The Art of the Start > Also by Guy Kawasaki Database 101 Hindsights How to Drive Your Competition Crazy ART Rules for the Revolutionaries OF THE Selling the Dream The Computer Curmudgeon The Macintosh Way START \ THE TIME-TESTED, BATTLE-HARDENED GUIDE FOR ANYONE STARTING ANYTHING Guy Kawasaki > PORTFOLIO Many years ago Rudyard Kipling gave an address at McGill Univer­ Published by the Penguin Group sity in Montreal. He said one striking thing which deserves to be re­ Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, U.S.A. Penguin Group (Canada), 10 Alcorn Avenue, Toronto, Ontario, Canada M4V 3B2 membered. Warning the students against an over-concern for money, (a division of Pearson Penguin Canada Inc.) Penguin Books Ltd, 80 Strand, London WC2R ORL, England or position, or glory, he said: "Some day you will meet a man who Penguin Ireland, 25 St Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd) cares for none of these things. Then you will knoiv how poor you are." Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) —Halford E. Luccock Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi - 110 017, India Penguin Group (NZ), Cnr Airborne and Rosedale Roads, Albany, Auckland, New Zealand (a division of Pearson New Zealand Ltd) . Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: To my children: Nic, Noah, and Nohemi. 80 Strand, London WC2R ORL, England A child is the ultimate startup, and I have three. First published in 2004 by Portfolio, a member of Penguin Group (USA) Inc. This makes me rich. 16 15 14 13 Copyright © Guy Kawasaki, 2004 All rights reserved <i Publisher's Note This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not en­ gaged in rendering legal, accounting, or other professional services. If you require legal ad­ vice or other expert assistance, you should seek the services of a competent professional. LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Kawasaki, Guy, 1954- The art of the start: the time-tested, battle-hardened guide for anyone starting anything / Guy Kawasaki. p. cm. Includes bibliographical references and index. ISBN 1-59184-056-2 1. New business enterprises. 2. Entrepreneurship. I. Title. HD62.5.K38 2004 658.l'l—dc22 2004044773 This book is printed on acid-free paper. © Printed in the United States of America Set in Sabon Designed by BTD NYC Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book. The scanning, uploading, and distribution of this book via the Internet or via any other means without the permission of the publisher is illegal and punishable by law. Please pur­ chase onlv authorized electronic editions and do not participate in or encourage electronic > Acknowledgments In giving advice, seek to help, not please, your friend. —Solon y thanks to all the people who helped me with this book. First, Rick Kot at Viking, because this book was his idea. Furthermore, he tolerated my crazy ideas—including the Mtitl e and subtitle and having a cover-design contest. Every author should be so lucky to work with an editor like Rick. (The con­ verse is not necessarily true.) Second, Patty Bozza and Alessandra Lusardi of Viking, and the Portfolio team: Joe Perez, Will Weisser, and Adrian Zackheim, as well as Lisa "Her Highness" Berkowitz. Behind every successful author stands an amazing team. Third, a group of readers who truly sought to help, not please, me. They spent many hours reading and refining my drafts. My eternal gratitude to: Marylene Delbourg-Delphis, George Grigoryev, Ronit HaNegby, Heidi Mason, Bill Meade, John Michel, Anne P. Mitchell, Lisa Nirell, Bill Reichert, Gary Shaffer, Rick Sklarin, and Andrew Tan. Fourth, a group of people who contributed by making sugges­ tions, course corrections, and additions. They are: Mohamed Abdel- Rahman, Anupam Anand, Imran Anwar, Dave Baeckelandt, A. J. Balasubramanian, Steve Bengston, David Berg, Scott Butler, Tom By- ers, Antonio Carrero, Lilian Chau, Pam Chun, Tom Corr, Stephen Cox, Deborah Vollmer Dahlke, Martin Edic, Bob Elmore, Eric Erick- son, Elaine Ferre, Pam Fischer, Sam Hahn, Lenn Hann, Steve Holden, Hilary Horlock, Katherine Hsu, Doug Ito, Bill Joos, John Michel, Cindy Nemeth-Johannes, Tom Kosnik, Pavin Lall, Les Laky, Molly \/M Lavik, Eric "I'm Open" Lier, Anthony Lloyd, Robert MacGregor, Tom J^teade, Chris Melching, Fujio Mimomi, Geoffrey O'Neill, Bola Contents Odulate, Colin Ong, Steve Owlett, Lakiba Pittman, Gina Poss, Julie Pound, Warrick Poyser, the