Scaling Insights by Guy Kawasaki

more of my background I work for Apple from 83 to 87 my job was to evangelize developers to create Mac software I left Apple I started a Mac software company I returned to Apple a few years later as Apple's fellow and chief evangelist I left that to start a venture capital firm and now I am the chief evangelist of a company out of Sydney Australia called canva it's an online graphic design firm I'm mercedes-benz brand ambassador so if you want to see one of the few AMG GT C's which is the convertible version of the AMG GT it's out there it may be one of five or so in the United States so long story how I got it you don't want to know how and I'm also on the faculty as an executive fellow of the School of Business at UC Berkeley it's called Hoss AAAS so that's what I do right now and I'm also the author of 13 books I'm working on my 14 so I've been I've been a worker for a large company like Apple I've started companies of in a venture capitalist an advisor I'm just got a mold I've done a lot in my life so I wanted to pass on some 10 key points that I've come up with scaling and we'll have a discussion so I hope you don't open it it shakes you up because I'm not known for pulling any punches okay so some thoughts on the art of scaling so number one thought that I have is I have never seen a company really fail because it could not scale fast enough honestly I think many entrepreneurs they have this fear that oh my god you know we're going to have so many customers there's so many people are going to be buying our dog food and so many people are going to sign up that we can't scale so we you know we need to put everything in the cloud and you know colocation and we build up this infrastructure and all this kind of stuff and come to find out maybe it's not a hockey stick maybe there's a bump in the road and lots of companies they run out of cash in that chasm a the work of Jeffrey Moore crossing the chasm is very interesting book for you to read and so I'm urging caution that I think it's better that you go slow and maybe sacrifice some growth than to go too fast and die because one outcome is very bad death the other outcome of sacrificing some growth is not so bad and I urge you to be conservative don't just think it's like the hockey stick to infinity and beyond they are going to be bumps in the road and so you know you you by definition the leading cause of failure and tech companies is death so as long as you have money in the bank you're not dead you're still in the game so just keep that in mind okay so that's tip number one for you tip number two is I think when people start to scale and grow they forget that they need to hire people who complement them not overlap with them and not duplicate with them so if you're the engineer don't hire just only engineers you need people who are operation sales finance all the other stuff that you don't want to do and you cannot do probably and the first part of this is at the Macintosh division we had this theory that a players hire a plus players so if you're a really good person you'd hire a person better than you because you have a self confidence and you're not worried about someone looking better than you so if you're the CEO theoretically your CFO should be better at finance than you your CMO should be better at marketing than you your CTO should be better a tech than you so it should be a source of pride that everybody in the room is better than you because I think that a player's hire A+ players on the other hand B players hire C players and C players hire D players and D players hire éclairs and you wake up one day and you're surrounded by Z players and this is what we call it Silicon Valley the bozo explosion so you need to fight the bozo explosion third point is at some point you have to put in systems it cannot be totally ad-hoc this is I think one is a major philosophical shift that you can't just fly by the seat of your pants anymore and this is this is a major mind shift it takes a different kind of person you know there are people who you to use a programming example there are people who are just great at creating version one but that doesn't mean that they're great at debugging and creating version 1.1 so you need all kinds of different roles and it's a very big real realization that you hire people like that and then you have to put in systems for people like that because they have a different operating system I took a long time to figure this out number three going back to Geoffrey Moore so you know I entrepreneurs have this temptation that they look at success stories Google Apple Microsoft whatever right so let's take the case of Microsoft so you look at Microsoft and say my god total world domination operating system right applications cloud enterprise gaming they got everything and so your two guys in the garage two gals in the garage a guy and a gal in the garage maybe you're 15 maybe you're 25 maybe you're 50 employees but you're looking at the Microsoft and the googles and the apples you say wow they have system they have app they have cloud they have e-commerce they have content they have everything so we're going to be like them we have to think big and I suggest to you that the way those companies got big is they did one thing really well and then they see really went down the line so you know Microsoft started with operating system and then they do apps and then they do you know and they go down the line and then one day you wake up and say my god we have achieved worldwide domination but I don't think it's because gates and Ballmer you know 30 years ago sat down and said okay we're going to do operating system apps online e-commerce content all at once and then we're going to wake up and we're going to own the world so the analogy is don't go for the strike in bowling hit one pin down at a time this is also a theory from Geoffrey Moore you get one pin down you hit another pin down and hit another pin down and then one day you wake up and my god all the pins are down and that's worldwide domination next thing is I think you need to pick your few battles that you know what's the core competitive advantage of your company is it technology is it marketing is that your geographic location is it your cost center whatever it is and I would urge you to not try to fight too many battles like you know don't try to say okay so we're going to have the best technology with the best customer support we're going to have 24 by 7 we're going to be in every geographic market we're going to be localized for every language we're going to do all that stuff and by the way we're going to invent a new business model you know you can buy software you can rent software you can lease software but we figured out a new way to distribute software so