Guy Kawasaki (Apple) on Top 10 Mistakes Entrepreneurs Make | Startup Grind

there you go you're in for a treat we have cool speaker after cool speaker full of content and advice for you all morning this morning our first speaker needs no introduction I could bore you with facts like he is XG evangelist of Apple quit Apple twice I could bore you with facts that if you've seen the new Steve Jobs movie he was mentioned in in many places I could bore you that he is chief evangelist at karma and he gets tens of thousands of new activations every single day the fact is that he is in my opinion the world's best evangelist but the real reason why I like guys so much is because he is an amazing human being who tries to help people and give value to them he wrote over 13 books books like the art of the start the art of social media enchantment and many more but the true cool fact about guy is that he was 48 when he started playing ice hockey he plays almost every single day he's going to play today and this is somebody who really knows the tech scene better than anyone and he really tries to add value all the time and most people know him so without any further ado please give it up for Guy Kawasaki thank you that standing ovation would mean a lot more if I know you didn't rehearse it but you know lesson number one in entrepreneurship don't be proud man take it when they offer it a little bit about my background you heard one version I have to say I have not seen the Steve Jobs movie yet so people have told me that I mentioned so at some point I will see it you know when you lived through the situation it's not clear that you want to revisit it necessarily so I have not yet seen it and there was no actor my name was just mentioned I think a couple times I was hoping that maybe Jackie Chan would play me but life is full of disappointments I have been a Macintosh evangelist from 1983 to 1987 for Apple a Macintosh division this is when I work for Steve and I left I started some software companies I returned to Apple as Apple's chief evangelist and an Apple fellow and then I left and I started garage comm which was a venture capital investment bank and subsequently I became a writer and a speaker today I'm chief evangelist of canva I gave you a canva promo card so you can try our service for free although much of the service is free anyway so you don't really need that promo card canvas is an online graphics design service so think fast free easy to use version of Photoshop I can tell you that we can build a graphic for you faster than you can boot Photoshop so so that's what I am and so today I'm chief evangelist of canva I'm an executive fellow at the Haas School of Business at UC Berkeley I am yeah I am a well I am a Board of Trustee member of Wikimedia Wikimedia is the parent organization of Wikipedia and I'm also a Mercedes brand ambassador which is a whole nother story somebody's got to do it haha so life is pretty good so I I live like four miles from here and I want to help you in the next half hour as much as I can as entrepreneurs it is true that I'm going to play ice hockey right after this I know that many of you want to pitch me on your company where you're going to sell dog food online and I know I should stay and spend an hour with you talking about how to sell dog food online but I'm 61 years old I figured I got 20 years left in me uh playing ice hockey so every day counts okay so I have been watching a high tech speakers for about 30 years believe it or not probably longer than many of you have been alive and I noticed two things about high tech speakers first of all and I hope you don't notice this at this conference but most high tech speakers suck and also most high tech speakers go long and that's a deadly combination you know like if you suck and your speech is short it's okay and if you're great in your speech is long it's okay but if you suck and go long it's like being stupid and arrogant I mean it's just you know so what I have done in my career is I've always adopted the top ten format so I'm going to give you the top ten mistakes of entrepreneurs that I've noticed that I've tried to help prevent and also that I made okay so you know when you're a keynote speaker there's often the temptation to talk as if you did everything right in your career so just listen to me follow my example and that's total I made a lot of mistakes I'm trying to prevent you from making the same mistakes at least make new mistakes okay I mean give yourself that much so these are the top ten mistakes that I've noticed of entrepreneurs including myself and how I think you can prevent the mistakes okay Steve Blank who follows me knows more than I do Tim Draper also knows more than I do but I get to be opening speech they got to follow me tough okay so so top 10 mistakes of entrepreneurs so mistake number 1 is this great temptation to multiply a big number by 1% so the way this works let me give you the typical Silicon Valley pitch 300 million Americans one in four owns a dog 75 million owned dogs in America each dog eats two cans of dog food per day total addressable market of 150 million cans of dog food per day times 1% patent-pending curve jumping paradigm shifting innovative way of selling dog food online made with my Rockstar programmers that I met drunk one week at a frat and so how hard could it be to get one percent of 150 million cans of dog food per day that's one-and-a-half million cans of dog food per day times 365 because dogs eat every day this is not b2b this B to C or B to D more accurately so so one percent a mere one-percent conservatively speaking worst case one percent of a hundred and fifty million cans of dog food per day one and a half million cans of dog food per day conservatively speaking I hear plans along these lines every day I bet many of you have said this right six billion people in China how hard could it be to just get one percent debt you realize how big