[neelm]

Ben Horowitz's actual topic is the challenge of incentivizing management.

His subject is covered very well by one of the best to write about this subject, Charlie Munger (Warren Buffets right hand man and Director of Berkshire Hathaway).

Charlie Munger discusses extensively the challenge of not only incentivizing managers and employees, but demonstrating that it is difficult to even fully understand what really incentivizes them (hint: it's typically different than what their superior thinks it is). He talks about human mis-judgement and its role in distorted intending incentives.

Munger says over 30+ years in business, this is the one area he continues to make judgement mistakes year after year, since this is such a difficult topic to get right. That doesn't mean you can't get it right or that proper incentives don't work however.

Check out the FedEx example in Munger's 1995 speech to Harvard.

http://www.rbcpa.com/Mungerspeech_june_95.pdf