$46B of hard truths from Ben Horowitz: Why founders fail and why you need to run toward fear (a16z co-founder)

1. Avoid Hesitation as a Leader

Do not hesitate on difficult decisions, especially when faced with two bad options, as hesitation is the most destructive thing a leader can do, leading to company paralysis and internal political dysfunction.

2. Build Psychological Muscle for Leadership

Develop the ability to confront difficult situations and choose the ‘slightly better’ path, even if both options are horrible, as this psychological muscle is crucial for great leadership.

3. Overcome Self-Limiting Beliefs

Recognize that external negative perceptions or events are less damaging than what you believe about yourself; by rejecting self-defeating beliefs, you can overcome almost any challenge.

4. Run Towards Pain and Darkness

Actively confront scary decisions and difficult conversations rather than avoiding them, as hesitation is destructive and facing the pain directly often leads to better outcomes.

5. Add Value Through Unpopular Decisions

Understand that your unique value as a leader comes from making decisions that most people don’t like or agree with, because if everyone agreed, your leadership wouldn’t be necessary.

6. Break Sunk Costs, Make Small Good Decisions

Psychologically break free from sunk costs to avoid bad paths, and consistently make small, difficult ‘good decisions,’ believing each will lead to the next positive outcome and ultimately success.

7. Maintain Confidence to Prevent Dysfunction

As a founder, maintaining confidence is crucial because losing it leads to hesitation, which can cause senior team members to fill the void, leading to internal politics and a dysfunctional organization.

8. Embrace D-Minuses, Avoid Fails

Be comfortable with making many small mistakes or getting ‘D-minuses’ as a CEO, as long as you avoid catastrophic failures (‘F’s) like running out of cash, and keep moving forward.

9. Prioritize Long-Term Respect Over Short-Term Liking

As a leader, focus on earning long-term respect by telling difficult truths, even if it means people won’t like you in the short term, because this honesty is vital for the company’s survival and success.

10. Hire People Who Make You Great

As a CEO, your primary role in team building is to find and hire world-class talent who can push the company forward and from whom you can learn, rather than trying to develop people in functions you don’t master.

11. Seek Managerial Leverage

Ensure your direct reports are proactively identifying and driving initiatives to advance the company; if you constantly have to tell them what to do, you’re not getting leverage and a change might be necessary.

12. Start a Company for Irrational Desire, Not Money

Only embark on starting a company if you have an irrational desire to build something larger than yourself and improve the world, as financial motivation alone is insufficient to endure the inherent difficulties.

13. Focus on Impact Beyond Profit

Founders should be driven by an abstract desire to create something important, where people enjoy working and benefit from the products, rather than solely by the pursuit of success and wealth.

14. Think Big and Commit Fully

When starting a company, aim for significant impact and commit fully with adequate resources (e.g., raising $10 million instead of $200,000), rather than thinking too small or hedging your bets.

15. Build Executive Teams Slowly and Deliberately

Avoid rushing to hire a full team of senior executives; instead, build the team slowly and at a pace that allows you to effectively integrate and manage them, preventing deference and political infighting.

16. Hire Experienced Talent Strategically

While avoiding blind deference, strategically hire experienced professionals who possess specialized knowledge (e.g., in sales) to accelerate specific functions and prevent costly trial-and-error learning.

17. Lead Through Influence as a PM

Recognize that the Product Manager role is fundamentally a leadership position requiring influence, as you must guide teams to achieve product success without formal authority (no direct reports, firing/promoting power).

18. Be the ‘Mini-CEO’ of Your Product

As a Product Manager, act as the ‘mini-CEO’ for your product, focusing on its ultimate success, consolidating ideas, prioritizing, and ensuring high-fidelity understanding of the vision across the team.

19. Give Specific, Actionable Feedback

When addressing performance issues, provide specific feedback on the gap between current performance and required role, offering support for improvement while clearly outlining consequences if the gap isn’t closed.

20. Improve Explanations to Avoid Yelling

If you find yourself yelling at your team, it likely indicates a failure on your part to clearly explain your expectations or vision, suggesting you need to improve your communication.

21. Judge People by Strengths, Not Past Failures

When evaluating individuals for investment or hiring, focus on their world-class strengths and what they can do, rather than fixating on past mistakes or weaknesses, as everyone is flawed.

22. Coach to Strengths, Not Weaknesses

When coaching or managing, help individuals leverage their strengths and maximize their potential, rather than excessively focusing on or hand-wringing about their weaknesses.

23. Invest in World-Class Strengths

In venture capital, prioritize investing in founders with world-class strengths that can overcome competition, acknowledging that everyone has flaws and planning to surround them with people who can compensate.

24. Leverage Networks for CEO Confidence

Accessing a powerful network from day one can significantly boost a founder’s confidence and ability to navigate challenges by connecting them with key decision-makers and experienced leaders.

25. Seek Support to Build CEO Confidence

Engage with mentors or firms that provide a strong network and peer support (like CEO barbecues) to help you feel capable and maintain confidence as a CEO, especially when facing self-doubt.

26. Distrust Superficial Advice

Be wary of short, generic advice snippets, especially from those without direct experience, as true wisdom in company building is subtle, complex, and requires deep understanding.

27. Focus on Efficient AI Infrastructure

Invest in or build solutions that can run open-source AI models with the lowest cost and latency, as this infrastructure layer will be extremely valuable in the AI industry.

28. Secure Significant Capital for Foundation Models

To compete in the foundational AI model space, be prepared to raise at least $2 billion for training alone, as this is the cost required to achieve competitive capability.

29. Build Complex, Sticky AI Applications

Focus on developing AI applications that are more complex and ‘stickier’ than simple wrappers around foundation models, as these offer significant opportunity and competitive moats.

30. Build Proprietary Models/Data for AI Moats

To create a competitive advantage in AI applications, develop your own specialized models or accumulate proprietary data through user interaction, as this goes beyond generic foundation models.

31. Address Complex Problem Spaces with AI

Recognize that many real-world problems, especially in enterprise settings (e.g., semantic issues, access control, long-tail human behavior), require more than basic foundation models and offer significant opportunity for specialized AI solutions.

32. Prioritize US Leadership in AI for Global Opportunity

Support US leadership in AI development and policy, as a strong US position is crucial for maintaining a system that provides broad opportunity and prevents concentrated power globally.

33. Foster Trust Through Shared Experiences

Build trust and rapport within a team by encouraging shared experiences, such as eating meals together, to reinforce a sense of unity and collective identity.

34. Enforce Strict Honesty and Integrity

Establish and enforce a strict code of honesty and integrity, both internally and externally, as a fundamental principle for building a strong, trustworthy culture, especially when starting from scratch.

35. Accept Life’s Unfairness to Move Forward

Internalize the understanding that life is not fair; letting go of the expectation of fairness allows you to focus on actionable solutions rather than dwelling on injustices.

36. Focus on Action, Not Prediction

As a CEO, prioritize building solutions and taking action (‘building an ark’) rather than merely predicting problems (‘predicting rain’), as only action leads to positive outcomes.

37. Support Pioneering Artists (Paid in Full Foundation)

Consider supporting organizations like the Paid in Full Foundation, which provides financial assistance (pensions) to pioneering hip-hop artists, enabling them to continue their work and receive recognition.

38. Don’t Assume a Bubble if Everyone Says So

A true market bubble requires widespread belief that it isn’t a bubble; if everyone is already calling it a bubble, it’s less likely to be one because capitulation hasn’t occurred.