will be if we just get one percent of the people in China how hard could that be huge mistake because it is hard to get one percent it's two mistakes in this it's hard to get one percent believe it or not and also I don't think any potential investor wants to hear that the focus of your company is to get a mere 1% to sort of contradictory problems with that so I think that the solution is to always calculate from the bottom up should always do a bottom-up analysis so the bottom-up analysis on selling dog food online would be well let's see we'll open up a website using our black hat you know SEO tricks we're going to stuff all the keywords in the headers and we're going to search for the terms that people use and we're going to hide out behind Matt Cutts his house and go to Google and go through the dumpster we're going to figure out the algorithm because we're smarter than the 25,000 phd's at Google let's say you get a hundred thousand unique visitors a month you know in the first part of your company to visit your website of those hundred and thousand uniques a mere 1% buys a case of dog food so that's a thousand people buying a case of dog food that's twenty thousand twenty thousand cans of dog food per month so bottom up your twenty thousand top down your one and a half million hmm guess which way you probably are going to go initially you're going to be much closer to twenty thousand then one and a half million so always do this bottom-up calculation okay it's a reality check mistake number two is that you scale too fast the way the thinking goes like this is investors gave us money to invest not to sit on it not to conserve it to invest they want us to spend because we have swap spit because we have kumbaya we have seen eye-to-eye our investors love us they believe in us so we need to scale because using our patent-pending curve jumping paradigm shifting way to sell dog food online conservatively speaking we're going to sell a million and a half cans of dog food per day and the worst thing in the world would be to have a bad reputation for service so we need to have several locations we need distribution sites across the world we need to co-locate our IT infrastructure we need to build customer service we need to build on boarding procedures because we're going to ship on time bug free and people are going to come and buy dog food the moment we open up our site so let's build all this infrastructure up because the worst thing in the world would be to start off with a poor service reputation well guess what your Rockstar programmers are not rockstars they don't ship on time what a concept first time in history a company missed its initial shipping date they don't ship on time and guess what to extend the metaphor a bit too far the dogs do not eat the food you thought you'd sell a million and a half cans of dog food per day you're not even close to that but meanwhile you have these three collocations you have a hundred and fifty and because fifty people and customers serve ready to handle the one and a half million cans of dog food orders per day but it doesn't happen so you scale too fast you build up all this infrastructure and I think this is probably the most common things that kills company I have never seen a company die because it could not scale fast enough once in my life once in my career I hope I can invest in a company or advising a company that could not scale too fast that's what we call in Silicon Valley a high quality problem ok the solution is a very different perspective which is to always eat what you kill that is you don't build up an infrastructure you don't hire customer service you don't do all those things until you're actually got something killed until you've bagged it not because you're gonna bag it not because you believe in yourself not because you think you're going to bag it it's after you bag it now this may lead to some interruptions in support right but I tell you something as long as you have a great product or service people will put up with a lack of great service and support it's much more likely you're going to die from scaling too fast then you're going to die because of a poor reputation for service ok eat what you kill number three is to focus on partnerships we have partnerships with all these large companies we have partnerships with all these infrastructure people with partnerships with incubators with all these grand partnerships you know what partnership is a word let me tell you what partnership means partnership means I don't have sales that's what it parses to so you think you know you're blowing smoke and you're convincing people that you're on the track for success because you have all these partnerships ok and I'll tell you something it just doesn't ring true the only cut I'll give you a very good acid test for partnership if you have a partnership and it forces you to open up Excel and change your spreadsheet change it because sales is going to go higher change it because costs are going to go lower some aspect of this partnership forces you to change Excel ok okay I can believe in that partnership but most partnerships is merely an exercise in PR let us blow smoke let's say we have a partnership with Microsoft partnership with an Amazon partnership with IBM partnership with HP partnerships are most of the time second thing the way you prevent this is focus on sales so what I'm trying to tell you and people violently disagree with this Steve Blank may disagree with it Tim Draper may disagree with it but I think sales fixes everything really if I could just communicate one thing to you just forget everything else I tell you today sales fixes everything because as long as you have sales and you have revenue and you have cashflow you are still in the game if you don't have sales all the partnerships all the all the business development all the strategic stuff is total sales fixes everything when you have sales your