How to Change the World

The Art of Recruiting

The art of recruiting is the purest form of evangelism because you're not simply asking people to try your product, buy your product, or partner with you. Instead, you are asking them to bet their lives on your organization. Can it get any scarier for them, and tougher for you, than this?

1. Hire better than yourself. In the Macintosh Division, we had a saying, “A player hire A players; B players hire C players”--meaning that great people hire great people. On the other hand, mediocre people hire candidates who are not as good as they are, so they can feel superior to them. (If you start down this slippery slope, you'll soon end up with Z players; this is called The Bozo Explosion. It is followed by The Layoff.) I have come to believe that we were wrong--A players hire A+ players, not merely A players. It takes self-confidence and self-awarness, but it's the only way to build a great team.
2. Hire infected people. Classically, organizations look for the “right” educational and professional backgrounds. I would add a third quality: Is the candidate infected with a love of your product? Because all the education and work experience in the world doesn't matter if the candidate doesn't “get it” and love it. On the other hand, an ex-jewelry schlepper like me can make it in technology if you're infected with a love of the product.
3. Ignore the irrelevant. This is somewhat redundant with the prior point, but it merits repetition. Often a candidate's educational and work experience is relevant on paper but irrelevant in the real world. Would a senior vice-president from Microsoft with a PhD in computer science be an ideal employee of a startup? Not necessarily--this poor guy has been working for a company with $60 billion in cash and 95% market share, and he woke up every day not worried about the competition or customers but the Antitrust Division of the Department of Justice. The flip side is also true: the candidate--using a jewelry analogy-- without the “perfect” background could be the diamond in the rough.
4. Double check your intuition. Everyone has stories about the candidate that they “knew” would work out who turned out to be a nightmare employee. Or the employee they “knew” wouldn't work out despite a lack of qualifications who turned out to be the employee of the decade. The problem with intuition is that people only remember when their intuition was right--truth be told, their intuition was probably wrong as often as right. My recommendation is that you ask every candidate the same questions and take extensive notes. You might even conduct the first interview by telephone so you cannot judge the candidates by their appearance. In particular, startup founders believe they have a good “gut feel” for candidates, so they conduct unstructured interviews that are way too subjective, and they end up with lousy hires.
5. Check independent references. How many of us have limited reference checking to only those provided by the candidate? I know I have. Can we be more stupid than this? This often happens because we don't double check our intuition: we like the gal, so we only call the references she's provided because we don't want to hear that we like a bozo. Do as I say, not as I did: check independent references--preferably at least one person that she worked for and one person that worked for her.
6. Apply the Shopping Center Test. As the last step in the recruiting process, apply the Shopping Center Test. It works like this: Suppose you're at a shopping center, and you see the candidate. He is fifty feet away and has not seen you. You have three choices: (1) beeline it over to him and say hello; (2) say to yourself, “This shopping center isn't that big; if I bump into him, then I'll say hello, if not, that's okay too;” (3) get in your car and go to another shopping center. My contention is that unless the candidate elicits the first response, you shouldn't hire him.
7. Use all your weapons. Once you've found the perfect candidate, use all the weapons at your disposal to land her--not just salary and options. More important--and more telling--is the attractiveness of your vision for how you'll change the world and the other employees (who doesn't like to work with smart people who are kicking butt?). To this armory, add your board of directors and advisors who should use their sway to sign her up. And finally, throw in the resume-building potential of working for a great organization like yours (let's not be naive, here). Once you decide you want a person, pull out all stops and go with shock and awe to land her.
8. Sell all the decision makers. A candidate seldom makes a decision all by herself. There can be several other people contributing to the decision. The obvious ones are spouses and significant others, but it can also be kids, colleagues, and friends. With Asian Americans, it can even be parents because Asian Americans are perpetually trying to make their parents happy. In the interviews, simply ask, “Who is helping you make this decision?” And then see if you can make them happy too.
9. Wait to compensate. A common mistake that many organizations make is using an offer letter as the starting point for negotiation. This is very risky because you don't know what reaction this first data point is going to have. If the candidate is Asian American, for example, she might show it to her mother; her mother might be offended by your lowball offer and then tell the candidate to forget your organization because it's dishonored your family. A offer letter confirms what everyone has agreed upon. It is the last step in negotiations, not the first one.
10. Don't assume you're done. Garage once recruited an investment banker (mea culpa #1) from a large (mea culpa #2) firm. After weeks of wooing and several offers and counter offers, he accepted a position with us. He even worked for us for a few days, and then he called in sick. Late the next night, he sent me an email saying that he had accepted an offer from a former client of his old investment bank. I learned a valuable lesson: never assume that your recruiting is done. Frankly, you should recruit every employee every day because when they go home at night, you might never see them again if you don't keep the lovin' going.

Addendum:

Here's a great article called “25 words that hurt your resume.” I found it because this site had a trackback to this blog entry.

Written at: Benihanas, Cupertino, California

Loop Du Jour

Today's loop is brought to you by a member of this blog's community: Krishna M. Sadasivam! It's a loop called PC Weenies---if you use a computer, you'll love these cartoons. And, I guess by definition, if you are reading this blog, you use a computer. :-)

You can point your friends to this URL, if you want to share it:

http://snipurl.com/pcweeniescartoon

If you want more humorous loops like Doonesbury, etc, go to:

http://network.filmloop.com/humor

Do “What” to the Butt?

A point of clarification to the award winners of the my loop contest. I've sent most of you a copy of The Art of the Start, and I signed them “Kick butt!--Guy Kawasaki.”

Some people thought I wrote “Lick butt.” Once I autographed a book for a woman, and she asked me why I signed her book, “Nice butt!” (I can't remember if she had one or not.)

So just so you know, I sign my books, “Kick butt.” Not “Nice butt.” Not “Kiss butt.” And certainly not “Lick butt.”

And while we're on the subject of kicking butt, let me tell you a funny story. About six years ago, at the height of the dotcom hype, I owned a Porsche 911 Cabriolet. One day I was at a stoplight in Menlo Park, and a car full of teenage girls in the next next lane were giggling and smiling at me.

I'm thinking, “Guy, you've finally arrived: Even teenage girls know who you are--Macintosh evangelist, venture capitalist, author, speaker. How sweet it is!” Finally, one of the girls motions me to roll down my window.

I put down the window, fully expecting her to tell me how much she loves my writing, speaking, whatever, and she says, “Are you Jackie Chan?”

That incident made me establish a new goal to execute: that someday Jackie Chan will be stopped at a light in Hong Kong, and a car full of teenage girls will ask him to roll down his window. Then one will ask, “Are you Guy Kawasaki?”

By the way, he may do his own stunts, but I do my own blogging.

The Art of Execution

If my memory isn't failing me, after the Robert Redford character gets elected in The Candidate, he whispers to one of his supporters, “Now what?” Raising money ls like running for office: it's very exciting and even fun if you get the money. But after you raise the money, now what?

The good news is that you got the money. The bad news is you got the money. At the end of the process, every entrepreneur has to answer the same question as the candidate: “Now what?” The answer to this question is, “Now you execute.” And the next question is, “How do we execute?” This is the topic of this blog.

1. Create something worth executing.You're going to get tired of my obsession with great products but pitching, demoing, bootstrapping, and executing are a lot easier if you've created something meaning-full. It's hard to stay motivated and excited about executing crap. It's easy if you're changing the world. So if you and your team are having a hard time executing, maybe you're working on the wrong thing.

2. Set goals. The next step is to set goals. Not just any kind of goals, but the right goals, and the right goals embody these four qualities:

   • Measureable. If a goal isn't measureable, it's unlikely you'll achieve it. For a startup, quantifiable goals are things like shipping deadlines, downloads, sales volume, whatever. The old yarn, “What gets measure gets done” is true. This also has ramifications on the number of goals because you can't (and shouldn't) measure everything. Three to five goals are plenty.

   • Achievable. Take your “conservative” forecast for these goals and multiply them by .1; then use that as your goal. For example, if you think you'll easily sell one million units in the first year, then set your goal at 100,000 units. There is nothing more demoralizing than setting a “conservative” goal and falling short; instead take 10% of your forecast, make this your goal, and blow it away. You might think that such a practice will lead to under-achieving organizations because they aren't being challenged--yeah, well, check back with me after you don't sell a million widgets like you conservatively thought you would.