you know it's hard enough to make great software it's hard enough to sell great software it's hard enough to support great software but if you think you're going to innovate in all areas wow that is that is a big hairy thing I think you should just pick your battles pick the battle that's going to be most important for you and so what if you don't have you know a Nobel prize-winning business model if you could just make stuff for a buck and sell it for five I'm telling you man step business model works all day long okay number six number six is let 100 flowers blossom this I stole from Chairman Mao and by this I mean you probably have very good idea of who you think your customer is and you are fairly mature so you may have in fact really pick the right customer but I think that even through the life of a company even if you know something like Apple or Microsoft or any of these companies at some point you ship you take your best shot at positioning and bran and then you see what happens and many times I think you'd be surprised that people who are not your intended customer by your product or service and they use it in unintended ways so with the Macintosh we thought we had a spreadsheet database on word processing machine and we were 0 for 3 there so what saved Apple was desktop publishing but we did not plan that stuff photo sharing we didn't know anything about desktop publishing luckily Aldus PageMaker from seattle you know with adobe making postscript so Aldus PageMaker with postscript and laser printer created desktop publishing that was not designed by Apple and that's what stuck so we were focused on making Macintosh a fortune 500 Mis sale spreadsheet database order processing come to find out what really blossomed was desktop publishing newsletters books newspapers PowerPoint slides that kind of stuff so I learned a very valuable lesson which is you take your best shot but then you put it out and if flowers blossom in unanticipated places with unanticipated people declare victory and take the money take the money to use a more analogue example you know Avon is this cosmetics company and they have a product called Skin So Soft and the purpose of Skin So Soft you don't have to be a genius to figure out is to make your skin soft so women are supposed to buy Skin So Soft to make their skin beautiful ok but what they were buying it for was as an insect repellent for children so you know what do you do do you say oh my god we know we need to call it McKenzie and we need to like figure out how we can get women to buy Skin So Soft to make themselves beautiful I think not I think you declare victory you say hallelujah you know this is absolutely what we intended we wanted to create a great insect repellent that's good for your kids you know our positioning statement now is safer and kinder and gentler than DDT for your children and then now we have we put in sunblock inside of our skin so soft so we block the Sun and the insects for your children take the money take the money you know you want to repel insects you want to do desktop publishing hallelujah I don't know if you're that familiar with how Silicon Valley works but let me give you an insight the way it works is we throw a lot of stuff against the wall very few things stick we go up to the wall we paint the bullseye around what's stuck and we say we hit the bullseye that's why I venture capitalist has never made a bad investment because they always put the target on the board after you see what sticks now you say well guy you know there's a lot of failure 90% of companies fail or whatever so if you ever get a venture capitalist to be honest you say well you know let's say you go to Kleiner Perkins or Sequoia right and you say well why'd you invest in Cisco and say well we knew that with the internet people would need hardware bla bla why'd you invest in YouTube well we knew that people would upload video and we're going to democratize video and and then why'd you invest it you know Yahoo or we knew that people wanted content that was in a killing proposition for that for the internet and say well why'd you invest in Webvan why don't you put four hundred million dollars so that people could buy you know dog food online why'd you lose so much money I mean you did Apple Cisco Yahoo YouTube why'd you do it that and that venture capital say I told my partner's not to do this look that's how it works okay number seven let me explain the difference between being a baker and an eater if you want to scale I think you need to think like a baker and eater sees the world as a zero-sum game if you eat the pie I don't eat the pie the more you eat of the pie the less I eat of the pie a baker a baker sees the world as not a zero-sum game I can bake more pies I can make bigger pies I can bake cookies I can bake cakes everybody can get dessert and I would say that if you are an innovative company you should be thinking like a baker not an eater that you're not trying to prevent your competition from succeeding you're trying to legitimize the entire industry and if you legitimize the entire industry then the rising tide floats all boats you can save this battle when you get 90 percent market share later right now the battle is to legitimize the industry you need to make the entire ocean float higher worry about getting your specific part of that ocean later okay so think like a baker not an eater number eight no I repeated myself my god number nine is focus on sales and my observation has been working with venture capitalists and entrepreneurs that and this is the most important thing you could take for my presentation sales fixes everything okay so when you have sales and cashflow by definition you're not dead you still have runway that's number one it's kind of a dull ism but people forget the isms so that's number one number two when you have sales your investors leave you alone because 90 percent of their portfolio is imploding and so they have to go and triage those people so if you have if you invested in 10 companies and one has sales and nine are dying guess what you leave that one alone and you go work on the other nine and you know you tell the seals of number eight and number nine oh listen you know you're a loser and you're a loser you were going to make you to merge and we're going to say oh it was an acquisition we're going to declare victory so we're going to take two plus two and get it to be three so so so I'm telling you when you have sales they leave you alone when you have sales employee morale is good when you have sales you know you can pay for the free sushi you can build a sand volleyball and buy the foosball and you know the ping-pong and you guys can go have offsites at the ritz-carlton Half Moon Bay you can do all that because you have sales buy everybody a