Editor’s note: When venture capitalists invest in early stage startups, more than anything else they are investing in the founders of the company and their ability to lead their employees through the most improbable set of circumstances to take an idea from a germ to a real and profitable business. In this guest post, Ben Horowitz of VC firm Andreessen Horowitz explains the leadership traits he and his co-founder Marc Andreessen look for before they invest in a startup. SOme of their investments include Skype, Zynga, Factual, and RockMelt. Before becoming investing partners, Horowitz and Andreessen co-founded Opsware, which they sold to HP for $1.6 billion, and prior to that Horowitz was an executive at Netscape.
At Andreessen Horowitz, we favor founders running the company. The reasons are many (and will be the topic of a future blog post). As a result, we spend a great deal of time thinking about the characteristics required to be a founding CEO. Perhaps the most important attribute required to be a successful founding CEO is leadership. So what is leadership and how do we think about it in the context of the CEO job? Are great leaders born or made?
Most people define leadership in the same way that Supreme Court Justice Potter Stewart famously defined pornography when he said: “I know it when I see it.”
A better definition comes from former Secretary of State Colin Powell who said: “You have achieved excellence as a leader when people will follow you anywhere if only out of curiosity.” For our purposes, we can generalize this to be the measure of the quality of a leader: the quantity, quality and diversity of people who want to follow her.
So what makes people want to follow a leader? We look for 3 key traits:
- The ability to articulate the vision
- The right kind of ambition
- The ability to achieve the vision
Let’s take these in order.
The ability to articulate the vision—The Steve Jobs Attribute
Can the leader articulate a vision that’s interesting, dynamic, and compelling? More importantly, can the leader do this when things fall apart? More specifically, when the company gets to a point when it does not make objective financial sense for any employee to continue working there, will the leader be able to articulate a vision that’s compelling enough that the people stay out of curiosity?
I believe that Jobs’ greatest achievement as a visionary leader so far was a) getting so many super talented people to continue following him at NeXT, long after the company lost its patina; then b) getting the employees of Apple to buy into his vision when the company was weeks away from bankruptcy. It’s difficult to imagine any other leader being so compelling that they could do these back-to-back and this is why we call this one the Steve Jobs attribute.
The right kind of ambition—The Bill Campbell Attribute
Andy Grove once remarked that a company needs highly ambitious executives in order to achieve its goals. However, it’s critical that those executives have “the right kind of ambition”: ambition for the success of the company rather than the “wrong kind of ambition”: ambition for the success of themselves.
One of the biggest misperceptions in our society is that a prerequisite for becoming a CEO is being selfish, ruthless, and callous. In fact, the opposite is true and the reason is obvious. The first thing that any successful CEO must do is get really great people to work for her. Smart people do not want to work for people who do not have their interests in mind and in heart.
Most of us have experienced this in our careers: a bright, ambitious, hard working executive that nobody good wants to work for and who, as a result, delivers performance far worse than one might imagine.
Truly great leaders create an environment where the employees feel that the CEO cares much more about the employees than she cares about herself. In this kind of environment, an amazing thing happens: a huge number of the employees believe that it’s their company and behave accordingly. As the company grows large, these employees become the quality control for the entire organization. They set the standard of work that all future employees must live up to. As in, “Hey, you need to do a better job on that datasheet—you are screwing up my company.”
I call this characteristic the Bill Campbell Attribute after my friend Bill who is the best that I’ve ever seen at this. If you talk to people who worked in any of the many organizations that Bill has run, they refer to those organizations as “my organization” or “my company.” A huge part of why he has been so unbelievably strong on this dimension of leadership is that he’s totally authentic. He would happily sacrifice his own economics, fame, glory, and rewards for his employees. When you talk to Bill, you get the feeling that he cares deeply about you and what you have to say, because he does. And all of that shows up in his actions and follow through.
Ability to achieve the vision—The Andy Grove Attribute
The final leg of our leadership stool is competence, pure and simple. If I buy into the vision and believe that the leader cares about me, do I think she can actually achieve the vision? Will I follow her into the jungle with no map forward or back and trust that she will get me out of there?
I like to refer to this as the Andy Grove attribute. Andy Grove will always be my model of CEO competence. He earned a Ph.D. in electrical engineering, wrote the best management book that I’ve ever read (High Output Management), and tirelessly refined his craft. Not only did he write exceptional books on management, he taught management classes at Intel throughout his tenure.
In his classic book, Only the Paranoid Survive, Grove details the story of leading Intel through the dramatic transition from the memory business to the microprocessor business. In doing so, he walked away from nearly all of his revenue. He humbly credits others in the company with coming to the strategic conclusion before he did, but the credit for swiftly and successfully leading the company through the transition goes to Dr. Grove. Changing your primary business as a 16 year old, large, public company raises a lot of questions. As Andy describes in an incident with one of his employees:
One of them attacked me aggressively, asking, “Does it mean that you can conceive of Intel without being in the memory business?” I swallowed hard and said, ‘yes, I guess I can.’ All hell broke loose.
