I’ve been sitting on this post for weeks thanks to the embargo on Ben Horowitz’s new book, which I reviewed earlier in full here.
As I was reading my galley of the book, the astoundingly shameful story about AOL CEO Tim Armstrong complaining that saving the lives of two of his employees‘ “distressed” babies had cost him too much money was making the rounds. These were employees who’d– by the way– taken jobs with full benefits and paid their premiums on health insurance for just such a worst-case-scenario disaster. That’s sort of how insurance works, after all.
I was horrified, but I shouldn’t have been surprised. It was a shocking story, yes, but it mirrored everything I saw in my thankfully limited time at AOL after TechCrunch sold to Armstrong: A CEO who was more likely to blame others for a change in policy than suck it up himself and take the arrows himself.
As the New Yorker put it:
In other words, don’t blame us for cutting back on retirement benefits; it was two babies we had to keep alive who took your money.
But beyond how horrific it was on a human level, it was also just incompetent. It’s just basic CEO’ing 101: You don’t single out employees in an all hands meeting. You don’t riff off-the-cuff in an all hands meeting. You don’t reduce your employees’ children’s lives down to a line item in the P&L– or if you do somewhere in a budget meeting, you don’t do it publicly, in front of them and all of their coworkers. Particularly when you are the CEO of a profitable multi-billion company who makes $12 million a year yourself and spends plenty of cash on employee parties and office ice luges for doing vodka shots. (OK, maybe that last one is more of an unspoken rule…)
The sociopath. Now the human being – Ben Horowitz:
The context was a bet-the-company move on buying a small company called Tangram. Opsware was on its ninth life or so, and facing the potential for bankruptcy again. It had one major client, and the man who ran that account wanted to kick Opsware out. The only thing he adored was this company Tangram. It was cheap and Horowitz realized if he could bundle Tangram’s software into Opsware, that would be the magic secret sauce to save almost all of his annual revenues, and… yunno, everyone’s jobs.
The company readily sold. During the talks, the two agreed that the CFO John Nelli wouldn’t join the combined company. I’ll leave the rest of the story in Horowitz’s own words:
But during the time between signing and close, John began to get severe headaches. His doctors discovered that he had brain cancer. Because he would not be an Opsware employee and it was a preexisting condition, he would not be eligible for health insurance under our plan. The cost of the treatment without health insurance would likely bankrupt his family. I asked my head of HR what it would cost to keep him on the payroll long enough to qualify for COBRA and what COBRA would cost. It wasn’t cheap– about $200,000. This was a significant amount of money for a company in our situation. On top of that, we barely knew John and technically we didn’t “owe” him anything. This wasn’t our problem. We were fighting for our lives.
We were fighting for our lives, but he was about to lose his. I decided to pay for his health costs and find the money elsewhere in the budget. I never expected to hear anything else about that decision, but fifteen months later I received a handwritten letter from John’s wife letting me know that John had died. She wrote that she was absolutely shocked that I would help a total stranger and his family and that I had saved her from total despair. She went on for several paragraphs saying that she didn’t know why I did it, but it enabled her to continue living and she was eternally grateful. I guess I did it because I knew what desperation felt like.
Karma. Humanity. Leadership. There are plenty of different interpretations of this. Maybe some of you even see it as weakness. But it’s a big reason the same people who worked for Horowitz at Opsware still work for him.
There are some CEOs who are not bandits. Sounds like Horowitz is one of them.