The holy grail of company building is finding product-market fit. But what most people don’t tell you is that once you’ve found it, product-market fit brings its own set of challenges, particularly when it comes to scaling rapidly and hiring the right executives at the right time.

Drawing from their extensive experiences, a16z cofounder Ben Horowitz and Databricks cofounder and CEO Ali Ghodsi sit down to talk about the hardest things about executive hiring and firing, and what is at stake.

They dive into the common reasons an exec fails, why sometimes micromanagement is a good idea, and the difference between someone who has written a playbook and someone who has only run one.

If you're giving them a lot of ideas, like more ideas than you're getting out, then that's probably not going to work.

If I have a new executive, I call them every day.

Can he run a playbook or can he write a playbook?

This is 1 of the most important decisions you could ever make as a leader in your company.

I got to make a decision about am I keeping your peer or am I keeping you?

Mistakes take between a year and a half to 2 years.

I always find if you give somebody a task and they get super emotional, then they're done.

I think companies quickly form a culture and fortunately or unfortunately, the more successful they are, they become a little bit arrogant.

So companies typically are not super open to massive change.

You think you're being like objective and factual, what you're really being is emotional, defensive and afraid of the actual truth.

And the actual truth when you fire somebody is mistakes were made.

The holy grail of company building is finding product market fit.

But what most people don't tell you is that finding product-market fit brings its own challenges.

All of a sudden, you need to scale really quickly, and scaling really quickly is actually really hard.

1 of the hardest yet most critical aspects of scaling is finding the right leaders at the right time.

And while the growth stage of a company is hard, it doesn't need to feel like things are constantly breaking.

If you're like 2 people and you find product market fit, you can grow to 10 people or something like that in a year.

But if you're at scale and you try to 5X, I mean, you're gonna completely blow up the company.

It's pretty rare to see like a big giant corporation that's figured out how to really be a team of small companies, a small business unit.

At some point, they're gonna reach a level of scale and complexity where like 1 guy just can't like run everything.

And you're going to need to bring in the experts, right?

The experts, the technically trained experts, the managers.

The growth team at A16Z has spent the last year culling the hard earned insights of dozens of leaders across the firm and late-stage startups to literally write the book on hiring executives at scale.

You can find that book at a16z.com slash growth slash executive dash hiring.

But in today's podcast, 2 of those leaders, A16z co-founder Ben Horowitz and Databricks co-founder and CEO Ali Godsi, sit down to talk about hiring and firing executives, including the most common reason an exec fails, why sometimes micromanagement is actually a good idea, and the difference between someone who has written a playbook and someone who has only run 1.

Ben also sits on the board of Okta, Databricks and more, and he's scaled up several organizations in his past, including LoudCloud that went public in 2001.

Ali, on the other hand, took over Databricks in

and has since scaled the company to over 5, 500 employees.

Before we jump in, just a few quick notes.

ICs refer to individual contributors without direct reports.

You'll also hear Ben and Ali refer to some of the executives that they've worked with.

Mark Craney was Ben's former head of sales at Opsware, while Ron Gabrisko is Databricks current CRO.

All right, let's kick this conversation off with where executive hiring often begins.

Recognizing the hard truth that you've outgrown someone.

As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16z fund.

Please note that A16z and its affiliates may also maintain investments in the companies discussed in this podcast.

For more details, including a link to our investments, please see a16c.com slash disclosures.

How do you know when you've outgrown an existing leader?

It's when you're asking other people, what do you think?

Or when you're starting to have the thoughts of like, is this the right person or is it not the right person?

When you can't even process it, then somehow it's gotten away from you.

Another 1 that I find is kind of leverage, right?

Like if you have somebody who's really doing the job, What you always find as CEO is they're kind of teaching you about how the function should expand How should it grow and if you're giving them a lot of ideas like more ideas than you're getting out Then that's probably not gonna work

I agree with that But that's a high bar if they still adding value and they work and they make the company better and so on.

Like that kind of leverage we're saying like, you know, this person just takes care of that thing and they're so good at it.

Can you keep me in the loop of how you even do this thing?

That's what you know, like when you pay a guy all that equity and all that money, that's what you expect, right?

But then what happens is, turns out they are like that, but they're a terrible communicator.

Or they're an amazing communicator and they're super awesome about it, but they just blob forever.

