Read Chapter 5 Art of The Start 2.0 Fundraising and Answer Questions Please read Chapter 5 Art of the Start 2.0 FundraisingPlease answer and submit the fol

Read Chapter 5 Art of The Start 2.0 Fundraising and Answer Questions Please read Chapter 5 Art of the Start 2.0 FundraisingPlease answer and submit the following questions on Canvas:What is an example of a company that used crowdfunding and why do you think they were successful?What is an Angel investor and what is an example of an angel group, what is one investment they made and why do you think they made it?What is a venture capital firm and why are they important in UNDERSTANDING digital media entrepreneurship? ALSO BY GUY KAWASAKI
The Art of Social Media
APE: Author, Publisher, Entrepreneur
Enchantment
What the Plus!
The Macintosh Way
Reality Check
How to Drive Your Competition Crazy
Rules for Revolutionaries
Selling the Dream
Hindsights
The Computer Curmudgeon
Database 101
PORTFOLIO / PENGUIN
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Kawasaki
ISBN 978-0-698-19363-5
Version_1
To my children: Nic, Noah, Nohemi, and Gustavo.
Children are the ultimate startup, and I have four.
Many years ago Rudyard Kipling gave an address at McGill University
in Montreal. He said one striking thing which deserves to be
remembered. Warning the students against an over-concern for money,
or position, or glory, he said: “Some day you will meet a man who cares
for none of these things. Then you will know how poor you are.”
—Halford E. Luccock
Acknowledgments
In giving advice, seek to help, not please, your friend.
—Solon
VERSION 2.0
M
y thanks to the readers of my drafts. They suggested hundreds of
changes that made the book more relevant and useful. Ankit Agarwal,
Biji Anchery, Christopher Batts, Mark Bavisotto, Stephen Brand, Dr. Julie
Connor, Gergely Csapó, David Eyes, David Giacomini, Oskar Glauser, Allan
Isfan, David F. Leopold, Eligio Merino, David Newberger, Greta Newborn,
Mike Sax, Derek Sivers, Dale Sizemore, Eleanor Starr, Steven Stralser, Leslie
Tiongco, Julius Vincze, and Maruf Yusupov.
Special thanks to these folks, who went above and beyond the call of
duty: Raymond Camden, Mark Coopersmith, Andy Dahlen, Peg Fitzpatrick,
Michael Hall, Chelsea Hunersen, Mohanjit Jolly, Bill Joos, Doug Leone, Bill
Reichert, Beryl Reid, Peter Relan, Mike Scanlin, Ian Sobieski, Stacy Teet, and
Hung Tran.
My gratitude to the Portfolio team: Rick Kot, Will Weisser, Adrian
Zackheim, Diego Núñez, Stefanie Rosenblum, Victoria Miller, and Tara
Gilbride. It’s good to work with the A Team again. It’s good to be working
with you guys again. I hope I didn’t drive you too crazy. And finally thank
you Sloan “Hitman” Harris. I’m glad you are on my side.
CONTENTS
Write what you know. That should leave you with a lot of free time.
—Howard Nemerov
Also by Guy Kawasaki
Title Page
Copyright
Dedication
Epigraph
Acknowledgments
Read Me First
Conception
Chapter 1: The Art of Starting Up
Activation
Chapter 2: The Art of Launching
Chapter 3: The Art of Leading
Chapter 4: The Art of Bootstrapping
Chapter 5: The Art of Fund-raising
Chapter 6: The Art of Pitching
Proliferation
Chapter 7: The Art of Building a Team
Chapter 8: The Art of Evangelizing
Chapter 9: The Art of Socializing
Chapter 10: The Art of Rainmaking
Chapter 11: The Art of Partnering
Chapter 12: The Art of Enduring
Obligation
Chapter 13: The Art of Being a Mensch
Afterword
What Do Entrepreneurs Do?
After Afterword
Index
Read Me First
I have never thought of writing for reputation and honor. What I have in
my heart must come out; that is the reason why I compose.
—Ludwig van Beethoven
I
f I knew then what I know now.” Most experienced entrepreneurs say this
at some point. My goal is that you won’t have to because you read this
book.
I’ve started three companies, invested in ten, and advised organizations
as small as two people and as large as Google. I’ve worked for Apple twice,
and I’m the chief evangelist of a startup called Canva. Hundreds of
entrepreneurs have pitched me—until my right ear won’t stop ringing.