bicycle you know ripoff Google whatever you want but it's all about sales and I you know whenever I meet companies and they talk about partnerships that's total the reason why you talk about partnerships is because you don't have sales so always be talking about sales sales fixes everything okay nobody ever died by selling too much number ten is maybe the toughest recommendation of all which is you have to understand even though you're the founder that at some point if you are not the right person to lead the company or lead the portion of the company you need to step aside it is not your company it is the employees companies it's the shareholders companies but it's not yours anymore and so at some point it may be the right thing to step aside now this may be you go from CEO to CTO I'm not saying you should step aside and quit but at some point you have to step back and say you know am I the best person in the role and that is the hardest decision to make it really takes some soul-searching and then number eight which I duplicated by mistake I would say that one of my recommendation for you for scaling is social media social media is God's gift to entrepreneurship and you know it's fast it's free it's ubiquitous it you it is not bound by money advertising is bound by money marketing is bound by money the social media is bound by energy it's bound by insight it's bound by the ability to do good work it's not bound by money and so I think we live in one of the greatest times or entrepreneurs because of social media and I have to tell you Jeff Weiner is not in this room anymore but I would focus on two platforms LinkedIn and Facebook those are the two twitter is neither here nor there Google+ is neither here nor there but for I think from most companies it is LinkedIn and Facebook now if you're a fashion company okay obviously there's Pinterest and Instagram but really if I were to tell you if you're only going to focus on - which - you'd be LinkedIn and Facebook Facebook is fantastic I mean there's a reason why it's worth so much and you know every day we do targeting like like my wife know real estate brokers who target in a live in Silicon Valley over 40 years old female and spends a hundred bucks and and sends out ads to those I don't know how else you can do that something like that okay so Facebook and LinkedIn are the two that I think are the best social media platforms you've got to get social that's what that slide should say get social so that's my top 10 tips for scaling so any questions I think well they're all important but I think if you hire better than yourself that has ramifications on everything else that you do because if you hire better than yourself if you hire a better salesperson than you are and that kicks ass sale right and I think that's the key that it's going to come down to the quality of people so it should be a source of pride that you are not the best person in the company that but you had the insight to hire people better than you the people work for Steve Jobs in the Macintosh division at what they did were better than him no one was better than him in what he did also but for the functional areas those people were all better than what he was so hire better than yourself that's a very rational way of thinking right so you as an entrepreneur you start out as a generalist yes and you hire the right people who have been there done that and therefore bring that competency right much deeper way so that's that's one of a way of bringing better picture ooh yes but how about just the caliber of people that have the ability potentially younger maybe smarter yeah four capable here than yourself how does that work on the mindset of the entrepreneur when they bring in these kinds of people who actually put into their hands the baby that they have created and brought to this point well I guess you know what's the alternative you hire someone dumber than you so that you can feel better you know seriously what is the alternative I really you know I wish people would take pride in the fact that they hired people better than themselves that would be a remarkable thing the other thing that you talked about was putting in systems yeah most of the companies here as you are talking to the other day they are series a movie on and therefore they have to point gotten the product market fit they have no revenue they have customers and at this point there is this the freedom to innovate to actually now execute to scale and and that's they're not that inflection point and the systems is is necessary to put that path in place so how do they actually balance the two because there still is the you know space for innovation that they need to create and continue to have while they are also looking for the other part of the organization well well I think I'm a supplier and so I'm a supply-side guy okay so and I mean the supply of innovation and innovative products so I think the products should always be innovative and that's what I'm saying about choosing a few battles so so if if the product is always innovative that's ninety percent of the action I would not also suggest that us so we're going to figure out a new way of financing this business so you know we're going to create this offshore corporation that's going to go public and you know whatever and then we're going to do this and we're going to get government grants and then we're like just just freaking make great software I mean you know and everything else will work out III think it takes great discipline and in part partially one of the hard things about this is you only know looking back right like it's it's easy easy to say okay yeah we did that right or we did that wrong but at the time who the hell knew and for every example of someone making a big mistake I can point out someone who you know did something that no one thought was right and worked out well I mean case in point when Apple created the a first Apple stores every detail expert in the world said you are crazy that one company cannot support retail at the kind of prices that that malls charge and there's no way that people are just going to walk in you know so they go to Abercrombie and Fitch and they buy a shirt and then or they go to they go to Lululemon and buy some yoga pants and they go buy $3,000 laptop you know that just ain't going to happen and so every every expert in retail sales said that Apple store would fail and obviously it did it so now we can say of course they were successful because they're very loyal following them really qualified sales people they have the Apple Genius Bar so obvious that this would have worked and not at all this is the go-to the boards that paint a bull's-eye yeah we knew the Apple store would work mm-hmm sure you knew seventeen you're sharing we can create