The Hard Thing About Hard Things

Loudcloud, Opsware and “the Struggle”

Every start-up encounters the Struggle. Your product turns out to have costly flaws. Your cash runs low, and your venture capitalist tells you fund raising seems unlikely. A loyal customer leaves you. A valuable employee walks away.

There’s no way around the Struggle and no formula for fixing your problems. Your company might not make it. Entrepreneurs who make it share one characteristic: They don’t quit.

Netscape veterans Ben Horowitz and Marc Andreessen founded Loudcloud, a cloud services provider, in 1999 and soon hit a rocky road. Seven months after they launched Loudcloud – its name marked the first time “cloud” had been used popularly to describe a computing environment – Horowitz and Andreessen had booked $10 million in contracts. They were hiring so fast – 30 employees a month – that workers had to sit in the hallways.

Then came the dot-com crash of 2000; the NASDAQ fell by 10%. Loudcloud needed capital but faced long odds. After Horowitz pitched one set of prospective backers, a colleague told him the skeptical investors “thought you were smoking crack.” Loudcloud raised a total of $120 million, but with so...