Editor’s note: Legendary investor Vinod Khosla is the founder of Khosla Ventures. You can follow him on Twitter at @vkhosla. And make sure to catch Khosla’s fireside chat at Disrupt SF at 1:55 pm PT on Wednesday.
I recently read Ben Austen’s WIRED article about Steve Jobs, which prompted me to put together my thoughts about the tradeoffs of being a successful entrepreneur. Austen’s article draws a caricature of Jobs and puts forth a series of false choices. After reading it, you might be convinced that you can either be a jerk and successful or decent and mediocre. Let’s take a look at some of the examples that the article highlighted from Jobs’ life:
1. In 1975, Atari paid Jobs and Steve Wozniak to create the iconic game Breakout. Woz pulled four all-nighters to get it done—but Jobs pocketed the whole bonus that Atari paid for the game’s efficient design. Austen cites this to set up a choice between “push[ing] colleagues to extraordinary lengths” (implicitly, screwing them over) or being fair and honest. Pushing employees to excellence doesn’t mean you’re being unfair or screwing anyone over. On the contrary, people respond well to challenging but fair environments.
2. In 1981, Jobs refused to give founding stock to Apple employee number 12, Dan Kottke. A fellow employee intervened, offering to match whatever options Jobs was willing to spare for Kottke. “OK,” Jobs replied, “I will give him zero.” Austen contends that good leadership is unsentimental, which comes with being disloyal to your employees. But lack of sentimentality doesn’t mean lack of caring and even generosity to those who have shown loyalty to a company. In fact, caring for employees, while being objective and critically honest about your issues/people, will attract and retain the right kinds of employees in my view.
3. In 1994, Jobs announced he was firing a quarter of the Lisa computer team, telling them, “You guys failed … Too many people here are B or C players.” Tolerating only A players doesn’t mean you have to scare your employees with this kind of intimidation. But, being clear about not tolerating B players and fixing any hiring mistakes is key. Doing it gently and fairly, but very firmly, can absolutely be done.
4. In 2005, Jobs ordered a smoothie at Whole Foods, but when the aging barista didn’t
make it to his taste, he railed about her incompetence. Austen cites this as a choice between “forc[ing] the whole world to bend to your vision” or “understand[ing] the limits of your power”. Good entrepreneurs driving bold new visions will often do both.
I’m not interested in commenting on Jobs’ personality and what it was or wasn’t. It doesn’t matter. What matters is that you don’t have to make the above tradeoffs. There is no single canonical model for the successful entrepreneur. Successful people come in all forms and they all have different limitations, baggage, prejudices, and ways of looking at the world. However, there are some shared characteristics that elevate them and their companies to rarified status. It’s worth taking a quick look at these key attributes.
“Build a team of A players” is part of the entrepreneur’s catechism. More than anything, building great teams (besides providing vision and culture) is what great founders do. But Austen’s article sets up a tradeoff here: You can build a team of great players, but then you have to have a culture of fear that doesn’t allow anyone to take risks. Every successful entrepreneur needs to build a great team.
Being clear about not tolerating B players and fixing any hiring mistakes is key. If you don’t fix B player mistakes by moving them to less critical roles or areas where they can succeed or, if none exists, by doing a fair exit deal with them, you will demotivate your best employees and bring down the standards of excellence. Austen’s article makes a valid point here. But how you do it, along with the style and fairness metrics you use, is what will determine your employees’ goodwill towards your venture. Doing it gently and fairly, but very firmly, can absolutely be done.
The ability and willingness to make tough calls, whether they involve products or people, is part of the required skill set for entrepreneurs. They have to be objective, intellectually honest leaders. After reading Austen’s article, you might think that unsentimental leadership comes at the price of loyalty, but that’s not true. You have to be objective with your team and yourself so you don’t sink the ship, while pushing everyone to deliver their best. Have the courage to hold back products that
aren’t good enough and give unvarnished feedback when that happens. Spending hours working on the wrong thing doesn’t count, no matter how hard someone works. You can and should be tough, require excellence, and criticize without being denigrating.
That being said, I prefer brutal honesty to hypocritical politeness. You might hurt some feelings, but it likely won’t do net harm among the A players. This is where the clarity and quality of vision matter. Tolerance for sloppiness and “good enough” mediocrity in anything critical is a killer. Building loyalty, trust, motivation, and a sense of team work are critical parts of optimizing for the long term. Creating this kind of honest, unsentimental, but fair, environment will actually foster loyalty in your employees.
