Art of the Start 2.0: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything - Softcover

Guy Kawasaki is the chief evangelist of Canva, a graphics-design online service, and an executive fellow at the Haas School of Business at the University of California, Berkeley. He is also the author of APE, What the Plus!, Enchantment, and other books. Guy has a BA from Stanford University and an MBA from UCLA.

Paul Boehmer is a seasoned actor who has appeared on Broadway, film, and television, including The Thomas Crown Affair and All My Children. Coinciding with another of his passions, sci-fi, Paul has been cast in various roles in many episodes of Star Trek.

Acknowledgments

In giving advice, seek to help, not please, your friend.

—Solon

Write what you know. That should leave you with a lot of free time.

—Howard Nemerov

Read Me First

I have never thought of writing for reputation and honor. What I have in my heart must come out; that is the reason why I compose.

—Ludwig van Beethoven

If I knew then what I know now.” Most experienced entrepreneurs say this at some point. My goal is that you won’t have to because you read this book.

I’ve started three companies, invested in ten, and advised organizations as small as two people and as large as Google. I’ve worked for Apple twice, and I’m the chief evangelist of a startup called Canva. Hundreds of entrepreneurs have pitched me—until my right ear won’t stop ringing.

When it comes to startups, I’ve been there and done that several times over. Now I’m doing what techies call a “core dump,” or recording what’s in my memory. My knowledge comes from my scars—in other words, you will benefit from my hindsight.

My goal is simple and pure: I want to make entrepreneurship easier for you. When I die, I want people to say, “Guy empowered me.” I want lots of people to say this, so this book is for a broad population:

1. Guys and gals in garages, dorms, and offices creating the next big thing

2. Brave souls in established companies bringing new products to market

3. Social entrepreneurs in nonprofits making the world a better place

Great companies. Great divisions. Great schools. Great churches. Great nonprofits. Great entrepreneurs. That’s the plan. A few details before we start:

   · My original intent was to merely update the book. However, I kept adding, altering, and deleting. Thus, this isn’t a “1.1” kind of revision. This is a “2.0,” whole-integer, real-man revision. When my editor at Penguin told me to turn on Track Changes in Word, so that copyediting would be easy, I LOLed. Version 2.0 is 64 percent longer than version 1.0.
   · For brevity, and because entrepreneurs are more similar than different, I use the word “startup” to refer to any new venture—profit or not-for-profit—and the word “product” to refer to any new product, service, or idea. You can apply the lessons of this book to start almost anything, so don’t get hung up on semantics.
   · If you’re reading the paper version of this book, you’ll see text that is underlined and italicized. This text is hyperlinked in the e-book version. You don’t need to buy the e-book, but I guarantee that you will gain more than the cost of the e-book in additional knowledge if you did.
   · For every recommendation, there is an exception, and I could also be wrong. Learning by anecdote is risky, but waiting for scientific proof is too. Remember, few things are right or wrong in entrepreneurship—there’s only what works and what doesn’t work.

I assume that your goal is to change the world—not study it. Entrepreneurship is about doing, not learning to do. If your attitude is “Cut the crap—let’s get going,” you’re reading the right book by the right author. Onward . . .

Guy Kawasaki

Silicon Valley, California

GuyKawasaki@gmail.com

CONCEPTION

CHAPTER 1

The Art of Starting Up

The most exciting phrase to hear in science, the one that heralds new discoveries, is not “Eureka!” (I found it!) but “That’s funny . . .”

—Isaac Asimov

GIST (Great Ideas for Starting Things)

It’s much easier to do things right from the start than to fix them later. At this stage, you are forming the DNA of your startup, and this genetic code is permanent. By paying attention to a few important issues, you can build the right foundation and free yourself to concentrate on the big challenges. This chapter explains how to start a startup.

