Ben Horowitz On What Leaders Get Wrong About Corporate Culture

Ben Horowitz On What Leaders Get Wrong About Corporate Culture


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? 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 a 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 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. 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? 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 it’s, “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. 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? 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. 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 wouldn’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. And 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? 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. 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 all 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 all that kind of thing. And I think Wall Street has a lot of those old things as well. We saw in Hollywood, right? 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. 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? 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 the 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. 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,
like 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. And 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 good culture or bad culture? 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. And 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? 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 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. 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? 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. 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 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, 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. And specifically I can’t
see what I don’t have and that is what feels most un-inculsive 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, 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? 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 and until we can see it because the talent is out there. And 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. 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. 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. And looking at Andreessen
Horowitz’s portfolio is there a favorite bet
the that you have in there that you’re really excited
about what the company’s doing that the media isn’t
covering already or you know? 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, people working
with it to cure cancer, to people doing threat detection on kind of massive attacks on kind of massive attacks from state actors and
these kinds of things. from state actors and
these kinds of things. And it’s just, I would
say really incredible what you can do if can
actually harness the mass amount of data that’s out there. And are you still
interested in Bitcoin at all? Yes, oh yeah, well not just Bitcoin. – Sorry.
– The whole of cryptocurrency. Yes. 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. 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 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 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
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.

24 Comments

  • Caspian Ahlberg says:

    Good video!

  • Minien says:

    Whew chile! This was awkward.

  • Chi chan says:

    This is my first time seeing Insider's Office. It looks pretty clean and fresh.

  • Just A Dio Who's A Hero For Fun says:

    All I understand is S t o n k s

  • Michael Taylor says:

    But I had diarrhea!

  • المخلص فقط JESUS says:

    JESUS CHRIST RETURNS, REPENT OF SIN AND CHANGE YO.U.R WAY OF LIVING

  • 10k Subs With No Videos Challenge says:

    who thinks this is interesting

  • Ariella Kadosh says:

    Yeah, not watching the rest of the vid. Dont feel like watching this hollow faced ghoul wax rhapsodic about demanding cash from his employees. Eat something, may make you less cranky.

  • DR NO says:

    Business insider is the biggest joke in the business world
    They are very biased and paid for their opinions

  • Inverter222 says:

    I wish he was my boss.

  • tango 4ever says:

    15:57 …please speak proper English…bothers me when I hear "port-O-fo-li-o" when the word, in English, is port-fo-li-o – 4 syllables, not 5, like in Spanish, Italian or Portuguese…its not an accent when you totally mispronounce a word by inserting letters that do not exist

  • Mike G says:

    This was BORING!!!

  • 888Caz says:

    The PIRATE/PROFITEER CORP …

  • Justin Krezelak says:

    He lost me at the word "culture". Only corporate word worse then that is "family". These are just BS words that translate to no work life balance, unrealistic demands and high turnover rates. The second you hear a company talking about their "culture" or how it's a "family"….RUN, don't walk. It's a massive red flag. If it's a good company with a good culture then they don't have to talk about their "culture" or other made up platitudes…. because it's a good company where people actually want to be and doesn't need to try and stop bleeding with pretend "culture" bandaids. Culture in business just means enforcing philosophical policies on top of actual policy. If your ACTUAL policies don't work….your company sucks and you have a terrible culture. Saying "culture" as a leader simply means people don't like you and don't want to work for you because you've entirely missed the mark as a leader to begin with….and that's a direct leadership issue, not a company wide cultural issue.

  • David Ng says:

    Anyone here going to buy the book after watching the video?

  • Noy BoySample says:

    casual day….that was a real game changer right there, really made the world a better place

  • BLAIR M Schirmer says:

    Utter fraud. "Corporate culture" is to destroy anything and everything to boost share price by a dime.

  • Akhil P says:

    Good talk.

  • Серж Шуляченко says:

    I want that in the United States held a trial about the word "homophobia."

    This word was coined in US universities associated with the US Democratic Party and Obama. For the manipulation of society and the elimination of political competitors.

    Homophobia against any person is a libel from which many US citizens suffered.

    For the court: a phobia word is a diagnosis of mental disorder, for this reason it is illogical for people with mental disorders to be punished with fines or prison.

    With the help of political pressure and their influence, the democratic party achieved that in Brazil and Switzerland people are imprisoned for "homophobia", while we understand that any phobia is a disease. If phobia is a disease, how can prison help? Fight against dissent? !!

    All involved in the creation of a lie about "Homophobia" should be held criminally responsible as fraudsters. Americans suffered from the corrupt Obama, who served the Bilderberg club.

    And so respectable court, I will continue. Ladies and gentlemen jurors, you are all a bit shocked of course by the fact that the former US president, a member of the Bilderberg club, Nobel Peace Prize winner Barack Obama who started the war in Syria and lost to the dictator Asad turned out to be a corrupt deceitful politician.

    Yes, it is, money rules the world, and Barack Obama turned out to be no exception.

    How to prove ?

    Let's ask defendant Barack Obama why he forgot about American homeless people, orphans, single mothers? Why do homosexuals matter?

    Because among homosexuals there are no unhappy people for a long time, among them there are millionaires and billionaires who pay money to corrupt politicians.

    Agree to the jurors, this is some sort of truth. Lobbying, lobbying, lobbying everything is well paid, party contributions, sponsors …

    What really is homosexuality? Everyone can answer this question for himself! Because there is a freedom of opinion, freedom of speech and democracy that allow you to do this. And here and now I am defending your rights to freedom of opinion, from cynical attackers.

    What is homophobia? This is a label that is hanged on a person, so that no one else will be noo friendly with them, that is, an attempt to provide an impression on a citizen through offensive labels on the scale of a state machine.

    How many of you can say that the Apostle Paul is "homophobic"?

    The apostle Paul tells us from the pages of the Bible that homosexuality is very bad.

    Do you believe the Apostle Paul ?

    Do you lay your hand on the Bible in court? The Apostle Paul speaks from the page of that very Bible to you. Read what is written there, it is written for you.

    Do you believe Barack Obama is getting money from the sponsors of their homosexual party ? What is to check, I ask the court to ask the defendant Barack Obama.

    How many homosexuals sponsor the US Democratic Party? What kind of sums in lobbying homosexuality ?

    And so we found that homophobia is a lie, a cynical lie. Let's see what Liberalism is.

    Communism Fascism Liberalism, I put in one row is not by chance.

    Liberalism promotes abortions among girls, liberalism defends the rights of a drug addict to drug use, liberalism deals with LGBT propaganda among young people. It is clear that liberalism is a crime against humanity.

    Defendant Barack Obama refused to answer all the questions posed.

    I am addressing these questions to Joe Biden, Hillary Clinton, please invite them to the court to give testimony on the "homophobia" and all the senators of the US Democratic Party.

    I also want to ask them if they are considering a proposal for punitive medicine in the USA for all patients for "homophobia"? After all, any phobia is a clinical case.

    From the speech on the Internet

    Emperor Sergius (predicted by Iona of Odessa)

  • Promothash Boruah says:

    Nice talk

  • Brooklyn Rowe says:

    Yeah this isn’t what I thought it was

  • francis mcgarry says:

    The interviewer brought up the word “culture”. I have worked in corporations since 1982. They do have “cultures”. Justin K. Most of what this guy just said is correct. The sad thing is he is just corporate union busting in some sense. Just pushing back on Ivy League mba greed driven aholes who buy and flip anything and everything for short term profit…

  • Naughty Nookie says:

    The same ceo that doomed a 25years company!

    I hope he die with cancer soon!

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