Good etiquette, unless it gets in the way, increases the probability of success. More people will want to work with you and see you succeed. This is especially true if you critique the work, not the people. It’s hard to do, and I often catch myself making this mistake when I am frustrated with what has not been done, but training, self-awareness, and having a person nearby who’ll call you on it helps. Page, Brin, and others have all enjoyed enormous success, but they haven’t had to do it by being jerks. They do it by valuing A players and logical debate; they’re always willing to discuss “why.”
Jobs was successful because his unreasonably high goals, brilliant insight, and relentless passion made people want to work with him. The story about him, Woz, and what happened with the money paid for their work on Breakout has been told before, and Austen uses it to try to convince you that demanding excellence is the same as taking advantage of people. I don’t see the connection. Maybe Jobs thought Woz was not doing his fair share or was a B player? I don’t know his reasons, but a good entrepreneur has to require the best and fix any compensation problems that are not commensurate with contributions. This has to become part of your culture, and it has to be shared by everyone in it. I believe employees who aren’t delivering should be told directly they aren’t a fit for the environment, and they should be put into a more appropriate role. Tolerating B players in critical roles is unfair to the rest of the team. Being nice or afraid to face the hard facts can be damaging to a company’s culture.
Setting a high bar for performance has to be part of the company culture. Objective decision-making is important; but being a tough leader isn’t the same as being a dictator. There are things most people can’t do as well as Jobs, but there are definitely things that can be done much better. You don’t have to have a surly personality to be successful, although sometimes it comes with the territory. Being that rational might come off as a little too Vulcan, but objectivity matters and it gets respect.
Fairness and strong ethics are core long-term values that build trust. It is fine to “violate any norm of social or business interaction that stands between you and what you want,” so long as it’s legal, ethical, and fair. I find generosity also pays. At Sun, we split founder equity evenly and in single digits despite our different roles, and it worked out well. A great place to start would be Reed Hasting’s presentation on the culture he is trying to develop at Netflix.
Dreaming up your own vision of the future is part of being a great entrepreneur. You have to be impatient. You have to force change and push the world forward against its own inertia. I’ll grant part of Austen’s point that this sometimes shows in ways it doesn’t need to and often comes with certain personality types that would benefit from being moderated. But fixing what needs to be fixed in the world requires people who aren’t willing to toe the line and accept the “limits of [their] power”. It doesn’t happen any other way. Refuse to compromise your visions.
The other part is convincing everyone else to see it the same way and follow you there. Whether you’re building spaceships for a fraction of the price that NASA used to pay (SpaceX) or reinventing money and the way commerce is done (Square), you have to be unreasonable and you have to push the world forward against its own inertia. Do this without apology and do it without being a jerk.
But, if being a “jerk” means refusing to compromise your visions, or striving for perfection, or not tolerating B players, then so be it. You don’t have to compromise on what really matters. It’s usually only a few things so reserve your silver bullets for them. But you can be flexible about your tactics and sensitive to people when it doesn’t get in the way of your key goals or when tactics cause a minor diversion to your long-term vision. As I like to say “be obstinate about your vision, not your tactics”.
Don’t fool yourself though. “Forcing the world to bend” requires sacrifice, which Austen correctly points out in his article, albeit with examples that might make you think that being a bad parent, an uninvolved member of society, or a spiteful human being is the price to be paid for major success.
Entrepreneurship is not a job; it’s a lifestyle! The important thing is to be clear about what priorities are important to you and what you’re trying to achieve. Once you do that, it won’t feel like you’re giving up that much. While my kids were young during my busiest times, I personally chose to sacrifice many things, except for family and work. I made it a habit to have 25 dinners at home per month, and I had my assistant report on my “home for dinner performance” every month (anything important is worth measuring). I’ve seen many other people save kids’ time, which is usually 6–8pm, and sacrifice other times. Figure out why you’re doing what you’re doing — fame, fortune, friends, fervor, impact, whatever it might be —be clear and don’t mix objectives. You can “change the world” and “have a great family life.” Other things can be sacrificed instead.
Above all else, great entrepreneurs are driven by passion and have the courage to execute on their vision of the future. They are not reasonable people. Don’t avoid trying to change the world because you don’t want to “end up like Steve.” It’s a false choice, and the world is better off because of Steve Jobs. We need more people with the audacity to take on energy, healthcare, poverty, food, education, and the rest of the big challenges facing us. It’s fun and ultimately rewarding to try to do these hard things, even more so than making money. Martin Luther King, Jr. told us that “human salvation lies in the hands of the creatively maladjusted.” Turns out he knew something about entrepreneurs.