicon Valley. Is there anything you feel like Wall Street could learn from the experimentation around culture in Silicon Valley?

Horowitz: Yeah, I think that Wall Street culture is, anytime you have an industry that’s really old, you get kind of cultural things that last and you don’t know why.

gordon moore robert noyce intel founders

Intel founders Robert Noyce (right) and Gordon Moore (left).

Intel Free Press


We have one of these things in Silicon Valley, most of Silicon Valley culture was set years ago by a company called Intel. And Intel had this amazing founder, Bob Noyce, who really transformed the culture of business from basically the East Coast super hierarchical, the executives have their own special parking spots and so forth to a more egalitarian, meritocratic culture.

And the idea was that the best engineers were as important to the business as the top executives. And so they wanted to make sure they heard the best engineers and their voice got told and all that. So they had casual dress and cubicles and all this stuff.

So we have all that in Silicon Valley still, but everybody’s forgotten why. And so you’re not coming to work in your pajamas because we want you wearing your pajamas at work, you want people to kind of dress the same so there’s not a hierarchy of fashion and all that kind of thing.

And I think Wall Street has a lot of those old things as well. We saw in Hollywood, which is the origin of the whole Me Too movement a lot of that came from the very early days and they just left it in the culture. It was never a good idea but then like they kept it and it was never a good idea. And so things that get in the culture, unless you really look at them and say, “Okay, we have to change,” the inertia will keep them there.

Silverstein: And you’ve had a long career as an entrepreneur as well as an investor, what is the biggest mistakes that you’ve made when it comes to culture — or a single one?

Horowitz: Oh I’ve made so many. The one that I remember the most is I thought, “If I lead by example, then everybody will just follow my culture,” which isn’t true at all because, look people come in with their own cultures. There’s whole subcultures going on all over the company and as the company grows they don’t even know you.

I’ll never forget I had this, I felt like, I was generally an honest person, nobody’s 100% honest but pretty honest, and I had a guy running products who was always lying, telling everybody just false promises this and that, hiring people, telling them we’re going to do this, telling customers that, and I had no idea. And then somebody just mentioned to me, yeah everybody’s just telling these fantastical stories in that area. And I’m like, “No that can’t be, no way.” You know, I was just shocked, how could they be lying all the time? I don’t lie all the time. And it was just, yeah that was a culture that he had come from, from another company that was into over marketing. And so if you don’t set the culture, the culture just is what it is, it’s not how you behave necessarily.

Silverstein: When you’re doing due diligence on a potential investment, are there red flags you look for? You said it’s hard to identify culture just walking into a place. But is there anything you can look for that’s an indication if something is a good culture or bad culture?

Horowitz: I mean, I think that you can get clues, it’s very hard in our position in the kind of time frame that we have to examine a company. One thing, it’s very rare that you would have the founder or the CEO make stuff up or kind of exaggerate or fake it till they make it or whatever they call lying these days without the whole company being like that because that is something that tends to be contagious. So you can clue in on that.

There are things where you have multiple founders in the meeting and some of them are afraid to say what they think like even in a pitch meeting and these kinds of things. Those are all cultural cues and aspects but I would say this, very few founders have a great sense of how to build a culture, so it’s something that they learn as they go. You know, it’s not like, we don’t see people come in who are cultural masters, like Toussaint Louverture or something like that.

Silverstein: If you look at a company like WeWork, where they had a lot of culture and some of it was very beneficial to what they built and some of it ended up not being as much so, what is your assessment of something like that?