metrics most easily Enterprise around social media cuz really gave you the addition I watched your face apply maybe fans a question for you what do you think are some of the most important metric for us towards what small businesses to think about I'm succeeding my social what should you what you for succeeding on social okay so I'm not a big quantify I don't look at my statistics the only statistics are honestly the only statistic I look at is how many more new followers did I get a day now you know you could say that's insipid and shallow thinking and you know it's quality not quantity but I gotta tell you I mean I think they're only two kinds of companies and people on social media those people like me who want more followers and Liars that's the only two so I'm not advocating that you buy followers so that you can say you got more followers that is just cheating and stupid but for me that's the thing I look at because I think when the rubber meets the road either people think your value to follow or they don't and they vote with their feet and so that's the only metric I really care about I listen I know there's all kinds of metrics about engagement and all that my my approach to social media is what I call the NPR model or the Wikipedia model so Wikipedia and NPR they provide great content and every once in a while they run a pledge drive right so turn on the radio and NPR saying we're in the pledge drive operators are standing by you know Microsoft is matching US dollar for dollar so if you put in ten dollars Microsoft will put in ten dollars and then we'll give you the hand-crank eat on radio so that in case there's a nuclear attack can crank up the radio find out when you're going to die so the reason why those pledge drives work and I used to be on the board of trustees of Wikipedia we raise 85 million bucks a year asking for donations with the world's ugliest banners okay on the world's ugliest site and and the reason why that works is because Wikipedia and NPR provides such value that they have earned the right to promote so I would say for every one of your startups you know you have to earn the right to promote and so how do you earn the right to promote you provide value what is value well value is its information its analysis or its entertainment or its assistance it's one of those four things so you know if if if I were running a social media analytics company I would be I look at the content that buffer and sprout put out they're always saying okay so we did this study and we figured out that you know if you if you do live video it's three times more effective than if you embed YouTube video or they always have these kind of things that they're constantly providing value and they put out a white paper and all this and then they say well you know per follower you get much more engagement on LinkedIn and it's much more likely that a LinkedIn person is really who he or she she says he or she is because they're trying to get jobs they're not all being lonely boy 15 so you get all that kind of content and so you earn the right and everyone thought I hit them with okay so now here's our new product try it but you've heard the right to do that because big because big brands abdicate to stupid agencies who used to be PR and advertising firms because believe me I was inside a big brand and I saw this happen that I would be telling them all this kind of stuff and they would say yeah but our agency back in the Midwest you know who they got like are in art history interns assigned to the thing and they're saying that you know we got to do this and we got to do that it they're saying you know they're saying stuff like you cannot repeat your tweets because when you repeat their tweets you lose followers and people are going to get angry and I said okay so you get six people angry a day but you gain you know a thousand so what's the problem and and I and I asked them you know like do you do you TiVo CNN you know so so CNN should run the story once a day because you're going to come home at 8:00 p.m. and turn on your TiVo or turn on your HDR and go watch with CNN stated 8:00 a.m. no CNN runs the same freakin story 12 times a day why is that because not everybody could SUSE and at the same time social media the same thing so repeat your tweets no we cannot do that and so I think a lot of it is because of abdication and they're advocating to people who don't know what they're doing you know like a very interesting thing is go look at all the agencies and look at how much engagement and followers they have they're terrible right so you so you it's I guess the analogy would be if you went in to see a cardiologist and he or she is smoking and fat and disgusting and wheezing maybe you shouldn't listen to that cardiologist you know that would be my logic yeah obviously depends on which industry but social media my social media is God's gift to you all right I don't know how I could say that any stronger it's not only God's gift to you maybe it's your only path unless you you know unless you raise 25 million bucks and your investors are saying yeah go run a Superbowl commercial unlikely I think it's social media and with social media with a you know a hundred thousand dollar social media person you can do a lot of damage but I'll tell you something great social media on a lousy product is still putting lipstick on a pig right so you need to start with a great product and then social media is easy but if you have a pig a pig is a pig might have lipstick on it but it's still a pig so don't get me wrong social media is a great tool but you gotta have you know what what no but everybody's not making that much no oh everybody's making noise but they're not adding value so what what business are you in you and what okay so if I were running social media for you I would just be curating and creating all kinds of stories about customer right I would write a post like these are the 10 things that United did wrong so did you write that ok so and so you you put that out you tweet it three times you put it on Facebook and LinkedIn you spend a hundred bucks and you know you you try these experiments I'm not saying I got all the knowledge okay but if this United thing is a goldmine for you if you wanted to do something more funny you know you would do like you do you try to make a video that's like three minutes long you know so there was United breaks guitars so now you know United breaks noses I mean you know there's like a lot of things you can do then then the rabbit died on the flight right so you can like in a United kills rabbits I mean we could go a long time with this and so that's entertainment you could write a paper about so you know what would you do if you were the CEO of United going forward this is what he should do probably resign