Answer Simple Questions

There is a myth that successful companies begin with grandiose ambitions. The implication is that entrepreneurs should start with megalomaniacal goals in order to succeed. To the contrary, my observation is that great companies began by asking simple questions:

   · THEREFORE, WHAT?* This question arises when you spot or predict a trend and wonder about its consequences. It works like this: “Everyone will have a smartphone with a camera and Internet access.” Therefore, what? “They will be able to take pictures and share them.” Therefore, what? “We should create an app that lets people upload their photos, rate the photos of others, and post comments.” And, voila, there’s Instagram.
   · ISN’T THIS INTERESTING? Intellectual curiosity and accidental discovery power this method. Spencer Silver was trying to make glue but created a substance that barely holds paper together. This oddity led to Post-it Notes. Ray Kroc was an appliance salesman who noticed that a small restaurant in the middle of nowhere ordered eight mixers. He visited the restaurant out of curiosity, and it impressed him with its success. He pitched the idea of similar restaurants to Dick and Mac McDonald, and the rest is history.

   · IS THERE A BETTER WAY? Frustration with the current state of the art is the hallmark of this path. Ferdinand Porsche once said, “In the beginning I looked around and, not finding the automobile of my dreams, decided to build it myself.”* Steve Wozniak built the Apple I because he believed there was a better way to access computers than having to work for the government, a university, or a large company. Larry Page and Sergey Brin thought measuring inbound links was a better way to prioritize search results and started Google.
   · WHY DOESN’T OUR COMPANY DO THIS? Frustration with your current employer is the catalyzing force in this case. You’re familiar with the customers in a market and their needs. You tell your management that the company should create a product because customers need it, but management doesn’t listen to you. Finally, you give up and do it yourself.
   · IT’S POSSIBLE, SO WHY DON’T WE MAKE IT? Markets for big innovations are seldom proven in advance, so a what-the-hell attitude characterizes this path. For example, back in the 1970s a portable phone was incomprehensible to most people when Motorola invented it. At the time, phones were linked to places, not people. However, Martin Cooper and the engineers at Motorola went ahead and made it, and the rest is history. Don’t let anyone tell you that the “If we build it, they will come” theory doesn’t work.

“The genesis of great companies is answering simple questions that change the world, not the desire to become rich.”

   · WHERE IS THE MARKET LEADER WEAK? Three conditions make a market leader vulnerable: First, when the leader is committed to a way of doing business. For example, IBM distributed computers through resellers, so Dell could innovate by selling direct. Second, when the customers of the leader are dissatisfied. For example, the necessity to drive to Blockbuster stores to pick up and return videos opened the door for Netflix. Third, when the market leader is milking a cash cow and stops innovating. This is what made Microsoft Office susceptible to Google Docs.

“How can we make a boatload of money?” is not one of the questions. Call me idealistic, but the genesis of great companies is answering simple questions that change the world, not the desire to become rich.

EXERCISE

Complete this sentence: If your startup never existed, the world would be worse off because __________.

Find Your Sweet Spot

If you have the answer to a simple question, the next step is to find a viable sweet spot in the market. Mark Coopersmith, coauthor of The Other “F” Word: Failure—Wise Lessons for Breakthrough Innovation and Growth, and senior fellow at the Haas School of Business, helps entrepreneurs do this by using a Venn diagram with three factors:

   · EXPERTISE. This is the sum total of what you and your founders can do. Though you won’t yet have a complete team, you must have a core of fundamental knowledge and ability to create something in order for a startup to start up.
   · OPPORTUNITY. There are two kinds of opportunities: an existing market and a potential one. Either is okay, but do a reality check of the size of the market in the next few years. There’s a reason people rob banks, not thrift stores. There are times, however, when there’s no way to prove that an opportunity exists and you just have to believe.
   · PASSION. This one is tricky because it’s not clear whether passion causes success or success causes passion. Everyone assumes the former is true, but let’s be honest: it’s easy to get excited about a business that takes off, so the latter may be true too. Still, success may take a long time, so you’d better at least not hate what you’re doing.

Don’t get the impression that all three factors are necessary or even obvious at the start. If you have at least two of the factors, you can often develop the third if you try hard enough.

Find Soul Mates

The next step is to find some soul mates to go on your adventure—think Bilbo Baggins in The Fellowship of the Ring. However, people love the notion of the sole innovator: Thomas Edison (lightbulb), Steve Jobs (Macintosh), Henry Ford (Model T), Anita Roddick (The Body Shop), and Richard Branson (Virgin Airlines). It’s wrong.