investors leave you alone okay when you have sales people are happy you don't need to have sand volleyball you don't have to have free sushi and back rubs and all that sales fixes everything and there's this often this discussion of well you know what came first was it passion for my business or sales and most people say well people are passionate and that leads to great product which leads to sales I think you could build a case it's the opposite like let's say you don't really care about selling dog food online you hate dogs right you're a cat person you hate dogs or maybe you can't stand the thought of killing cows and putting them in cans or dogs okay somehow you hate dog food but my god you stepped into this startup and it literally is selling one and a half million cans of dog food per day okay let's just make up this story guess what I promise you you will develop a passion for dog food you will say we are democratizing dog food it used to be such an inefficient supply chain you know there was the the cow the slaughterhouse the canner the factory the pet store the dog and we're going to disintermediate all that insufficient all that duplication of function we're going to eliminate that we're going to make dog food so much more efficient I feel passionate about dog food we're bringing joy to dog food owners around the world focus on sales sales fixes everything fourth mistake is to focus on the pitch I meet many entrepreneurs particularly first-time entrepreneurs they're obsessed with the pitch and the plan you know that they think the most important application for a start-up is PowerPoint second most important is Excel third most important is word because we need to write the business plan we need to make the forecast and we need to make the pitch it is as if the mission of your company the reason that your company exists is to raise money okay the reason for your company is not to raise money raising money is a means to an end the end is to create customers that's what you want to do so I see many many entrepreneurs who focus too much on the pitch Excel Word and PowerPoint are not the key apps for you what you should do is focus on the prototype make that prototype website make that prototype software make that prototype hardware the device you know very few people are funding the peep the process of making pitches on Kickstarter right have you ever seen a Kickstarter project support our creation of our PowerPoint click here right if you donate $100 we'll put your name in the PowerPoint if you donate $50 we'll send you a PDF of the PowerPoint all right focus on the prototype the most important thing you could do is focus on a prototype get the prototype out you'll learn more from shipping a prototype pitching a thousand venture capitals a very good very good calculation to keep in your mind is that when it comes to PowerPoint in pitches you know I think a picture is worth a thousand slides right but a prototype and a demo is worth a thousand pitches prototype prototype is everything number five number five is if we're going to do a pitch let's at least do the pitch right I think most pitches contain way too many slides and audience after audience hears me say this this is the Guy Kawasaki 10-20-30 rule of power port which is the optimal number of slides in a PowerPoint presentation is 10 10 you'll be lucky to get 10 points across you should be able to give these 10 points in 20 minutes why 20 minutes when the meeting is 60 minutes it's because unfortunately to this day roughly 90% of this world still uses Windows and I know when you show up for a pitch with a Windows laptop you need 40 minutes to make it work with the projector 30/30 refers to the optimal font size a very good test for you is figure out who the oldest person is in the audience divide his or her age by two pitching a 60 ovc 30 points 50 year-old VC 25 points god help you someday you may be pitching a 16 year old VC 8 points ok 10-20-30 rule 10-20-30 rule you know the way the ideal pitch goes is that you in the first minute explain what you do not who you are what you do I think many people and it's probably going to happen to this conference you know somebody's going to ask Tim Draper so Tim what do you look for in a company and Tim's going to say people we want a team we want a world-class team so you hear that you're going to say ok so we should start our pitch with an explanation of the team ok so you're gonna say well my ancestors came across in the Mayflower they landed in Connecticut they started this Connecticut blacksmith and then they turn that into a store and then eventually you know my father became the biggest biggest entrepreneur stores and all the Northeast so he dialed a chair and bought a building at Dartmouth so I went to Dartmouth and after Dartmouth I went to Harvard Business School and half there Harvard Business School I went to goldman sachs and after goldman sachs i got bitten by the tech bugs i came to Silicon Valley and I started working for Google and then I took dotnet classes and Microsoft on the weekend and so now here I am and you know what nobody gives a okay really nobody gives a a much better story is my parents came over in the last helicopter our South Vietnam they landed in Sacramento they ran a liquor store they saved every penny they could to send me to Sacramento State I went to Sacramento State I took computer science I loved computer science and I'm here today I started this company in my dorm we eat nothing but noodles every night okay we haven't had protein for years but we built but we built this great website and now 10,000 people are signing up per day and we need capital to expand oh my god oh my god be still my heart I want to hear that story right and so don't start your pitch with who you are because almost by definition if you're pitching you need money and if you need money it's because you're not been successful so far or you're not proven duh so