but I mean you know and then I just saw an interview of Richard Branson talking about as virgin you know what he would have done or all that so you should reshare that video so basically I think you want to build a reputation that you know when I follow you it's not about you pimping your product to me all the time you showed me a video from Richard Branson you wrote an essay about what the United should do you've you cited a Harvard Business Review about the ten secrets to customer support you know you found an old interview with the CEO of Nordstrom who explains the Nordstrom way you know whatever it is and I think those kinds of things are highly likely to be Reshard and so now the I call it the reshare test and the way the reshare test works is whenever you post something you should believe that what you're posting is so good that people will reshare it not not that just the first generation will like it but they will like it so much they will risk their reputation on it so to use the restaurant analogy you know giving a like or a thumbs up or a plus that's like tipping the waiter right which is nice don't get me wrong but if you go to a restaurant and then the next day you go in the office and say you have got to eat at this restaurant it is the best sushi steak whatever it is the best at that point you're not just giving the weight of the tip you are risking your reputation you're telling people you've got to eat at this restaurant and if they go and it sucks you suck so in your mind if you posted a video of Richard Branson explaining what he would do if he were the United CEO that passes the reshare test right so I get it I follow you I get it hello you know the people who follow me we find this interesting - and they reshare it so they see you so this guy I really found a good thing I'll follow him I think that's how you build up more followers you spoke about Facebook and LinkedIn and the peanuts not funny be Monroe from someplace before we could be home yeah especially working a new CEO like there is already value but for b2b companies or what are the different ways in maybe yeah see I I guess I I think that this question in a suggesting should be to be companies be on social media right I think in a few years we're going to look back at that question like today if I said to you if you're selling books online clothing online I understand if you're a restaurant I understand selling surfboards online I understand but I sell bolts I sell titanium airplane parts I sell office furniture for enterprises should I have a website and what would you say no so I think the same thing is going to be true of social media of of b2b probably is true already not it's hard for me to imagine if you said to me so guy tell me a company who should not be on social media I would really struggle with that it it would be like say tell me a company that should not have a website you know I mean take an extreme so like I don't know General Dynamics right why should General Dynamics have a website it's not like I was like why don't I buy an f-18 what I've always wanted a fighter plane I'm gonna go buy one I just one click in my basket so why should general dynamic I don't know I don't don't get me wrong I don't know if General Dynamics makes f18 but one of those defense contractors makes them so why should it recruiting you know maybe maybe they just want to have a presence so that 600 politicians in Congress are aware of them or you know maybe so 500 bureaucrats in China are aware I don't know whatever but I can't build the case where General Dynamics shouldn't have a website with me mom how do you think beautifully the companies can relate within in one of the ways anyone well linked is certainly for recruiting I I wish I was here when Jeff was talking because I have like an epiphany with LinkedIn about a month ago because LinkedIn in my mind like I think many other people they believe that LinkedIn is for professional business networking business development that kind of stuff right but in my humble opinion having tried a lot of stuff lately I think LinkedIn is just basically Facebook with authenticated identities and so if you looked at my LinkedIn feed you would be shocked because it's all anti-trump surfing and Mercedes all three of those you would probably have said don't belong on LinkedIn it should be about business profession you know all that kind of stuff my my LinkedIn time line is the most unprofessional I shared a picture today of me in a wetsuit surfing and the caption was does this wetsuit make my butt look big okay that's not your typical LinkedIn post but I'm telling you is getting a hundred thousand views so now obviously I have a cavalier attitude you know I'm not sure you should do that or your company should do that but I'm telling you that I think LinkedIn is a social media platform and that it's going to be a prime source of news as opposed to I need to put my resume up there so that I can get hired it's way beyond that but lots of people don't want to make that leap the irony is whenever I do surfing Mercedes or anti-trump there's always three or four people who say take it to Facebook don't post here and and then they say you know if you don't stop I'm going to unfollow you to which I say go ahead and and let's see the irony here is that these people are telling me what I'm doing on Facebook is unprofessional but I think them telling me that I'm being unprofessional and they're going to unfollow me makes them look unprofessional right so when you go on on LinkedIn and you say a guy you posted about anti-trump so I'm unfollowing you politics don't belong on LinkedIn I think that's the equivalent of your intermediate or high school and you say in front of the whole school I'm not going to be your friend anymore like tell me if you're a recruiter and you see that person's tell someone with 20 million followers I'm not going to follow you anymore you see if that's the kind of employee we want mature good judgment you know whatever so sometimes people from companies like Accenture and Walmart and they do that to me and I push back and I say so is this are you saying that Accenture which holds itself as a thought leader are you saying that you're recommending to your clients that when they don't like somebody on social media they should declare that they aren't following them and about 60 minutes later the comment disappears because I think they finally figured out you know I am so stupid I am right I mean I think that's the beauty of LinkedIn that that at some point people realize that hmm maybe I should not hold up a sign that says I'm an idiot I should hide that if I am an idiot so anything I don't know how we went down this rat hole but anyway I I don't say I just now to me LinkedIn is the best social media platform so