Bullets and β in High Output Management.

The best book on management in startups is Andy Grove’s High Output Management: “Let chaos reign, then rein in the chaos.” As a venture investor, I think a lot about how I help and work with my limited set of portfolio companies.

I am more of an editor than a writer in helping my companies. One thing I’m constantly reminding my founders is the difference between risk and uncertainty in their decisions.

I believe there are primarily three buckets of decisions:

  1. Definites: The outcomes are known.
  2. Risks: The outcomes are unknown, but the probabilities are known.
  3. Uncertainties: The outcomes are unknown, and probabilities are unknown.

I try to be as Chris Paik would say, an “unemotional soundboard,” for my founders in walking through the probabilities and uncertainties around inputs and outputs. The point of high-output management is to choose high-leverage activities that have a multiplicative impact on the overall output of his subordinates and peers.

There is a tendency for founders to focus on checklisting—or what Keith Rabois would say, solving B+ problems—and going for quick, definite results. But sometimes, instead of shooting silver bullets, there comes a time you need to shoot lead bullets. By better triaging the risk and uncertainties with a decision, founders can better position themselves in shooting the lead bullet.

There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: “If our company isn’t good enough to win, then do we need to exist at all?”

– Ben Horowitz in Lead Bullets.