– You know, courage without genius
might not get you where you need to go,
but genius without courage almost certainly won’t.
In this industry, you don’t have a business
until you have a product.
The entrepreneur with the idea at the right time
is going to look like a genius.
The entrepreneur with the right idea at the wrong time
is going to look like a moron.
Failure is a wonderful thing.
Failure teaches you all this stuff,
and it’s great to fail a lot.
Like, and we don’t buy any of that.
New companies generally shouldn’t exist.
Existing companies are usually pretty good at what they do.
Having the right idea and having it at the right time
being able to execute on it is 99% of it.
No matter how dire it gets,
no matter how like evil Moriarty is,
Sherlock’s going to have that stroke of genius
that’s going to save the day.
I think that the development, career path, skills training
is going to be such a more fundamental part
of how the economy works.
Me and my business partner at my last company, Ben Horowitz,
coined a term he calls the, “Law of Crappy People.”
You’ve been sitting here listening to me for 20 minutes,
and I’ve been working on this for five years,
and you think you understand this so well
that you can make me a suggestion.
– He’s an American entrepreneur, venture capitalist,
and software engineer.
He’s the co-founder and general partner
of the Silicon Valley venture capital firm
Andreessen Horowitz.
He has an estimated net worth of 600 million dollars.
He’s Mark Andreessen,
and here are his top 10 rules for success.
(loud bang)
– The two things we really zero in on
in people are two things.
They sound simple, they not being very difficult
courage and genius.
Courage is the one we talk about a lot,
because it’s the one people can learn.
Courage, which is to say
not giving up in the face of adversity,
just being absolutely determined to succeed,
is something that you can force yourself to do.
It can be very painful.
You can force yourself to do it.
The genius part is a little bit harder
to force yourself to do.
Courage without genius might not get you
where you need to go,
but genius without courage almost certainly won’t.
And so, we’re looking for some kind of magic combination
of genius and courage.
We don’t believe there’s a tension
between product and business.
We believe there’s a staging.
Which is, in this industry, you don’t have a business
until you have a product.
And in particular, you don’t have a business
until you have a product that a lot of people will want.
We have this concept, we use the term, “product/market fit”,
which is basically you have a product that the market wants,
and you can tell because the market’s pulling the product.
And until you have that, time spent building the business
around the product is pointless,
because it’s not going to go anywhere.
Like, best case, it’s going to be a zombie.
There’s a lot of companies,
or in the Valley,
there’s a lot of companies in the Valley and elsewhere
that are 25, 50, 75 people.
They’ve got a product, nobody really wants it.
They sell a few every quarter,
and they kind of eke out a living.
And they go on for year after year after year after year
after year and they never get anywhere.
They never go public.
They never get bought,
and people just basically collect salaries.
And that’s not what we want to do, and that’s not
what super high potential entrepreneurs want to do.
So, what we basically say is,
if you want to build a big success,
you’ve got to nail the product.
It’s got to be a killer product.
It’s got to be something that has product/market fit.
When you have product/market fit,
then you build a company around it, right?
So then you build a sales force,
then you start doing marketing,
then you start doing business deals,
then you start expanding internationally,
and you do all this other stuff.
And it’s at that point where you start to apply
a lot of capital, and you build a big board,
and you start hiring executives and doing all this stuff.
But a full executive team, with a sales force,
all that stuff before you have a killer product
is a complete waste of time.
Entrepreneurs are often uniquely bad
at wrapping their heads around timing,
’cause entrepreneurs by definition
are highly optimistic people, ’cause you have to be.
‘Cause you’re starting a company, and you have to be
highly optimistic if you’re going to set off and do that.
And you’re probably so optimistic,
that you’re probably too aggressive on timing,
and you probably assume that something is going to happen
in the market, faster than it’s actually going to.
And so, sometimes what you see happen,
you see the Friendster, Myspace, and Facebook scenario.
You see that happen a lot.
You see a company fail, and then another company
with the exact same idea six years later,
and that’s a huge success.
And it’s just flat out, simply timing
and I don’t know what to say,
well I don’t know in general
what to say about that in the specifics,
there’s a lot of specific things I think you do
to try and address that.
