Entrepreneurs can design and instill cultures with the same intent as they do strategies, says Ben Horowitz, co-founder and general partner at the Silicon Valley venture capital firm Andreessen Horowitz. In his new book, What You Do Is Who You Are: How to Create Your Business Culture, Horowitz dissects four surprising case studies of leaders whose unexpected decisions and behaviors powerfully reshaped their worlds. His examples are Haiti's Toussaint Louverture, who led the only successful slave revolt; the samurai, creators of a strict code that defined Japanese society for 700 years; Genghis Khan, who conquered more land than anyone else in history; and Shaka Senghor, who, while in prison, founded a gang that significantly influenced the institution's culture.

What You Do explains how founders can apply their lessons to growth companies. Inc. spoke with Horowitz about building the culture you really want.

Inc.: All your central case studies are of warriors, or at least people living with the constant threat of violent death. Is it possible to forge a culture outside such a crucible?

Horowitz: A lot of the violence in the book comes from stories that make clear things that are relatively subtle. That is: How does the leader's behavior invoke--over time and systematically--the behavior of the whole organization? If you look at Sun Tzu [a Chinese military commander also discussed in the book], people weren't paying attention during his drills and, as a consequence, he cut their heads off. That's super harsh. But the point was to let everybody know that if we don't practice correctly a lot more people are going to die out in the field. There is a clarifying object lesson. People have other techniques to move culture, like Michael Ovitz at Creative Artists saying we are all going to wear suits to distinguish our culture as one of a higher level of professionalism. Those are obviously more moderate.

The book takes as its premise that culture is not immutable. But since culture defines companies, doesn't change endanger founding principles?

The business changes as it grows, and it might be missing cultural elements it needs. Say you are an enterprise software company. You might start off with some kind of bottom-up free-download distribution model. Eventually, to do bigger deals with larger companies, you need an enterprise sales force. That requires an urgency, competitiveness, and precision that might not be present in the earlier days.

Leaders learn a lot about themselves and their companies during early crises. Should you wait to define your culture until you've been through some hell and high water?

You don't want to start too late, because you don't want your culture to be entirely accidental. But I agree that if you start too early you are not going to know what you are doing. And you will have to unravel things that you thought were a good idea but then find don't work in an organizational context. I was talking to an entrepreneur the other day who had this corporate value of kindness. But people weaponized that. They turned it into "You can't give me any feedback because that is unkind." You get stupid stuff like that, and you have to change. So start small and expand as you go as opposed to trying to define every behavior from jump street.

You say "virtues"--the samurai term for "acts"--are more important than values. Entrepreneurs talk a lot about values. Are they wasting their time?

Values are the aspiration: who we want to be. Then you ask: How do we need to behave to be who we want to be? That's more difficult. And that's why it is so important to be precise and to put the "why" into your values. Uber had this value: Do the right thing. I don't know what was behind that. But on its face it doesn't tell you much about how to behave. Is the right thing to stay true to what you promised your investors? Or is it to tell the truth to the customer? 

The samurai were very detailed about what they meant by politeness: It is the best way to express love and respect for somebody. And then here are all the things you have to do, like how you bow at the tea ceremony. Contrast that with somebody saying, "Our value is we are high integrity" or "We are here for one another. " Those don't mean anything.

I love the idea of "shocking rules." Explain how those work.

Here at the firm we wanted to really respect the entrepreneur and the entrepreneurial process. That is tricky in venture capital, because people are coming to ask you for money. So you feel like you are the big person because you have got the money. And they are the little person because they are asking for it. I wanted to reverse that. So we made this rule that if you are late to a meeting with an entrepreneur, there is a fine of $10 a minute. That is steep. But the reason it's there is that it is shocking. You say, "I was making an important phone call on another deal." Or "I had to use the bathroom. And now I am paying money? Why do I have to pay that exorbitant, ridiculous fine to work here?" And we tell them: Building a company is incredibly hard. We respect that so much we will not waste a minute of the entrepreneur's time. If there is a question in anyone's mind about how they should treat entrepreneurs, that rule answers that question. 

A lot of people now contest the idea that companies should consider culture fit when hiring. Where do you stand on that?

Culture is not immutable. So the idea that I am only going to hire the people who have the culture that I have is weird. And your culture does not have everything you want. You will want to bring in something new. But you do have to be very clear before hiring someone about what elements of the culture that exists you need them to adopt. We give people our culture document, which is six or seven pages long and covers five virtues. And we tell them if you are not signed up for this, please don't sign the offer letter.

You say a new employee's first day is the most important. How would you optimize the chances of making a favorable and accurate impression on that person?

It's not about creating a favorable and accurate impression. New hires are figuring out what it takes to succeed. On Shaka Senghor's first day out of quarantine in prison, he saw one of the other prisoners stab a guy in the throat. Then the prisoner threw his shank in the trash and went to have a sandwich. Shaka immediately realized, "That is what is required to survive here" and asked himself, "Can I do that?" That happens in a company context all the time. Every behavior the new hire sees on that first day will be understood and processed. So, first and foremost, take onboarding extremely seriously and make sure the behaviors you want are the ones they see. Because those are the behaviors that will multiply.

What is the most important lesson that entrepreneurs should take away about culture?

When you think about the organization you are leading, 20 or 30 years from now no one is going to remember which quarters you made or which deals you did. They are going to remember the impact you had on one another and the people you touched. That is your culture. If you are going to get one thing right, that is it.

Published on: Oct 29, 2019