🔑#1 - The Secrets to Healthy Conflict

Years ago I read The Hard About Hard Things by Ben Horowitz.

It’s a good book. If you’re running a company it’s a cathartic listen.

Here’s what stood out to me in the book:

Ben Horowitz and Marc Andreesen have built 2 billion dollar companies (Loud Cloud $1.6Bn sale to EDS + Netscape $4Bn sale to AOL). They have also started one of the largest and most prolific VC firms in the world called Andreesen Horowitz.

According to the book, Marc and Ben will argue viciously in front of other employees over investments. Even when they agree, one of them will practice taking the opposite side and arguing it. He finds the act of doing this makes them better investors and teaches others the value of active disagreement.

I’ve observed similar behaviors from other great investors like John D. Rockefeller (Standard Oil) and Warren Buffett (Berkshire Hathaway).

John D Rockefeller had a business partner named Henry Flager.

In his biography (Titan), we learn that they lived near each other, and every day they would walk to work. The author notes they spent hours each day actively talking about their plans and strategies.

Warren Buffett and Charlie Munger famously had a magnetic relationship from day one. They often spoke daily, for hours at a time on all types of topics.

It seems like the best investors I’ve read about share a key similarity.

They find a knowledgeable partner to spar with, and they spar with them daily.

The act of an investor speaking (or writing) your ideas, and having someone to fine tune them is comparable to Michelangelo taking a block of hard marble, and chiseling it for years to produce the David sculpture.

When you have an idea, that’s always the first version of it.

Let’s call that V1.

As an investor, you only get 1 shot at making your decision. Either you invest, or you don’t.

When you’re building a company, you can launch a product, sometimes called an MVP (minimum viable product), then you’re able to iterate on it based on what you learn.

As an investor, you don’t have that luxury.

Once you make an investment, you have to live with that decision whether it was good or bad.

To make a good decision, you need to go from a V1 idea to a V100 over time.

The way I’ve observed people get there (myself, Warren, and Ben included) is to talk to other smart people about and debate it actively.

Assume with each conversation, your thinking evolves by 0.5 or 1 version.

This means if I haven’t had 100 conversations about an investment, I’m not ready to do it.

Active Debate

My business partner and I Xavier are both happy to take both sides of an investment and debate it ruthlessly. Perhaps most importantly, we respect each other deeply (I wrote about this in a previous issue on “How to Disagree”).

We know there is no outcome where one of us gets our feelings hurt in a disagreement.

The point of our conflict is to get to the best possible answer about how to invest our shareholder’s money.

In all my companies I’ve had very smart people that work with me, but I’ve rarely experienced the type of healthy conflict I’m able to have with Xavier.

It got me thinking…how can I get people to take a stand and argue their ideas?

I’m surrounded by smart people. I want to hear their ideas!

It will make me a better investor.

And it will make our company more successful.

Most people will disagree quietly.

Disagreement at companies often passes like ships in the night.

Conflict saves lives. I want conflict in the workplace.

But, disagreeing and creating conflict is scary.

Here are some reasons why I think people don’t do it:

1. Safety & fear of hierarchy: If I make my boss look wrong, I may lose my job
2. Lack of certainty: I won’t say anything because I’m not 100% sure
3. The expert effect. The others have a lot of experience and confidence in this topic. Who am I to try and correct them?
4. They don’t care. I think this is uncommon.

From my experience, if you’re working in a healthy workplace with a good boss, the following things are true:

-Speaking up and disagreeing will move your career forward

-Taking a stand is a sign of leadership. If you believe in something, and you get buy-in from your peers on that idea, you will get rewarded.

-Experts are a fallacy, nobody knows everything. Also, assume that each person has a very limited lens on any discussion.

-Good experts welcome debate. Any real expert will appreciate debate in order to come to a better knowledge of a topic. Experts who don’t welcome debate are false experts and should be avoided.

Finally, there are two things I’d like to close with here briefly…

1. For Leadership. How do you cultivate disagreement in the workplace?
2. For Teams. Now that you know conflict is good. How do you go about doing it?

For Leadership 👉 How do you cultivate disagreement in the workplace?

• Hire for it. In the interview, and reference process you’re looking for people who have a history of actively disagreeing in a helpful (not annoying) way.
• Ask your team to disagree with you. Practice this daily.
• Set the example. Disagree early and often with your partners. Show that healthy conflict is celebrated in the workplace and you’ll give your other smart employees a voice.
• Actively remind people it’s your job to challenge people and ideas in your workplace “I need you to step up, and challenge directly more often. The only way you get a promotion in this firm is by challenging directly.”
• Reward it. Promote & reward when you get the behavior you want.
• Relish being wrong. Say out loud when you were wrong. Show excitement in being proven wrong.
• Create space. My sister works at a large bank. Once a quarter they get everyone together and each person (even if it’s your first week on the job!) has to come up with a ‘fix’ or suggestion on how they can be doing things better. The person leading it is incredibly attentive always takes notes, and engages actively. This exercise teaches employees early on the type of culture they’re dealing with

Andy Grove, former Intel CEO, would say, “I want to ask you a favor. It’s a big one, and it is the most important thing you can do for me. I really need you to tell me what I am doing wrong, how I am screwing up.”

For employees 👉 How do you practice good conflict?

A safe place to test your new disagreement muscle is in 1on1s with your manager.

Then once you get comfortable you can disagree in a more fluid, open meeting setting whenever you feel like it.

If you don’t have 1on1s, you should schedule it once a month or at least once a quarter with your manager.

Some tools you may use:

• Ask for permission. If this is your first time speaking up - You can reference this article. For example: “I read an article recently that encouraged healthy disagreement in the workplace. I’d like to give it a try here with you, is that ok?”
• Ask for advice. Ask your manager “if I disagree with something we’re working on, or have ideas, what is the best way and best format to present that to you and others without hurting anyone’s feelings”?
• Turn it into a game. Asking upfront if you can to play a game that picks you as the Devil’s Advocate removes the friction that comes with disagreeing.

❓To the readers. What do you think? Is workplace conflict helpful? Harmful? Would love to hear your experience with it.

🔑 #2 - On Leverage

When asked why nobody has recreated Buffett’s success, their answer is “nobody wants to get rich slow”.

Leverage is a way to get rich fast. It’s also the way to lose everything fast, which is why Charlie and Warren stay away from it.

🔑#3 - Starting a Business - Free

Most people overcomplicate entrepreneurship in their mind, and therefore they never try it.

Running a business is as simple as

1. provide a service people want
2. tell people about the service

You don’t need to be rich to do it. Above Nick and his wife used chalk to generate attention for his first business.

You don’t need to overcomplicate it.

If you live in the US, I hope you had a nice Thanksgiving last week. 🦃

Have a great week,

Sieva

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