You try to keep your
(mumbles) rate low.
You try to give yourself runway for the market to develop.
You try to correct for the fact
that you’re probably being too optimistic.
But, I think in practice, that’s a lot of luck.
The entrepreneur with the idea at the right time
is going to look like a genius.
The entrepreneur with the right idea at the wrong time
is going to look like a moron.
And it’s really hard for an entrepreneur
to tell the difference.
And by the way, there’s always been this kind of thing
in Silicon Valley, of this sort of, “failure fetish,” right?
Failure is good, right?
Failure is, all you guys were probably all been taught this,
heard about this from a lot of people.
Failure is a wonderful thing.
Failure teaches you all this stuff,
and it’s great to fail a lot, and we don’t buy any of that.
We think that’s all complete, complete nonsense.
We think failure sucks.
(audience laughing)
We think failure is a terribly,
terribly depressing thing to go through.
We think success on the other hand is wonderful.
(audience laughing)
You know, you wouldn’t think that this is something
you have to actually say out loud,
but we do find it to be clarifying
when we point it out.
(audience laughing)
And so we are strongly biased towards people
who are so determined to succeed
that they just never give up, they never quit.
And I think that is a huge part of it.
And that’s something we try to look deeply for.
That’s the kind of thing that’s not listed on a resume, right?
That’s something that has to be deep in somebody’s,
fundamentally deep in somebody’s character,
and you have to see it in their backgrounds.
New companies generally shouldn’t exist.
Existing companies are usually pretty good at what they do.
And so, for a new company to exist, it not only has to
come in and go into business, and bring a product market,
but it has to bring a product market that’s so much better
than what already exists, that it punches through
the sort of status quo.
Most customers in most markets are pretty happy
buying from the current suppliers,
so there has to be a real edge on the thing.
And we look for that in either a technology change,
usually a technology change or an economic change,
which are often the same thing.
The single best piece of advice I’ve ever heard,
I heard the other day
watching Steve Martin, the comedian, on Charlie Rose.
Steve Martin, that I’m sure everybody in the room
knows who Steve Martin is, but he’s one of
the most successful comedians in the last 30 years
across many different media,
across television, movies, and books, and everything.
He’s been tremendously successful.
He recently wrote a book about,
it’s actually really funny
’cause it’s a book about how he became successful,
and it’s not even a funny book.
I mean, it’s Steve Martin, so it’s a little bit funny,
but it’s not a comedy book.
He actually sat down and wrote a book of how I did it.
And in particular, right in comedy,
comedy is a little bit like startups,
in that there are a few comedians like Jerry Seinfeld,
or Steve Martin, that are hugely successful.
And then there’s like, for every one of those,
there’s 10 thousand others who are still playing nightclubs
in very, very small towns.
So there’s a huge dispersion from the big winners
to a very large number of people who work equally hard,
who don’t get there.
And he boiled it down to something that I think
was incredibly insightful.
Obvious, but insightful.
He said, “Young comedians always come to me and they say,
“How do I be like you?
“How do I be successful like you?”
And he said they’re always looking for like,
“How do I get an agent?”
Or “How do I get booked?”
Or “How do I get on the Tonight Show?”
Or “How do I get a movie role?”
And he said, the real answer is
be so good that they can’t ignore you.
And it turns out that he just,
and this is what his book talks about,
is he applied himself with a level of discipline
at being an amazing comedian.
And it’s really funny, right?
Steve Martin’s a great illustration of this,
’cause Steve Martin on stage is incredibly silly,
and he’s got the banjo, and he’s got the arrow.
If you watch his footage from the 70s
when he was up-and-coming.
He’s got the arrow through his head, he’s dancing around,
he’s doing all this crazy stuff,
and it looks like he’s just clowning.
But the level of discipline and rigor
and practice that he put into it
was astonishing over a decade long period.
And then after a decade of hard work
was a sudden overnight success.
The key point there being,
be so good that they can’t ignore you.
If there’s a forum like this, and a group like this,
and efforts like this, and my blog,
and all these things.
