Ben Horowitz and Ali Ghodsi: How to Run a Billion-Dollar Business...

Ben Horowitz shares advice with Ali Ghodsi about not selling Databricks and seeing a venture through.

The podcast sets the stage for discussing Databricks' 2016 crisis and Ghodsi taking over as CEO.

The discussion turns to Ghodsi's transition from academia to CEO and his learning process.

Ali Ghodsi describes the initial challenge of differentiating Databricks' product from its open-source project.

Ben Horowitz explains how he became involved in the CEO transition at Databricks.

Ghodsi discusses his early days as CEO and the company's internal issues.

Ghodsi highlights the success of Apache Spark and the challenge of monetizing open-source software.

Ghodsi details the early strategy of making Spark the dominant open-source project.

Ben Horowitz praises Ghodsi's capabilities as a CEO, particularly his technologist background.

Horowitz discusses Ghodsi's strengths in business development and strategic decision-making.

Ghodsi elaborates on his journey from academic to commercial leader and the learning process involved.

Ghodsi emphasizes the importance of learning from the best and hiring strong teams.

Ghodsi and Horowitz discuss the mistake of hiring people who mirror the founder's archetype in all roles.

Ghodsi shares an anecdote about a sales team selling products that didn't exist yet.

Horowitz explains his method of giving feedback by asking "fucked up questions" and Ghodsi's improvement on this.

The discussion shifts to the principles of "Radical Candor" and effective feedback delivery.

Ghodsi and Horowitz discuss the importance of frequent, direct feedback in maintaining a high-performance culture.

The conversation turns to scaling Databricks' culture of intensity from 50 to 10,000 employees.

Ghodsi explains that the leader's own work ethic sets the standard for the organization.

The discussion touches on how to assess employees' work ethic and balance.

Ghodsi emphasizes the need for both hard work and working smarter, focusing on sustainability.

Ghodsi mentions actively intervening when teams show signs of burnout.

Ghodsi highlights that Databricks' work-life balance scores are sometimes too low, requiring intervention.

The conversation mentions Frank Slutman's book "Amp It Up" as a resource for high-performance cultures.

Horowitz links high performance to organizational design and employees feeling they are making an impact.

Ghodsi emphasizes the importance of employees feeling like they are winning and making an impact.

The difficulty of driving output when a company is not winning is discussed.

Ghodsi explains the importance of having a clear path to victory to motivate teams during challenging times.

Ghodsi explains his leadership style of being both strategic and deeply involved in the details.

Ghodsi reiterates the need for CEOs to get into the weeds to understand the business and provide effective guidance.

Ghodsi discusses the importance of empowering employees and fostering a sense of impact.

Ghodsi explains the difference between giving direct commands and listening to understand problems.

Ghodsi states that the truth often lies with individual contributors, not just executive staff.

Ghodsi emphasizes the need for CEOs to be fast and deeply involved to get accurate information.

Ghodsi explains that CEOs shouldn't address all departments equally but prioritize based on importance.

The discussion highlights the risk of over-systematizing and losing the ability to go deep.

Ghodsi and Horowitz discuss the difficult lesson of recognizing when people cannot be fixed and need to be replaced.

The conversation shifts to Ben Horowitz's experience in business development and deal-making.

The Microsoft deal in 2017 is brought up as a significant early partnership.

Horowitz recounts the early efforts to engage with Microsoft due to its vast distribution channel.

Horowitz describes how a conversation with Satya Nadella at A16Z facilitated the Microsoft deal.

Ghodsi explains the fortunate timing and external factors that helped the Microsoft deal.

The strategic advantage of Microsoft's desire to counter Hortonworks is discussed.

Horowitz emphasizes the importance of securing large commitments from partners to maintain momentum.

Ghodsi discusses the technique of challenging a partner's forecast to ensure commitment.

Ghodsi recounts his own pressure to secure a specific number in the deal to avoid being fired.

The strategy of requiring a pre-commit to ensure a partner's sustained engagement is explained.

Ghodsi explains the difficulty of getting large commitments from smaller companies.

The concept of a "giving gap" in deal-making, where both parties benefit, is crucial.

Horowitz states that most large deals are lost multiple times before being won, highlighting the need for grit.

