Given the author’s love of rap – and willingness to include rap lyrics as chapter intros – my only quibble with “The Hard Thing About Hard Things” was not referencing the most motivational rap song of all time: “Till I Collapse” by Eminem featuring Nate Dogg.
As the song begins, with Eminem talking over an army drill cadence:
“Cause sometimes you just feel tired, feel weak… and when you feel weak, you feel like you wanna just give up… but you got to search within you, and try to find the inner strength… and just pull that s— out of you… and get that motivation to not give up, and not be a quitter… no matter how bad you wanna just fall flat on your face, and collapse…”
It’s the ultimate theme song (if you like rap) for Horowitz’ time as CEO of Loudcloud and later Opsware, going through hell – and being forged into steel via incredible trials by fire – along the hard, bloody road to success (seeing Opsware acquired for $1.6 billion). Highlighting lessons from that experience is the purpose of the book.
In another section, Horowitz distinguishes between okay CEOs and great CEOs by pointing out a difference in perspective on how they made it through killer trials. When Horowitz would ask fellow CEOs “how did you do it,” as in “How did you survive that brutal gauntlet,” okay CEOs would point to something specific. Whereas the great CEOs would simply boil it down to a simple hardcore essence: “I never quit.”
They simply refused to give in or give out, as the “Till I Collapse” chorus puts it:
Til the roof comes off, til the lights go out
Til my legs give out, can’t shut my mouth
Til the smoke clears out, am I high perhaps
I’m a rip this s–, til my bone collapse…
You must know what this means, on a deep level, to be a great CEO. And the same goes for traders. Nearly all traders, like nearly all CEOs, face their “time in the wilderness” – when nothing feels easy, everything feels impossible, and killer challenges press on every side.
I devoured “The Hard Thing About Hard Things” in less than 24 hours, having heard about it via youtube interview of Horowitz at a tech startup conference. The sense of realness – of someone who has been down in the mud and the blood and fought their way through – was absolutely compelling.
This book – basically a series of guidelines for CEOs and building a business – is not some fluffy management tome written by a theoretical management consultant with no personal concept of what brutally hard decisions are like. This is front-line reporting from a CEO who has gone to war… taken severe casualties… made series after series of life-or-death decisions… motivated troops in the trenches… and ultimately won. (As such, the book will almost certainly offend or turn off those with a more ‘civilized’, and less emotionally raw, perspective on company leadership.) 
The book had triple resonance for on three fronts: Entrepreneur, CEO, and Trader. The “building a business” aspect spoke directly to our plans: Mercenary Trader, our financial publishing and trading education startup built on founder sweat equity, is on the cusp of critical mass after four-plus years of blood, sweat and tears. Our model is built around cultivating a true community of traders – monetizing the research we use to trade and invest our own funds (and those of clients), while educating members in our community (in a way that no one else does) that they might join us, share ideas and insights, and take their own trading to new heights.
In terms of hardcore challenges, we have already had to deal with questions like whether to sell a major piece of the business… how to handle joint venture projects (including a major software initiative) gone south… the bloody business of firing people (of course)… and lots of other things, all while managing capital simultaneously.
Ultimately we want to provide seed capital to the breakthrough star traders in our community, having trained them and equipped them with shared community resources – our own version of Julian Robertson’s “Tiger Cubs” – and use flowback from publishing profits to further deepen and expand our research capabilities, even while creating a shared idea environment that fosters partnerships and even life-long friendships. Think hedge fund incubator crossed with “trader greatness training” and deep community value-add.
Not unlike what a great Silicon Valley firm cultivates for tech founders (and hence the tie-in to this review)… the VC model of A16Z (Horowitz’ and Andreessen’s firm) was compelling in this regard too, in the way they took a bunch of long-standing VC industry conventions and simply decided to blow them up.
(I found it hilarious, as an aside, that the historical reason VCs are extremely private, and totally disdainful of publicity, is because this is how the original banking houses did it, like the Rothschilds and whatnot – as Horowitz relates, those guys were publicity-shy because they so often funded both sides of wars.)
For the longest time, as Horowitz makes clear, VCs assumed that tech founders needed “adult supervision.” Even worse, they would sometimes try to eyeball a founder to decide if they were “CEO material” based on appearance and superficial impressions, not unlike the worst practices of the redneck talent scouts in “Moneyball” pre-Billy Beane. One almost imagines choosing a candidate to lead an organization simply because he (or she) looks a little better in a tailored suit – which is apparently what actually happens, given an utter lack of substantive process.
Horowitz and Andreessen, in contrast, realized that great tech CEOs are MADE, not born – shaped and created via community experience and support – and that all the truly great tech companies were led to greatness by the passionate founders who created them in the first place (Jobs, Gates, Hewlett and Packard etc).
They thought tech founders would likely be in synch with a vision of empowering founders, rather than expecting to hand their passionate idea over to an empty suit… and they were right. So they set up A16Z, a different kind of VC firm, to facilitate that transition: “Making” the CEO out of the founder, or rather helping the founder to come into his own as CEO, through guidance and support.
This view had deep parallels with a great point of frustration, for yours truly, in respect to the trading industry: There are so many books, so much literature, talking about what makes for a “great trader,” or what makes someone “trader material,” not unlike someone being “CEO material.”