Successful companies are usually started, and become successful, with the contributions of at least two soul mates. After the fact, people may recognize one founder as the innovator, but it takes a team to make a new venture work.

“The first follower is what transforms the lone nut into a leader.”

To illustrate this concept, Derek Sivers, the founder of CD Baby, showed a video at the TED2010 conference that starts with one person dancing alone in a field. A second person joins in, and then a third, and the crowd “tips” into a full-scale dance festival.

According to Sivers, the first follower plays an important role because he brings credibility to the leader. Subsequent followers emulate the first follower, not only the leader. In his words, “The first follower is what transforms the lone nut into a leader,” and in a startup, that first follower is usually a cofounder.

Cofounding soul mates need to have both similarities and differences. The key desirable similarities are:

   · VISION. Although this has become an overused word uttered by wannabe visionaries, in the context of soul mates, it means that founders share a similar intuition for how the startup and market will evolve. For example, if one founder believes that computers will remain a business tool for large organizations, and the other believes the future is small, cheap, and easy-to-use personal computers for everyone, they aren’t a good match.
   · SIZE. Not everyone wants to build an empire. Not everyone wants a lifestyle business. There aren’t right and wrong expectations; there are only expectations that match or don’t match. This doesn’t mean founders can know what they want at the start, but it’s nice if they’re at least on the same page.
   · COMMITMENT. Founders should share the same level of commitment. Does the startup, family, or a balanced life come first? It’s hard to make a startup work when the founders have different priorities. One founder wanting to work for two years and flipping the startup for a quick sale and the other wanting to create a company that will endure for decades will create problems. Ideally, founders agree that they’re in it for at least ten years.

The differences that are desirable include:

   · EXPERTISE. At a minimum, a startup needs at least one person to make the product (Steve Wozniak) and one person to sell it (Steve Jobs). Founders need to complement each other to build a great organization.
   · ORIENTATION. Some people like to sweat the details. Others like to ignore the details and worry about the big issues. A successful startup needs both types of founders to succeed.
   · PERSPECTIVE. The more perspectives, the merrier. These can include young versus old, rich versus poor, male versus female, urban versus country, engineering versus sales, techie versus touchy, Muslim versus Christian, and straight versus gay.

Finally, a few words of wisdom about cofounders:

   · DO NOT RUSH. Founders may have to work together for decades, so add them like you would pick a spouse—assuming you’re not a serial divorcee. It’s better to have too few founders than too many. Breaking up with founders, like spouses, is hard to do.
   · DO NOT ADD FOUNDERS TO ENHANCE FUNDABILITY. The reason to bring in additional founders—and any other employee but especially founders—is to make your startup stronger and more likely to succeed. Ask yourself, “Would I hire this guy if we didn’t need funding?” If your answer is no, you’d be insane to hire him.
   · ASSUME THE BEST, BUT PLAN FOR THE WORST. Founding teams blow up all the time. Your startup may be the exception, but just in case, make everyone (including yourself) vest his stock over time to prevent people who leave in less than four years from owning large amounts of equity.

Make Meaning

Now take your answer to the simple question, sweet spot, and soul mates and assume that you do succeed. Then subject yourself to one more test: Does your startup make meaning? Meaning is not money, power, or prestige. Meaning is not creating a cool place to work with free food, Ping-Pong, volleyball, and dogs. Meaning is making the world a better place.

“If you make meaning, you’ll probably also make money.”

This is a difficult question to answer when you’re two guys/gals in a garage who are writing software or hand-making gizmos, but it’s also difficult to comprehend how an acorn can grow into an oak tree. If, in your wildest dreams, you cannot imagine that your startup will make the world a better place, then maybe you’re not starting a tilt-the-earth company.

This is okay; there aren’t many companies that tilt the earth. And there are even fewer in that category that set out to do so. But WTF, I want you to dream big. When today’s humongous companies were only one year old, few people predicted their ultimate success or the meaning they would make. Trust me, if you make meaning, you’ll probably also make money.

Make Mantra

The next step is to create a three- to four-word mantra that explains the meaning that your startup is seeking to make. For startups, the definition of “mantra” from the American Heritage Dictionary of the English Language is perfect:

A sacred verbal...