Despite shocking many of his best employees with this radical strategy, ultimately the company trusted Andy. They trusted him to rebuild their company around an entirely new business. And that trust turned out to be very well placed.
So, are great leaders born or made?
Let’s look at this one attribute at a time:
- Articulation of the vision—There is no question that some people are much better story tellers than others. However, it is also true that anybody can greatly improve in this area through focus and hard work. All CEOs should work on the vision component of leadership.
- Alignment of interests—I am not sure if the Bill Campbell Attribute is impossible to learn, but I am pretty sure that it is impossible to teach. Of the three, this one most fits the bill “born not made.”
- Ability to achieve the vision—This attribute can absolutely be made; perhaps this is why Andy Grove’s tolerance for incompetence was legendarily low. Indeed, the enemy of competence is sometimes confidence. A CEO should never be so confident that she stops improving her skills.
In the end, some attributes of leadership can be improved more than others, but every CEO should work on all three.
Vision is a main part in Leadership.
This article has no substance. A good CEO should have:
1. an ability to articulate the vision
2. put the company’s interests above their own
3. should be competent
Wow! Breaking news. Nothing different than what you’d see from a business school academic in terms of insight or actionability.
And while you’re at it, be like Steve Jobs, Bill Campbell and Andy Grove – all once in a generation type leaders. And then we’ll fund your seed round. Great.
Also, remember there was a time when Steve Jobs wasn’t the golden child he is now. The best strategies are written after the fact. As it seems are inane navel-gazing, see how smart I am articles like this which really do zero to help entrepreneurs in any meaningful way.
You don’t think this is actionable? What’s so hard to understand about whether the CEO can get people to follow the vision and can get things done? It’s a very clear litmus test. The purpose of the article isn’t to provide a how-to guide for entrepreneurs, it’s to explain what they base their investment decisions on.
Breaking News: “At Andreessen Horowitz, we favor founders running the company.”
How many VC would think that way? How many companies with the founder running the company under current VC environment? No wonder the formula is 10 investment, 2 break even, 1 good bet and 7 rats. (VC demand 10 to 1 ROI min. other wise, it would be called “boring”). With VC drop some MBAs to “teach” the start-ups. Ha.
Good article, a bit too late with current environment of the “lesson learned”, body scattering battle field. Few of us with wounds all over the body (death of thousand cuts) left the field. New blood should come in and benefit all the wisdom.
“The first thing that any successful CEO must do is get really great people to work for her.”
The first thing a VC should have when giving advice on management qualities is the confidence not to display their insecurities regarding gender. In an PC attempt to promote equality they fail, instead exposing their lack of acumen concerning executive leadership. Competence is independent of gender, therfore their attempt to be fair and inclusive, overlooks true ability, and misses the most competent. AH = fail.
I was hoping to see the 3 fundamental keynotes of Bill gates here.
*Being in the right place at the right time. (You could well be already there ).
*Have a vision of where the industry / business you’re working in is going.
*Taking Massive and Immediate Action. (It is time to act).
All of our successful CEO today knows this and in some point of their life, have done this.. The question is, why aren’t we (normal people) not doing the things said above?
Off the record: the only CEO whom I think isn’t fitted here, is her
So, Bill Gates an overall player then? :D (i’m trying not to be cynical)
If you look at MSFT I think it shows that Bill Gates was obviously doing something right. It would be interesting if someone could make a valid argument otherwise.
He did do something right. He knew the right people, was in the right place, said the right thing, and found a cheap way to mass deliver a product that he copied. Doesn’t make you a great leader, but make’s you bloody rich.
You are missing something,
He was great visionary himself, He lead company with vision to bring computing to millions. He got smartest people to work for him and created good (might not be best) products which reached millions (this is important) and changed millions of life.
Uh…. you all realize that Bill gates was a Software Architect, right? The CEO of Microsoft is, was, and probably always will be the invincible Steve Balmer. he’s the one with the all the gusto and brains you are talking about… all Bill could do is code (and code he did).
These skills and abilities must be built on a foundation of trust, or no one will follow you, no matter how clear the vision. Great article here, keep it up!
Matthew Schmitt
http://matthew-schmitt.com
I think i will just be like myself and out work and preform all them old cats above.
The Padrino
http://www.thepadrino.com
Alignment of interests: fake it till you got it. Even if you don’t really care, go through the motions and do what a caring person would do. Who know? You may just become a decent gal.