information analysis entertainment that's what I do that's what I post at one point you were a big on bigger jitter class on Twitter when you're doing yeah well lots of things lots of things have changed like I think that Twitter is just it's too much at this point I used to love Google Plus - don't get me wrong but Google Plus I mean Google just sort of stopped caring I think about Google Plus and so for me for me really it's Facebook and and like then yes and your eyes on the and your marketing activities that could be useful for the company like for example like creatures doing webinars I think all I'm a little skeptical of all trade shows but video conference and webinar in a slam-dunk virtually no cost right if I were a b2b company would I try doing Facebook live absolutely I would you know b2b company Facebook live what could a b2b company Facebook live do we're interviewing one of our key customers how they use our product or we're going to take you behind the scenes to show you how we make the widgets or let me we're going to interview the the product manager of the product or the engineer of the product I think you should be going Facebook live all the time and listen all this stuff that I tell you could be all wrong but I just tell you just suspend disbelief and try it just try Facebook live and then tell me it sucked and it didn't work okay I understand that but don't think that our Facebook is trixie and if showing that they're naked and drunk so it has no place for b2b I would debate that I would debate that all day long try it just try it what else okay I cannot understand snapchat to save my life I just I I am not the target I just I have tried it I just I don't know I over 60 well so I I you know me I I don't know if I would use snapchat to sell social media analytics I'm going to like put Neal dog ears on her I mean I don't know you know I snapchat I've pumped I cannot tell you what to do it snapchat I don't know although you know with Instagram stories I'm an Instagram is like snapchat for the rest of us right and these I can I can understand what's happening with Instagram really difficult to make you as a person religious as a really bad if you do think of behavior very active social yeah generally for media and photography yeah what do you go to trial happen get with one piece what do you do with somebody because instead something realistic I buy the product you can work in a city Social Register counted yeah Amy so someone rips you and says your product is crappy buggy whatever you know whatever I would I would respond and I would say I apologize for your experience here's my cell phone here's my email let's take it offline so I can get more information and so to solve your problem and that is I mean my thinking would be on two levels one is I don't want my dirty laundry washed in front of everybody and I also don't want to appear like I'm threatened or he's right so I think you you know this is you take the high road or you say you know this should have never happened you don't use the word Rhea comma date that that's not going to work anymore you know we'd like the route yeah we'd like to react AMA date your seat and I would I would try to take it offline you know I don't think most people are looking for a fight and I along the lines of baking not eating I think you should always take the high road and assume people are good until proven bad at least twice one time could just be a mistake and you know whatever the second time is III have a theory the Guy Kawasaki theory of perfect knowledge of and I this is how it works so there have been many times where I thought someone was an and when I was young I used to think how you think he's an you had a bad interaction you had a bad day or whatever you know probably most people don't think he's an it's going to conflict what I just said about giving people chance lies but then my observation is that if you think someone's an pretty much everybody thinks that person is an very seldom have I met an that I asked other people and they say he's a terrific guy so there's perfect information about so I think one of the so so one is to like let's take it offline and then the second thing which really works is when somebody rips you like that ask them have you used the product because I promise you I think about 90% of the time they're going to say no I haven't but I saw this on you snip that you know you're buggy and you know crappy and slow and not secure and so they haven't used the product they're quasi trolling you there being an and you're just asking a very neutral question have you used the product so if you know if if if I were Elon Musk and something says in a your ers class is a piece of the brakes don't worry or whatever and you say do you own one oh no I just read someplace that you know like okay I mean you know ask someone that's maybe that's the first step ask them do you actually use did you actually use the product because they may just be trying to get a rise out of you so what else you got a ton of fun you're investing at all your Hyneman yeah Ford into something at least in some sense it can't be a little counterintuitive right but it's your time which is an either investment in doing some yeah so does it always work there's some exercise wait wait what does I have to do it going slow so eventually wait long if you are spending more time for your limited time no not what what I'm talking about going slow is basically how fast you increase your burn rate so you know there's a theory that you you you prepare for growth and you know you building the infrastructure and you put in systems and you do all these kind of stuff but I have to say you know time and time I've seen this situation now maybe for companies younger than you but time and time I've seen the situation where sort of goes like this so the company gets funded CEO comes back and says we just got funded I really like these venture capitalists they really did get it they understand my vision and their investing they told me they're investing in people people it's not the product it's not the market if they believe in us the missing people I really like unlike all the other VCS this guy's this gal believes okay that's the first board meeting so what comes next so now the Rockstar programmer that you hired from Craigslist not so Rockstar misses the shipment full of bugs so you go back to the next board meeting au sake I told you we chip now I was wrong you know whatever but we're in beta now and the beta sites love it that's a whole nother subject beta sites always love what you give them because frankly it takes a real to tell you your product sucks it's like saying do you like my baby who the hell ever says oh you have an ugly baby but you know there are your babies right okay so anyway so