Your company has gone through so many hardships while you were CEO. How did you develop the mindset of not giving up?
It was very difficult. A lot of it for me is just not wanting to let everybody down, and so I had to keep trying to come up with an answer. Now there's a question of whether you will find it before you run out of time, but it's so important to keep looking for it because every second you spend not looking for it is a second that's lost, and you may run out of time. You just have to stay focused. In talking to people who have succeeded, most of them say not giving up was the key.
When Loudcloud went public in 2001, the company’s business was already in very bad shape—how did you make a decision to do an IPO?
There's an old guy who used to be on an American football team, and he used to say "I'd rather be right than consistent." I always kept that in mind. I have had experience with IPOs and the decision to go public was extremely challenging. I knew we were going to get massively criticized for taking a company public that was 18 months old and losing a lot of money.
I knew it was going to be bad. We got slaughtered in the press, got sued and all kinds of other bad stuff happened. I still did it because I thought it was better than the alternative and in retrospect it was. My experience has been that when you have to choose between something that's bad and something that's worse, you go with the thing that's bad.
Based on your own experience, what’s the difference between those who could be CEO and those who are not?
It requires a lot of self-confidence because you make a lot of mistakes. If your mistakes cause you to lose confidence, then you can't succeed in your job. You need to control your own psychology—that's by far the most difficult skill.
It's not intellectually challenging, but the psychological aspect is extremely difficult because not only are there a number of mistakes you make but the consequences are massive because they affect everybody in the company; all the customers, and all the investors. Every time you screw something up, a lot of people get hurt so being able to learn as you're doing that, and not lose so much confidence and realize that you're still the best person to do the job even though you've not done nearly as good a job as you might have.
Every company is different and a great CEO in one company is not necessarily a great CEO in another company. It's the company you built—you hired everyone, and you set the culture and so forth. There are a lot of advantages if you yourself run it—and you have to believe in that. Mark Zuckerberg can’t run Toyota, but he's great at running Facebook. If you rate yourself against other CEOs, it gets very intimidating because you only get to know what they do right because that's all they let anybody see. You really have to think that who's the best CEO for your company.
Have you ever met anybody who you think is a natural CEO?
I don't know that I've ever met anybody who I felt was a natural. I think Airbnb’s Brian Chesky had a lot of pieces, but so much of it is developed as they go. A lot of the basic things that you do as a CEO are things that would make people not like you. For example, if we're friends and you tell me a story, and I go, "Whoa, I don't know about the way you opened the story. It’s too weak. The conclusion didn't have much punch to it. Go back and work on it and tell me the story tomorrow or you'd never be friends with me."
That's what you do all the time as CEO so it's not really a natural thing in a lot of ways. It's something that you have to learn to do and you have to know how far you can push people. You want to make people uncomfortable because that's when they learn, but you don't want to make them so uncomfortable that they can't stand you and that just takes practice.
This book was written for CEOs, but it was read by many non-CEOs.
The most surprising thing about the book has been that people who aren't CEOs liked the book because I literally wrote it for technology company CEOs. My conclusion from talking to the many people who read it who aren't CEOs is that the book really ends up about how do you do something larger than yourself, and that could be running an organization but it also can be just being part of an organization.
Also, a huge number of CEOs have come to me and said, "I gave this book to my spouse" because they wanted them to understand what they're dealing with. A lot of CEOs have given it to their employees for the same reason.
There are many parts of book where you have conversations with your wife. What kind of roles do significant others of a CEO play?
The CEOs job is very lonely in that when you're really worried about something, it's scary/dangerous to share it too broadly. When things go extremely bad, you do need somebody to talk to. Also, I think that part of the job of being CEO is making very difficult decisions about what's more important in the business than others. A lot of the decision also plays into life and you need to figure out what's important in your life.
I wanted to illustrate some of those conversations where you get clarity sometimes. In one part of the book I went through a conversation I had with my father where he said, "Flowers are cheap but divorce is expensive." It was meant to be a moment of clarity—it’s when you're making decisions without even knowing you're making a decision.
Do you think the kind of abilities or skills you need for becoming a CEO have changed from the time when you were CEO in early 2000?
I think some of the demands are actually less because getting a product out to the market in the early days meant you need sales people, professional services, customer support and so forth. The parts of a skill set that you had to develop were broader than they are now. So when you think of a company like Twitter or Snapchat: they could get very far along with just engineers. They get fully marketed, make a lot of progress, and be valued at a pretty high value. I think that's helpful in that trying to develop all parts of a skill set simultaneously is quite difficult and that's definitely changed.
But a lot of the things are the same. One of the things that I had in the book was a very, very old document that I wrote on product management. I wrote it in 1995 or 1996. I put it in there just as an example of how a simple document doesn't have to be a huge amount of work. You can just do something very simple to be effective.
Although I thought it was completely out of date, a number of product managers told me that they’ve read it. The fact that people who are doing product management think that's relevant now was surprising. The CEO stuff is probably much more relevant than that as a product management document.
Japanese technology companies like Sony and Sharp have been struggling to grow or even to survive for a long time. What kind of leaders are needed to change a company?
The challenge for Sony and Sharp is that they did not successfully transition from analog to consumer electronics to digital consumer electronics. Basically, when that transition occurred, software intellectual property tended to dominate the market, and Sony never became as world class as a software company as they were a hardware company.
To change that, you have to shift towards a culture of innovation. I wrote about this point in a chapter called Peace Time CEO Wartime CEO. Sony has been running in a very peace time mode for a long time. They need less consensus, more of a sharper, faster decision-making as a fundamental mechanism of the company. They also need that decision maker to be an innovator—and I think it does have to be a technology person.
At this stage you need somebody who's very, very good at products and who's willing to make decisions and take those risks. Sony is not in nearly as bad shape as Apple was in 1997. But Apple got exactly that person when they bought NeXT and they got Steve Jobs.