   • Relevant. A good goal is relevant. If you're a software company, it's the number of downloads of your demo version. It's not your ranking in Alexa, so telling the company to focus on getting into the top 50,000 sites in world in terms of traffic is not nearly as relevant as 10,000 downloads per month.

   • Rathole-resistant. A goal can be measureable, achievable, and relevant and still send you down a rathole. Let's say you've created a content web site. Your measureable, achievable, and relevant goal is to sign up 100,000 registered users in the first ninety days. So far, so good. But what if you focus on this body count without regard to the stickiness of the site? So now you've gotten 100,000 people to register, but they visit once and never return. That's a rathole. Ensure that your goal encompasses all the factors that will make your organization viable.

3. Postpone, or at least de-emphasize, touchy feely goals. I'll get lots of negative feedback about this, but touchy feel goals like “create a great work environment” are bull shitake. They may make the founders feel good. They may even make the employees feel good. But companies that execute on measurable goals are happy. Those that don't, aren't. As soon as you start missing the measurable goals, all the touchy feely stuff goes out the window. As my mother used to tell me, “Son, sales fixes everything.”

4. Communicate the goals. Many executive teams set goals, but they don't communicate these goals to the organization. For goals to be effective, they have to be communicated to every employees in the organization. Employees should wake up in the morning thinking about how they're going to help achieve these goals.

5. Measure progress on a weekly basis. The goals that people achieve are the goals that are measured. If you don't measure progress towards a goal, you might as well not set it. This is also another reason for setting only three to five goals: people can't focus on more than five, and measuring many more that five is difficult too. The optimal time period to review progress is weekly: monthly is too little pressure; daily is too anal.

6. Establish a single point of responsibility. If you ask your employees who is responsible for a goal, and no one can answer you in ten seconds, then it means that there's not enough accountability. If more than one person is responsible for the achievement of a goal, then no one is responsible. Good employees accept responsibility. Great employees seek responsibility. Lousy employees avoid responsibility.

7. Follow thru on an issue until it is done or irrelevant. Many organizations set goals and even measure progress towards them. However, after a short period of time, some goals are no longer on the radar because people start focusing on the coolest and most interesting stuff. For example, fixing bugs in the current version of a software application may not be as interesting as designing a new, breakthrough product, but your current customers think so.

8. Reward the achievers. Rewarding the people who achieve their goals has two positive effects. First, the achievers feel rewarded and become even more excited about doing their job. Second, the under- and non-achievers know that the company takes execution very seriously. The form of the reward can be money, stock options, time off--whatever works to serve notice to everyone that “this person delivered.”

9. Establish a culture of execution. Execution is not an event--a onetime push towards achieving goals. Rather it is a way of life, and this way of life (execution versus non-execution) is set in the early days of the organization. The best way to establish this culture is for the founders, particularly the CEO, to set an example of filling goals, responding to customers, and heeding and measuring employees. This obsession should go right down to the level of the CEO answering emails and responding to phone calls.

10. Heed your “Morpheus.” Morpheus is the character in The Matrix who gave Neo the choice between the blue pill and the red pill. He was, essentially, the adult supervision. Cold, brutal reality is the ally of execution, so find a Morpheus who distributes the red pills and enables employees to see things as they really are.

Written at: Backseat of a car going to and from Stockton, California.

The Art of Bootstrapping

Someone once told me that the probability of an entrepreneur getting venture capital is the same as getting struck by lightning while standing at the bottom of a swimming pool on a sunny day. This may be too optimistic.

Let's say that you can't raise money for whatever reason: You're not a “proven” team with “proven” technology in a “proven” market. Or, your company may simply not be a “VC deal”--that is, something that will go public or be acquired for a zillion dollars. Finally, your organization may be a not-for-product with a cause like the ministry or the environment. Does this mean you should give up? Not at all.

I could build a case that too much money is worse than too little for most organizations—not that I wouldn't like to run a Super Bowl commercial someday. Until that day comes, the key to success is bootstrapping. The term comes from the German legend of Baron Münchhausen pulling himself out of the sea by pulling on his own bootstraps. Here is the art of bootstrapping.

1. Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it's queen and prince too for a bootstrapper.
2. Forecast from the bottom up. Most entrepreneurs do a top-down forecast: “There are 150 million cars in America. It sure seems reasonable that we can get a mere 1% of car owners to install our satellite radio systems. That's 1.5 million systems in the first year.” The bottom-up forecast goes like this: “We can open up ten installation facilities in the first year. On an average day, they can install ten systems. So our first year sales will be 10 facilities x 10 systems x 240 days = 24,000 satellite radio systems. 24,000 is a long way from the conservative 1.5 million systems in the top-down approach. Guess which number is more likely to happen.
3. Ship, then test. I can feel the comments coming in already: How can you recommend shipping stuff that isn't perfect? Blah blah blah. ”Perfect“ is the enemy of ”good enough.“ When your product or service is ”good enough,“ get it out because cash flows when you start shipping. Besides perfection doesn't necessarily come with time--more unwanted features do. By shipping, you'll also learn what your customers truly want you to fix. It's definitely a tradeoff: your reputation versus cash flow, so you can't ship pure crap. But you can't wait for perfection either. (Nota bene: life science companies, please ignore this recommendation.)
4. Forget the ”proven“ team. Proven teams are over-rated--especially when most people define proven teams as people who worked for a billion dollar company for the past ten years. These folks are accustomed to a certain lifestyle, and it's not the bootstrapping lifestyle. Hire young, cheap, and hungry people. People with fast chips, but not necessarily a fully functional instruction set. Once you achieve significant cash flow, you can hire adult supervision. Until then, hire what you can afford and make them into great employees.
5. Start as a service business. Let's say that you ultimately want to be a software company: people download your software or you send them CDs, and they pay you. That's a nice, clean business with a proven business model. However, until you finish the software, you could provide consulting and services based on your work-in-process software. This has two advantages: immediate revenue and true customer testing of your software. Once the software is field-tested and battle-hardened, flip the switch and become a product company.
6. Focus on function, not form. Mea culpa: I love good ”form.“ MacBooks. Audis. Graf skates. Bauer sticks. Breitling watches. You name it. But bootstrappers focus on function, not form, when they are buying things. The function is computing, getting from point A to point B, skating, shooting, and knowing the time of day. These functions do not require the more expensive form that I like. All the chair has to do is hold your butt. It doesn't have to look like it belongs in the Museum of Modern Art. Design great stuff, but buy cheap stuff.
7. Pick your battles. Bootstrappers pick their battles. They don't fight on all fronts because they cannot afford to fight on all fronts. If you were starting a new church, do you really need the $100,000 multimedia audio visual system? Or just a great message from the pulpit? If you're creating a content web site based on the advertising model, do you have to write your own customer ad-serving software? I don't think so.
8. Understaff. Many entrepreneurs staff up for what could happen, best case. ”Our conservative (albeit top-down) forecast for first year satellite radio sales is 1.5 million units. We'd better create a 24 x 7 customer support center to handle this. Guess what? You sell no where near 1.5 million units, but you do have 200 people hired, trained, and sitting in a 50,000 square foot telemarketing center. Bootstrappers understaff knowing that all hell might break loose. But this would be, as we say in Silicon Valley, a “high quality problem.” Trust me, every venture capitalist fantasizes about an entrepreneur calling up and asking for additional capital because sales are exploding. Also trust me when I tell you that fantasies are fantasies because they seldom happen.
9. Go direct. The optimal number of mouths (or hands) between a bootstrapper and her customer is zero. Sure, stores provide great customer reach, and wholesalers provide distribution. But God invented ecommerce so that you could sell direct and reap greater margins. And God was doubly smart because She knew that by going direct, you'd also learn more about your customer's needs. Stores and wholesalers fill demand, they don't create it. If you create enough demand, you can always get other organizations to fill it later. If you don't create demand, all the distribution in the world will get you bupkis.
10. Position against the leader. Don't have the money to explain your story starting from scratch? Then don't try. Instead position against the leader. Toyota introduced Lexus as good as a Mercedes but at half the price--Toyota didn't have to explain what “good as a Mercedes” meant. How much do you think that saved them? “Cheap iPod” and “poor man's Bose noise-cancelling headphones,” would work too.
11. Take the “red pill.”This refers to the choice that Neo made in The Matrix. The red pill led to learning the whole truth. The blue pill meant waking up wondering if you had a bad dream. Bootstrappers don't have the luxury to take the blue pill. They take the red pill--everyday--to find out how deep the rabbit hole really is. And the deepest rabbit hole for a bootstrapper is a simple calculation: Amount of cash divided by cash burn per month because this will tell you how much longer you can live. And as my friend Craig Johnson likes to say, “The leading cause of failure of startups is death, and death happens when you run out of money.” As long as you have money, you're still in the game.