second meeting is all we're late but this time my rock star programmer said they're going to do it and we are so confident because of all the positive feedback we'd have from our beta sites we think we need to increase our infrastructure we need more support we need field servers we need systems engineers because man when we turn the switch my god you know we're going to go to infinite infinity and beyond the VC is like looking up from his photos okay so you do that another six months go by I had to fire that Rockstar programmer come to find out his architecture was couldn't scale you know whatever so now and then we had this we have this big discussion like should we try to put band-aids on this sinking ship or should we rewrite from scratch and we decided because we're the visionaries that we are we need to rewrite it from scratch that's the right thing to do so meanwhile you you know you got this fifty hundred thousand dollar an overhead because you were going to ship and all that right and so the next board meeting is it you know that's they give you like one more shot and then the next board meeting is like you know every Monday for 84 weeks I've been telling my partners this is a world-class team and a great market with a patent-pending curve jumping enterprise scalable technology and I got to tell you that tired of here I'm tired of saying that so we got this other loser company in our portfolio in a similar market we're going to make you two guys merge I'm going to declare victory and the CEO goes back to his team and says can I swear because this is how it goes this is like I just got by our board like they told me you've heard him say that they invest in people you heard that right and you heard them say that they believed in me when I was 18 months ago all right and so now they just threw me out under the bus so this is Pied Piper right in Silicon Valley right this is Pied Piper they just threw me out I can't believe it they told me they invested in people and that's what happens and so you know that's kind of predictable so the key is don't have a run rate don't have a burn rate of a hundred thousand a month when you have zero sale like duh and then the flip side of that is like I said before sales fixes everything so you just had sales you would not have this problem nobody would be bugging you you could have foosball tables all over the place you can have all sites you can go to you know opening night of Hamilton take the guys to San Francisco Giants baseball Annika what you do sales fixes everything so you know I don't know just a long answer to your question what else you're probably not you guys like saying why do we bring guy in and what a downer conversation honestly um I'm not an expert in that kind of thing when I travel around the world my observation is that entrepreneurs are more similar than they're different and I think you know if you if you control for if I didn't know where I was and there are no visual cues accents and stuff like that honestly I it's very hard to tell where you are it's not like entrepreneurs in Europe say very different things than entrepreneurs in China and all that it not not my experience anyway I think people in this room you're probably more similar than you are different 8 yeah that's been my experience I I uh I can I've met entrepreneurs like you all over the world and you all you all want to change the world you're all you know at the prime of your life I used to be there once but ah uh yeah I think you're in a great time man and probably the biggest risk for you is Donald Trump really I truly do believe that you may not I don't know where everybody is politically but I literally think he could end the world I mean I just like I wake up every morning and say thank you God we didn't attack North Korea another day it's good you know and so I think that's that's something to keep in mind and and so I've never said that before that you know the political situation could affect entrepreneurship so much I used to tell people you should ignore who the president is because if you believe Barack Obama or Hillary Clinton or Donald Trump is going to make a difference in your you know 15% startup like how does it go from you know who's president down to it caused you to fail probably it's because you hired allow the programmer much more than it's Donald Trump but I'm not sure that's true anymore because he really could ruin industries so but you know in a sense you can't do anything like that about that right so I think the entrepreneur attitude is you know if you're an entrepreneur and you're waiting for the perfect time or you have the perfect team in the perfect market with no competition you're not an entrepreneur I mean that's the bottom line because anybody can start when there's no competition great market and great technology it takes someone with real courage to start it when you know it's this team you're putting together with duct tape and it's technology with duct tape and it's unproven market but I gotta say you know if you look at the history of great companies great tech companies it's hard to make the case well listen when you watch venture capitalists talk they're always saying we want team technology and market right they always say those three things but then if you were to if you were to test Microsoft Yahoo in Pinterest Instagram Bluebird I mean just all the successful companies you heard of if you were to really say okay so did any of these companies have a great team in a great and proven market with great and proven technology zero zero right every one of them is unproven team unproven technology unproven market and that's why entrepreneurship is so hard and so you know after the fact you could say yeah I knew Steve Jobs was a great person and a great entrepreneur I knew that Bill Gates I knew that you know Jeff Willy and I know Reed Hastings I knew you know I knew they were great but really at the time you had to squeeze the trigger 20 25 years ago you had no idea there's nobody it's only retro actively so you know the bottom line is man you you take your shop and you you work like hell and you hope you get lucky I mean I really think so I so the older I get the more I think it's better to be lucky than smart it really it's so now so you know what does that translate for you I think well so the key lessons I would say is hire better than yourself I can only give you things that I think will increase the probability of yours I can't tell you how guaranteed it because if I could guarantee it I wouldn't tell you I would keep this as a secret so I think that hiring people better than yourself embracing social media it's the best kind of free marketing you could get i think another good thing I'd like to tell you is you should never ask people to do something