The Art of the Start (book)

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About

This is a fantastic book written by Guy Kawasaki (www.guykawaski.com); a noted keynote speaker, venture capitalist and managing director of Garage Technology Ventures (www.garage.com) and previously an Apple Fellow/'evangelist' for Apple. What I love about this book is the down-to-earth advice and lack of technical jargon - I'd definitely recommend buying a copy of this book to anyone thinking of starting up a company (especially one in IT). On this page I've summarized for myself, some of the key points I got from the book. A lot of the book is also nicely summarized in this 40 minute keynote presentation he gave:

Main Messages

Two of the ideas which really stood out for me were these:

  • Make Meaning - If a company seeks to make meaning (eg: Google - improving people's lives), the money will come. If a company seeks to make money it will not make meaning and is unlikely to make money. Somewhat romantic, but I like to think this is true.
  • The Shopping Centre Test - This is supposed to be applied to job applicants, but I see its applications much wider. If you see a person in a shopping small shopping centre you either (A) want to walk straight up and have a chat, (B) figure that if you bump into them so be it, or (C) leave the shops! In a start-up situation only people from (A) should be hired.
  • Find Soulmates - The idea here is every entrepreneur needs "soul mates" - people who compliment their skills and keep them on track.
  • Stay at One-Thousand Feet - Beautiful analogy. MBAs tend to pitch way up in the clouds (like a B-1 lancer) and use business jargon, engineers/geeks tend to pitch on the ground (like a Navy seal) and go into technical detail. The best place to pitch is in the middle: above the ground but still tactical (A-10 warthog).


Summary

Chapter 1: The Art of Starting

  1. Make Meaning - aim to: (a) make the world a better place, (b) increase quality of life, OR (c) right a terrible wrong. If you start out solely to attract money you will attract the wrong kind of employees.
  2. Make Mantra - (eg: Nike: "authentic athletic performance")
  3. Get Going
    • Think Big
    • Find a Few Soulmates - most successful companies (eg: Apple, Google, YouTube) start out with two or three key players (even if you haven't heard of the second one) - vary rarely one person on his own.
    • Polarize People - gives a great example of cars which you either love or hate. Don't be afraid to create that division between people.
  4. Define your Business Model
    • Keep it simple - eg: Ebay: we charge a listing fee + commission)
    • Copy an existing business model (don't reinvent the wheel)
    • Ask women - women don't have the killer instinct ("lets destroy the competition") as men.
  5. Weave a MAT - Milestones, Assumptions & Tasks

MiniChapter: The Art of Internal Entrepreneuring

Not really relevant to me!


Chapter 2: The Art of Positioning

  • Seize the High Ground: ... in other words be:
    • Positive - don't treat business as war.
  • Customer-Centric - ask what you want for your customer not yourself: calling yourself a "word leader" is egotistical and unprovable.
    • Empowering - employees must believe what you do makes the world better.
    • Niche Yourself
    • Make it Personal - eg: "What happens to Rocky ..."
    • Speak English - (eg: "we help safeguard your communications" instead of "utilizing the 2048-bit Diffie-Hellman DES ... to create... etc"
    • Cascade the Message - make sure EVERYONE - from upper management to lowest worker - knows your positioning (message).


Chapter 3: The Art of Pitching

  • Explain yourself in the first minute - eg: "we sell security" instead of telling life story.
    • Ask people the 3 most important things they'd like to hear about your company
  • Observe the 10/20/30 Rule - 10 slides, 20 minutes, 30 point font.
  • Slides for potential customer:
    1. Title
    2. Problem
    3. Solution
    4. Sales Method
    5. Technology
    6. Demo - good time for a live demo
    7. Competitive Analysis
    8. Management Team
    9. Next Step
  • NOTE: The book also gives very similar layout for pitching to investors etc... and always suggests following up.
  • Set the Stage - if the projector doesn't work, is your fault. Bring own projector & copies of presentation.
  • Let one Person do the Talking - CEO should be able to answer all questions
  • Catalyze Fantasy - Venture capitalists are always hearing "the market is $50 billion & we plan to have X% market share" - and this is obviously wild speculation.

A bolder approach is to encourage the audience to do the maths themselves by saying something like: "almost every website has online forms, there are MANY websites, everyone is worried about getting hacked into, lost of companies will want this product".

  • Get to One-Thousand Feet and Stay There - Don't pitch way up in the clouds with hand-waving (like a B-1 lancer/MBA) or in the dirt with technical detail (like a Navy seal/engineer). The best place to pitch is above the ground but still tactical (A-10 warthog).
  • Shut up, take notes, regurgitate & follow-up
    • Taking notes says: "I think you're smart, what you're saying is worth writing down, I'm willing to learn, and I'm consciences".
    • Following-up can really separate the wheat from the chaff.
  • Rewrite from Scratch - is tempting to recycle old presentations, but best way to improve & stay fresh is often to start with a blank presentation.
  • Pitch Constantly - takes most peoples 25 times to get familiar and comfortable with a pitch - are no shortcuts. Video-tape yourself and if you're not embarrassed watching it you are ready!


Minichapter: The Art of PowerPointing

  • Use a dark background - ever seen movie credits with black text on a white background?! Constant bright is harsh on the eyes.
  • Add your logo to the master page -
  • 'Use common, San Serif Fonts - can't go wrong with Arial
  • Animate your body, not your slides - if you think it's cool, remove it
  • "Build" bullets - big blocks of text are horrible. The best bullets reveal themselves gradually.
  • Use only one level of bullets - don't entire agree with this one - I like two levels with two colors
  • Add diagrams and graphs
  • Make printable slides


Chapter 4: The Art of Writing a Business Plan

  • Pitch then Plan - A good business plan is a detailed version of a pitch (not vice-versa).
  • Focus on the Executive Summary - A good executive summary is a concise and clear description of the problem you solve, how you solve it, your business model, and the underlying magic of your product or service. It should be approximately four paragraphs in length & is most important part of your document.
  • Keep it Clean -
    • Don't exceed 20 pages
    • Select one person to write it
    • Simplify your Financial Projection to Two Pages
    • ...