We all talk about the mechanics of how do you hire people,
or how do you raise money, or how do you do this,
or how do you do that, or how do you sell your company?
And a lot of that, it’s important stuff,
but a lot of it is when to addressing
around the core proposition of the core problem,
which is how to be so good that they can’t ignore you.
And in a startup, a lot of that has to do with
have an idea that’s so good that they can’t ignore you.
And the best idea,
having the right idea and having it at the right time
and being able to execute on it is 99% of it,
and the rest of the stuff that we all talk about,
that I talk about all the time,
is all add-on and ancillary to that.
There are no silver bullets.
There are only lead bullets.
There’s this temptation,
especially when you get into crisis,
when you get into a real problem.
There’s this temptation to think,
“There must be a magic answer.
“There must be some stroke of genius.”
It’s almost, it’s like,
I don’t know if people watch
the new Sherlock Holmes TV series, which I just love.
It’s like, you know, Sherlock is going to have,
no matter how dire it gets,
no matter how evil Moriarty is,
Sherlock’s going to have that stroke of genius
that’s going to save the day.
And there’s this really strong tendency
to kind of think that that’s out there.
And we see a lot of entrepreneurs
that cycle through different silver bullets,
and then they don’t work, and they don’t work,
and they don’t work.
Ben’s point is always, the answer’s probably
in firing a whole bunch of lead bullets.
So the answer probably is
the engineers working later at night for six months,
and getting the next version of the product out.
And the answer is probably for the sales reps
to go call on twice as many customers and close more deals.
And the answer is probably to, you know,
your stock price is low, go find the investors
who are willing to invest
when you’re trading in half the cash.
‘Cause it turns out they actually do exist,
and then your stock goes up a little bit,
and people start to regain confidence.
So I would say I’ve certainly come around
to that point of view a lot,
and so when we work with entrepreneurs,
we often have very similar advice, ’cause it’s kind of,
it’ll be tempered through the very practical realities
of what you have to do to get through a situation like that.
I think our companies systematically are too weak
on helping people evolve in their careers
and develop new skills.
And I think that same thing is true
across the entire economy.
And you almost can’t be too good at it.
The classic example in the Valley right now,
is everybody needs mobile, everybody needs iOS programmers.
So everybody’s out trying to recruit the same,
it feels like there’s only 3,000 iOS programmers
in the Valley, and everybody’s trying to recruit them all.
It’s like, well you’ve got,
in a lot of these companies, you’ve got Java programmers,
and you’ve got PHP programmers,
and you’ve got Web programmers.
It’s like, take four months,
and we actually,
there’s a training company we work with
called Big Nerd Ranch.
They’re spectacular.
They literally are, it’s Big Nerd Ranch.
It’s where you send people off,
and they train them (man laughing)
on how to be iOS programmers
at the Big Nerd Ranch.
– [Man] Dear God.
– Yeah, everybody’s writing that down.
(audience laughing)
Or he’s pointing to somebody that’s been there.
And so, train people up on how to do these things.
We have another company called the Udacity
that does this kind of training now online,
and is rolling out all these tracks
to be able to train people how to do mobile development,
or how to train people how to do data science.
And so I think the development, career path, skills training
is going to be such a more fundamental part
of how the economy works, and I think it has to be.
Because today we’re all hiring mobile developers.
Three years from now we’re all going to need to hire
neural implant developers or whatever it’s going to be.
– [Man] I love it.
– And we’re going to have that exact same problem again.
– How do you as you grow the startup to be a lot bigger
prevent mediocrity from creeping in.
– So I love, this question I love
because I think there’s actually,
a way to think of this is from a systems standpoint.
So, my business partner at my last company, Ben Horowitz,
coined a term he calls, “The Law of Crappy People.”
We focused on it a lot at my last company
and focus on it a lot in my current company.
Basically, the Law of Crappy People,
is basically a derivation of the concept that
A people hire A people, and B people hire C people,
which is kind of a cliche and everybody kind of knows that.
But the Law of Crappy People kicks in as you grow.
