Dick Costolo sits for plenty of interviews. But Twitter's CEO had never played the role of interviewer until Thursday, when he grilled Ben Horowitz, the hip-hop-loving partner in Menlo Park-based venture capital powerhouse firm Andreessen Horowitz, at our Innovation Uncensored conference in San Francisco.
Since Horowitz is an early investor in Twitter (what's your revenue model again?), this could have been all kinds of awkward. But these are two guys who stare down risk and disruption daily. And it turned out to be an historic mind meld, revealing details about the day-to-day business management styles of two Silicon Valley icons.
The full conversation between these two giant business brains—annotated with must-read links—is embedded here, and the key leadership lessons are in the text below.
1. Wartime CEOs Can't Always Delegate
Costolo brought up a Horowitz's well-known blog post about wartime and peacetime CEOs and took it a step further, asking Horowitz, How does a leader go from General Grant to the Reconstruction?
Horowitz had first written about the subject after reading a bunch of management books and noticing that most professional consultants wrote from the perspective of really successful companies. But the lessons of embattled CEOs are just as vital, Horowitz said. Peacetime CEO's are much more willing to delegate and rely on the organization when their companies are well out in front of the competition. But when the difference between bankruptcy and success depends on the next product release, "A wartime CEO may not delegate," Horowitz said. "They make every decision based on the next product release. They may use a lot of profanity."
When it comes to HR, the peacetime CEO's approach is all about grabbing talent, Horowitz said. But as a wartime CEO (He founded LoudCloud and OpsWare with Andreessen, Tim Howes, and Sik Rhee), "My number one role for employees was, 'Do you want to work here?' And if you don't want to work here, I can't use you. This is going to be hard. This is going to suck. We're getting our butts kicked." Anyone who wants to work at a wartime company has to answer those challenges.
2. Founders Have Permission To Make Unreasonable Requests
Horowitz got in a few questions of his own. Costolo, he said, is often referred to by Twitter (and now Square) cofounder Jack Dorsey as a "founder" of the service, even though Costolo is its third CEO. So Horowitz asked him what exactly makes a CEO a "founder," even if he wasn't with the company from day one?
"What I think [Jack Dorsey] is really doing is saying that, 'I anoint Dick with the permission to make unreasonable requests of you and demands of you,'" Costolo said. "Founders of a company have permission to make unreasonable requests of the team. They have the moral authority to make absurd requests that they can make with a straight face and you (you being anyone else in the company) don't have permission to say 'You must be out of your mind, that's impossible.'"
Of course, Costolo isn't operating in a vacuum. He's caucusing with Twitter's board, upon which actual founders Dorsey and Ev Williams sit, to make sure he sets some context before issuing challenges. The result, he says is that "there's a gravitational pull that the team has to listen to my requests and say 'Okay, we'll go out and figure out how to do that.'"
Horowitz asked if the "founder" distinction gave Costolo the authority to unravel some of Twitter's fabric. The answer was, in short, yes.
And Costolo gave an example. Twitter's architecture just wasn't suited for how the company wanted to scale when he came on as CEO, he said. And that became apparent in the days running up to a historic traffic night with the presidential election. So he instituted some fundamental changes in the way the company's architects worked. Without getting too far down the geek hole with talk about the company's technology stack and how it wasn't a "service-based componentized architecture," Costolo said he told his architectural team: "We're never going to be able to keep the site up and running and scale it.… You're not going to be able to code that way anymore. You're going to have to use this other way of building things."
And because he's the "founder" they made it so.
3. Create A Culture Of Dissent
Before Costolo got to Twitter, the culture of the company often involved avoiding open conflict. "One of the things I told my managers a little bit after I took over as CEO," Costolo said, "was, 'You have an obligation to vocally dissent in a meeting if you disagree with what we're discussing.' I don't want to ever hear afterward, 'Well I didn't really think what Bob said was really the right thing to do.'"
The reason, he went on to say, is that failing to speak up and doubting a decision later only serves to undermine managers' authority—it leaves their team with the perception that they don't have to authority to dissent. And who wants to work for that guy?
4. Be The Person You Want To Work For
"One of the things I say to people is: Imagine if we succeeded," Horowitz said in describing how he instills the importance of style in his management teams. If the company succeeds on a foundation of jerky leadership, "And now we've got thousands of employees and everybody who works here is miserable at work and goes home and kicks a dog... how would you feel about yourself?"
So how does a person deemed worthy of promotion end up becoming the caricature of a bad boss? "The number one kind of bad thing people do when they get promoted from individual contributor to manager," Horowitz says, "is that they have some kind of platonic form of manager in their mind, and they try and be that platonic form, which is not them. The manager all of a sudden … goes from being somebody who you can talk to just like a complete jerk."