Chapter 5: The Art of Bootstrapping

  • Manage for Cash Flow, not Profitability - a bootstrappable business model often has: * low up-front capital requirements * short (<1 month) sales cycles & payment terms * recurring revenue * word-of-mouth advertising.
  • Build a Bottom-up Forecast - an example for an China ISP:
    • Top down model:
      • population 1.3 billion x 1% want internet x 'expect' 10% this market x each account $240/year = $312 million (and these percentages 'conservative'!)
  • Bottom up model:
    • 10 phone sales/day/salesperson to get a prospect x 240 working days/year x 5% estimated "success rate" within 6 months x $240 sale x 5 salespeople we can bring on board = $144,00 in first year.
    • Both require estimates, but bottom up is more realistic!
  • Ship, then test
    • pros: * immediate cash flow * real-word feedback
    • cons: * tarnished image if quality problems
    • Tarnished image is potentially big negative, so must ask can you:
      • leapfrog the competition
      • ship it to an isolated area where potential damage is limited.
      • find a tolerant/understanding/willing group of guinea pigs?
      • fill needs of customers
      • feel safe you are not endangering the customers.
      • fell you've done so much "in vitro" testing you need to know what the real world thinks.
      • survive without money much longer!
    • Or ask yourself: "Would I let my mother or father use the product or service in its current state". If the answer is yes, ship it.
  • Forget the "Proven" Team - If bootstrapping, forget about recruiting veterans - focus on affordable, inexperienced young people with bushels of raw talent and energy.
    • NOTE: Most successful entrepreneurs (eg: Bill Gates, Steve Jobs, Michael Dell, Oprah Winfrey) did not have "right" background to create multi-billion dollar companies.
  • Start as a Service Business - advantage being cash starts flowing immediately. Example: Software company A operates as consultants billing hourly developing software tools for clients, then realized many customers can use their tool, and sell it independent of the consulting service. Company B tries to create a similar product from scratch, but takes longer than expected and will probably run out of money before achieving success.
  • Focus on Function, Not Form - gives some sensible examples of how to save cash on legal, accounting, PR, advertising and headhunting.
  • Pick Your Battles - don't try to make your money doing the things anyone can do. Make money from your magic and ask how you can tap into the efforts of other organizations to get to the market better, faster and cheaper.
  • Go Direct - a multi-tiered distribution system isolates you from your customer, and based on the thinking established re-seller/consultant/distributor brings the benefit of sales force, brand awareness, and pre-existing customer relationships.
  • Position Against the Leader - eg: (Lexus: "As good as Mercedes, but 30% cheaper")
  • Take the "Red Pill" - Like Neo, you can chose fantasy or reality: successful bootstrappers ask: "when will your product be ready for market", "when will you run out of money", etc.
  • Get a Morpheus - Typically is a chief financial officer, chief operations officer, controller or accountant - someone to deliver the red pill (reality).
  • Understaff and Outsource - overstaffing causes web of problems: excess space in long-term lease, excess furniture and computers, trauma in workplace as people are let go, trauma in the lives of those let go, hiring different kinds of people, going through gyrations convincing the world you're not imploding.
  • Build a Board - some believe board of directors only appropriate for companies far along. Board is important for good guidance and should be high-quality directors (not all internal people).
  • Sweat the Big Stuff - don't focus on saving pennies to determent of the bigger picture.
    • Small stuff: office space, furniture, computers, office supplies.
    • Big stuff: developing & selling product or service, collecting the money.
  • Execute
    • Set and communicate goals
    • Measure progress
    • Establish a single point of accountability
    • Reward the achievers
    • Follow through until an issue is done of irrelevant
    • Heed Morpheus
    • Establish a culture of execution - execution is like a habit, and CEO should set proactive example.


Chapter 6: The Art of Recruiting

  • Hire "A" Players - A players hire A+ players. B players hire C players, C hires D, and soon you get Z players: the trickle down effect causes a bozo explosion. CEO and management team must have humility to admit some people can perform function better than they can, and must be self-confident enough to hire these people.
  • Don't confuse Correlation and Causation - A candidate who worked at an organization when it achieved success, but he might just have been along for the ride.
  • Don't confuse Big-Organization Skills with New-Organization Skills - success in big organization doesn't guarantee success in a startup.
  • Dramatize your Expectations - "can you function with no secretary and cheap motels" - scare off those who couldn't handle it.
  • Read the Tea Leaves when Checking References - whenever you don't get a superlative reference, you are effectively getting a negative one.
  • Trust the Richest Vein - your current employees are the richest resource for preventing bozo explosion and brining in good staff.
  • Hire "Infected" People - It's not enough candidates are good and different; they must believe your organization can change the world. Ask candidate to demonstrate your product, to see if he gets it & measure the time the candidate talks about compensation/pay/perks versus your product.
  • Ignore the Irrelevant - don't decide based on age, gender, race, etc.
    • Expereince in a Big, Successful Organization - "did the candidate help create success or was he along for the ride"
    • Educational Background - you want smart people, not necessarily "degreed" people. Many successful people (Steve Jobs, Steve Case, