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The art of the start biz

  1. 1. The Art of the Start The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything Author: Guy Kawasaki Publisher: Portfolio Date of Publication: 2004 About the Author ISBN: 1591840562 Number of Pages: 215 pages Guy Kawasaki The Big Idea You have the idea of a lifetime and yet you do not know where andGuy Kawasaki is a managing how to begin. It is a dilemma shared by entrepreneurs everywheredirector of Garage Technology - what does it take to turn a great idea into action?Ventures, an early-stage venturecapital firm and a columnist for Author Guy Kawasaki brings two decades of business Previously, he was to offer a definitive guide for anyone who dreams of startingan Apple Fellow at Apple anything. Whether you are thinking of starting a start-up InternetComputer, Inc. where he was one operation or a church group, The Art of the Start will provide youof the individuals responsible for with everything you need to know from raising money to fostering athe success of the Macintosh is the author of eight booksincluding The Art of the Start,Rules for Revolutionaries, How toDrive Your Competition Crazy,Selling the Dream, and TheMacintosh Way. He has a BA fromStanford University and an MBAfrom UCLA as well as an honorarydoctorate from Babson College.For more information, visit: Published by BusinessSummaries, Building 3005 Unit 258, 4440 NW 73rd Ave, Miami, Florida 33166 ©2003 BusinessSummaries All rights reserved. No part of this summary may be reproduced or transmitted in any form or by any means, electronic, photocopying, or otherwise, without prior notice of
  2. 2. The Art of the Start By Guy Kawasaki Chapter 1 - The Art of StartingThere are five important things an entrepreneur must accomplish: 1. Make Meaning. The best reason to start an organization is to make meaning. Meaning is not about money, fame or power. Instead, meaning is about making the world a better place, increasing the quality of life, righting a wrong and preventing good from ending. 2. Make Mantra. Instead of a mission statement, take your meaning and make your own mantra. A mantra is defined as a sacred verbal formula repeated in prayer, meditation, or incantations such as an invocation of god or a magic spell. Examples of mantras include Disneys “Fun family entertainment”, and Nikes “Authentic athletic performance.” 3. Get Going. Start creating your product or service and commence delivering to your customers. Forget about writing long business plans or creating complicated financial projections. Instead build your prototype and launch your website. 4. Define Your Business Model. Define your customers and their needs. Come up with a sales mechanism that will earn you more money than what you are spending. 5. Weave a Mat (Milestones, Assumptions, and Tasks). Compile a list of the milestones you need to meet, assumptions that are built into your business model, and the tasks you need to accomplish to create your organization. Chapter 2 - The Art of PositioningWith the right positioning, you should be able to see clearly why the organization wasstarted, why it should be patronized by customers, and why good people shouldchoose to work for the organization.Before you begin dwelling into the art of positioning, you must first answer thequestion, “What do you do?” You must be able to provide an answer that not onlyseizes the high ground but shows exactly how your organization differs from itscompetitors. It is only then that you can communicate this powerful message to yourchosen market.Seize the High GroundGood positioning must have the following qualities: · Positive. · Customer-centric. · Empowering to your employees. · Self-explanatory. · Targets the intended customer. · Must show the core competencies of your organization. · Relevant to your core competencies and to the core needs of your [2]
  3. 3. The Art of the Start By Guy Kawasaki customers. · Long-lasting. · Different from your competitors.Other Positioning Tips: · Position your product or service in the most personal manner you can. · You must choose a remarkable name for your organization, product or service. · Use plain words that are easy to understand when describing what your company can do for your customers. Avoid technical or insider jargon. · Offer concrete points instead of mere overused adjectives when distinguishing your products to competitors. Instead of calling your system safe, say that your system has never been hacked. · Ensure that each member of your organization understands your companys positioning. Chapter 3 - The Art of PitchingFor an entrepreneur, pitching is almost as important as breathing. Not only ispitching a great tool for raising money, it is essential for reaching agreements.Needless to say, agreements are common to any entrepreneurs daily life.Here are some tips to help you make a perfect pitch: 1. Explain Yourself in the First Minute. Every single time you make your pitch, take in mind that your audience is waiting for you to answer one question: “What does your organization do?” The next time you make a pitch, make sure that you answer that question in the very first minute. 2. Answer the Little Man. Picture a little man sitting on your shoulder the next time you are giving a presentation. Imagine the little man whispering, “So what?” in your ear every time you make a point. Always answer the little mans question. To make it even better, right after you answer the so-what question, move into “For instance…” and provide a real-world use or scenario. 3. Know Your Audience. Do your research before any meeting starts. Find out who you would be pitching to and learn whats important to your audience. You must also visit the organizations website and gather core information about the people you would be speaking to. 4. Observe the 10/20/30 Rule. Use the following the next time you are giving a presentation: ten slides, 20 minutes, 30-point font text. The 10 slides that are necessary for a pitch to investors are: a. Title slide b. Problem c. Solution d. Business model e. Underlying magic [3]
  4. 4. The Art of the Start By Guy Kawasaki f. Marketing and sales g. Competition h. Management team i. Financial projections and key metrics j. Current status, accomplishments, timeline and use of funds 5. Set the Stage. Remember that everything and anything that goes wrong would be your fault. Therefore, you must be prepared. Make sure you bring your own projector and your own written materials. It might even be advisable to bring two laptops (both with your loaded presentation) and a memory card with a copy of your presentation just in case. 6. Let One Person do the Talking. In a pitch, it would be advisable for the CEO to do 80% of the talking. As for the rest of the team, one or two slides that pertain to their expertise are more than enough. 7. Pitch Constantly. The best way to achieve familiarity is to keep doing your pitch over and over again. Try out your pitch in front of your employees, relatives and friends. Chapter 4 - The Art of Writing a Business PlanAn entrepreneur will soon discover that a business plan is not really as important asmost people deem it should be. However, the fact remains that most investors,recruits, potential board makers and decision makers expect a business plan and willnot rest until they are given one.Focus on the Executive SummaryWhen writing a business plan, use the ten slides that are necessary for a pitch toinvestors (previous chapter) and use them as your framework. Instead of a title slide,provide an executive summary. Remember that this executive summary is the mostimportant part of your business plan.An executive summary is a concise and clear description of the problem you wish tosolve. It also states how you wish to solve the problem, your business model and theunderlying magic of your product or service. Remember, your executive summarywill determine whether or not people will read the rest of your business plan.Keep It CleanHere are other tips you should use when creating your business plan: · Do not exceed twenty pages. The shorter your plan is, the more likely it is to be read. · Only one person should write the entire business plan. · Use staples to bind the plan. Forget about leather, embossed portfolios. · Simplify financial projections to two pages. After all, it is simply impossible to know how much youll spend on office items in your fourth year of operations. · Include key metrics. Remember, the number of customers you have, locations and resellers are important to your investors. · Provide the right numbers. Your cash flow statement for the first five years is [4]
  5. 5. The Art of the Start By Guy Kawasaki very important. Chapter 5 - The Art of BootstrappingMost people are surprised to learn that industry giants Microsoft and eBay are twocompanies that started with a bootstrap model. A bootstrappable business modelhas: · Low up-front capital requirements. · Short (under a month) sales cycles. · Short (under a month) payment terms. · Recurring revenue. · Word of mouth advertising.Bootstrapping might mean passing up profitable sales that may take a long time tocollect or stretching your payments for everything you buy. This might mean adecline in “paper” profits but for a bootstrapper, paper profits are not as important ascash flow management.Ship, Then TestIf you are bootstrapping, you obviously are not sitting on a pile of money. Therefore, itis imperative that you get your product or service to the market immediately. Whenusing this philosophy, you are opting to fix the problems of your product later ratherthan now.The good news is, with this method, you will receive immediate cash flow andfeedback from the real world. Unfortunately, this method might also tarnish yourimage if there are quality problems.It is not easy to make this decision. If you feel that you would allow the people youlove to use the product or service as it is right now, then it might be correct to ship it. Ifyou are running out of money, it might also be advisable to ship the product and dealwith the consequences later.Bootstrapping TipsHere are other things to consider when you are on a bootstrappers model: 1. Forget the “Proven” Team. When youre bootstrapping you must almost always go for whats affordable. Keep this in mind when you are choosing your team. Forget about hiring well-known industry veterans who would cost you an arm and a leg on wages alone. Instead, choose young inexperienced people with moldable talent and endless energy. 2. Focus on Function, Not Form. Do not focus on form when it comes to spending money. If you need proper accounting, you dont need to hire a big name firm. You also dont need to buy $700 office chairs when cheaper ones would do. 3. Go Direct. Take the opportunity to sell directly to your customers. Only use [5]
  6. 6. The Art of the Start By Guy Kawasaki resellers once you have ensured that your product and service is bug-free. Remember, you have to establish your product on your own. 4. Position against the Leader. As a bootstrapper, positioning against the market leader or going against accepted ways of doing things might be the smartest thing to do. 5. Understaff and Outsource. Overstaffing can cause you a multitude of problems. It is better to understaff and outsource. Do not outsource research and development, marketing and sales. Instead, outsource your payroll management. 6. Build a Board. A board of directors is always a source of good guidance and superb direction. You dont need to worry about your lack of capital to attract high-quality board members. If your products are innovative enough, the board members will come. 7. Sweat the Big stuff. Save on office space, furniture, computers, and office equipment. However, make sure you spend enough on product development, sales, billing and collection. 8. Execute. The failure to execute can be disastrous to a bootstrapper. To be able to execute, you must be able to: · Set and communicate goals. · Measure progress. · Establish a single point of accountability. · Reward the achievers. · Follow through until an issue is done or irrelevant. · Heed reality. · Establish a culture of execution. Chapter 6 - The Art of RecruitingRecruiting good people is one of the most enjoyable and yet most critical tasks thatyou must face as an entrepreneur.When recruiting, you must look beyond race, color, education and work experience.Instead you should focus on three factors: 1. Can the candidate do what you need? 2. Does the candidate believe in your meaning? 3. Does that candidate have the strengths you need?Recruitment Tips: 1. Hire people better than you. 2. Remember that there are very few A players out there. Dont make the mistake of disqualifying A prospects because of gender, race, sexual orientation or age. [6]
  7. 7. The Art of the Start By Guy Kawasaki 3. Ignore the following factors: experience in a big, successful organization, experience in a failed organization, educational background, experience in the same industry, experience in the same function, and functional weakness. They are unimportant. 4. It is best to hire candidates who possess major strengths even if they have major weaknesses. Chapter 7 - The Art of Raising CapitalA start-up business is usually on a constant look-out for capital from outsideinvestors. Investors include venture capitalists, foundations, friends and familymembers.Although pitching plays a major role when you are trying to raise capital, the realitiesof your organization are so much more important. You must offer a product orservice that is meaningful and long-lasting.Here are some tips you can use when raising capital: 1. Build a Business. The best way to get investors is to build a business immediately. How do you build a business without money? Have a bootstrapper model. 2. Get an Intro. Have current investors, lawyers, accountants, other entrepreneurs and professors introduce you to investors. This way, they will learn about you from sources they respect. 3. Clean Up Your Act. Get rid of obvious flaws in your system. Flaws often occur in your intellectual property, capital structure, management team, stock offerings and regulatory compliance. 4. Disclose Everything. Dont attempt to hide problems that can not be cleaned up immediately. Do not allow anything to damage your credibility. 5. Acknowledge, or Create, an Enemy. Believe it or not, investors do not want to hear that your organization has no existing competitors. This only tells them that there is no existing market out there for your service, or that you are too stupid to use Google. 6. Dont Use Old Lies. Here are some examples of lies start-ups tell investors. Refrain from using them and be prepared to come up with new ones: a. “Our projection is conservative.” b. “All we have to do is get 1 percent of the market.” c. “P&G is too old to be a threat.” d. “Several investors are already in due diligence.” e. “Key employees will join as soon as we get funded.” [7]