Written at: Atherton, California.

Loop de Hawk

This is a good story. A few months ago I spoke at the Surfing Industry Manufacturers Association meeting in Cabo San Lucas. To my dismay, the speaker I followed was Tony Hawk.

After our speeches, I got to hang out with Tony and set up an Airport network for us, so I asked him to sign my PowerBook. (Incidentally, he did not ask me to sign his, but I digress...)

Anyway, fast forward a few months. He got married in early January, and he created a loop of his wedding pictures. These pictures are a FilmLoop exclusive. :-)

If you'd like so share this loop with Tony Hawk fans, please send people to:

http://snipurl.com/tonyhawkwedding

Hindsights II: the Learning Continues

It's been a few years since I wrote the Hindsights speech. During these years, a lot of water has gone under the bridge. I am married to the same woman. I have three kids with a fourth on the way. (My youngest is a girl we adopted from Guatemala, and any day now, we are adopting her biological brother.) I've written seven books and made about five hundred speeches. I've started three companies and done another tour of duty at Apple. Finally, I've racked up 1.5 million miles on United Airlines--it's a bad sign when immigration tells you, “There's no more space on your passport; you need to get a new one.”

You'd think that I would have learned something beyond the original ten hindsights, and indeed I have. To this end, here is Hindsights II. If you add these hindsights to the ones in my first speech, you'll have the big things that I've learned in life.

1. Things are never as good or as bad as they seem. When I was working at Apple from 1983 to 1987, the company experienced fantastic highs and dismal lows. Shipping Macintosh was one such high. Apple's first layoff a few years later was a dismal low. But I saw that when things were supposedly great, there were lots of problems that people chose to ignore. Then I saw that during the black days, things weren't that bad: Customers were still buying Macintoshes by the thousands; developers were fairly happy, and most employees weren't affected by the layoffs. (Some employees even thought the layoffs were a good method to clean house.) So I've learned to temper my optimism and my pessimism in my old age.
2. You can love an adopted child as much as a biological one. A man's contribution to a pregnancy lasts about ten seconds--five if he told the truth--three if you asked the mother. And yet I've met many men who who were skeptical about adoption because they didn't think they could “bond” with a child that didn't have their DNA--ie, the ten-second commitment. This is simply not true: when you hold your precious jewel for the first time, no one cares if none of those chromosomes came from you. Certainly not the baby. Certainly not your wife. So get over it. Your DNA isn't the Holy Grail--to mix several metaphors.
3. The key to child delivery is one word: “epidural.” We went to the delivery classes; we learned the relaxation techniques; we took the soothing music with us to the hospital. At the end of the day (or, more accurately twenty-six hours), we came to believe that if God wanted every delivery to be natural, She wouldn't have enabled doctors to invent the epidural shot.
4. People act like their last names sound. People may start to look like their dogs, but I think that they act like their last names sound. For example, I have a buddy named Will Mayall. He helps me with anything technical; for example, when I ask him if he can make my web site or blog do something, his initial response is, “I may be able to” and then two hours later he's done it “all.” Hence, “may all.” Similarly, there's Jean-Louis Gassée. He's a funny guy--always armed with a great (usually sexual) metaphor to explain anything. He is a “gas” for the things that he “says”--hence, “gas say”. Then there's Kawasaki--my high school football teammates told me that I was a “cow's ass sagging.”
5. If you think someone is an orifice, everyone else does too. When I met people that I didn't like, I wondered if it was me or the person. Perhaps I had gotten her all wrong, and other people liked her, respected her, adored her, whatever. After much investigation, I formulated the Rule of Perfect Information About Orifices; that is, if you think someone is an orifice, pretty much everyone thinks she's an orifice too. There is seldom disagreement about orifices. The same, however, is not true about good guys. If you think someone is a good guy, you should never assume most people agree with you.
6. Life is too short to deal with orifices. Continuing on the orifice track. I'm now fifty-one years old, so more than half my life is over. There's not enough time left to accommodate orifices--frankly, there's not enough time to take care of the people you like. Why should you waste time with people you don't? So no matter how great a customer, partner, or vendor someone could, or should, be, don't waste time with orifices. They not only waste your time, but they taint your soul for the time you spent with the people you like.
7. Entrepreneurs are always a year late and 90% high in their “conservative” forecast. I've worked with entrepreneurs who were so green they couldn't run a lemonade stand, and I've worked with entrepreneurs with great track records in brand-name companies. At the end of the day, experience, age, gender, educational background...nothing matters: entrepreneurs are usually a year late in delivering their product, and their financial results are 90% lower than their “conservative” forecast. This isn't necessarily bad--indeed it may be necessary for entrepreneurs to believe their own bull shitake, but it is how things work.
8. Judge others by their intentions and yourself by your results. If you want to be at peace with the world, here's what you should do. When you judge others, look at what they intended to do. When you judge yourself, look at what you've actually accomplished. This attitude is bound to keep you humble. By contrast, if you judge others by their accomplishments (which are usually shortfalls) and yourself by your intentions (which are usually lofty), you will be an angry, despised little man.
9. You don't have to answer every email. I am compulsive about answering email. Sometimes I simply can't answer email for weeks, and I feel like slitting my wrists. However, there have been a couple of times where I lost my inbox--copied the wrong file, file got corrupted, whatever--and I was terrified that hundreds of people wouldn't get a response and would be furious. They'd be thinking, “Guy thinks he's such a big shot that he doesn't need to answer email anymore.” I expected to get hatemail for weeks. Do you know what happened? Nothing. Not one pissed-off email. I was amazed. But I am still compulsive about email.
10. Always use the toilet in an airplane after a woman. This is getting a little vertical, or horizontal, depending on how you want to look at it. Simply put, men pee on the seat. Women don't. And if a woman follows a man who peed on the seat, then she will clean it up before she sits down. If you sit down after her, you're good to go--so to speak.
11. Never ask people to do something that you wouldn't do. This is the ultimate test for every sales promotion, marketing campaign, engineering design, and employee directive. If you won't do something, don't ask anyone else to do it. I don't care how great your nuclear powered mousetrap is: You wouldn't pay $500,000 for it, go back to school for a PhD in Physics to learn to set it, and drive to the middle of Utah to drop off the dead, toxic mouse. On the flip side, as my buddy Smittie told me, if you do the tough, dirty stuff then (a) employee can't complain; and (b) employees will follow you because they know you would do what you're asking them to do.

Addendum: Hindsights IIa: Many men have written to me that their spouses pee while standing up. Thus, my belief that women pee sitting down is false. And maybe WAY false because a woman peeing standing up is likely to be “less accurate” for reasons of plumbing. All this said, someone once told me that pee is sterile anyway, but I digress.

Written at: Anderson School of Management, UCLA, Los Angeles, California.

Award Winners Loop

By popular demand, I've made it easy for you to see the award winners by clicking here. I've also added one more award:

Best Canadian family: Cameron B

Now seeing the winners is easier than shooting fish in a barrel.

How to Be a Demo God

From February 6th to 8th, executives from seventy companies will do a six-minute demo of their products to an audience of venture capitalists, analysts, and journalists. This event is called, logically, Demo. It's a great event--especially if you understand the dance that's going on: entrepreneurs acting like they don't need capital, and VCs acting like they don't need entrepreneurs. (This dance is akin to acting prudish in a brothel, but I digress...)

This posting is ostensibly for the seventy or so souls who will do the demos--everyone one of them aspiring to be labeled a demo god. I should probably throw in another seventy vice presidents of marketing. And seventy PR account execs. Let's call it three hundred or so people. But it's also for anyone who has to demo a product to raise capital, make a sale, garner press, or recruit an employee.