When it comes to startups, I’ve been there and done that several times
over. Now I’m doing what techies call a “core dump,” or recording what’s in
my memory. My knowledge comes from my scars—in other words, you will
benefit from my hindsight.
My goal is simple and pure: I want to make entrepreneurship easier for
you. When I die, I want people to say, “Guy empowered me.” I want lots of
people to say this, so this book is for a broad population:
1. Guys and gals in garages, dorms, and offices creating the next big
thing
2. Brave souls in established companies bringing new products to
market
3. Social entrepreneurs in nonprofits making the world a better place
Great companies. Great divisions. Great schools. Great churches. Great
nonprofits. Great entrepreneurs. That’s the plan. A few details before we start:
My original intent was to merely update the book. However, I
kept adding, altering, and deleting. Thus, this isn’t a “1.1” kind
of revision. This is a “2.0,” whole-integer, real-man revision.
When my editor at Penguin told me to turn on Track Changes
in Word, so that copyediting would be easy, I LOLed. Version
2.0 is 64 percent longer than version 1.0.
For brevity, and because entrepreneurs are more similar than
different, I use the word “startup” to refer to any new venture
—profit or not-for-profit—and the word “product” to refer to
any new product, service, or idea. You can apply the lessons of
this book to start almost anything, so don’t get hung up on
semantics.
If you’re reading the paper version of this book, you’ll see text
that is underlined and italicized. This text is hyperlinked in the
e-book version. You don’t need to buy the e-book, but I
guarantee that you will gain more than the cost of the e-book
in additional knowledge if you did.
For every recommendation, there is an exception, and I could
also be wrong. Learning by anecdote is risky, but waiting for
scientific proof is too. Remember, few things are right or
wrong in entrepreneurship—there’s only what works and what
doesn’t work.
I assume that your goal is to change the world—not study it.
Entrepreneurship is about doing, not learning to do. If your attitude is “Cut
the crap—let’s get going,” you’re reading the right book by the right author.
Onward . . .
Guy Kawasaki
Silicon Valley, California
GuyKawasaki@gmail.com
CONCEPTION
CHAPTER 1
The Art of Starting Up
The most exciting phrase to hear in science, the one that heralds new
discoveries, is not “Eureka!” (I found it!) but “That’s funny . . .”
—Isaac Asimov
GIST (Great Ideas for Starting Things)
It’s much easier to do things right from the start than to fix them later. At this
stage, you are forming the DNA of your startup, and this genetic code is
permanent. By paying attention to a few important issues, you can build the
right foundation and free yourself to concentrate on the big challenges. This
chapter explains how to start a startup.
Answer Simple Questions
There is a myth that successful companies begin with grandiose ambitions.
The implication is that entrepreneurs should start with megalomaniacal goals
in order to succeed. To the contrary, my observation is that great companies
began by asking simple questions:
THEREFORE, WHAT?*
This question arises when you spot or
predict a trend and wonder about its consequences. It works
like this: “Everyone will have a smartphone with a camera and
Internet access.” Therefore, what? “They will be able to take
pictures and share them.” Therefore, what? “We should create
an app that lets people upload their photos, rate the photos of
others, and post comments.” And, voila, there’s Instagram.
ISN’T THIS INTERESTING? Intellectual
curiosity and accidental
discovery power this method. Spencer Silver was trying to
make glue but created a substance that barely holds paper
together. This oddity led to Post-it Notes. Ray Kroc was an
appliance salesman who noticed that a small restaurant in the
middle of nowhere ordered eight mixers. He visited the
restaurant out of curiosity, and it impressed him with its
success. He pitched the idea of similar restaurants to Dick and
Mac McDonald, and the rest is history.
Frustration with the current state of
the art is the hallmark of this path. Ferdinand Porsche once
said, “In the beginning I looked around and, not finding the
automobile of my dreams, decided to build it myself.”* Steve
Wozniak built the Apple I because he believed there was a
better way to access computers than having to work for the
government, a university, or a large company. Larry Page and
Sergey Brin thought measuring inbound links was a better way
to prioritize search results and started Google.
IS THERE A BETTER WAY?