Adam Neumann

Adam Neumann is the cofounder of WeWork and the former CEO.
Jackal Pan/Getty Images


Horowitz: Well, that’s one of those ones where a lot of time your strength is your weakness. They had this amazingly optimistic culture, Adam had convinced the whole company they could do anything and they were going to change the future of work and so forth. And that had a great power to it, not only in raising a lot of money but also the quality of the people they were able to hire, the kind of momentum they had behind the whole thing, and people who kind of partnered with them and worked with them all kind of started to believe in, because there’s such a powerful optimism. But I think that when you are that optimistic, generally, and WeWork I don’t know intimately, but it’s really easy for people to shut down bad news. We’re changing the world, we’re doing this, everything is going to go well, we said it, it’s going to happen. And then somebody goes, “Well you know, our accounting systems really aren’t up to speed with the business, we can’t even track of what we’re doing here.” “No, it’s going to be fine.” That there is really problematic because there’s no way that the issues that came out of WeWork weren’t known in WeWork but somehow that information didn’t travel to where it needed to go and that is often a cultural problem about can you hear the bad news as well as the good news.

Silverstein: You don’t seem to shy away from discussions about race and diversity and it seems we’re in a moment right now where there’s a lack of diversity in leadership in many companies but there’s a lot of diversity among employees who are starting to ask questions very blatantly to managers. What do you suggest that managers say and what should they do in order to address that?

Horowitz: Yeah, I think that people are approaching diversity from a weird perspective which is from a pressure, they’re getting pressure from the press or from their employees or so forth and they’re not sure what they should do but what they really want is the sticker that says, “I’m not sexist, I’m not racist or whatever, I love women, or I love Hispanic people,” and the problem with that is if you start from there then you’re actually solving the wrong problem and that what you’re trying to do is get to some numerical breakdown or this or that or the other.

Steve Stoute

Steve Stoute is the former president of Urban Music for Sony Music Entertainment, and the author of “The Tanning of America.”
Andy Kropa/Invision/AP


When the real thing is people want their talent to be seen and their talent to be valued. Let me give you a story about this that made it very clear for me. So my friend, Steve Stoute who used to be president of Sony Urban Music, and he calls me up one day and he goes, “Ben I used to be president of Sony Urban Music,” and I’m like, “Steve I know that,” but that’s his personality he tells me stuff I already know when he wants me to really listen. And I go, “I already know that,” he says, “Yeah, but it wasn’t urban music, it was black music but we had to call it urban music because black music, that would’ve been racist.” And I was like, “Well that’s kind of silly,” and he goes, “No, no, no that wasn’t the really dumb thing, the really dumb thing was, because we called it urban music I can only market it in cities,” and I was like, “Wow, that’s really weird,” he’s like, “Yeah, like there are no black people living in rural areas,” I was like, “That is so stupid,” and he goes, “No, no, no you’re not listening to me Ben, I was president of Sony Urban Music, Sony Urban Music, I had Michael Jackson, what white people don’t like Michael Jackson? It wasn’t black music, it was music. And because they made me market it as black music, we cut off the market.” And I was like, “Wow, that’s exactly how we do it in corporate America, but we call it, it’s urban HR, we call it the diversity department.”

And so rather than it being talent it’s female talent, Hispanic talent, African American talent, but no, it’s talent and the problem is, we’re not able to see the talent because it’s not the same talent that we have necessarily.

And so how it works in a company is and why people care about the leadership is, oh you’ve got a woman running your group, guess what, there’s a lot of women in it, you have a white man running your group, a lot of white men in it, Asian person, a lot of Asian people. And that whole dynamic perpetuates because why, I know what I’m good at, I value it highly, and I can test for it in an interview.

Specifically, I can’t see what I don’t have and that is what feels most un-inclusive once you get there, once you actually get the job. And so we had this problem at our firm very early on, we had an Asian guy running research, everybody was Asian, woman running marketing, everybody’s a woman and so forth.

So I’m trying to diagnose this. And I go to our head of marketing, genius woman, Margit Wennmachers and I say, “Margit what is in your hiring criteria where no men have been able to get the job?” And she says, “Helpfulness.” And I’m like, snap, I don’t know a lot of helpful men. But the more important thing about that was we’re a venture capital firm, we’re in the services industry, what job did we have where being able to anticipate somebody’s needs before they even said anything wouldn’t be an incredible asset to the company? But we didn’t have that criteria in most of our profiles, we couldn’t see it, I couldn’t see it, I was talent blind.

Silverstein: You draw, especially in this book, lessons from all different cultures and all different stories, what inspired you to look across history and across cultures that you’re not a part of and have you received any pushback from going across, you’re interested in rap and all sorts of different history.

Horowitz: I’m not Haitian but I wrote about the Haitian Revolution and I wasn’t in prison but I wrote about prison. And I’m not an ancient Samurai warrior but I wrote about that and so forth. I think the subject matter was treated with kind of the right lens with the right amount of respect and honesty that I haven’t gotten a lot of, I haven’t gotten negative pushback, it’s been mostly supportive. But I think it’s been very important, each one of those is kind of critical in what it does.

So for example, people will go, “Why are you talking about prison culture?” And prison culture turns out is very instructive because if you’re hiring into a company people come with a lot of cultural building blocks, so they know how to show up for an interview and dress correctly, they know how to be on time, they know how to do certain things, they have kind of cultural things that you can build on.

shaka senghor

Shaka Senghor was imprisoned for murder. He’s now an advocate for criminal justice reform.

Prince Williams/Getty Images


In prison you’re really starting from first principles, people come in with very very little and so going through how Shaka Senghor built that culture, built the prison gang culture and then changed it is one of the most illuminating things that I have ever kind of been through as a process, understanding that in any kind of cultural example I’ve seen. So it turns out to be, I think very effective.

Silverstein: Looking at Andreessen Horowitz’s portfolio is there a favorite bet that you have in there that you’re really excited about what the company’s doing that the media isn’t covering already?

Horowitz: So, one of the companies that I’m personally involved in that is an amazing company that I think the media’s, because it’s infrastructure, doesn’t pay much attention to, is a company called Databricks which basically is the infrastructure for AI, it’s kind of the big data database. They’re solving an amazing set of problems from, you know, people working with it to cure cancer, to people doing threat detection on kind of massive attacks from state actors and these kinds of things. And it’s just, I would say really incredible what you can do if you can actually harness the mass amount of data that’s out there.

Silverstein: Are you still interested in Bitcoin at all?

Horowitz: Yes, oh yeah, well not just Bitcoin.

Silverstein: Sorry.

Horowitz: The whole of cryptocurrency.

Silverstein: Yes.

Horowitz: Cryptocurrency, blockchain technologies are we think going to be transformational in the future. And the reason is it’s a new computing platform is a way to think about it. And it’s deceptive because like other new computing platforms, it’s worse in every way except for one. So if you think about the smartphone, like it was a way worse computer than the PC, try doing a spreadsheet on that, it doesn’t have a keyboard, the screen is tiny. And so if you looked at it through that lens it was terrible. But, it had a GPS and a camera on it so you could build Instagram, you could build Lyft, you could never build that on a PC, you’ll never build it on a PC.

Blockchain’s like that, the new feature is trust, meaning I don’t have to trust a company, or the government, or my lawyer, or anything. I could just trust the game-theoretic and mathematical properties of the platform and then I can program new things and there’s been, the early things, Bitcoin is a great example, I can program money. People will go, “Bitcoin, it’s this, it’s that, it’s not a real currency.” The thing is 10 years old and it’s got 170 billion dollars in value and it’s just software. It’s just a software program with four guys working on it and so you go, “Well how is that?” It’s because it’s got trust and people trust it as a store of value and that’s an amazing thing.

And if you think about being able to program everything from a new judiciary to, you know, art. So art now exists in the, it’s all virtual, art is virtual, like how much does the canvas and the paint cost? Almost nothing. But because you know that that was painted by Basquiat, no one else has one, it’s worth a lot of money. What if you could do that digitally? Well that’s something that you can do with this kind of technology, so there’s all kinds of amazing possibilities, early days, but we’re fired up about it.

 

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