1: “Why does everybody hate Ben so much?”
That was the question asked by Loudcloud CEO Ben Horowitz‘s mother-in-law.
Ben called an all-company meeting, which his wife Felicia typically attended.
“This time her parents were in town, so they came, too,” Ben writes in The Hard Thing About Hard Things.
It was the year 2000, and Ben was in a difficult spot.
A year earlier, his start-up, Loudcloud, had been the darling of Silicon Valley, with a $720 million valuation.
Then came the crash. The NASDAQ Index fell from 5,049 to 1,105 in eighteen months—an 80 percent drop.
“With nearly three hundred employees and very little cash left, I felt like I was going to die,” Ben writes.
There was, however, one potential path forward: an IPO.
“In an oddity of the times,” Ben writes, “the private funding market shut down for companies with our profile, but the window on the public market remained just slightly open.”
Ben had called the all-company meeting to announce that the company would go public.
“The meeting did not go well,” he writes. “People did not realize how close to the edge we were, so the news of the IPO didn’t make anyone happy.”
Everyone was angry but said nothing directly to Ben.
“My in-laws, however, heard everything,” he recalls. “And, as my father-in-law put it, ‘it wasn’t nothin; nice.'”
The situation seemed hopeless. His wife Felicia “was discouraged. My in-laws were depressed. The employees were pissed,” he writes.
And, Ben? “I had no idea if I’d be able to raise the money.”
2: As the IPO unfolded, the business press was negative about Ben and the company’s prospects.
BusinessWeek featured an article that called Loudcloud “the IPO from hell,” he remembers.
The Wall Street Journal did a cover piece which quoted one money manager who said, “Wow, they were desperate.”
“A scathing story in Red Herring noted that our list of customers was ‘quite thin,'” Ben writes, “and that we were too reliant on dot-coms.
“It quoted a Yankee Group analyst positing that we had ‘lost something like $1 million dollars per employee over the last 12 months,’ and conjecturing that the way we did it was by having a bonfire in the parking lot and getting everyone busy burning dollar bills.”
The road show was rough.
“The stock market crashed daily, and technology stocks were to blame,” Ben writes. “Investors looked like they’d come out of torture chambers when we arrived.
One mutual fund manager stared at Ben and his Loudcloud co-founder, Marc Andreessen, and asked, “Why are you here? Do you have any idea what’s going on in the world?”
The desperate situation had somehow gone from bad to worse.
“I thought that there was no way we’d be able to raise the money,” Ben remembers thinking. “We were going to go bankrupt for sure. I did not sleep more than two hours total during the entire three-week trip.”
3: On day three of the IPO tour, Ben received a call from his father-in-law.
“John Wiley did not call me for casual reasons,” he writes. “If he called, it was serious, possibly even deadly serious.”
The older man had had a rough life and was used to bad news.
Ben: “Hello.”
John: “Ben, the office said not to bother you, but I just want to let you know that Felicia stopped breathing, but she is not going to die.”
Ben: “Not going to die? What?!?! What happened?”
He couldn’t believe what he was hearing. “I had been so focused on work that I had lost focus of the only thing that really mattered to me,” he recalls.
Ben: “What happened?”
John: “They gave her some medicine and she had an allergic reaction and she stopped breathing, but she’s okay now.”
Ben: “When?”
John: “Yesterday.”
Ben: “What? Why didn’t you tell me?”
John: “I knew that you were busy and that you were really in trouble at work because of that meeting I went to.”
Ben: “Should I come home?”
John: “Oh, no. We’ll take care of her. You just take care of what you need to do.”
Ben was “completely stunned,” he writes. “I started sweating so hard that I had to change my clothes right after the call. I had no idea what to do. If I returned home, the company would surely go bankrupt.
“If I stayed . . . how could I stay? He called his father-in-law back and had him put Felicia on the phone.
Ben: “If you need me, I will come home.”
Felicia: “No. Get the IPO done. There is no tomorrow for you and the company. I’ll be fine.”
Even after Felicia’s crisis, the challenges continued. Ben pushed ahead, but it was far from easy.
“I stumbled through the rest of the road show completely discombobulated,” he remembers. “One day I wore a mismatching suit jacket and suit pants, which Marc pointed out to me midway through the meeting.
“I had no idea where I was half the time,” he writes.
Despite all this, the Loudcloud IPO eventually went forward at $6 a share. They raised $162.5 million.
“But there was no celebration and no party,” Ben writes. “Neither Goldman Sachs nor Morgan Stanley—the two banks that took us public—even offered us the traditional closing dinner.”
More tomorrow!
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Reflection: When everything feels like it is collapsing around us and the critics are loud, how do I stay anchored in what matters most and keep moving forward anyway?
Action: Recall one season in my life when I pushed through fear and criticism to do the hard but necessary thing. Write down what I learned so I can draw on that courage the next time I face a make-or-break decision.
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