you're trying to build this place you have a world-class team by dropping Dartmouth Goldman Sachs right you work for JP Morgan right you you saw the big short you know all about finance right so you know I think in the first minute you have to explain what the hell you do I have sat in so many pitches fifteen minutes into the pitch I know this guy came over in the Mayflower all right I know this guy came over from this I know this guy's sure I know they're third-generation they've endowed chairs at Harvard and Stanford and Dartmouth I still don't know what they do I don't know if it's software hardware device 3d printing I have no idea what to do and I'm sitting there wondering what the hell does this people do you need to answer that question I'll give you another metaphor two kinds of airplanes in the world Airbus 380 787 747 those things need two miles of runway to take off okay other kind of airplane f-18 takes off from a US aircraft carrier okay it goes 0 to 150 knots in one and a half seconds there's a steam catapult you strap your thing in your butt into that plane and boom you are in the air or you're dead there's only two choices right so I think when you make your pitch don't do a 747 a 747 is rumbling along and at one point nine miles it lifts up and everybody goes ha we defied gravity again 747 pitches let me tell you about my team because I heard Tim Draper say he invests in teams so we're going to go through all 5 people on our exec staff and tell you their background that's a frickin 747 you want an f-18 this is what we do we have democratized design so now people don't need to buy Photoshop or an expensive high-end product they don't need to rent it they don't need to spend weeks learning it you go to canva.com and you'll be instantly creative and productive with graphics that's it f-18 not 747 number six number six is I think many entrepreneurs believe that it's a serial world first I'll raise money then I hire the team then I build a prototype then I'll get sales then I'll go public okay and I thought this way too but life is not fair life is not serial life is parallel I need to build the prototype recruit the team raise money sell and support at the same time we're pushing everything down the path at the same time admittedly it would be easier maybe even more optimal to do things serial if I could just focus on fundraising focus on the product focus on sales life is a okay life is parallel it is not cereal for an entrepreneur number seven number seven is the concept that you are going to retain control okay so retaining control is a delusion I know I know you have advanced math and you know that 51% is a majority of the company so you think that with you and your buddies having 51% of the company you control the company okay because you think that in board meetings when push comes to shove there's going to be a vote right and the votes going to be 5149 and you won I've never seen that happen just about every board meeting every decision is unanimous it never comes down to vote for strategic direction and vote for how we should do this vote for who we should hire so the concept of retaining control once you take outside money is an illusion you cannot retain control you have to understand that the moment you take outside money you take somebody else's money you have obligated yourself to make that person more money they're not investing you because they like you because they're your friend they want to give you a dollar and get 50 back that's it you are a tool okay you are a means to an end so understand that and control is overrated because if you had a very large percentage of a company that fails it doesn't mean anything ideally what you want is a small percentage of a hugely successful company it is much better to own 0.5 percent of Google than 51% of the piece of crap ok so give up this concept that we have to retain control because the moment that you have taken outside money you have lost control just get over that and so the better way to approach this is to think we need to make a bigger pie instead of 51% of a piece of crap we want to end up with 5% of the next Google Cisco Apple always be thinking bigger pie bigger pie it's not the percentage of the company that you own it's the per share price that's what you care about per share price number eight number eight is to use patents for defensibility all right I'll bet in many of your pitches when it comes to the defense ability slide or the competitive analysis slide you say we filed patents okay so I'm not discouraging you from filing patents go ahead god bless you file a patent cost fifteen hundred bucks right and it'll take you ten years to get it done by then you'll probably be dead but it's okay file the path that if nothing else it will impress your parents seriously look mom I have a patent in my name that's like you know if for an asian-american if you're not a doctor lawyer or dentist but you hold a patent that's as good as it gets okay so I think you know the ideal number of times you use the word patent in a pitch and explaining your company is one so on some slide about competitive analysis your meeting with Tim Draper just say we filed all the patents we could but and here's where the IQ test happens but we do not believe that patents make us defensible because it'll take so long to get so expensive and then if somebody violates our path we would have to go to court so let's see we have Apple Microsoft Google Cisco they have infinite money we have limited money but we're going to win the patent lawsuit like what planet are you on now people say well guy every once in a while you read this story sixty million dollar settlement Microsoft vs. some file compression company Microsoft was found to violate the patent of file compression code right so guy that proves that it works it doesn't prove anything the fact that you heard about this story is because it hardly ever happens so when it