But you always take the weakness against the magnitude of the

And then the causes for people running out of gas, I always find are also many could be, you know, you promoted them and they continue to do their old job and they never actually figured out what the new job was or the company just outgrew them or like, sometimes there's like actual personal, Like they've got a drug problem.

Like something happens and the person you hired and you had for a while isn't that person.

And that 1 is very confusing to me always because you're like, you thought you knew who they were, but they're not that anymore.

Once the executive feels like it's not working and they're on the back foot.

Yeah, they spiral and it's very hard to actually turn it around, right?

Well, and then if they lose the team, it doesn't matter.

The 1 thing that's always true is if the team doesn't believe in the executive anymore, it doesn't even matter.

Like say whatever you want to me, Ali, I still have to fire you because nobody's following you.

You're almost better off starting anew somewhere else.

As opposed to wrecking your reputation by continuing here.

When do you give somebody a chance to grow?

you said, there has to be a superpower there that you have identified, you know, they can come up with an amazing product or they're amazing communicators, or they can really get the team to execute.

Then the question is, can you just put them in a position where you can accentuate that strength and then

I'd say is I think a mistake a lot of companies make is, you know, in engineering and in product and so forth, the knowledge of how your company works is really, really valuable.

But in sales and marketing, the knowledge of how other people's companies work is actually the more valuable thing.

And so if you take somebody who only knows your company and they have to go learn the world, You're kind of harming everybody in the company, because if you're going to pay somebody to do that, go pay somebody who knows the world, like go buy the knowledge, go buy the acceleration as opposed to, and I don't really care how much potential your internal smart MBA who doesn't have any experience has, the idea that they're going to run worldwide sales for you if you've got a killer product and get that done fast is probably wrong.

I just think it's because like people with the wrong background are trying to figure out the other side.

so you typically have tech CEOs and founders who are really good at tech, they're smart, maybe they have an engineering degree, and like, well, how hard can the sales or marketing be?

You know, if you have somebody who runs out of gas, then do you fire them?

I definitely think that you can put people in new roles and they can succeed in it.

So there's, I've got an early team and everybody's doing everything in the beginning and people are taking on roles that are eventually going to be bigger than them.

Then there's, I hired a high end VP of marketing, gave her gave him a point and a half equity and a big salary.

I think it's going to be hard to put them in a new role and remove all of their equity and it's too hard to take those away.

What I have done is, you know, look, it turns out I don't think you're really like, you don't need to express it this way, but this person is not amazing at running a big team.

And, you know, they're really a super IC.

It's very often I see super ICs who went into management And it doesn't need to be on the tech side.

They're just so good that eventually they started managing, but actually they're not good people leaders.

And, you know, eventually their team is just doing random things.

And they don't kind of care because they're busy super ICing, doing the work of 2, 3 people themselves.

In those cases, I've been able to take them out and say, hey, look, I'll give you a fancy title.

You move over here and do the super icy stuff.

And you're extremely valuable because honestly, you're better than most of these people that you used to manage because you're a super icy.

But don't try to lead also a team of 200 people because you're actually not leading them.

Yeah, so that's a use case that you think works.

That you're switching them back, you're saying, look, you do great work, so we overpromoted you to something that you're not good at.

And let's put you back what you're good at, and I'll still pay you a lot of money and give you a good title.

But you've got to not lie to yourself if you do that, because it's easy to lie to yourself and say, well, this person has some bright strengths.

I can just put them in this other thing and overpay them.

Look, there is a failure mode, which I've seen, which is you move a person to a new role, And then what happens is they start checking out.

Well, that 1 is maybe at least you'll know.

But the person you like, who's kind of just disengaged and kind of just phoning it in, is the hardest 1.

So I think you have to do the hard thing about hard things.

And there, I think there's really no option but to have the conversation and they know.

You pull them and say, look, man, you checked out.

And I have found in those cases, they all like sort of feel ashamed and like, yeah, I know, I know I've been phoning it

Yeah, no, well, that's an important kind of part of it and kind of gets to the next thing, which is, okay, how do you have the conversation?

And the mistake I see CEOs make is, okay, the way to have the conversation, you know, particularly engineers is to be correct.

The undisputable facts about why you should be.

Ironically, you think you're being like objective and factual.