And what the “Law of Crappy People” really is
is that the capabilities or the competence
of the people at any level in your company as you grow,
are going to degrade to the worst person
at that level in your company.
And so, your vice presidents,
over time, are all going to be as bad
as your worst vice president.
Your directors over time, are all going to be
as bad as your worst director.
Your engineers over time, are all going to be
as bad as your worst engineer.
And the reason is because the way
that hiring decisions get made,
and the way that promotion decisions get made
inside a company, is within reference
to the people who are already there.
So, I’m a manager.
I want Joe to get promoted from engineer
to senior engineer.
My argument is he’s a really good engineer,
and the other executives who are battling
for promotions for their people say,
“Well, he’s not that good.”
And then I say, “Well, he’s at least as good you know, Bob,
“who is your guy, who is a senior engineer.”
And you’re like, okay, yeah I guess that’s true.
Bob isn’t that great, and Bob is a senior engineer,
so clearly Joe should also be a senior engineer.
And before you know it, all your senior engineers
are as bad as Bob.
And it’s absolutely astonishing
it’s absolutely astonishing to watch
because it basically degrades
if somebody significantly better than the worst person,
they get promoted.
And when new people get hired,
they get hired in reference to
the worst person at the level.
So, it’s basically on a level by level basis.
And you basically need to just beat it back with a stick.
You need to be so determined to not have the,
another term that people use,
“The soft bigotry of low expectations.”
You need to be absolutely determined to have
your definition of good not be the average
of the people we have in the company
or the person who was accidentally promoted
to a certain level who really shouldn’t have been,
but now that he is, that’s the definition of the level,
’cause he’s now a part of it.
And you just need to absolutely beat it back with a stick.
And one of the heuristics I think you can use
to beat it back is to ask yourself a question,
on every hire and on every promotion is
“Are you raising the average?”
Because you’re probably either,
if you’re hiring somebody or promoting somebody,
you’re either going to be raising the average at that level,
or for that role in the company,
or you’re going to be lowering the average.
And if you’re continuously raising the average,
which is very hard to do,
then you’re going to defeat the Law of Crappy People.
But if you’re not super focused
and super determined on that,
then it will inevitably degrade.
Really bright founders, with these really radical ideas
tend to go through what they call the “idea maze”.
So, they tend to have worked for years,
working their way through the idea
to try and figure out how to get from
the initial crazy starting point, to at the end
something that will actually work in the real world.
And the really great entrepreneurs
can walk you through the “idea maze”,
and make you understand the flow of thinking
that got them to the point where
they actually came out the other end
with what is a great idea.
And what’s interesting about that is
those are generally not,
there’s this kind of a theory in venture capital
you want to back coachable entrepreneurs.
The entrepreneurs who really have the radical ideas,
are generally not only not coachable,
they generally react with hostility to being coached.
So one of the things we test for is,
we basically say, “Well, you know,
“have you thought about doing it this other way?”
What we’re not looking for is the,
“Oh, that’s a great idea.”
What we are looking for is the stare that’s just like,
“You idiots.”
(audience laughing) Right?
“You moron.
“You’ve been sitting here listening … “
And you know, this is them talking to me.
“You’ve been sitting here listening to me for 20 minutes,
“and I’ve been working on this for five years,
“and you think you understand this so well
“that you can make me a suggestion?
“And not only are you an idiot for thinking you can do that,
“but I will now explain to you, in detail,
“why you’re that big of an idiot.”
We love those.
(audience laughing)
Those are fantastic.
Those are outstanding.
And it goes right back to the combination
of genius and courage I was talking about.
So in particular, part of it’s in the words,
but also part of it’s just the look on the face.
We love that look.
(audience laughing)
It’s like caviar.
– Thank you guys so much for watching.
I made this video because FBGM 247
asked me to.
So if there’s a famous entrepreneur
that you want me to profile next
leave it in the comments below, and I’ll see what I can do.
I’d also love to know which of Marc’s top ten rules
hit you the hardest,
is going to have the biggest impact on you business and why.
Leave it in the comments,
I’ll join in the discussion.
Thank you so much for watching, continue to believe,
and I’ll see you soon.
(loud bang)
might not get you where you need to go,
but genius without courage almost certainly won’t.
In this industry, you don’t have a business
until you have a product.
The entrepreneur with the idea at the right time
is going to look like a genius.
The entrepreneur with the right idea at the wrong time
is going to look like a moron.
Failure is a wonderful thing.
Failure teaches you all this stuff,
and it’s great to fail a lot.
Like, and we don’t buy any of that.
New companies generally shouldn’t exist.
Existing companies are usually pretty good at what they do.
Having the right idea and having it at the right time
being able to execute on it is 99% of it.
No matter how dire it gets,
no matter how like evil Moriarty is,
Sherlock’s going to have that stroke of genius
that’s going to save the day.
I think that the development, career path, skills training
is going to be such a more fundamental part
of how the economy works.
Me and my business partner at my last company, Ben Horowitz,
coined a term he calls the, “Law of Crappy People.”
You’ve been sitting here listening to me for 20 minutes,
and I’ve been working on this for five years,
and you think you understand this so well
that you can make me a suggestion.
– He’s an American entrepreneur, venture capitalist,
and software engineer.
He’s the co-founder and general partner
of the Silicon Valley venture capital firm
Andreessen Horowitz.
He has an estimated net worth of 600 million dollars.
He’s Mark Andreessen,
and here are his top 10 rules for success.
(loud bang)
– The two things we really zero in on
in people are two things.
They sound simple, they not being very difficult
courage and genius.
Courage is the one we talk about a lot,
because it’s the one people can learn.
Courage, which is to say
not giving up in the face of adversity,
just being absolutely determined to succeed,
is something that you can force yourself to do.
It can be very painful.
You can force yourself to do it.
The genius part is a little bit harder
to force yourself to do.
Courage without genius might not get you
where you need to go,
but genius without courage almost certainly won’t.
And so, we’re looking for some kind of magic combination
of genius and courage.
We don’t believe there’s a tension
between product and business.
We believe there’s a staging.
Which is, in this industry, you don’t have a business
until you have a product.
And in particular, you don’t have a business
until you have a product that a lot of people will want.
We have this concept, we use the term, “product/market fit”,
which is basically you have a product that the market wants,
and you can tell because the market’s pulling the product.
And until you have that, time spent building the business
around the product is pointless,
because it’s not going to go anywhere.
Like, best case, it’s going to be a zombie.
There’s a lot of companies,
or in the Valley,
there’s a lot of companies in the Valley and elsewhere
that are 25, 50, 75 people.
They’ve got a product, nobody really wants it.
They sell a few every quarter,
and they kind of eke out a living.
And they go on for year after year after year after year
after year and they never get anywhere.
They never go public.
They never get bought,
and people just basically collect salaries.
And that’s not what we want to do, and that’s not
what super high potential entrepreneurs want to do.
So, what we basically say is,
if you want to build a big success,
you’ve got to nail the product.
It’s got to be a killer product.
It’s got to be something that has product/market fit.
When you have product/market fit,
then you build a company around it, right?
So then you build a sales force,
then you start doing marketing,
then you start doing business deals,
then you start expanding internationally,
and you do all this other stuff.
And it’s at that point where you start to apply
a lot of capital, and you build a big board,
and you start hiring executives and doing all this stuff.
But a full executive team, with a sales force,
all that stuff before you have a killer product
is a complete waste of time.
Entrepreneurs are often uniquely bad
at wrapping their heads around timing,
’cause entrepreneurs by definition
are highly optimistic people, ’cause you have to be.
‘Cause you’re starting a company, and you have to be
highly optimistic if you’re going to set off and do that.
And you’re probably so optimistic,
that you’re probably too aggressive on timing,
and you probably assume that something is going to happen
in the market, faster than it’s actually going to.
And so, sometimes what you see happen,
you see the Friendster, Myspace, and Facebook scenario.
You see that happen a lot.
You see a company fail, and then another company
with the exact same idea six years later,
and that’s a huge success.
And it’s just flat out, simply timing
and I don’t know what to say,
well I don’t know in general
what to say about that in the specifics,
there’s a lot of specific things I think you do
to try and address that.
You try to keep your
(mumbles) rate low.
You try to give yourself runway for the market to develop.
You try to correct for the fact
that you’re probably being too optimistic.
But, I think in practice, that’s a lot of luck.
The entrepreneur with the idea at the right time
is going to look like a genius.
The entrepreneur with the right idea at the wrong time
is going to look like a moron.
And it’s really hard for an entrepreneur
to tell the difference.
And by the way, there’s always been this kind of thing
in Silicon Valley, of this sort of, “failure fetish,” right?
Failure is good, right?
Failure is, all you guys were probably all been taught this,
heard about this from a lot of people.
Failure is a wonderful thing.
Failure teaches you all this stuff,
and it’s great to fail a lot, and we don’t buy any of that.
We think that’s all complete, complete nonsense.
We think failure sucks.
(audience laughing)
We think failure is a terribly,
terribly depressing thing to go through.
We think success on the other hand is wonderful.
(audience laughing)
You know, you wouldn’t think that this is something
you have to actually say out loud,
but we do find it to be clarifying
when we point it out.
(audience laughing)
And so we are strongly biased towards people
who are so determined to succeed
that they just never give up, they never quit.
And I think that is a huge part of it.
And that’s something we try to look deeply for.
That’s the kind of thing that’s not listed on a resume, right?
That’s something that has to be deep in somebody’s,
fundamentally deep in somebody’s character,
and you have to see it in their backgrounds.
New companies generally shouldn’t exist.
Existing companies are usually pretty good at what they do.
And so, for a new company to exist, it not only has to
come in and go into business, and bring a product market,
but it has to bring a product market that’s so much better
than what already exists, that it punches through
the sort of status quo.
Most customers in most markets are pretty happy
buying from the current suppliers,
so there has to be a real edge on the thing.
And we look for that in either a technology change,
usually a technology change or an economic change,
which are often the same thing.
The single best piece of advice I’ve ever heard,
I heard the other day
watching Steve Martin, the comedian, on Charlie Rose.
Steve Martin, that I’m sure everybody in the room
knows who Steve Martin is, but he’s one of
the most successful comedians in the last 30 years
across many different media,
across television, movies, and books, and everything.
He’s been tremendously successful.
He recently wrote a book about,
it’s actually really funny
’cause it’s a book about how he became successful,
and it’s not even a funny book.
I mean, it’s Steve Martin, so it’s a little bit funny,
but it’s not a comedy book.
He actually sat down and wrote a book of how I did it.
And in particular, right in comedy,
comedy is a little bit like startups,
in that there are a few comedians like Jerry Seinfeld,
or Steve Martin, that are hugely successful.
And then there’s like, for every one of those,
there’s 10 thousand others who are still playing nightclubs
in very, very small towns.
So there’s a huge dispersion from the big winners
to a very large number of people who work equally hard,
who don’t get there.
And he boiled it down to something that I think
was incredibly insightful.
Obvious, but insightful.
He said, “Young comedians always come to me and they say,
“How do I be like you?
“How do I be successful like you?”
And he said they’re always looking for like,
“How do I get an agent?”
Or “How do I get booked?”
Or “How do I get on the Tonight Show?”
Or “How do I get a movie role?”
And he said, the real answer is
be so good that they can’t ignore you.
And it turns out that he just,
and this is what his book talks about,
is he applied himself with a level of discipline
at being an amazing comedian.
And it’s really funny, right?
Steve Martin’s a great illustration of this,
’cause Steve Martin on stage is incredibly silly,
and he’s got the banjo, and he’s got the arrow.
If you watch his footage from the 70s
when he was up-and-coming.
He’s got the arrow through his head, he’s dancing around,
he’s doing all this crazy stuff,
and it looks like he’s just clowning.
But the level of discipline and rigor
and practice that he put into it
was astonishing over a decade long period.
And then after a decade of hard work
was a sudden overnight success.
The key point there being,
be so good that they can’t ignore you.
If there’s a forum like this, and a group like this,
and efforts like this, and my blog,
and all these things.