does happens it's news okay patents I hope they're not too many lawyers here filed a freaking patent okay but don't believe in your mind it makes you defensible and never say that it makes you defensible the exception to this maybe biotech but generally speaking don't say that patents make you defensible what you should say is we file the patents we're going to do this just in case someday we may be acquired it'll make us more valuable but fundamentally we believe that what will make us defensible is our success so we are focusing on making our company be successful that's what you do yeah there are many companies who cannot patent their idea not patentable or patentable but not defensible the key is to succeed scale makes you defensible as I said before sales fixes everything number nine number nine is that when you hire people you hire people in your own image right so if you're male and why'd you hire male and white if you're young you are young I think it's a huge mistake that to really be successful you need to hire people who compliment you who are different from you if you're a kid you need an adult right if you're a man you need a woman you need more women because you have to over it takes two women to overcome the stupidity of one man so so but but I see so many companies that it's like you know Stepford like everybody is the same so you need to hire people who compliment you if you know fundamentally in a company there's only two real functions okay when you cut all the out there's only two things the company has to do you have to make it and you have to sell it duh everything else is you have somebody who could make it and somebody can sell it you got it so if you hire only engineers like yourself this is going to be nobody to sell it and if you hire MBAs who are good at selling there's nothing to make there's nobody you know nobody's making something to sell so you need to complement right how are people who are different from you number ten number ten is this concept that you're going to befriend your investors because you met with them and they really understand what you're doing they really like you they said to you we invest in people we have faith in you we have confidence you why do you think we're giving you millions of dollars it's because we invest in people and what you hear is they like us they befriended us we're going to go play golf together at the Los Altos Country Club right and listen I'm not saying you should have a hostile relationship with your investors but I'm telling you that that is a very tenuous relationship I don't want to sound negative and depressing and all that but just accept the role that you are a means to an end they want to give you a dollar and get back 50 that's okay they're not going to say it in those terms they're going to say that they trust you they love you they see you they get the vision and all that but I think whenever you hear somebody say we like you we trust you were investing in you just add one more phrase to that sentence every time you hear somebody say that just add one more phrase which is as long as things are going good we like you as long as things are going good we believe in you as long as things are going good just hear that and so the better approach to this is to always exceed expectations right so I guess I'm telling you you should sandbag investors you should always sort of forecast what you are 80% certain you can deliver that you should tell them that something is going to ship in June and it ships in May and as long as you exceed expectations it will be a friendly cordial relationship or they'll leave you alone which may be better but always always you know understand this is a financial transaction it's not about kumbaya and swapping spirit we're not we're not something spit you know I'll give you an online-dating analogy okay so an online dating there are two extremes it's in harmony at eHarmony you're going to find your soul mate you're going to walk hands in hands on windswept beaches drinking white wine completing each other's sentences your kids are perfect there's no to ADHD there's no Asperger's there's got straight A's they're trying to pick between Dartmouth Harvard Stanford 4.2 GPA 2400 SAT right your house is clean your dogs are well-trained ain't no poop in the house life is good with eHarmony 29 fields of psychographic information are you funny are you all the glory you like white wine or red wine you find your soul mate right that's eHarmony the other side of online dating is tinder hmm interesting not interesting interesting not interesting I hate to tell you but in entrepreneurship it is a tinder world it's a tinder world it ain't harmony it's tinder okay so in this tinder world exceed expectations don't meet expectations exceed expectations don't mean that's the world we live in now I don't want you to think I'm filled with anger I think somebody should tell it to you straight so maybe I'm wrong okay maybe I'm too negative but maybe I'm right and so I'm just asking you that you know as you go through your entrepreneurial careers just remember these 10 mistakes remember my suggestions how to fix them and if it prevents any of you from making any of these mistakes I've succeeded that's the top 10 mistakes of entrepreneurs thank you very much okay thank you

Channel: Startup Grind

Views: 83,635

Keywords: Guy Kawasaki, Canva, Startup Grind, Silicon Valley, Entrepreneurship, Entrepreneur, Startup, Start Up, entrepreneur, business, mistakes, founder, technology, san francisco, innovation, funny, fail, failure, top 10, startup advice, guy, kawasaki, apple, mistakes entrepreneurs make, steve jobs, mac, fundraising, marketing, product, investor, investing, author, book, sales, conference, presentation, keynote, graduation speech, linkedin, facebook, youtube, twitter, celebrity, billionaire, epic fails

Id: IBt_z2ZZSLI

Length: 33min 29sec (2009 seconds)

Published: Thu Mar 03 2016