With no further delay, here is the path to demo-god-dom:

1. Create something worth demoing. My first “duhism” for the week, and it's only Monday morning. If you want to be a demo god, create a great product to demo. If you create mediocrity, and you somehow slipped past the gatekeepers of Demo, you will be outed there. I know Demo is a great PR opportunity, but if you don't do a demo, only you'll know you have mediocrity. If you do the demo, the whole world will.
2. Do it alone. A demo god works alone. You may think it will be interesting and hilarious if the two co-founders do the demo together. Plus, it will show the world how they're getting along so well. Do you know why  Laurel and Hardy is so famous?  It's because there has been so few successful duets. It's hard enough for one person to do a demo. Trying to get two people to do an interactive demo is four times harder. If you want to be a duet, go to a karaoke bar.
3. Bring two of everything. There is a place for duplication: equipment. Expect everything to break the night before you're on stage, so bring two, maybe even three, computers, phones, thumb drives, whatever you'll use in your demo. There is zero slack for equipment failures at Demo other than the projector and audio (which are the responsibility of the Demo folks).
4. Get organized in advance. You should never futz around in a demo--for example, looking for folders and files on your hard disk. You have weeks to prepare for these six minutes; you're absolutely clueless if you haven't set everything up in advance.
5. Reduce the factors you can't control. Should you assume that you'll have Internet access during your demo? Yes, but have a back up anyway.  Sure, the hotel has a T1 line, but several hundred people in the audience are accessing it. You can count your lucky stars that Verizon has EvDO service in Phoenix. Better yet, simulate Internet access to your server by using a local server.You don't have to show the real system. This, after all, the demo.
6. Get to it. You only have six minutes, so within thirty seconds, stop jawboning and start demoing. Nobody cares about the genesis of your company or that you have a PhD in cognitive science from Stanford. They came to see a demo, not hear your life story. Believe me, if your demo is good, they'll hunt you down to get your whole story later. If your demo sucks, it won't matter if you've won a Nobel Prize.
7. “Do the last thing first.” I stole this from my buddy Peter Cohan who is a demo maven; he teaches people how to do a great demo. What he means, and I second, is that you have about one minute to captivate your audience, so don't try building to a crescendo. Start with “shock and awe”--the absolute coolest stuff that your product can do. The goal is to blow people's minds.
8. Then show the “how.” Once you've blown their minds, then you work backwards and show them the “how.” This is the knockout punch: not only is the “what” fantastic, but the “how” makes it possible for mere mortals to do this too. True or false: What's coming out of your mouth should impress the audience. The answer is False; what's happening on the screen should impress the audience, not what you're uttering.
9. Cut the jargon. The Demo audience thinks that it is very sophisticated and tech savvy. It may well be, but you should cut the jargon nonetheless because jargon seldom impresses people. The ability to speak simply and succinctly is always the best way to go. You may have the world's greatest enterprise software product, but the consumer device partner of your dream venture capital firm is in the audience. If she can't understand your demo, she's not going to be telling her counterparts about it back in the office.
10. Don't take any questions until the end. There are no questions during a demo at Demo because of the six minute limit. However, in other circumstances, you may be tempted to field questions as you go. Don't do it. It's too risky. You never know what you'll be asked--it could take you down a rat hole so deep that you'll never come back up. The upside of showing that you can answer any question in real-time is an ego trip that doesn't justify the downside of getting derailed.
11. End with an exclamation point. You want to start on a high. You also want to end on a high. (If I had to choose, though, I'd start with a higher high than end with a higher high.) Just keep one more cool thing in your bag of tricks. Think of it as a great dessert at the end of a great meal. Scary but true: the goal is to end like the Ginsu knife commercial: “But wait, there's more...” And when you do end on this exclamation point, leave the screen alone. Give the audience plenty of time to let the exclamation point sink in. If they're interested, they look you up in the program, so don't end with a screen of contact information.

Written at: Atherton, California.

First--and Last--Guy's Blog's Loop's Photo Winners

Much to my delight, dozens of you have posted your picture to my loop of blog readers. In your honor, I am presenting the first and last “Guy's Blog's Loop's Photo Winners.” (You know I love top ten lists, but I couldn't reduce the number of categories.) I didn't plan to select “winners” when I asked people to join the loop, but I just enjoyed the photos so much.

You know who you are: Send me your address, and I'll send you an autographed copy of The Art of the Start. (You see how little FilmLoop really knows about your identity?)

1. Best use of a mirror: Andreas J (Perhaps we should take up a collection to buy you a camera with a self timer and a tripod.)
2. Best action shot: Mlongfellow; close second: William V
3. Worst hair: Scott I
4. Best marketer: Mike L
5. “I've been reading too many blogs” award: John Ray T
6. Best name of linked-to blog: longblondetail.blogs.com
7. Closest to pornographic: Steve P
8. Best hockey picture: Terry R
9. Strongest quadriceps: Lusin L
10. Most dubious use of depth of field: Terry R
11. Most pricks in photo: Dan O
12. Cutest skirt: Garry H
13. Best plug for Macintosh: Tie: Dan W and Michael D
14. Worst plug for Macintosh: Nelson L
15. Best nasal hair: Brian K
16. Best use of rubber bands: Andrew H
17. Most likely to piss off environmentalists: Lance M
18. Best picture of Chairman Mao: Madhura Konkar
19. Most likely to be an MBA: Matt J
20. Best smile: Sam P
21. Best Bose ad: Pete W
22. Cutest couple: Tie: George H, Chris H, and Michelle H
23. Best “how the heck did you do this?” shot: Thomas K

R U in the Loop?

One of my favorite restaurants is called Hobees. One of my favorite things about Hobees is its bulletin boards where there are pictures of customers in far off places wearing a Hobees tshirt. So I've decided to create the digital version of this so that we can all “meet” each other.

Hence, I've created a loop for you to add your picture. To get to it, click here.

1. Drag and drop a picture yourself in the loop. Choose a picture that captures your essence. For example, my picture shows me in the penalty box of where the Calgary Flames play. Everyone who has subscribed to the loop will shortly see it--we call this “real-time, two-way collaboration”--admittedly, a phrase that violates many of my anti-buzzword sentiments. :-)
2. Change the caption of the frame from the default name of the file to your name and location by double clicking on your picture. The caption area is in the lower left part of the picture. It usually has something like “img22334” in it.
3. Be clean. Only two people can delete the picture: the person who posted it and moi. I will delete pictures in bad taste--you can be sexy, but you can't be pornographic. :-)
4. A single loop's capacity is 200 pictures. When it gets close to this limit, I will create another loop and link it to the previous loop. This means you'll see about 199 pictures then a frame that says something like “Click here to get the next volume.”
5. There are a mere 10,000-15,000 readers of this blog. If everyone submits a picture, we will create the longest chain of loops in the history of, well, mankind. If I'm asleep or away from the computer when the loop fills up, you won't be able to add your picture. I'll be checking often to try to minimize this. However, please come back later and try again.
6. Power users can add a “frame action” to a picture. Put your cursor (without clicking) on your picture. A yellow frame will appear, click on the arrow, and select “Set frame action.” In the “Set Photo Action” popup, select “Go to website.” Enter your web address. Now when people double click on your picture, they will go to your web site.
7. If you want to share this loop with anyone, click on the “Share” button. Then enter that person's email address and send it.

Looking forward to “meeting” you.

Addendum: My firm, Garage Technology Ventures is an investor in FilmLoop, and I serve on its board of directors. Please refer to the sidebar called “Alignment of Interest,” to see a list of the companies in our portfolio that I am most active in. (Get it: :Alignment of interest“ versus ”Conflict of interest“?) Maybe you ”had to be there...“ :-)

Written at: Vallco Shopping Center, Cupertino, California

The Zen of Business Plans

In my day job, I not only hear a lot of PowerPoint pitches, but I also read a lot of business plans. The PowerPoint pitches explain my Ménière's disease, but the business plans explain my recent need for reading glasses. One of my goals for blogging is to reduce the external factors that are causing the degradation of my body, so this entry's topic is the zen of business plans.