Ghodsi describes the intense effort required to overcome objections and secure the Microsoft deal.

Ghodsi praises Microsoft under Satya Nadella as a strong partner.

The impact of Satya Nadella's "Growth Mindset" philosophy on Microsoft's partnership approach is mentioned.

The conversation shifts to Databricks' approach to acquisitions and the build-versus-buy decision.

Ghodsi explains Databricks' strategy of integrating acquired teams and founders, not just buying revenue.

Ghodsi details the careful process of evaluating potential acquisitions, focusing on people, product, and culture.

Ghodsi notes that Databricks prioritizes financials last in their acquisition evaluation.

Ghodsi warns against acquisitions that dilute the company's core product architecture and customer experience.

Ghodsi stresses that financial engineering in acquisitions can provide short-term gains but harm long-term brand and product cohesion.

Ghodsi emphasizes that customer experience and product reputation are built on strong engineering and can be damaged by poor acquisition integration.

Ghodsi highlights the risk of acquired companies with weaker talent diluting the acquiring company's culture.

Ghodsi discusses the challenge of evaluating talent in the middle ground during acquisitions.

Ghodsi warns about the danger of acquiring companies with strong sales but weak engineering.

Ghodsi explains that a focus on integrating people and culture makes Databricks a more attractive acquirer.

Ghodsi recalls an email from Ben Horowitz that highlighted the immense opportunity at Databricks, reinforcing his decision not to sell.

Ghodsi describes his reaction to Horowitz's ambitious valuation predictions and how it fueled his conviction.

Ghodsi reflects on how the advice to simply add an acronym to "FANG" pushed him to analyze Databricks' potential for massive growth.

Ghodsi acknowledges that while ambitious, these comments from Horowitz were a driving force for thinking bigger.

Horowitz discusses the rarity of finding both a great market opportunity and a capable entrepreneur, as seen with Databricks.

Ghodsi recounts a critical moment where an acquisition offer was on the table, and he chose not to sell.

Ghodsi shares his conversation with Horowitz about not selling, highlighting Horowitz's support for his decision.

Horowitz's key advice to Ghodsi was about the long-term vision and the regret of missing a significant opportunity.

Ghodsi states that the ambition to reach a trillion-dollar valuation was a significant factor in not selling.

Ghodsi discusses the current market for talent, especially in AI, and the challenge of retaining employees.

Ghodsi notes the difficulty of defining compensation benchmarks like the "95th percentile" in the current competitive market.

Ghodsi acknowledges the intense AI talent wars and the pressure on young professionals.

Ghodsi expresses concern about the pressure on young professionals to start companies, feeling it might be exaggerated.

Ghodsi suggests that the narrative around extremely high offers for AI talent might be inflated and serve the interests of CEOs.

Ghodsi discusses how to attract and mentor young talent by focusing on opportunity and impact, rather than just compensation.

Ghodsi emphasizes the immense power of CEOs to influence young employees through mentorship and guidance.

Ghodsi notes that experienced employees who have tried startups often return with a greater appreciation for established companies.

Ghodsi's favorite acquisitions involve individuals who have experienced scaling processes in large companies and then ventured into startups.

Ghodsi explains why individuals with both large company experience and startup failure are highly valued.

Ghodsi emphasizes the luck and timing involved in startup success, citing Databricks' founding year as a critical factor.

Ghodsi highlights the importance of timing and market readiness, noting that starting Databricks a year earlier would have been too early.

Ghodsi recalls the precarious financial situation in 2015, where the company almost failed to secure Series C funding.

Ghodsi mentions the failure of a PLG (Product-Led Growth) motion at Databricks.

Ghodsi discusses the pivot to B2B enterprise sales in 2015 as a last resort.

Ghodsi highlights the importance of hiring Ron, a sales expert, despite him not having a PhD, as he was a true "sales savant."

Ghodsi describes Ron as an "uncomfortable hire" who challenged the company's status quo and drove customer focus.

Ghodsi emphasizes the critical role of retaining original talent and co-founders for company success.

Ghodsi credits the early team, including Ron, for making the market work for Databricks.

Ghodsi notes that finding talent like Ron involved luck and overcoming the initial discomfort of hiring someone outside the typical academic background.