What You Do Is Who You Are

by Ben Horowitz

  I was stunned. That was it? Hey, motherfucker? It was weird, but profound. By being willing, in that moment, to see Mark for who he was and to go meet him in his culture, I made him just comfortable enough that he took a chance on us.

  We got him in the nick of time. Not only did we lack an enterprise sales culture, but we lacked everything that underpinned it: a sales philosophy, methodology, and attitude. We needed an approach to winning deals, a method that would reliably make us stand out, and an attitude that we would refuse to lose. Cranney had all of that. It started with his philosophy. He believed that you were either selling or being sold: if you weren’t selling a customer on your product then the customer was selling you on why she wasn’t going to buy it.

  He instilled in our eight-person sales team the crucial four C’s. To sell, you had have 1) the competence—expert knowledge of the product you were selling and the process to demonstrate it (qualifying the buyer by validating their need and budget; helping define what their buying criteria are while setting traps for the competition; getting sign-off from the technical and the economic buyer at the customer, and so forth) so that you could have 2) the confidence to state your point of view, which would give you 3) the courage to have 4) the conviction not to be sold by the customer on why she wasn’t going to buy your product. Cranney was obsessed with training every salesperson, testing them, and holding them accountable on the four C’s.

  For him, selling was a team sport. That sounds like he made it fun and collegial, but no. He was fond of saying that most reps had a Wizard of Oz problem: they lacked either the courage, the brain, or the heart to be successful by themselves. That’s where the process and the team came into play. Every person on each sales team had a specific role to play—making the technical sale, navigating the organization, serving as the closer—and if he did not play his role to perfection, the sale was in jeopardy. Quite rapidly, Cranney’s system began to work. In his first nine months, our sales team expanded to thirty people and our win rate went from the low 40s to the mid-80s.

  As he saw sales as analogous to football, he kept a close eye on the clock and the scoreboard. His urgency and his total intolerance for anyone who was hurting our effort caused more than a few clashes with his team. Early on, he went to Memphis to observe one of our technical proofs of concept (POCs) at FedEx, where we installed our software in a company’s environment to prove that we could manage their servers as advertised. POCs were complex and stressful, because of the extreme variance in network equipment types, servers, and software. Chip Starkey, one of our best field engineers, was running this one, and Cranney asked him where Mike the sales rep was. Chip said, “He never attends these.” Cranney took out his phone:

  Mark: Mike, did you get a good workout in today?

  Mike: Yes, I ran five miles.

  Mark: Good news! You’re going to have a lot more time to work out, because you’re fired.

  Two months into Cranney’s tenure, I received a call from Sy Lorne, a board member who chaired our governance committee and had helped to design our whistle-blower policy. Sy was a brilliant lawyer who had been the general counsel of the Securities and Exchange Commission:

  Sy: Ben, I received a somewhat disturbing letter.

  Ben: [highly alarmed] What did it say?

  Sy: “Dear Mr. Lorne, I am writing to you in your capacity as the point of escalation on Opsware’s whistleblower procedures. I recently interviewed at Opsware and must report my experience. Everyone at Opsware was extremely professional, well-mannered, and courteous throughout the process. Everybody except Mark Cranney. In my entire career, I have never experienced such a lack of professionalism or decency. I request that you fire Mr. Cranney immediately. Sincerely, [name removed to protect the innocent].”

  Ben: Did he say what happened?

  Sy: No, that’s the whole letter.

  Ben: What do you think I should do?

  Sy: Well, you have to investigate it. Once you do, let’s talk again.

  I called my head of human resources, Shannon Schiltz. Unlike many HR professionals, Shannon did not engage in politics. She moved in silence with precise intent, like a ninja. I said: “Shannon, I need you to investigate this incident with Mark, but try not to trigger his paranoia. Let’s interview him last and only if necessary.” She said, “I got it.”

  After three days, Shannon reported back. She had spoken to everyone involved in the incident, including the alleged victim, but amazingly, nobody else in the company, including Cranney, had learned about her investigation. I said, “Give me all the bad news. Don’t hold anything back.” She said, “Well, the good news is that the stories are one hundred percent consistent, so I really don’t even need to talk to Cranney to understand what happened.” I was shocked. In all the investigations that I’ve ever seen, the only certainty is that the stories will conflict. I asked her what happened. She said:

  The candidate had experience as an inside sales rep, but not much yet as an outside rep. [In enterprise software, an outside sales rep is a more senior position.] He interviewed with various people, then with Cranney. Five minutes into the interview, Mark said: “Okay, we’re done.” Then, before the candidate was out of the cube, Mark crumpled up his resume and threw it in the trash. Next, before he was out of earshot, Mark stuck his head out of his cube and yelled to the hiring manager, “How in the fuck did that sorry motherfucker make it all the way to me?”

  I hesitated. I wanted an intensely competitive culture, but had I gone too far? Maybe, but this was wartime—we had to become ferocious fast. I called Sy to get his take. He heard the whole story and said, “That’s crazy.” I asked, “Do I need to fire him?” He said, “No, no. But you might want to talk to him and have him work in a soundproof booth.”