We all talk about the mechanics of how do you hire people,
or how do you raise money, or how do you do this,
or how do you do that, or how do you sell your company?
And a lot of that, it’s important stuff,
but a lot of it is when to addressing
around the core proposition of the core problem,
which is how to be so good that they can’t ignore you.
And in a startup, a lot of that has to do with
have an idea that’s so good that they can’t ignore you.
And the best idea,
having the right idea and having it at the right time
and being able to execute on it is 99% of it,
and the rest of the stuff that we all talk about,
that I talk about all the time,
is all add-on and ancillary to that.
There are no silver bullets.
There are only lead bullets.
There’s this temptation,
especially when you get into crisis,
when you get into a real problem.
There’s this temptation to think,
“There must be a magic answer.
“There must be some stroke of genius.”
It’s almost, it’s like,
I don’t know if people watch
the new Sherlock Holmes TV series, which I just love.
It’s like, you know, Sherlock is going to have,
no matter how dire it gets,
no matter how evil Moriarty is,
Sherlock’s going to have that stroke of genius
that’s going to save the day.
And there’s this really strong tendency
to kind of think that that’s out there.
And we see a lot of entrepreneurs
that cycle through different silver bullets,
and then they don’t work, and they don’t work,
and they don’t work.
Ben’s point is always, the answer’s probably
in firing a whole bunch of lead bullets.
So the answer probably is
the engineers working later at night for six months,
and getting the next version of the product out.
And the answer is probably for the sales reps
to go call on twice as many customers and close more deals.
And the answer is probably to, you know,
your stock price is low, go find the investors
who are willing to invest
when you’re trading in half the cash.
‘Cause it turns out they actually do exist,
and then your stock goes up a little bit,
and people start to regain confidence.
So I would say I’ve certainly come around
to that point of view a lot,
and so when we work with entrepreneurs,
we often have very similar advice, ’cause it’s kind of,
it’ll be tempered through the very practical realities
of what you have to do to get through a situation like that.
I think our companies systematically are too weak
on helping people evolve in their careers
and develop new skills.
And I think that same thing is true
across the entire economy.
And you almost can’t be too good at it.
The classic example in the Valley right now,
is everybody needs mobile, everybody needs iOS programmers.
So everybody’s out trying to recruit the same,
it feels like there’s only 3,000 iOS programmers
in the Valley, and everybody’s trying to recruit them all.
It’s like, well you’ve got,
in a lot of these companies, you’ve got Java programmers,
and you’ve got PHP programmers,
and you’ve got Web programmers.
It’s like, take four months,
and we actually,
there’s a training company we work with
called Big Nerd Ranch.
They’re spectacular.
They literally are, it’s Big Nerd Ranch.
It’s where you send people off,
and they train them (man laughing)
on how to be iOS programmers
at the Big Nerd Ranch.
– [Man] Dear God.
– Yeah, everybody’s writing that down.
(audience laughing)
Or he’s pointing to somebody that’s been there.
And so, train people up on how to do these things.
We have another company called the Udacity
that does this kind of training now online,
and is rolling out all these tracks
to be able to train people how to do mobile development,
or how to train people how to do data science.
And so I think the development, career path, skills training
is going to be such a more fundamental part
of how the economy works, and I think it has to be.
Because today we’re all hiring mobile developers.
Three years from now we’re all going to need to hire
neural implant developers or whatever it’s going to be.
– [Man] I love it.
– And we’re going to have that exact same problem again.
– How do you as you grow the startup to be a lot bigger
prevent mediocrity from creeping in.
– So I love, this question I love
because I think there’s actually,
a way to think of this is from a systems standpoint.
So, my business partner at my last company, Ben Horowitz,
coined a term he calls, “The Law of Crappy People.”
We focused on it a lot at my last company
and focus on it a lot in my current company.
Basically, the Law of Crappy People,
is basically a derivation of the concept that
A people hire A people, and B people hire C people,
which is kind of a cliche and everybody kind of knows that.
But the Law of Crappy People kicks in as you grow.
