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Ben Horowitz ’88CC; How to Ruin Your Company with One Bad Process

I am a giant advocate for technical founders running their own companies, but one consistent way that technical founders deeply harm their businesses is by screwing up the budgeting process. Yes, the budgeting process. How ridiculous is that? How does it happen and why is it particularly problematic for engineers?

I’ll begin by describing how I screwed it up in my company. Our sales were growing so fast that the biggest problem that we faced was that we literally could not handle all the customers that wanted to sign up for Loudcloud. To combat this and enable us to grow, I worked diligently with my team to plan all the activities that we needed to accomplish to expand our capacity and capture the market before the competition. Next, I assigned sub-goals and activities to each functional head. In conjunction with my leadership team, I made sure that each goal was measurable and supported by paired metrics as well as lagging and leading indicators. I then told the team to figure out what it would take to accomplish those goals and return with their requirements for headcount and program dollars. Finally, I made adjustments to their requests based on industry benchmarks (mostly reductions) to get to a plan that I thought made sense.

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