  We had an egalitarian culture borrowed from the early days of Intel: all employees, including me, sat in cubes. Based on Sy’s advice, I sat Mark down and walked him through the incident, explaining that he was creating liability for the company and himself. He understood the issue, but he was who he was. So I broke our cultural rule and put Mark in a walled office; that way if he did slip up—and he certainly would—it wouldn’t be public. Equality was less important than the cultural virtues we needed to survive.

  We grew our valuation from around $50 million when we hired Mark to $1.65 billion four years later, when we sold to Hewlett-Packard. That price was roughly double what BladeLogic sold for. Adding Cranney’s cultural elements made a huge difference.

  We don’t have records of all the ways the soldiers of Louverture’s slave army reacted when he brought in white French and Spanish officers, but we know that there was tremendous tension. If you bring in outside leadership, it will make everyone highly uncomfortable. That’s what cultural change feels like.

  Make Decisions That Demonstrate Priorities

  In 1985, Reed Hastings was a twenty-four-year-old high school math teacher who really wanted to work with computers. He took a job serving coffee at a company called Symbolics Inc. just to get a foot in the door.

  Symbolics, which registered the first dot-com ever, Symbolics.com, made the programming language LISP. LISP was elegant and easier to use than its counterparts like C. It achieved this elegance in part by shielding the programmer from managing the computer’s memory, which at the time was an unbearably slow task. Symbolics had to make specialized hardware just to run the language. But when Hastings wasn’t busy dispensing coffee, he learned to program the Symbolics machines.

  Later, when he got his master’s degree in computer science at Stanford University, he had to revert to using C. Frustrated, he began to look into managing memory more cleverly so he could improve LISP and get back to using it all the time—and he discovered techniques that made C radically easier to debug.

  In those days, the most vexing software bug was a “memory leak.” Memory leaks occurred when a programmer allocated the computer’s memory for some temporary use, but forgot to give it back to the machine later. Because thes
e leaks only occurred when users took a random, unpredictable path, they were exceptionally difficult to re-create and to fix—and, in the meantime, the machine was useless.

  Hastings figured out a way to detect memory leaks in the lab before a program shipped, and in 1991 he started a company called Pure Software to capitalize on his discovery. Its product, Purify, radically improved the way people developed software and was a hit.

  Yet he had never paid any attention to management or culture and as the head count grew, morale plunged—so much so that he asked his board to replace him as CEO (it refused). Every time Pure had a cultural problem, it aggressively put a process in place to fix it, just as though the company were maximizing semiconductor yield. The side effect of creating a massive set of rules that governed behavior—of optimizing for removing all errors rather than for encouraging exploration and free thinking—was to stifle creativity. Hastings vowed not to make that mistake again.

  Pure went public in 1995 and was sold to Rational Software in 1997 for about $500 million, which gave Hastings the capital to start a company called Netflix.

  Why would this computer genius start a media company?

  At Stanford, Hastings had taken a course that required him to calculate the bandwidth for a computer network. This particular network was a station wagon carrying a trunk full of backup disks traveling across the country. This out-of-the-box example forced him to think about networks in a different way.

  In 1997, when a friend showed him one of the first DVDs, Hastings thought, Oh, my God! This is the station wagon! That insight prompted him to build what he thought of as a high-latency, high-bandwidth computer network that delivered 5GB data payloads for a thirty-two cent postage stamp. In other words, he started a company to deliver movies over the postal network.

  He knew that the network would eventually move to a low-latency, high-bandwidth equivalent, streaming its content over the Internet; that’s why he called the company Netflix rather than DVD By Mail. But in 1997, the Internet was far from ready for that. Its video images were tiny, jumpy, and pretty much totally unwatchable.

  So Netflix became a DVD-by-mail company that competed with Blockbuster and Walmart. In 2005, Hastings and his team saw YouTube for the first time. The quality wasn’t ideal, but you could pick from a menu of videos, click on one, and watch it immediately.

  Two years later, Netflix launched its streaming service. Hastings later observed that the challenge wasn’t getting into a new business—almost every company could and would do that; it’s B School 101. The challenge was getting into a new business with the intention of making it the business. Almost no companies did that. Netflix’s entire high-customer-satisfaction, very-profitable culture was built around delivering DVDs.

  In 2010, Hastings felt that he had just enough streaming content to run an experiment in Canada, which had no DVD-by-mail service. The company signed up as many Canadian streaming subscribers in three days as it had expected to get in three months. The age of streaming was clearly at hand—but how could Hastings make the jump to becoming a global business built around streaming? Obviously he’d have to bundle streaming with DVD to begin with, but what next? Every time he raised this vital topic with his team, trying to hyperleap the company into the future, the conversation reverted to optimizing the DVD service.

  Hastings made a hard decision to demonstrate his priorities. He kicked all the executives who ran the DVD business out of his weekly management meeting. “That was one of the most painful moments in building the company,” he said later. “Because we loved them, we’d grown up with them, and they’re running everything that’s important. But they weren’t adding value in terms of the streaming discussion.” Hastings had long kept looking over his shoulder for a pure-streaming company that would run right by Netflix. He knew that that competitor wouldn’t have any DVD execs in its meetings. So why should Netflix, if it was going to be that company?