And what the “Law of Crappy People” really is
is that the capabilities or the competence
of the people at any level in your company as you grow,
are going to degrade to the worst person
at that level in your company.
And so, your vice presidents,
over time, are all going to be as bad
as your worst vice president.
Your directors over time, are all going to be
as bad as your worst director.
Your engineers over time, are all going to be
as bad as your worst engineer.
And the reason is because the way
that hiring decisions get made,
and the way that promotion decisions get made
inside a company, is within reference
to the people who are already there.
So, I’m a manager.
I want Joe to get promoted from engineer
to senior engineer.
My argument is he’s a really good engineer,
and the other executives who are battling
for promotions for their people say,
“Well, he’s not that good.”
And then I say, “Well, he’s at least as good you know, Bob,
“who is your guy, who is a senior engineer.”
And you’re like, okay, yeah I guess that’s true.
Bob isn’t that great, and Bob is a senior engineer,
so clearly Joe should also be a senior engineer.
And before you know it, all your senior engineers
are as bad as Bob.
And it’s absolutely astonishing
it’s absolutely astonishing to watch
because it basically degrades
if somebody significantly better than the worst person,
they get promoted.
And when new people get hired,
they get hired in reference to
the worst person at the level.
So, it’s basically on a level by level basis.
And you basically need to just beat it back with a stick.
You need to be so determined to not have the,
another term that people use,
“The soft bigotry of low expectations.”
You need to be absolutely determined to have
your definition of good not be the average
of the people we have in the company
or the person who was accidentally promoted
to a certain level who really shouldn’t have been,
but now that he is, that’s the definition of the level,
’cause he’s now a part of it.
And you just need to absolutely beat it back with a stick.
And one of the heuristics I think you can use
to beat it back is to ask yourself a question,
on every hire and on every promotion is
“Are you raising the average?”
Because you’re probably either,
if you’re hiring somebody or promoting somebody,
you’re either going to be raising the average at that level,
or for that role in the company,
or you’re going to be lowering the average.
And if you’re continuously raising the average,
which is very hard to do,
then you’re going to defeat the Law of Crappy People.
But if you’re not super focused
and super determined on that,
then it will inevitably degrade.
Really bright founders, with these really radical ideas
tend to go through what they call the “idea maze”.
So, they tend to have worked for years,
working their way through the idea
to try and figure out how to get from
the initial crazy starting point, to at the end
something that will actually work in the real world.
And the really great entrepreneurs
can walk you through the “idea maze”,
and make you understand the flow of thinking
that got them to the point where
they actually came out the other end
with what is a great idea.
And what’s interesting about that is
those are generally not,
there’s this kind of a theory in venture capital
you want to back coachable entrepreneurs.
The entrepreneurs who really have the radical ideas,
are generally not only not coachable,
they generally react with hostility to being coached.
So one of the things we test for is,
we basically say, “Well, you know,
“have you thought about doing it this other way?”
What we’re not looking for is the,
“Oh, that’s a great idea.”
What we are looking for is the stare that’s just like,
“You idiots.”
(audience laughing) Right?
“You moron.
“You’ve been sitting here listening … “
And you know, this is them talking to me.
“You’ve been sitting here listening to me for 20 minutes,
“and I’ve been working on this for five years,
“and you think you understand this so well
“that you can make me a suggestion?
“And not only are you an idiot for thinking you can do that,
“but I will now explain to you, in detail,
“why you’re that big of an idiot.”
We love those.
(audience laughing)
Those are fantastic.
Those are outstanding.
And it goes right back to the combination
of genius and courage I was talking about.
So in particular, part of it’s in the words,
but also part of it’s just the look on the face.
We love that look.
(audience laughing)
It’s like caviar.
– Thank you guys so much for watching.
I made this video because FBGM 247
asked me to.
So if there’s a famous entrepreneur
that you want me to profile next
leave it in the comments below, and I’ll see what I can do.
I’d also love to know which of Marc’s top ten rules
hit you the hardest,
is going to have the biggest impact on you business and why.
Leave it in the comments,
I’ll join in the discussion.
Thank you so much for watching, continue to believe,
and I’ll see you soon.
(loud bang)
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