WHY DOESN’T OUR COMPANY DO THIS? Frustration
with your
current employer is the catalyzing force in this case. You’re
familiar with the customers in a market and their needs. You
tell your management that the company should create a
product because customers need it, but management doesn’t
listen to you. Finally, you give up and do it yourself.
IT’S POSSIBLE, SO WHY DON’T WE MAKE IT? Markets
for big
innovations are seldom proven in advance, so a what-the-hell
attitude characterizes this path. For example, back in the 1970s
a portable phone was incomprehensible to most people when
Motorola invented it. At the time, phones were linked to
places, not people. However, Martin Cooper and the engineers
at Motorola went ahead and made it, and the rest is history.
Don’t let anyone tell you that the “If we build it, they will
come” theory doesn’t work.
“The genesis of great companies is answering simple questions that
change the world, not the desire to become rich.”
WHERE IS THE MARKET LEADER WEAK? Three
conditions make a
market leader vulnerable: First, when the leader is committed
to a way of doing business. For example, IBM distributed
computers through resellers, so Dell could innovate by selling
direct. Second, when the customers of the leader are
dissatisfied. For example, the necessity to drive to Blockbuster
stores to pick up and return videos opened the door for Netflix.
Third, when the market leader is milking a cash cow and stops
innovating. This is what made Microsoft Office susceptible to
Google Docs.
“How can we make a boatload of money?” is not one of the questions.
Call me idealistic, but the genesis of great companies is answering simple
questions that change the world, not the desire to become rich.
EXERCISE
Complete this sentence: If your startup never existed, the
world would be worse off because __________.
Find Your Sweet Spot
If you have the answer to a simple question, the next step is to find a viable
sweet spot in the market. Mark Coopersmith, coauthor of The Other “F”
Word: Failure—Wise Lessons for Breakthrough Innovation and Growth, and
senior fellow at the Haas School of Business, helps entrepreneurs do this by
using a Venn diagram with three factors:
EXPERTISE.
This is the sum total of what you and your
founders can do. Though you won’t yet have a complete team,
you must have a core of fundamental knowledge and ability to
create something in order for a startup to start up.
OPPORTUNITY.
There are two kinds of opportunities: an
existing market and a potential one. Either is okay, but do a
reality check of the size of the market in the next few years.
There’s a reason people rob banks, not thrift stores. There are
times, however, when there’s no way to prove that an
opportunity exists and you just have to believe.
PASSION.
This one is tricky because it’s not clear whether
passion causes success or success causes passion. Everyone
assumes the former is true, but let’s be honest: it’s easy to get
excited about a business that takes off, so the latter may be true
too. Still, success may take a long time, so you’d better at least
not hate what you’re doing.
Don’t get the impression that all three factors are necessary or even
obvious at the start. If you have at least two of the factors, you can often
develop the third if you try hard enough.
Find Soul Mates
The next step is to find some soul mates to go on your adventure—think
Bilbo Baggins in The Fellowship of the Ring. However, people love the
notion of the sole innovator: Thomas Edison (lightbulb), Steve Jobs
(Macintosh), Henry Ford (Model T), Anita Roddick (The Body Shop), and
Richard Branson (Virgin Airlines). It’s wrong.
Successful companies are usually started, and become successful, with
the contributions of at least two soul mates. After the fact, people may
recognize one founder as the innovator, but it takes a team to make a new
venture work.
“The first follower is what transforms the lone nut into a leader.”
To illustrate this concept, Derek Sivers, the founder of CD Baby, showed
a video at the TED2010 conference that starts with one person dancing alone
in a field. A second person joins in, and then a third, and the crowd “tips” into
a full-scale dance festival.
According to Sivers, the first follower plays an important role because he
brings credibility to the leader. Subsequent followers emulate the first
follower, not only the leader. In his words, “The first follower is what
transforms the lone nut into a leader,” and in a startup, that first follower is
usually a cofounder.
Cofounding soul mates need to have both similarities and differences.
The key desirable similarities are:
VISION.
Although this has become an overused word uttered by
wannabe visionaries, in the context of soul mates, it means that
founders share a similar intuition for how the startup and
market will evolve. For example, if one founder believes that
computers will remain a business tool for large organizations,
and the other believes the future is small, cheap, and easy-touse personal computers for everyone, they aren’t a good
match.
SIZE.