  You’d be hard-pressed to find a management book that recommends rewarding the loyal team generating all your revenue by booting them out of the company’s key meeting. But Hastings understood that moving the culture in the right direction trumped all other priorities. He had to shift the culture from one that prioritized content and logistics to one that prioritized content and technology. That change would affect everything from work hours to compensation strategy. But if he didn’t make it, Netflix would today be Blockbuster—which went bankrupt in 2010.

  Louverture knew that telling people that agriculture was a priority wouldn’t make it so. He had to do something dramatic to demonstrate that it was the highest priority—something everyone would remember. He forgave the slave owners and let them keep their land. Nothing could be clearer. Likewise, Hastings couldn’t just say that streaming was a priority; he had to demonstrate it.

  The results for Netflix have been spectacular. As late as 2010, it was ridiculed by the media giants. “It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey Bewkes, the CEO of Time Warner. “I don’t think so.” Today, with a market cap of more than $150 billion, Netflix is worth almost double what AT&T recently paid for Time Warner.

  Walk the Talk

  The 2016 U.S. presidential election featured a blizzard of withering exposés. The press revealed Donald Trump’s multiple past bankruptcies, shabby treatment of employees, and the lewd and misogynistic comments he’d made while preparing to tape a segment for Access Hollywood. But the most consequential attack addressed how Hillary Clinton had handled top-secret emails. This charge had real traction, climaxing in a chant of “lock her up” at the Republican National Convention—in a call to convict Clinton of espionage and other crimes. Law enforcement never came close to considering her conduct criminal, but the political damage was significant.

  As secretary of state, Clinton used a personal email server instead of the government system to send and receive emails. Her enemies suggested that she must therefore have been funneling secret documents to America’s enemies. Her friends, and Clinton herself, said it was simply a matter of convenience; after all, no secretary of state before John Kerry had employed a state.gov email address. Colin Powell used an AOL account.

  Anyone who’s had to deal with multiple email accounts on multiple mobile devices could understand Clinton’s rationale. FBI investigators accepted Mrs. Clinton’s explanation, taking her point that none of the emails she sent or received on her public server was marked as classified. However, that wasn’t the end of her email problems.

  As the election grew closer, the Russians stole a treasure trove of the Democratic Party’s emails by hacking the account of John Podesta, the chairman of Clinton’s campaign. This hack, and the slow drip of consequences from it, may have swung the election to Donald Trump. How did the Russians pull off this coup? Was this an audacious cyber-crime?

  CyberScoop, a cyber-security news organization, explained what happened:

  Podesta wasn’t hacked because he used a bad password. His email was breached because hackers sent a spear phishing email pretending to be Google asking for his credentials because, according to the fake email, he had already been hacked. It’s a common tactic of hackers to create emotional urgency during an attack. Ironic as it is, pretending you’ve already been hacked is a common tactic because it can push people to quickly click malicious links without thinking through or checking the consequences.

  In other words, Podesta was hacked in the simplest and most common way—via an email that told him to click on a link to protect himself. Anybody who’s read the most cursory article about Internet security knows that the first rule is, Don’t click on an unknown link and enter your password. A legitimate business will never ask you to do it. So how could this happen?

  The official story is that Podesta forwarded the suspicious email to the campaign’s IT person asking whether it was legitimate and that person told campaign aide Charles Delavan that it was a phishing attack. Then Delavan mistyped in his note to Podesta, say
ing it was “a legitimate email” and that Podesta should “change his password immediately.” Should we believe this explanation? This would be the equivalent of a suicide hotline chat where the hotline rep mistypes that the person at risk should swallow the bottle of pills and wash them down with a fifth of tequila.

  So the entire episode got blamed on a low-level aide who wouldn’t be attacked by the press and the Democratic Party. Hmm. In the end, though, it’s irrelevant whether that story was a cover-up. What matters is that the Russians hacked Podesta’s email, which revealed a number of mildly embarrassing and cumulatively damaging episodes that included campaign staffers having been fed some debate questions in advance, having gotten improper information from the Department of Justice about Clinton’s email case, and joking about the hearings into the Benghazi attack of 2012.

  In her book about the campaign, What Happened, Clinton recognized that questions about her personal handling of emails—as pointed out in former FBI director James Comey’s inflammatory letter to Congress about them just ten days before the election—were compounded by the Podesta hack: “Together, the effects of Comey’s letter and the Russian attack formed a devastating combination.”

  How could the campaign have been so negligent?

  Whether you were a Clinton supporter (as I was) or a detractor, most reasonable people would agree that she was an experienced and competent manager. Her campaign’s explicit instructions to all staff were to take security very seriously. In late March 2015, FBI agents visited her campaign managers to warn that foreign governments would try phishing them. Everyone was required to use two-factor authentication on their email accounts and every member of the campaign was trained on phishing attacks. If Podesta had followed either of those protocols he would have fended off the attack. Together, the protocols formed the standard belt-and-suspenders-level protection.