Presence of all these attributes are undoubtedly essential for a great leader but to guess the presence of ‘alignment of interest’ and ‘ability to achieve’ must be extremely difficult, if not impossible, while investing as a VC. If I were a VC I would look at the team of senior management, not just a leader. Too often too much importance is placed on one man. Too often the leadership qualities are derived ex-post facto. We all suffer from survivorship bias.
This is exactly why the VC people are in the middle of nowhere right now – because of THESE misconceptions (I didn’t use the right word – forms of idiocy, expressed in these patterns of thought, did you notice?).
Go on. PLEASE, go on! I didn’t laugh like this for a long time. :) Every word is just a treasure and begs to be included in a golden book ‘How NOT to think in these turbulent times’.
sounds like you have all the answers then. why don’t you step up and write a blog about how it *should* be done, Alex? what’s your experience with trying to analyze potential leaders to invest in?
So you’re saying a good CEO shouldn’t be able to articulate the vision, shouldn’t put the company’s interests above their own, and shouldn’t be competent? Are you a troll or just an idiot?
This post articulate many prevalent leadership theories; everything from Collins to Posner suggests that vision, ability and ambition are the most important traits for a leader.
The most important characteristic is the right sort of ambition. No leader manages to build an organization without leading in a humble, company centric way.
HOW ABOUT BEING YOUR SELF. BE COMFORTABLE IN YOUR OWN SHOES
Seems like being yourself for you means running around shouting everything you say. How is that working out for you?
lol great diss kaiynne
In my view venture capitalists and investors are more serious about management skills rather than the leadership skills. But this article tells a different story.
Depends on the place the company is in its lifecycle…
If you’re a VC looking to seed an early round company, then leadership is the most important thing. But if you’re an investor in an established company (likely public but not necessarily) then being able to manage is more important.
This is why you see that a lot of early stage CEOs stay with a company too long after it ‘makes it’, and just flounder. Imagine Mark Zuckerberg trying to run IBM, or Sam Palmisano trying to run Facebook. This also accounts for the success of Microsoft in that Gates and Ballmer were able to balance the two skills, and shift the limelight as the company transitioned from a focus on new products to sustaining/expanding product lines.
Good article and points but as mentioned above, is Bill Gates just a run of the mill or does he meet ALL the above traits?
Also curious if there was some esoteric reason or maybe just typo’s for using “her” & “she” where it should be “him”, “he” and “his”.
“the quantity, quality and diversity of people who want to follow her.”
“A CEO should never be so confident that she stops improving her skills.”
Bill Gates?
- vision: among many examples, he imagined a PC in every desk way early in the 70′s; I think he at least matches Jobs in this trait
- the right kind of ambition: how about the Gates Foundation? hard to think of anybody topping this one
- ability to achieve the vision: hard to think of anybody more successful than Mr. Gates and Microsoft
Yeah, the whole “she” and “her” was annoying because no one really talks that way when speaking in generalities. We always use “he” or “him”. I don’t want to speculate on “his” motivation for writing this way, but I have a pretty good guess.
Agreed. And in in the off chance the writer used “she” and “her” to get us to stop thinking about leaders as male only, it seems a better way to push this would be to actually pick a, say, female to highlight as an example? Keeping on using “she” and “her” when all the examples in the article are male seems quite odd and disingenuous.
i thoroughly appreciated the blog (thanks ben) but i have to agree with stanley here. the use of the masculine pronoun is a linguistic standard. this may be unfortunate, but to deviate from the standard creates a distraction — an interpretation cost, so to speak. i also don’t think using the masculine pronoun is anti-women. if one is really concerned about gender bias, “he/she” would have been most appropriate, IMHO (or “she/he”, or better yet, alternating).
Tom, everyone does typically use “him” or “he”, but that doesn’t make it more correct that using “her” or “she”. The writer is obviously trying to correct for gender bias.
Would have been better to use the general, they or them.
Unfortunately the English language doesn’t have this feature.
Rather than appreciate someone trying to show you a new idea, you complain that it’s not what you’re used to hearing and seeing. Great attitude to life you’ve got going!
I agree with this… it’s actually why I came to comment….
The article was written by a man, it never once even makes a slight reference to any female executive (of which there are a handful who could have been exampled for this piece)….
So yes, for the article itself to be such a sausage fest and then have the words “she” and “her” used as general-pronouns is a bit of an oversight… it might even be seen of as snide or wink-wink-smicker-snicker to some uber-femenist types…
Good article, bad choice of pro-noun. (And yes, it is worth mentioning Maksim T… not complaining… just kind of pointing out for future reference).
Great article. You make some very good points. I also think that a lot of creativity and drive comes out from a person in times of necessity.
I think this use is just a reaction against using the masculine form. But of course using the feminine is even more wrong since the masculine has been used for both throughout history.
If using masculine really bothers people, they should just use the plural and avoid the issue altogher:
“CEOs should never be so confident that they stops improving their skills.”
