The Confidence-Competency Curve
Founders fail by losing confidence after costly mistakes; normalize D-minuses and just never take the F
- Difficulty
- Moderate
- Time to result
- ~ongoing to results
- Steps
- 3
- Confidence
- 90%
Founders become CEOs of large organizations with no idea how to run them, so they make many mistakes, and those mistakes are extremely expensive. That can crater their confidence, which causes hesitation, which locks up the company and invites political power struggles. The escape is to climb confidence and competency together and to reset expectations: the median CEO score is around 18 out of 100, so getting comfortable with D-minuses is the job, as long as you never take the F of running out of cash.
Origin
Horowitz's diagnosis of why founders fail, and the design principle behind a16z, whose whole structure is built to solve the founder confidence problem.
Core principles
- 01Founder mistakes are high-impact and hit everyone who joined you, which is why they erode confidence
- 02Lost confidence causes hesitation, which locks the company and turns it political
- 03You have to climb the confidence and competency curves together
- 04The CEO median score is ~18, not 90; D-minuses are survivable, only the F (running out of cash) is fatal
How to run it
- 1
Expect expensive mistakes as normal
Accept up front that as a first-time CEO you'll make many mistakes and some will be costly (down rounds, lost customers, botched products). This is the normal texture of the job, not evidence you're unfit.
Pro tip Straight-A students and engineers used to getting things right find this most disconcerting; naming that in advance blunts it.
Watch out Losing confidence is the actual failure mode; the mistakes themselves are survivable, the confidence collapse is what ends founders.
- 2
Reset the grading scale to ~18/100
Recalibrate what 'doing well' means. The median CEO scores around 18, so a string of D-minuses is a passing performance, not a crisis.
Pro tip Judge yourself against 'did I avoid the F?' not against a 90; a D-minus that keeps you alive is a win.
Watch out Never take the F: don't run out of cash and don't lose the whole thing. Below that line, keep going.
- 3
Rebuild confidence through capability and community
Climb confidence and competency together by getting things done and by surrounding yourself with a network and peers who make you feel like a real CEO.
Pro tip a16z engineers this deliberately: a 600-person network you can call, CEO-to-CEO conversations, and the 500-person CEO barbecue so founders feel like they belong among peers.
Watch out Going to 'maybe I shouldn't be running this' is a dangerous place; founders, unlike professional CEOs, are the ones who can build the next product, so protect that belief.
In the wild
Early on Horowitz replaced typical speaker events with a barbecue in his backyard, at peak 500 CEOs, mixing founders with Larry Page, Mark Zuckerberg, and Paul West. A struggling CEO would stand among them, feel 'I must be important, I'm a real CEO,' and carry that confidence back to the company.
→ The ritual directly targeted the confidence problem Horowitz identifies as the root cause of founder failure, and he plans to bring it back in some form.
Common mistakes
Grading yourself on a 90-point scale
Expecting near-perfect performance after every costly mistake destroys confidence, triggering the hesitation that locks up the company; the real bar is ~18 and avoiding the F.
Letting mistakes convince you to step aside
Concluding 'this is too big for me' surrenders the founder's unique ability to build the next product, which professional CEOs almost never manage.
Is it for you?
Best for
First-time founder-CEOs whose confidence is cratering under the weight of expensive early mistakes
Not ideal for
Leaders whose problem is overconfidence rather than lost confidence, where more self-forgiveness is the wrong medicine
From the transcript
“you kind of have to somehow climb the confidence and the competency curve together”
“the the the median on the CEO kind of test is like 18. It's not like 90.”
“as long as you don't get the F. as long as you don't run out of cash, as long as you don't lose the whole…”
From the episode
$46B of hard truths from Ben Horowitz: Why founders fail and why you need to run toward fear (a16z co-founder)