But even when someone is promoted because of his or her cutthroat style, the problem comes when they try to change. Horowitz recalled the story of basketball player Charles Barkley, who had a reputation off the court for getting in bar fights, getting arrested, peeing in public—it overshadowed his on-court performance so much that Nike cast him in a famous series of ads in which he proclaimed "I'm not a role model." Suddenly he was freer to be himself on and off the court, and some of the pressure came off. The Barkley story, Horowitz said, is a perfect example of the importance of retaining the personality that got you to the management role in the first place.
"The best advice for managers is: You've got to be the person you want to work for," Horowitz added. "And don't urinate in public."
5. Build Trust Through Honesty
Costolo described in fascinating detail the challenges he faced as Twitter was growing astronomically. Lots of people were coming to work at Twitter from other tech giants—Google in particular. Training managers often meant undoing what they'd learned at companies that had very distinct management approaches. That challenge is best told through the following back and forth between Horowitz and Costolo:
Costolo on how he responded to people who began suggestions for problem solving with the phrase: "At Google…":
"This isn't Google. We don't have the gross margins they have. We don't have the engineering infrastructure they have."
However, he added...
"Google makes this incredible amount of money, so it actually justifies whatever decision they're making."
"Yeah. Cash covers up a lot of mistakes. Spread the cash over the mistake and nobody sees it."
"People would come in and say, 'Well at Google, we only hired salespeople who were only taller than five-foot-six.' Okay, well, it didn't matter, because you could have said the opposite and it would have worked."
Google is also famous for letting its engineers work on passion projects—the famous 20% time. Costolo has a different approach. He brought up a hypothetical example of a developer who comes to his manager and says he's sad because he wants to work on Project A because he's more passionate about it. And maybe if he can't work on it, he'll quit. Instead of telling the developer what he wants to hear, a Twitter manager considers first whether Project A is a priority for the company. Otherwise, Costolo said, "five months later when they've worked on Project A ... and we still don't ship it because it's not a priority, they end up quitting then because their manager's thrown them under the bus five months ago." "The way you build trust with your team is around super-clear communication in that instant when they say 'I will be sad if you don't do X.' You have to say 'We're not going to do X, and here's why and believe me you'll be much sadder later if I let you go do it and you spend a bunch of time on it and nothing ever happens.'"
6. Explain Your Decisions
Twitter knows from crossroads decisions. Changes to its API have sunk third-party services built on its back end. And recently, Twitter soured its relationships with LinkedIn by cutting off the ability to pull your Twitter feed into your LinkedIn profile. Horowitz asked Costolo what those kinds of decisions look like from the inside.
Before making them, Costolo said, he gathers feedback from insiders, but it's important to know when you've gathered enough. A good sign is when you start to hear the same themes repeated, he said.
Just as important is making sure everyone on the inside understands why you made the decision. "Here's what I've decided, and here's why I've decided it," Costolo said. "So when someone in the market or someone outside the company says, 'Well I don't understand…,' The people inside the company all understand what I understand. They may still disagree with me, but having that context makes it much, much easier for them to say to people outside the company or people in the space: 'Here's why we did this.'"
7. Manage Superstars By Setting Aside Your Ego
Our CFO Ali Rowghani was the CFO at Pixar," Costolo said. "And so he's reported to Steve Jobs and Ed Catmull. I'm sure I tell him a few things and he looks at me and in the back of his brain, he's going 'That's not what Steve would have said.'"
So how do you effectively disagree or sway someone whose ideas have proven extremely effective? You can't always, Costolo said. And it's in these situations that he responds by saying, "You know I really have no idea. So hopefully you guys can come to some sort of agreement on this." It's important, Costolo adds, not to go against the will of a team of senior, experienced managers too often, lest they start to tune out. "Even if I go into the room disagreeing with these guys, if I start to hear from all these senior people that they agree on something I don't, then I have to set my thinking aside," Costolo said. "And then I have to do what I tell my managers and leave the room and commit to my decision." If you don't, he adds, "There's no better way to undermine your own leadership."
Costolo returned to the topic later to describe how his senior managers are conduits for the most important leadership lessons on the planet.
"These guys have worked with Larry Ellison and [Marc] Benioff and Steve Jobs, and you can say—I say to them all the time: 'Okay ... you guys dealt with this kind of stuff at Salesforce, what would Benioff do in this case? Tell me the discussion you would have.' If you take your ego out of it, you can learn a truckload from these guys."