What you're really being is emotional, defensive and afraid of the actual truth.

If you're being objective, it's always partially your fault, usually more than half your fault, if you're honest.

And so if you start from a place of the truth, which is kind of what you're talking about.

Hey, you're not putting in an effort is always a much better than let me tell you all the places where you came up short.

Like if you start the conversation there, they have no choice, but to get very defensive And say, well, I don't agree with that.

If you really actually thought you were right, you might get squeezed into not actually even finishing the firing.

So you kind of have to just start from the place of most honesty.

Or like, if you're not ready to fire them, you want to know why their work sucks.

Just say, Hey, like, here's what I observed.

It's just a normal one-on-one where you're like, Hey, what's going on with the output of this thing?

And you know, like things happen in those conversations.

You find shit out and it could actually help him.

You know, I was talking to an entrepreneur the other day and he's like, yeah, you know, he starts hitting on me with the exact thing that you always started and like, you know, I, you know, I I'm trying, I'm struggling with, you know, being a CEO, whether I should, you know, I want to be empathetic, but yeah.

And I'm like, who are you talking about firing?

And, you know, of course, like there was a super talented guy slacking off and so forth.

Don't put so much pressure on yourself that you got to go right to firing him.

Just find out what's going on with this guy.

And, you know, the interesting thing was he has the conversation, you know, he finds out it was a personal life issue.

And once a guy admitted it, he was like, you know what, fuck this person I'm fighting with.

I want to work here and go hard and let that, like literally that conversation solved it, just like a little bit of honesty, but to get to that honesty, you have to start by being honest with yourself.

And if you don't tell yourself the truth, if you lie to yourself, then there's no way you're going to get the truth out of the other person.

There's no way you're going to get to the right answer.

You know, it's this question that you ask executives a lot, and this and that, you know, like, have you fired somebody, da-da-da-da.

I think it's important because if you don't know how to do that, you don't actually know how to get to the truth.

And the bigger the company gets, the more political it gets, the more difficult it gets.

You have more regions, more countries, more people, more functions.

And there are professional execs who know how to manage it up.

Well, and then you take it all personally.

Just like you don't want to get to the truth about yourself.

And the CEOs who can't do that always eventually fail.

I would say for me, you said it, for me the number 1 thing I try to do in the conference, if I've decided this is done, and we're parting ways, My first question is usually, how do you think it's going?

And you know, 50% of the cases they'll say it's not going well.

From then it's much easier to, you know, take it to the next.

I found that if you can get a person to start it there, instead of saying, Hey, here are the things you're doing wrong, or I don't like this, just start with like, is it working?

And if they're not there, then I think step number 1 is just to get them there to realize that look, it's not working.

Like marketing is not doing a great job or sales is not or like engineering is not humming and we're missing the SLAs.

It's not just, you know, your department.

Like Because as soon as it gets personal, that's when the defensive people have to put up their guard.

Yeah, and I'll pull it out and I'll say, look, we're having outages left and right.

This is gonna be a really hard problem to fix.

And you've been at it for 6 months, we've been at it for 6, 12 months.

Sales is promising things and customers are doing things.

But in any department, you could have this conversation.

They'll kind of eventually say, yeah, but it's hard, man.

Then you've gotten them to a place where, look, I think we can bring in someone that can actually fix this.

Someone who can bring in the right people, or someone that has dealt with nasty, nasty outages like this, or someone who can actually sell to these really, really big conglomerates.

Wouldn't that be the right thing for the company?

So I try to like abstract this away from them.

It's like, just what's best for this company.

Once we've accomplished this, I've actually seen many execs get to that point.

Then they kind of turn to me And then they say, they actually will say, okay, I get it.

Then it's like, okay, that's a separate thing.

Hey, this is Steph with a quick interruption.

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Actually, you bring up a really good point, which a lot of CEOs don't do this.

And it's so important that when you talk about your expectation for an executive, it's not what you and your people can do.

It's what you and your people can do in the context of the organization.

And that means working with your peers so effectively that you get what you need.

And if you can't do that, then I got to make a decision about, am I keeping your peer or am I keeping you?

See all a16z Podcast transcripts on Applepodcasts

The Hard Things About Scaling: Executive Hiring with Ben Horowitz and Ali Ghodsi