1. Write for all the right reasons. Most people write business plans to attract investors, and while this is necessary to raise money, most venture capitalists have made a “gut level” go/no go decision during the PowerPoint pitch. Receiving (and possibly reading) the business plan is a mechanical step in due diligence. The more relevant and important reason to write is a business plan, whether you are raising money or not, is to force the management team to solidify the objectives (what), strategies (how), and tactics (when, where, who). Even if you have all the capital in the world, you should still write a business plan. Indeed, especially if you have all the capital in the world because too much capital is worse than too little.
2. Make it a solo effort. While creation of the business plan should be a group effort involving all the principal players in the company, the actual writing of the business plan--literally sitting down at a computer and pounding out the document--should be a solo effort. And ideally the CEO should do it because she will need to know the plan by heart. Take it from an author, for writing to be cogent and consistent, there needs to be only one author. It's very difficult to cut-copy-and-paste several people's sections and come out with a good plan.
3. Pitch, then plan. Most people create a business plan, and it's a piece of crap: sixty pages long, fifty-page appendix, full of buzzwords, acronyms, and superficialities like, “All we need is one percent of the market.” Then they create a PowerPoint pitch from it. Is it any wonder why that the plans are lousy when they are based on crappy pitches? The correct sequence is to perfect a pitch (10/20/30), and then write the plan from it. Write this down: A good business plan is an elaboration of a good pitch; a good pitch is not the distillation of good business plan. Why? Because it's much easier to revise a pitch than to revise a plan. Give the pitch a few times, see what works and what doesn't, change the pitch, and then write the plan. Think of your pitch as your outline, and your plan as the full text. How many people write the full text and then write the outline?
4. Put in the right stuff. Here's what a business plan should address: Executive Summary (1), Problem (1), Solution (1), Business Model (1), Underlying Magic (1), Marketing and Sales (1), Competition (1), Team (1), Projections (1), Status and Timeline (1), and Conclusion (1). Essentially, this is the same list of topics as a PowerPoint pitch. Those numbers in parenthesis are the ideal lengths for each section; note that they add up to eleven. As you'll see in a few paragraphs, the ideal length of a business plan is twenty pages, so I've given you nine pages extra as a fudge factor.
5. Focus on the executive summary. True or false: The most important part of a business plan is the section about the management team. The answer is False.* The executive summary, all one page of it, is the most important part of a business plan. If it isn't fantastic, eyeball-sucking, and pulse-altering, people won't read beyond it to find out who's on your great team, what's your business model, and why your product is curve jumping, paradigm shifting, and revolutionary. You should spend eighty percent of your effort on writing a great executive summary. Most people spend eighty percent of their effort on crafty a one million cell Excel spreadsheet that no one believes.
6. Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. For every ten pages over twenty pages, you decrease the likelihood that the plan will be read, much less funded, by twenty-five percent. When it comes to business plans, less is more. Many people believe that the purpose of a business plan is to create such shock and awe that investors are begging for wiring instructions; the reality is that the purpose of a a business plan is to get to the next step: continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.
7. Provide a one-page financial projection plus key metrics. Many business plans contain five year projections with a $100 million top line and such minute levels of detail that the budget for pencils is a line item. Everyone knows that you're pulling numbers out of the air that you think are large enough to be interesting, but not so large as to render urine drug-testing unnecessary. Do everyone a favor: Reduce your Excel hallucinations to one page and provide a forecast of the key metrics of your business--for example, the number of paying customers. These key metrics provide insight into your assumptions. For example, if you're assuming that you'll get twenty percent of the Fortune 500 to buy your product in the first year, I would suggest checking into a rehab program.
8. Catalyze fantasy. Don't include citations of some consulting firm's supposed validation of your market. For example, “Jupiter Research says that the market for avocado-farming software like we make will be $10 billion by 2010.” No one ever believes this “validations” because the entrepreneur who pitched at 9:00 am said this about USB thumb drives; the one at 10:00 am said this about online dog food sales, and the one at 11:00 said this about smart antennas for cell phones. What you want to do is catalyze fantasy: that is, enable the reader to make her own mental calculation that this market is big. “Every Nokia Series 40 and Series 60 owner would buy this--Wow, this is a hot market!”
9. Write deliberate, act emergent. I borrowed this from my buddy Clayton Christensen. It means that when you write your plan, you act as if you know exactly what you're going to do. You are deliberate. You're probably wrong, but you take your best shot. However, writing deliberate doesn't mean that you adhere to the plan in the face of new information and new opportunities. As you execute the plan, you act emergent--that is, you are flexible and fast moving: changing as you learn more and more about the market. The plan, after all, should not take on a life of its own.

Written at: Atherton, California.

* Note: the question is what is the most important part of the business plan, not what is the most important part of the business itself. The management team is more important than the executive summary to the business, but the discussion of the management team is not the most important part of the business plan because if the executive summary sucks, people won't get to the management team section.

Loop du jour: Bombshelters

Yes, bombshelters. Twenty four pictures of bombshelters. Truly bizarre. May we never need them... By the way, if any of you have loops that you'd like to submit to my “loop du jour” posting, just let me know.

The best charts I've ever seen

Check out these charts by Karl Hartig. My favorite is the consumer electronics one. It shows how long it took consumers to adopt electronic stuff. I used it in my book called Rules for Revolutionaries. I've been trying to find it ever since, and my buddy Bryan came through today.

Written at: Palo Alto, California.

Technorati

Can someone explain this to me? http://www.technorati.com/search/http://blog.guykawasaki.com?cc=fs7akxjn5h It looks like I have about 600 links, but Technorati also says I have no links, so I'm ranked above 1 million. Which is it? :-) Thanks! Guy

How to Kick Butt On a Panel

Despite my intention not to blog tonight, I cannot resist.

Today I moderated a very good panel at a conference, and while this experience is fresh in my mind, I want to explain how to kick butt on a panel. At any given conference, there are about three keynote speakers and twenty five panelists, so the odds are much higher that you'll be a panelist than a keynote speaker. Thus, I hope this entry appeals to a broader audience.

Superficially, a panel looks easy. There are four or five other people on it--all of whom you think you're smarter than--and it only lasts sixty minutes. How hard could it be? Herein lies the problem: everyone thinks a panel is easy so they don't take it seriously. A panel is actually a better opportunity to position yourself than a keynote because you are juxtaposed to four or five people in real time--whereas keynotes are sequential. If you want to stand head and shoulders above the other panelists, here's what to do:

1. Know the subject. I hope you're getting as tired of duhisms as I am, but this needs to be said. If you're invited to a panel on wireless security, and you don't know much about the subject, then you should decline. I don't care how wonderful the opportunity seems to be. If you can help it, never provide an audience the opportunity to truly know that you're clueless.
2. Control your introduction. The first mistake that most panelists make is that they assume the moderator has an up-to-date and accurate bio. Odds are that the moderator either knows nothing about you or has done a Google search and printed a bio that is inaccurate. Before the panel starts, hand the moderator a three sentence description of who you are and tell her to read it verbatim.
3. Speak up. The optimal distance between your lips and the microphone is one inch. You're sitting down. You're hunched over. You're not projecting. So get close to the mike and speak up. Assume there's a fifty-one years old geezer in the back with a hearing aid like me.
4. Entertain, don't just inform. As in keynotes, the your goal is to entertain, not only inform. The funnier you are, the more people will think you're smart because it takes great intelligence to be funny. I'd go so far as to pick a friendly fight with the moderator or another panelist. Let it rip. Have fun. Think of a panel as friendly, though emotional, conversation in front of 500 of your closest friends.
5. Tell the truth, especially when the truth is obvious. If you're lucky, and there's a good moderator, that moderator will try to pin you to the wall with tough, embarrassing questions. This is a good thing because it provides an opportunity to (a) be funny and (b) show that you're a straight shooter. “The truth will get you glee.” If everybody knows the truth, don't even try to fudge. It would be far better to say, “I take the 5th amendment.” That will get a laugh.
6. Answer the question that's posed, but never limit yourself to the question that's posed. When asked a question, answer the question (unless you have to take the 5th). Answer it as fast as possible, but then feel free to take the conversation in a direction that you want. For example, let's say that the moderator asks, “Do you think cell phones will get viruses soon?” It's perfectly okay to answer, “Yes, I think this is an issue, but the real issue that faces most of use is the lack of good cell phone coverage,” if that's what you really want to talk about.
7. Be plain, simple, and short. Let's assume you are on a panel of experts. Let's further assume the moderator is an expert. The moderator asks a question. You think that you're answering her and the other panelists--all experts, so you launch into alphabet soup, acronym du jour. Big mistake. The audience is, well, the audience. Not the moderator nor the panelists. Reduce the most complex and technical issues to something plain, simple, and short, and you'll position yourself as (a) unselfish and (b) a star.
8. Never look bored. This may be one of the hardest aspects of a panel. Let's say the other panelists launch into a long, boring, jargon-filled response. The temptation is to whip out a Blackberry at worst or to look bored at best. Don't do it. Fake rapt interest because the moment you look bored, a photographer is going to snap a picture or the camera man is going to put your face on the ten foot screen. You've go it made if you can fake sincerity. :-)
9. Never look at the moderator. The moderator is asking the questions, but he is merely a proxy for the audience. When you answer, don't look at the moderator. Look at the audience because the audience doesn't want to see the side of your head. (FYI, a good moderator will not make eye contact with you--forcing you to look away from him and look at the audience.) (Someday I may write an entry about how to be a good moderator because most people incorrectly think it's so easy to be one.)
10. Never say, “I agree with (name of previous panelist).” A moderator will often ask everyone to answer the same question. If you're not the first one to answer, there's the temptation to say, “I agree with what my colleague just said...” That's a dumbass response. Come up with something different, and if you're not quick enough on your feet to do this, don't go on the panel. At the very least say, “I think that question has been answered. For the audience's sake, let's move on.”