  8. 8. The Art of the Start By Guy Kawasaki Chapter 8 - The Art of PartneringPartnerships - a word that is actually more complicated than it sounds. Althoughgood partnering can increase cash flow, accelerate revenue and reduce costs, a badpartnership can very well mean the other way around.Here are some tips that can help you master the art of partnering: 1. Partner for “Spreadsheet” Reasons. Partnering can accelerate your entry into a new area, open up new distribution channels, speed up product development and reduce your costs. 2. Define Deliverables and Objectives. These include additional revenues, reduced costs, new products and services, new customers, new markets, etc. 3. Ensure that the Middles and Bottoms Like the Deal. It is not enough that upper management believe that the partnership is a good idea. Make sure that the partnership is understood by all the members of the organization. Everyone must contribute to make a partnership work. 4. Find Internal Champions. Choose one person from each organization to become an internal champion. Ensure that the main goal of the chosen champions is to achieve success. Nothing but the partnership counts. 5. Cut Win-Win Deals. Both partners have to win. Do not enter into win-lose partnerships. 6. Wait to Legislate. Dont ask for legal advice too early. Legal experts will always give you more reasons not to go through the deal. Agree on business terms on your own before you bring in your lawyers. 7. Put an “Out” Clause in the Deal. The assurance that both parties wont be trapped into a partnership that is not working actually promotes longevity. Chapter 9 - The Art of BrandingThe classic Ps of marketing (product, place, price and promotion) pretty much sumsup the art of branding. Some people add prayer to the list, but the author prefersproselytization which is the art of converting others to your belief or doctrine.For todays start-ups, proselytization is the core of branding. You must be able tocreate something contagious that would make people enthusiastic and eager to tryyour product or service. You must be able to make other people spread the wordaround.Create a ContagionThe secret to branding is aligning with a product or service that is already gold or [8]
  9. 9. The Art of the Start By Guy Kawasakienhancing your product and service until it becomes gold. You must be able tocreate or find products and services that are contagious. Contagious products andservices are: · Cool. · Effective. · Distinctive. · Disruptive. · Emotive. · Deep. · Indulgent. · Supported.Branding Tips 1. Lower the Barriers to Adoption. You have to make your product or service simple and yet effective. You must flatten the learning curve. Your customers must be able to get basic functionality right almost immediately. 2. Recruit Evangelists. Evangelists are people who believe in your company and what you do. Take advantage of the customers who wish to help you and your business. Assign them tasks and expect them to get done. Provide them the tools they need to evangelize. 3. Foster a Community. Identify and recruit customers who are enthusiastic about what you do. Hire someone whose sole task is to foster a community. Integrate the presence of your community in all your sales and marketing tools. Allow members to use your building for their events and conferences. 4. Achieve Humanness. Target the young and dont be afraid to make fun of yourself. Feature your customers and help the underprivileged. 5. Focus on Publicity. To attract publicity, create something grand and get them into the hands of people. Make friends even with reporters from publications you have never heard of. Additionally, make sure you maintain good relations with the press all year round. Chapter 10 - The Art of RainmakingA rainmaker is a person who generates large quantities of business. The first step ofrainmaking in a start-up business is to get the very first version of the product orservice out to the market. After you do this, you must observe where your product orservice will sell the most.The second step of rainmaking is to be able to sell the product or service well.Remember, as a start-up, people are not aware of your products and services. Youmust overcome resistance. [9]
  10. 10. The Art of the Start By Guy Kawasaki Here are some tips you can use to master the art of rainmaking: · Pick the right lead generation method. · Find the key influencer. Ignore titles. They really dont mean much. · Be nice to secretaries and administrative aids. · Make your prospect talks. This way, theyll be able to tell you what you need to do to close the deal. · Ask customers to test drive your products and services. · Give your customers a slow and easy adoption curve. · Do not be fazed when you are rejected. Chapter 11 - The Art of Being a Mensch Mensch is a Yiddish term for an ethical and admirable person. In some cultures, it is considered the highest form of praise. To be a mensh, you must help people, do whats right and contribute to society. Here are some tips on becoming a mensch: · Help people who can not help you back. · Observe the spirit of agreements, pay for what you get and focus on what is important. · Help society by giving money, time, expertise and emotional support. [10 ]ABOUT BUSINESSSUMMARIES is a business book summaries service. Every week, it sendsout to subscribers a 9- to 12-page summary of a best-selling business book chosen from among the hundreds of books printedout in the United States every week. For more information, please go to