that you would not do so if you won't do it don't ask people to do it at a very simplistic level if you hate CAPTCHA don't put CAPTCHA on your website right because if you hate capture guess what probably everybody hates capture so why you know what's the purpose of capture reduce the number of customers right so and you know if like to use that same test internally if you're sitting in Silicon Valley but your programmers are in Bangalore so what when you fly to Bangalore you fly first-class and when the programmers fly here if our coach so you're asking your programmers to fly coach for you fly business or first that's wrong if they're flying coach you fly coach if they're flying first you fly first video don't get me wrong it's that kind of thing and I think those those three things if you did that that's this is sweet as you could put yourself in that spot I got to tell you one more story I got yeah I guess I mean I don't you know I don't they need the office you know they need this room I could finish with this story and it's a story that it's pivotal in my life so you used to be the ice story so ice 1.0 was you harvested ice in the winter you use a saw sleigh and a horse it's nineteen hundred thirty years later there's ice factory you freeze water essentially Iceman delivers ice in the ice truck thirty more years later refrigerator now you have your personal ice factory Iceman doesn't deliver ice to your house you just go to your refrigerator ice harvesting ice factory and refrigerator all did the same thing cleanliness and convenience but the mechanism by which they delivered it got better cutting blocks of ice freezing water centrally refrigerator and yet you you would think that oh smart business people would say huh I'm an ice harvester but a factory is better I'm gonna get on the factory curve then you own the ice factories in whom refrigerators bread I'm gonna get on a refrigerator curve but the truth is not one company went from harvester to Factory to refrigerator because most companies define themselves in terms of what they already do so if you define yourself as we take chemicals we put it on plastic film that plastic film is exposed to light we get the plastic film back we expose it to different chemicals and we produce photographs then guess what you might not embrace digital photography and if you are tapping signals through a telegraph you might not embrace telephones and if you have copper based telephones you might not embrace voice and so nobody in this room probably uses a Kodak camera or a Polaroid camera or a smith-corona computer or a Wang word processor or Remington Rand you've got to get to the next curve and so the next curve is where the innovation is it's where the meaning is made it's where the margin is it's where all the action is so hopefully your first product has jumped to the next curve or created the next curve but then you know just remember as you scale that you know do you want to be the most successful ice factory in the world when everybody else is using refrigerators that's to test okay so part of my profanity but you know I have you okay do you guys watch Silicon Valley okay that the reason why it's funny is because it's true I thought you have that should be required viewing now obviously it's kind of exaggerated but not too much and not too much that is a great series so you if you want insights into tech startups watch Silicon Valley on HBO yeah ok one more because I don't we share them did you mention to the crispness it'll be the same for the classic word-of-mouth marketing and except that someone willing to sort of lose an application yeah say something about you yes that's evangelism so you hold each other the same what is it makes people do that oh ok ok so that's called evangelism and evangelism comes from the Greek words of bringing the good news so that's what that's what evangelism means so the difference between evangelism and most traditional sales is the traditional sales person has his or her best interests I want you to buy Macintosh because I got my you know monthly quota and if I meet quota I get bonus that's not evangelism evangelism is you make graphics I have a better way for you to make graphics you should use canva or 30 years ago you should use Macintosh now don't get me wrong if you use canva or Macintosh it's good for me I work for Apple right but really the reason why I'm telling you to use canva or Macintosh back then is because it's good for you it's going to make you more creative and productive and so if your product passes this test you'll get evangelists so this is a Garmin Phoenix watch I don't have any you know ties with it although this is a you know evaluation unit so I didn't pay for it but they're not paying me to tell you this is a really great watch alright mercedes-benz brand ambassador I'm paid for that so you have to suspect what I'm doing but you know when I tell people this is up this bag I'm really into bags I've bought bags all the time so this is a bag made by peak design it's really well designed as a great place for a laptop you could shove everything in here I mean I can show you this my power supply this is my tripod this is all the gifts carry you know when you have like all the adapters when you're a McIntosh owner this is a this is an extra pair of pants because you just never know and this is you know I like goes on like this is a now orange key and then you know this is why my laptop's over here my notebooks over here I carry a lot of cash because you never know I may be going through some country something I got to pay somebody off and I want to pay them off I'm going to get the hell out of that country so I hear like a multiple passports I got all this this is a great bag this is a great bag I love this bag now I'm not being paid to tell you to buy this peak design bag this bag is good news that's evangelism thank you thank you I hope you don't get far my pleasure in it can I say a great joke okay so this is a story that always works I going to preface it with that so you know there is a little like irony that I'm speaking to Microsoft because I spent much of my career trying to defeat this company at Apple and so whenever I speak in Microsoft I was going to do it today but I thought you know I don't know so the way the story works is so I told my wife this morning that I'm going to speak to Microsoft on the Microsoft campus and so honey in your wildest dreams did you ever think that I would be a keynote speaker for Microsoft and you know what my wife said she said honey you're not eating my wildest tree [Laughter] [Applause]

Channel: Microsoft for Startups

Views: 18,085

Rating: 4.8555956 out of 5

Keywords: Guy Kawasaki, scaling, startups

Id: Wh9J2TdBsHs

Length: 67min 47sec (4067 seconds)

Published: Sun Jul 09 2017