Yours, in moderation,

Guy

Written at: Atherton, California.

Loop du jour: Images of an Ever Changing China

Starting today, once per day, I'm going to select a loop that I think is really cool. Here's the first one. Images of an Ever Changing China. Thirty eight photos that illustrate how fast China is changing.

Addendum to How to Get a Standing Ovation

My, my...this topic sure generated a lot of comments. I'll respond to them here:

1. Dress code in Hawaii. A great aloha shirt is the way to go. Have I got the solution for you. The world's best aloha shirts come from Anne Namba. I often wear them in my speeches because it's powerful to know that you are wearing the most expensive shirt in the room. Here is a horribly out of focus (don't blame me, I didn't take the picture) picture of me in an Anne Namba alongside Rick Smolan and Russell Brown.
2. Dress code of Steve Jobs; Steve denigrating the competition. Steve is Steve. There is only one Steve Jobs. Very few rules apply to him. Certainly not the rules of a mere mortal like me.
3. Toastmasters. Can't say I know much about them, but I hear nothing but good things. My father was a member in Hawaii, and he was a great speaker.
4. Conversational tone of voice. Absolutely. This tone is a natural outcome of telling stories. I'm an evangelist, and I hate the preachy tone. I despise the, “I've come down from the mountain to inform you ignoramuses” tone too.
5. Keep it simple. No simple answer here. I believe I can cover ten topics in a speech. :-) Certainly you shouldn't ramble, but remember: be entertaining!
6. Better to be too short than too long. Generally, true, but if you're too short, you can insult the audience. If you're too long, you insult yourself. Just practice until you end exactly on time.
7. Delivery of proceedings before or after the speech. I hate giving out my slides before a speech. I think it leads to attention deficit because people can skip ahead. However, many people like slides to take notes on--and my slides are particularly sparse, so I'm not exactly blowing the suspense. I always offer my PDF after my speeches but not just because I'm a good guy. I also like to capture people's email addresses for future evangelism. :-)
8. How will I keep up with “this amazing flow of brilliant content”? (You the Man, Martin Oetting, for putting it this way!) Good question. I just know there are bloggers out there who don't think I can keep up this pace...which drives me further to keep up this pace. I ask myself that question every night at 10 pm or so. It takes me two hours to write a blog entry. Then it takes me one hour to recover before I can fall asleep. On Tuesday nights the posting is late because I have to watch my favorite TV program: Boston Legal (my goal is to be the Denny Crane of technology). Postings are also late anytime the San Jose Sharks play. I'm trying to post five times a week: skipping Friday and Saturday nights. This Thursday is going to be tough because I have a hockey game at 10:45 pm. When I reach 100,000 page views a day, I'm going to start taking it easier.

What do you think: Does this qualify as Wednesday's posting so I don't have to write one tonight?

I hope you like KubaKounter, my daily page views counter. When I asked if anyone knew of such a thing, two people went and wrote one for me! Is the Web great or what?

Written at: Palo Alto, California.

How to Get a Standing Ovation

When I started public speaking in about 1986, I was deathly afraid of public speaking--for one thing, working for the division run by Steve Jobs was hugely intimidating: How could you possibly compete with Steve? It's taken me twenty years to get comfortable at it. I hope that many of you are are called upon to give speeches--it's the closest thing to being a professional athlete that many of us will achieve. The purpose of this blog entry is to help you give great speeches.

1. Have something interesting to say. This is 80% of the battle. If you have something interesting to say, then it's much easier to give a great speech. If you have nothing to say, you should not speak. End of discussion. It's better to decline the opportunity so that no one knows you don't have anything to say than it is to make the speech and prove it.
2. Cut the sales pitch. The purpose of most keynotes is to entertain and inform the audience. It is seldom to provide you with an opportunity to pitch your product, service, or company. For example, if you're invited to speak about the future of digital music, you shouldn't talk about the latest MP3 player that your company is selling.
3. Focus on entertaining. Many speech coaches will disagree with this, but the goal of a speech is to entertain the audience. If people are entertained, you can slip in a few nuggets of information. But if your speech is deathly dull, no amount of information will make it a great speech. If I had to pick between entertaining and informing an audience, I would pick entertaining--knowing that informing will probably happen too.
4. Understand the audience. If you can prove to your audience in the first five minutes that you understand who they are, you've got them for the rest of the speech. All you need to understand is the trends, competition, and key issues that the audience faces. This simply requires consultation with the host organization and a willingness to customize your introductory remarks. This ain't that hard.
5. Overdress. My father was a politician in Hawaii. He was a very good speaker. When I started speaking he gave me a piece of advice: Never dress beneath the level of the audience. That is, if they're wearing suits, then you should wear a suit. To underdress is to communicate the following message: “I'm smarter/richer/more powerful than you. I can insult you and not take you serious, and there's nothing you can do about it.” This is hardly the way to get an audience to like you.
6. Don't denigrate the competition. If you truly do cut the sales pitch, then this won't even come up. But just in case, never denigrate the competition because by doing so, you are taking undue advantage of the privilege of giving a speech. You're not doing the audience a favor. The audience is doing you a favor, so do not stoop so low as to use this opportunity to slander your competition.
7. Tell stories. The best way to relax when giving a speech is to tell stories. Any stories. Stories about your youth. Stories about your kids. Stories about your customers. Stories about things that you read about. When you tell a story, you lose yourself in the storytelling. You're not “making a speech” anymore. You're simply having a conversation. Good speakers are good storytellers; great speakers tell stories that support their message.
8. Pre-circulate with the audience. True or false: the audience wants your speech to go well. The answer is True. Audiences don't want to see you fail--for one thing, why would people want to waste their time listening to you fail? And here's the way to heighten your audience's concern for you: circulate with the audience before the speech. Meet people. Talk to them. Let them make contact with you. Especially the ones in the first few rows; then, when you're on the podium, you'll see these friendly faces. Your confidence will soar. You will relax. And you will be great.
9. Speak at the start of an event. If you have the choice, get in the beginning part of the agenda. The audience is fresher then. They're more apt to listen to you, laugh at your jokes, and follow along with your stories. On the third day of a three-day conference, the audience is tired, and all they're thinking about is going home. It's hard enough to give a great speech--why increase the challenge by having to lift the audience out of the doldrums?
10. Ask for a small room. If you have a choice, get the smallest room possible for your speech. If it's a large room, ask that it be set “classroom style”--ie, with tables and chairs--instead of theatre style. A packed room is a more emotional room. It is better to have 200 people in a 200 person room than 500 people in a 1,000 person room. You want people to remember, “It was standing room only.”
11. Practice and speak all the time. This is a “duhism,” but nonetheless relevant. My theory is that it takes giving a speech at least twenty times to get decent at it. You can give it nineteen times to your dog if you like, but it takes practice and repetition. There is no shortcut to Carnegie Hall. As Jascha Heifitz said, “If I don't practice one day, I know it. If I don't practice two days, my critics know it. If I don't practice three days, everyone knows it.” Read this article to learn what Steve Jobs does.