Not everyone wants to build an empire. Not everyone
wants a lifestyle business. There aren’t right and wrong
expectations; there are only expectations that match or don’t
match. This doesn’t mean founders can know what they want
at the start, but it’s nice if they’re at least on the same page.
COMMITMENT.
Founders should share the same level of
commitment. Does the startup, family, or a balanced life come
first? It’s hard to make a startup work when the founders have
different priorities. One founder wanting to work for two years
and flipping the startup for a quick sale and the other wanting
to create a company that will endure for decades will create
problems. Ideally, founders agree that they’re in it for at least
ten years.
The differences that are desirable include:
EXPERTISE.
At a minimum, a startup needs at least one person
to make the product (Steve Wozniak) and one person to sell it
(Steve Jobs). Founders need to complement each other to build
a great organization.
ORIENTATION.
Some people like to sweat the details. Others like
to ignore the details and worry about the big issues. A
successful startup needs both types of founders to succeed.
PERSPECTIVE.
The more perspectives, the merrier. These can
include young versus old, rich versus poor, male versus
female, urban versus country, engineering versus sales, techie
versus touchy, Muslim versus Christian, and straight versus
gay.
Finally, a few words of wisdom about cofounders:
DO NOT RUSH.
Founders may have to work together for
decades, so add them like you would pick a spouse—assuming
you’re not a serial divorcee. It’s better to have too few
founders than too many. Breaking up with founders, like
spouses, is hard to do.
DO NOT ADD FOUNDERS TO ENHANCE FUNDABILITY.
The reason
to bring in additional founders—and any other employee but
especially founders—is to make your startup stronger and
more likely to succeed. Ask yourself, “Would I hire this guy if
we didn’t need funding?” If your answer is no, you’d be insane
to hire him.
ASSUME THE BEST, BUT PLAN FOR THE WORST.
Founding teams
blow up all the time. Your startup may be the exception, but
just in case, make everyone (including yourself) vest his stock
over time to prevent people who leave in less than four years
from owning large amounts of equity.
Make Meaning
Now take your answer to the simple question, sweet spot, and soul mates and
assume that you do succeed. Then subject yourself to one more test: Does
your startup make meaning? Meaning is not money, power, or prestige.
Meaning is not creating a cool place to work with free food, Ping-Pong,
volleyball, and dogs. Meaning is making the world a better place.
“If you make meaning, you’ll probably also make money.”
This is a difficult question to answer when you’re two guys/gals in a
garage who are writing software or hand-making gizmos, but it’s also difficult
to comprehend how an acorn can grow into an oak tree. If, in your wildest
dreams, you cannot imagine that your startup will make the world a better
place, then maybe you’re not starting a tilt-the-earth company.
This is okay; there aren’t many companies that tilt the earth. And there
are even fewer in that category that set out to do so. But WTF, I want you to
dream big. When today’s humongous companies were only one year old, few
people predicted their ultimate success or the meaning they would make.
Trust me, if you make meaning, you’ll probably also make money.
Make Mantra
The next step is to create a three- to four-word mantra that explains the
meaning that your startup is seeking to make. For startups, the definition of
“mantra” from the American Heritage Dictionary of the English Language is
perfect:
A sacred verbal formula repeated in prayer, meditation, or
incantation, such as an invocation of a god, a magic spell, or a
syllable or portion of scripture containing mystical potentialities.
Here are five examples (some hypothetical) that illustrate the power of a
good mantra to communicate the meaning of organizations:
Authentic athletic performance (Nike)*
Fun family entertainment (Disney)*
Rewarding everyday moments (Starbucks)*
Democratize commerce (eBay)
Empower craftspeople (Etsy)
These examples illustrate the three most important characteristics of a
mantra:
BREVITY.
Mantras are short, sweet, and memorable. (The
shortest mantra is the single Hindi word “Om.”) Mission
statements are long, dull, and forgettable. From the CEO to the
receptionist, everyone must know it. Compare the
effectiveness of Starbucks’s mantra, “Rewarding everyday
moments,” to its mission statement, “Establish Starbucks as
the premier purveyor of the finest coffee in the world while
maintaining our uncompromising principles while we grow.” I
rest my case.
“‘Authentic athletic performance’ is much better than ‘Sell lots of
shoes made in China.’”
POSITIVITY.
Mantras are uplifting and explain how your startup
does good things that make the world a bet…
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