The People Decision Most Business Owners Avoid
“Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic.” – Ben Horowitz
Last month we talked about the conditions capital demands before it writes a check. Predictable cash flow. Clean financials. Operational depth. A clear end game. Quality.
But there is a question that sits underneath all five of those conditions, and it is the one most business owners skip: Who is in the room when the decisions get made? Ben Horowitz wrote an entire book about this “The Hard Thing About Hard Things” and it is one of the most honest things ever written about why people decisions break companies.
You can have all five conditions dialed in on paper. But if the person running your sales team was the right hire at $3 million and is now drowning at $18 million, none of it holds. If your head of operations is loyal but overwhelmed, your clean financials are a temporary illusion. Capital does not just evaluate your business. It evaluates the people operating it.
ROI or ROEg
There is a concept we use with every leader we work with. We ask them whether they are optimizing for ROI or ROEg.
Return on Investment measures actual value created. Return on Ego measures how right you feel.
ROEg is not arrogance. It is not narcissism. It is something quieter. The kind of ego that avoids hard conversations because it feels disloyal. The kind that promotes someone out of gratitude instead of fit. The kind that keeps someone in a seat because letting them go would mean admitting you made a mistake hiring them, or that the company outgrew them, or that you waited too long to act.
Ego is like carbon monoxide. Colorless. Odorless. You do not smell it. You do not see it. You just slowly stop thinking clearly, and by the time someone notices, the damage is done.
The Book Every Business Owner Should Read But Probably Keeps Putting Off
Imagine my surprise when I read this book and realized that not only is Ben Horowitz a lifelong rap fan, but he actually quotes lyrics from artists like Jay-Z and Nas throughout it. It caught me off guard in the best way -- a Silicon Valley venture capitalist opening chapters with rap lyrics felt unexpected, but it works. The references are not decorative. They underscore his core argument: that building and running a company is genuinely hard, that most business books pretend otherwise, and that sometimes the most honest voices on struggle come from outside the boardroom.
The Hard Thing About Hard Things is not a feel-good leadership book. It is the one that covers what most leadership books skip entirely -- the decisions that keep you up at night.
The people decisions you are probably avoiding
Horowitz is direct about something most of us already know but rarely say out loud: the quality of a company is largely determined by the quality of its people decisions. And most leaders make them too slowly, too emotionally, and too privately.
The damage compounds quietly. By the time you act, the organization has already lost confidence in the person -- and sometimes in you for waiting so long.
He walks through three scenarios in particular.
Letting an executive go. The pattern is familiar. You hired someone strong. They performed well early. The company grew, and slowly things started slipping. You gave informal feedback. You hoped it would self-correct. Months passed. Horowitz’s point is simple: once you have made the decision, act within days, not weeks. Every day you wait makes it worse -- for the organization, for you, and for the person. Be direct in the conversation. Be generous in the exit. How you handle it tells your entire company who you are.
Laying people off. Horowitz went through large-scale layoffs at Loudcloud and is unusually specific here. Two things stand out. First, be certain before you act -- a second layoff three months later destroys trust permanently.
Second, the CEO must own the announcement. Do not delegate it to HR. The person who made the business decisions that led there needs to stand up and say so.
Demoting a loyal early employee. This is the hardest one. The person who was there when nobody else believed in you, who worked nights and weekends, and who is now in a role the company has grown past. Horowitz does not let you off the hook here. Keeping someone in a role they cannot perform is not loyalty -- it is a quiet betrayal of the whole organization, and ultimately of the person themselves.
His test is simple: if this person applied for this role today, would you hire them? If the answer is no, you already have your answer.
Horowitz keeps coming back to one point: the most humane thing you can do is be direct and act decisively. Delaying a hard people decision out of discomfort feels kind but is actually cruel. And the leaders who make these calls callously are not stronger -- they are just less self-aware.
Being a good person and making a hard call are not in conflict. In fact, being a good person is exactly why you have to make the call.
3 Things To Do This Week
1. Name the person you have been protecting. You do not have to do anything about it yet. Just stop pretending you do not know.
2. Ask yourself the Horowitz question. If this person applied for their current role today, would you hire them? Sit with the honest answer.
3. Check whether you are optimizing for ROI or ROEg. Pick one decision you have been putting off. Write down who benefits from the delay -- your business, or your comfort.
If you have not read The Hard Thing About Hard Things yet, move it to the top of the list.
At SCALE, we make the improbable possible – Strategically Cultivating Acceleration Leveraging Expertise using our GPS Framework. Expect to break through barriers, scale your company, and maximize value so you can successfully exit or transition on your terms.