It's taken me twenty years to get to this point. I hope it takes you less. Part of the reason why it took me so long is that no one explained the art of giving a speech to me, and I was too dumb to do the research. And now, twenty years later, I love speaking. My goal, every time I get up to the podium, is to get a standing ovation. I don't succeed very often, but sometimes I do. More importantly, I hope that I'm standing and clapping in the audience of your speech soon.

Written at: Atherton, California.

The Education of a Late-Adopter Blogger

A few things:

1. Apology 1: I didn't realize that editing an entry causes RSS feeders to send the entry again. As you RSS subscribers know, I make a lot of changes to my entries, so you're getting multiple copies of the same entry as I tweak it. Unfortunately, it's unlikely I'll stop tweaking. I think of my blog like a web page that I can change all the time. I wasn't aware that I'm causing you to get entries over and over.
2. Apology 2: I'm just figuring out how Typepad and Ecto work together. It's been an educational experience in font wars and templates. To put it mildly, I was feeling around in the dark.
3. If anyone knows of a counter that I can put on my blog that shows a running count of visits for the day and then resets each day to 0, please let me know. After a while, a cumulative counter gets boring. I have a counter where I see the daily stats, but I'd like to put one on the blog for everyone to see.
4. If you want me to cover a topic, please leave a comment in one of the postings. I read just about every comment.

Thanks for reading my blog!

Guy

The Venture Capitalist Wishlist

By popular demand (okay, two people asked me to do it), here are the top ten ways to attract the interest of venture capitalists. There's no guarantee that if you do these ten things that you'll raise millions of dollars, but this wishlist will get you in the game.

Before you even start addressing the hard stuff, never ask a venture capitalist to sign a non-disclosure agreement (NDA). They never do. This is because at any given moment, they are looking at three or four similar deals. They're not about to create legal issues because they sign a NDA and then fund another, similar company--thereby making the paranoid entrepreneur believe the venture capitalist stole his idea. If you even ask them to sign one, you might as well tattoo “I'm clueless!” on your forehead.

1. Build a real business. This seems like a “duhism,” but few entrepreneurs do it. Most entrepreneurs focus on quick flips to an IPO or acquisition. Don't get me wrong: venture capitalists aren't necessarily good guys who want to make meaning and change the world. It's just that we've noticed that entrepreneurs who make meaning and change the world usually also make money. Nothing is more seductive to venture capitalists than a company that they can easily imagine having a big impact on the world.
2. Get an intro. Venture capitalists are lazy people. We don't want to be DeBeers: sifting through two tons of dirt to find a few diamonds. We want things handed to us on a silver platter like when someone we know, and maybe even trust, tells us about a good deal. The best intros come from corporate finance attorneys, college professors, and the CEOs of companies in our portfolio. Intros from these parties will usually result in at least a meeting. (Incidentally, this is a good reason why even though Uncle Joe the divorce attorney could probably do your early legal work, you don't want him to: he can't make any introductions compared to the lowliest lawyer at Heller, Ehrman.)
3. Obey the 10/20/30 rule. To repeat myself, your PowerPoint presentation should have approximately ten slides; you should be able to give this presentation in twenty minutes; and the smallest font should be thirty points. And yes, this means you--the guy with the revolutionary, patent-pending, curve-jumping, open-source, Google-adwords-optimized way to sell dogfood online.
4. Show traction. The easiest way to “prove” that you have a real business is to see that you're already generating revenue. It's one thing to believe your bull-shitake PowerPoint presentation; it's another to see cash flowing into your company. You show traction, and most venture capitalists will be willing to suspend disbelief. Fundamentally, you're asking venture capitalists to take a leap of faith with you--we'd rather jump off a diving board than the Golden Gate Bridge. If you can't show traction, then at least line up customer references who will really say, “If they build this, we'll buy it.”
5. Clean up your act. Going back to my theory that venture capitalists are lazy, you need to present a clean deal to venture capitalists. “Clean” means that there isn't a lawsuit by your former employer contesting the ownership of the intellectual property of your company; nor have you sold common stock to your friends and relatives; nor given stock to vendors in lieu of fees; nor have a disgruntled founder who owns 25% of the company but doesn't do anything but sit around and complain. The more crap that a venture capitalist has to clean up, the less likely he'll be interested in your deal.
6. Disclose everything. If you have crap that you simply cannot clean up, then disclose it right away--not necessarily in the first meeting, but soon thereafter. When it's making an investment decision or, later, serving on your board of directors, the worst thing you can do to a venture capitalist is surprise her with bad news.
7. Acknowledge, or create, an enemy. Woe to you that claims you have no competition. It means you're clueless or pursuing a market that doesn't exist. Venture capitalists like to see some competition--it means that there's some validation that a market exists. Then, it's your problem to explain why you have an unfair advantage. If you truly have no competition (and I doubt it), then just say that Microsoft or Google might go after you because these companies do want it all.
8. Tell new lies. Please refer to my list of the top ten lies of entrepreneurs. Every time you tell one of these lies, you decrease the likelihood of funding by 25%. Do the math: you tell four lies, and you won't get funded. I'd like to add an eleventh lie that someone brought to my attention: “This is the last round of funding we'll need.” That's a joke and a lie.
9. Don't fall for old trick questions. Venture capitalists will try two trick questions on you in order to assess your degree of cluelessness. (1) Do you see yourself as the long-term CEO of this company? (2) What is the liquidity path for your company?“ The right answer for the first one is, ”My goal is to build a great company. If it means that I need to step aside, I will gladly do so when the time is right.“ The right answer for the second one is, ”Frankly, I haven't given a lot of thought to liquidity. My team and I are heads down and focusing on finishing the product. If we build a great company, I'm confident liquidity of some form will occur.“
10. Under promise and over deliver. In everything that you say, ensure that your results exceed expectations. Deliver a prototype earlier. Deliver your list of references earlier. Sign up your first customers earlier. Close a partnership deal earlier. Launch earlier. The only thing you shouldn't do earlier is run out of money.

Written at: Back seat of a car going to San Francisco.

The Art of Branding

In honor of the recent Macworld Expo and the upcoming Super Bowl (the two great branding exercises of every new year; one much more fruitful than the other), this blog entry is about the art of branding. My assumptions are that you don't have infinite resources and that you do have a great product (see an earlier post called “Guy's Golden Touch”). If you do have infinite resource and don't have a great product, there's still hope, but you don't need to read this entry any further.

1. Seize the high ground. Establish your brand on positive attributes like “making meaning,” “doing good,” “changing the world,” and “making people happy”--not doing in your competition. Think about it: when is the last time you bought a product to hurt a company's competition? (Other than maybe Macintosh users.) That's not why you spend your dollars. If you want to beat your competition, establish an uplifting brand, but don't try to establish a brand based on your silly desire to beat your competition.
2. Create one message.  It's hard enough to create and communicate one branding message; however, many companies try to establish more than one because they are afraid of being niched and want the “entire” market. “Our computer is for Fortune 500 companies. And, oh yes, it's also for consumers to use a home.” Face it, Volvo can't equal safety and sexiness, and Toyota can't equal economical and lexuriousness (sic). You can pick one message, see if it works, and then try another. But you can't try several at once.
3. Speak English. Not necessarily, English, but speak in non-jargonese. If your positioning statement uses any acronyms, the odds are that (a) most people won't understand your branding, and (b) your branding won't last very long. For example, “best JPEG decoder” presumes that people understand what “JPEG” and “decoder” mean. And ten years from now, who knows if JPEG matters anymore. Not to be an ageist, but a good test is to ask your parents if they understand what your positioning means--assuming your parents aren't computer science professors.
4. Apply the opposite test. How many times have you read a product description like this? “Our software is scalable, secure, easy-to-use, and fast?” Companies use these adjectives as if no other company claims its product is scalable, secure, easy-to-use, and fast. See if your competition uses the antonyms of the adjectives that you use to describe your product. If it doesn't, your description is useless. For example, I've never seen a company say that its product was limited, full of leaks, hard-to-use, and slow.
5. Cascade the message.  Let's say that you craft the perfect branding message. As the Japanese say, “Mazel tov.” Now cascade your message up and down your organization. The marketing department of many companies assume that once they're put out the press release or run the ad, the entire world understands the message. It's unlikely that even the entire company does. Start with your board of directors and work down to Trixie and Biff at the front desk and make sure every employee understands the branding.
6. Focus on PR, not advertising. Many companies waste away millions of dollars trying to establish brands with advertising. When it comes to branding, too much money is worse than too little because when you have a lot of money, you spend a lot of money on stupid things like Super Bowl commercials. Brands are built on what people are saying about you, not what you're saying about yourself. People say good things about you when (a) you have a great product and (b) you get people to spread the word about it.
7. Strive for humanness.  Great brands achieve a high level of humaness. They speak to you as an individual, not as part of a market. It's “my iPod.” “My Macintosh.” “My Harley Davidson.” “My bottle of Coke.” By contrast, you'd never think, “My Windows XP,” or “My Microsoft Office,” so I wouldn't label Microsoft as a great brand although, obviously, it is a great financial success. Ideally, you'd achieve both.
8. Flow with the go. As much as a I love marketing, at the end of the day, customers ultimately determine what your brand means. To a great degree, you take your best shot, and then you see what sticks. Or, more accurately, you see what customers make stick for you. For decades Apple has tried to make the Macintosh brand stand for power. For decades consumers believe the Macintosh brand stands for easy to use. Ultimately, you flow with what's going, and you be thankful that it's flowing at all.