But great traders, like great CEOs, are also MADE – it is at least partly an unnatural thing, as Horowitz says – and there is a huge amount of psychological and emotional development along the way. There is training needed for this stuff. And not the same old “cut losses and let profits run” stuff either, but real, deep, meaningful training. Having potential is not the same thing as being developed – not by a long shot.
Apart from the excellent (and very specific) insights into building, running and selling a business – and various aspects of CEO day-to-day – here are ten things from the book that struck me personally as to where the jobs of CEO and Trader overlap:
1) CEOs and Traders are paid to make decisions. The reason CEOs get paid so much (relative to normal jobs) is because they have to make the hard calls. The bigger the enterprise in question – the more that is riding on every key decision, for good or ill – the more important those decisions become. It’s the same with traders: Pay is commensurate with good decision making, not activity level, and in synch with the size of one’s asset base. It’s not physically harder to run $100 million or $1 billion than, say, $10,000, but the trust required to be awarded stewardship of those assets has to be earned.
2) CEOs and Traders are always accountable. Whatever happens, “it’s your fault.” Good luck, bad luck, meteor strike, employee sabotage, doesn’t matter. If it goes wrong, the negative outcome for the business – or for P&L – is laid at the feet of the CEO (or the trader). This is a mental and emotional burden that most people who haven’t born that kind of permanent pressure don’t understand.
3) CEOs and Traders need knowledge handed down. Colleagues and mentors who have been through comparable experiences, and can share wisdom, are truly invaluable. Horowitz underscored this repeatedly with key lessons learned from Bill Campbell, often at critical decision making junctures. Reinventing the wheel is just unnecessary, and highly dangerous, in contrast to tapping the seasoned wisdom of others who have already been through it.
4) CEOs and Traders need a support network. Both of these can be incredibly lonely jobs at times. The weight of hard decision making – which no one can take off your shoulders – can create a sense of feeling isolated. Employees, family and friends can’t help with this burden. Sometimes they even add to it (though not intentionally), by being party to the outcome of the decision (but not the requirement of making it). There is no substitute for having friends and mentors at arm’s length from the situation – fellow CEOs, fellow traders – who know what this is like, and can empathize and share while remaining removed from the situation itself.
5) CEOs and Traders need ability to handle “the struggle.” The description of “the struggle” was one of my favorite parts of the book. It’s a description of the dark times, as in the REALLY dark times, like dark on the way to pitch black. Even if you get super lucky and avoid it, you need mental preparation for the day “the struggle” potentially comes. Going through it is a rite of passage.
6) CEOs and traders need a healthy tolerance for pain. This is different than “the struggle.” Pain tolerance is required even when things are going well. In a world where competition for scarce resources is the natural order of things, achieving excellence is always hard. There is no such thing as perfect – mistakes are inevitable, sometimes big ones. Indeed if there is a “secret to success,” a willingness to endure pain – to fail forward, correct mistakes, and stay brutally honest and doggedly determined the entire time – would be it. It even becomes desirable (if not always possible) to enjoy the pain as it makes you stronger.
7) CEOs and Traders need deep cognizance of their own psychology. On the outside, as Horowitz says, everything is always “great” and “amazing” and otherwise perfect for those who ask. Inside, emotions can be tossed about like a ship on a storm. This requires more than just “suck it up” psychological fortitude. It requires a nuanced awareness of one’s personal psychology and ability to manage it.
8) CEOs and Traders need “Wartime” skills. Horowitz’ distinction of “peacetime CEOs” and “wartime CEOs” applies to traders too. There are markets where everything is unfolding nicely and confident optimism is richly rewarded; and then there are markets where the manning of battle stations and ruthless risk control win the day. While most traders, like most CEOs, will more naturally gravitate to “peacetime” skill sets, the potential for war must always be accounted for.
9) CEOs and Traders need trial by fire. How do you know if you’ve got what it takes? Get thrown in the shark tank and see what happens. It’s not enough to do okay in favorable conditions. The water has to get bloody. There is no way to deny this or shy away from this, if the goal is to play for meaningful stakes. Playing for real stakes in the real world means being tested.
10) CEOs and Traders always have opportunity. As the book puts it, “there is always a move.” If you feel completely boxed into a situation with no way out, you may not be thinking hard enough (or creatively enough). When it comes to strategic decision making, the deep complexity and open-boundary nature of the sheer number of options available can be ruthlessly intimidating in one sense, but intoxicating and freeing in another sense. If thriving in conditions of uncertainty doesn’t sound appealing, then as with pain tolerance, you may want a different gig.
In conclusion, CEOs and traders have the coolest jobs on the planet. What other careers let you strategically and tactically allocate resources, sometimes vast quantities of such, with sky-is-the-limit potential for profit creation and impactful change? What others jobs are so ruthlessly demanding, yet so ultimately fulfilling, while remaining interesting almost every single day? What other jobs not only require, but DEMAND, such an elite and diverse array of skillsets, including management capabilities both external and internal? Very few.
If you are serious about building a business, becoming a CEO, or stepping up your game as a trader via leadership lessons with strong cross-application to trading, buy this book.
If no-holds-barred honesty is a turn-off and you prefer a rose-colored-glasses view of reality, however, don’t buy this book. It pulls no punches, which is fantastic for those with the clear-eyed courage of Thucydides: “The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out to meet it.”
JS (jack@mercenarytrader.com)
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