Propon Team, Richard Putz, Anita Rao, A friend is one to whom you can pour out the contents of Jim Roberts, Marty Rogers, John Roney, Aaron Rosenzweig, Michael your heart, chaff and grain alike. Knowing that the gentlest of Rozenek, Brian Rudolph, David Schlitter, John Scull, Izhar Shay, Marc hands will take and sift it, keep what is worth keeping, and Sirkin, Marty Stogsdill, Judy Swartley, Russ Taylor, Larry Thompson, with a breath of kindness, blow the rest away. Amy Vernetti, Ryan Walcott, Shelly Watson, Tim Wilson, Ryan Wong, —anonymous and Jan Zones. Fifth, the people who helped me to market this book: Alyssa Fisher, Sandy Kory, Tess Mayall, Ruey Feng Peh, Shifeng Li, Shyam Read Me First xi Sankar, Betty Taylor, and Kai Yang Wang. Sixth, my loving and lovely wife, Beth. Thank you for bearing with me as I wrote this book during a very busy time in our lives, and Causation for the best twenty years of my life. Chapter 1: The Art of Starting 3 Seventh, Sloan Harris of International Creative Management. Thank God for Sloan—otherwise, Rick Kot and Portfolio would have Articulation eaten me alive. Chapter 2: The Art of Positioning 29 44 Eighth, Patrick Lor and the gang at iStockPhoto.com who helped Chapter 3: The Art of Pitching this graphically challenged author. Chapter 4: The Art of Writing a Business Plan 66 Finally, John Baldwin, Ruben Ayala, and Ken Yackel of the Ice Oasis Skating and Hockey Club. Were it not for them, I would have Activation finished this book six months earlier. But then I wouldn't be the best Chapter 5: The Art of Bootstrapping 79 fifty-year-old, transplanted Hawaiian, beginner ice hockey player in Chapter 6: The Art of Recruiting 100 Silicon Valley. And this is certainly a desirable niche to fill. Chapter 7: The Art of Raising Capital 119 Proliferation Chapter 8: The Art of Partnering 151 Chapter 9: The Art of Branding 167 Chapter 10: The Art of Rainmaking 192 Obligation Chapter 11: The Art of Being a Mensch 211 Afterword 217 Index 219 Vlll ix Read Me First 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 here are many ways to describe the ebb and flow, yin and yang, bubble-blowing and bubble-bursting phases of busi­ ness cycles. Here's another one: microscopes and telescopes. In the microscope phase, there's a cry for level-headed thinking, a return to fundamentals, and going "back to basics." Experts magnify every detail, line item, and expenditure, and then demand full-blown forecasts, protracted market research, and all- encompassing competitive analysis. In the telescope phase, entrepreneurs bring the future closer. They dream up "the next big thing," change the world, and make late-adopters eat their dust. Lots of money is wasted, but some crazy ideas do stick, and the world moves forward. When telescopes work, everyone is an astronomer, and the world is full of stars. When they don't, everyone whips out their micro­ scopes, and the world is full of flaws. The reality is that you need both microscopes and telescopes to achieve success. The problem is that this means gathering information that is spread among hundreds of books, magazines, and conferences. It also means talking to dozens of experts and professionals—if you can get, and afford, an audience. You could spend all your time learning and not doing. And doing, not learning to do, is the essence of entrepre- neurship. The Art of the Start alleviates this pain. My goal is to help you use your knowledge, love, and determination to create something Yl great without getting bogged down in theory and unnecessary details. My4kpresumption is that your goal is to change the world—not study it. If your attitude is "Cut the crap and just tell me what I need to do," you've come to the right place. You might be wondering, Who, exactly, is "you"? The reality is that "entrepreneur" is not a job title. It is the state of mind of people Causation who want to alter the future. (It certainly isn't limited to Silicon Val­ ley types seeking venture capital.) Hence, this book is for people in a wide range of startup endeavors: 9 guys and gals in garages creating the next great company • brave souls in established companies bringing new products and services to market • saints starting schools, churches, and not-for-profits Great companies. Great divisions. Great schools. Great churches. Great not-for-profits. When it comes to the fundamentals of starting up, they are more alike than they are different.