Written at: Atherton, California

Art of the Start Online Seminar Archive

If you'd like to view the Art of the Start seminar that I recently did for Raindance Communications, please click here. (My seminar is near the bottom so keep scrolling.)

The way this worked was that the audience viewed my PowerPoint slides while they listened to me talk (live) via a conference call. There's a registration process, and your computer/browser may not (apparently) pass the browser test. Keep “continuing” through the browser test no matter what you're told. 

Essentially, this is the keynote speech that I give based on The Art of the Start. If you'd like a PDF copy of the presentation, click here.

Written at: Atherton, California

Hindsights

Harker School Commencement

I've been blogging for a whole ten days now, and all my topics have been business stuff: venture capital, entrepreneurship, intrapreneurship, evangelism, etc. Now I want to throw you a total curve ball.

About fourteen years ago my wife and I separated for a time. As part of my search for what the hell was going on in our lives, I looked for a book about people's hindsights in life--what they did right, what they did wrong, and what their advice would be.

To my surprise, I could find no such book. So, like a fool, I decided to write the book. After all, how hard could it be to turn on a record their hindsights ala Studs Terkel?

Let me tell you, it was hard. Very hard. Every step of the process was hard: figuring out who to interview, getting the interviews, doing the interviews, and editing the interviews. It was much harder than writing a book where you just sit there and make things up. :-)

I also wrote a speech based on the book, and I have given it six times at commencements, graduations and baccalaureates: Palo Alto High (three times), DeAnza College, High Tech High, and Harker School. Giving these speeches brought me some of the greatest moments of joy in my life. And, unlike the Kurt Vonnegut hoax, these were for real.

Yesterday at Macworld Expo someone came up to me and told me how much the speech meant to his family. Memories of these speeches and the book came flooding back, so today's blog is the full text of my Hindsights speech.

Nota bene: read and forward this at your own risk because hindsight #10 has cost parents thousands of dollars!

Hindsights

Speaking to you today marks a milestone in my life. I am fifty years old. Thirty-two or years ago, when I was in your seat, I never, ever thought I would be fifty years old.

The implications of being your speaker frightens me. For one thing, when a fifty year old geezer spoke at my baccalaureate ceremony, he was about the last person I'd believe. I have no intention of giving you the boring speech that you are dreading. This speech will be short, sweet, and not boring.

I am going to talk about hindsights today. Hindsights that I've accumulated in the thirty-two years from where you are to where I am. Don't blindly believe me. Don't take what I say as “truth.” Just listen. Perhaps my experience can help you out a tiny bit.

I will present them ala David Letterman. Yes, fifty year old people can still stay up past 11:00 pm.

#10: Live off your parents as long as possible.

I was a diligent Oriental in high school and college. I took college-level classes and earned college-level credits. I rushed through college in 3 1/2 years. I never traveled or took time off because I thought it wouldn't prepare me for work and it would delay my graduation.

Frankly, I blew it.

You are going to work the rest of your lives, so don't be in a rush to start. Stretch out your college education. Now is the time to suck life into your lungs-before you have a mortgage, kids, and car payments.

Take whole semesters off to travel overseas. Take jobs and internships that pay less money or no money. Investigate your passions on your parent's nickel. Or dime. Or quarter. Or dollar. Your goal should be to extend college to at least six years.

Delay, as long as possible, the inevitable entry into the workplace and a lifetime of servitude to bozos who know less than you do, but who make more money. Your parents and grand parents worked very hard to get you and your family to this point. Do not deprive them of the pleasure of supporting you.

#9 Pursue joy, not happiness.

This is probably the hardest lesson of all to learn. It probably seems to you that the goal in life is to be “happy.” Oh, you maybe have to sacrifice and study and work hard, but, by and large, happiness should be predictable.

Nice house. Nice car. Nice material things.

Take my word for it, happiness is temporary and fleeting. Joy, by contrast, is unpredictable. It comes from pursuing interests and passions that do not obviously result in happiness.

Pursuing joy, not happiness will translate into one thing over the next few years for you: Study what you love. This may also not be popular with parents. When I went to college, I was “marketing driven.” It's also an Oriental thing.

I looked at what fields had the greatest job opportunities and prepared myself for them. This was stupid. There are so many ways to make a living in the world, it doesn't matter that you've taken all the “right” courses. I don't think one person on the original Macintosh team had a classic “computer science” degree.

You parents have a responsibility in this area. Don't force your kids to follow in your footsteps or to live your dreams. My father was a senator in Hawaii. His dream was to be a lawyer, but he only had a high school education. He wanted me to be a lawyer.

For him, I went to law school. For me, I quit after two weeks. I view this a terrific validation of my inherent intelligence. And when I quit, neither of my parents were angry. They loved me all just the same.

#8: Challenge the known and embrace the unknown.

One of the biggest mistakes you can make in life is to accept the known and resist the unknown. You should, in fact, do exactly the opposite: challenge the known and embrace the unknown.

Let me tell you a short story about ice. In the late 1800s there was a thriving ice industry in the Northeast. Companies would cut blocks of ice from frozen lakes and ponds and sell them around the world. The largest single shipment was 200 tons that was shipped to India. 100 tons got there unmelted, but this was enough to make a profit.

These ice harvesters, however, were put out of business by companies that invented mechanical ice makers. It was no longer necessary to cut and ship ice because companies could make it in any city during any season.

These ice makers, however, were put out of business by refrigerator companies. If it was convenient to make ice at a manufacturing plant, imagine how much better it was to make ice and create cold storage in everyone's home.

You would think that the ice harvesters would see the advantages of ice making and adopt this technology. However, all they could think about was the known: better saws, better storage, better transportation.

Then you would think that the ice makers would see the advantages of refrigerators and adopt this technology. The truth is that the ice harvesters couldn't embrace the unknown and jump their curve to the next curve.

Challenge the known and embrace the unknown, or you'll be like the ice harvester and ice makers.

#7: Learn to speak a foreign language, play a musical instrument, and play non-contact sports.

Learn a foreign language. I studied Latin in high school because I thought it would help me increase my vocabulary. It did, but trust me when I tell you it's very difficult to have a conversation in Latin today other than at the Vatican. And despite all my efforts, the Pope has yet to call for my advice. Latin has proven to be very valuable, but a “live” language would be nice too.

Learn to play a musical instrument. My only connection to music today is that I was named after Guy Lombardo. Trust me: it's better than being named after Guy's brother, Carmen. Playing a musical instrument could be with me now and stay with me forever. Instead, I have to buy CDs at Tower.

I played football. I loved football. Football is macho. I was a middle linebacker--arguably, one of the most macho position in a macho game. But you should also learn to play a sport like hockey, basketball, or tennis. That is, a sport you can play when you're over the hill.

It will be as difficult when you're 50 to get twenty-two guys together in a stadium to play football as it is to have a conversation in Latin, but all the people who wore cute, white tennis outfits can still play tennis. And all the macho football players are sitting around watching television and drinking beer.

#6: Continue to learn.

Learning i