I really appreciate the time taken to share these insights, especially as it’s by someone who not only has a great track record but who also puts their money where their mouth is.
Ben, my question is if you were to recommend one resource for each of the three points, what would they be? I’m not the next Steve Jobs, but what you are saying makes a lot of sense to me and I have a strong interest in doing all I can to improve my abilities in those areas.
I like Ben’s posts. And also wish that Marc would write more.
The problem with this article is that it is one giant conflict of interest. What do Andy Grove, Bill Campbell, and Steve Jobs have in common? Access to billions of cash on their respective company balance sheets that can and has been used to overpay for acquisitions and secure life’s finer things for the author as well as the venture capital community in general….and therein lies the rub!
This rub is one of the biggest issues in Silicon Valley – the fact that public company leadership teams are buddy/buddy with all of the venture capitailists that they are sitting across the table fromwhen they negoiate purchase prices for M&A transactions.
Given this dynamic which is rampant in the Valley, it’s really hard to take articles like this one seriously.
So are leaders born or made?
Back to this question, I think some leaders are born with special gifts and in the right environment will outshine. Others however, can be made if these were lucky enough to find the tools and the environment to florish if they have the persistence within.
For these both types of leaders , meeting the right mentor in their lives (whether inpirational, knowledge or experience wise) will help shape these leaders to become what they are in the future.
Really great post! Thanks for sharing!
Nothing against Bill/Andy – but what Steve Jobs has done with Apple hardly compares to anything the other two have.
Apple is now the 3rd largest company in the US as they just passed Walmart in market capitalization – selling high end products in one of the greatest recessions of all time.
You’d be hard pressed to find any stock with the 1 year, 3 year, 5 year returns of Apple. The reason for this is Steve Jobs.
The run MSFT had from 1990-2000 wasn’t too bad ;-) Could use me one of them right now.
The economy was in a very different state between 1990-2000 than it has been in 2000-2010.
2000-2010 includes not one but two significant downturns.
Apple’s annual return between 2000 and today is 44.5% while Microsoft between 1990-2000 was 42.8%. Close, but no cigar.
Love these guest editorials whether it is Ben Horowitz or Vivek Wahda on TC or Robert Reich on Huffington Post.
While short, I think this is one of the best articulated arguments of what a leader is. This applies to leadership in business, communities and politics.
There’s some interesting talk about Bill Gates but it didn’t get too much analysis. Can a TC writer propose a few examples of those who truly excel at all 3 components?
I would argue that all of the above traits are part of the charismatic or transformational leadership model (which I like, in case anyone was wondering).
Great stuff! Thanks!
I would be very curious for you to elaborate on this conflict between confidence and competence; it’s one that a lot of scientists face implicitly, yet don’t seem sure enough to talk about it…
I don’t want to *feel* like the CEO has my interests in mind. I want to *know* that the CEO has my interests in mind.
Interesting that you use the word feel, because it sort of implies that it’s okay if the CEO works to build that illusion rather than reality.
I believe the foremost trait for leadership is uniqueness – having his / her own style of thinking, understanding & executing the task.
That’s very wrong. Uniqueness is in fact a bad quality in a CEO.
I think this is an absurd post from the usually “feel good” type of people who feel jobless after making their billions. The modus operandi of these “feel good” type of rich dudes is:
Look for successful company and its leaders, co-opt their seemingly “appeals to the heart” qualities, forgetting the fact that the devil is in the details, and start giving useless “free advice” to the bunch of entrepreneurs who are toiling hard producing something useful.
My own “free advice” to everyone is to ignore these rich dudes “free advice” and instead to “follow your instinct and focus on what you do best”.
Sekar
“Andy Grove will always be my model of CEO competence. He earned a Ph.D. in electrical engineering …”
Andy Grove has PhD in Chemical Engineering.
Maybe he has two…
Either way…. chemicals, electricity…. all i know is I don’t want either one to touch me.
What a delightfully insightful article :-)
Thumbs up!
Leadership in the context of Vision, Ambition and Achievement is ok. There is also a case for putting people at the heart of all Leadership decisions. Should the people aspect not be highlighted more directly.
In recent times, Employees at the heart of business success has increasingly been spoken off, as is evident in this
http://www.nytimes.com/2010/02/14/business/14cornerweb.html
Mark Zuckerberg thinks he’s Steve Jobs but he’s not.
http://valleywag.gawker.com/5016267/mark-zuckerberg-preps-steve-jobs-impersonation-for-developers-conference
This article is indicative of the current investors desire of creating a company and achieving a quick return on their money, and their incapacity to appreciate vision. I wonder whether great inventors like Philo Farnsworth, Nicola Tesla or Edison had any of the described qualities. No wonder that overall the VCs are losing money in the last 10 years.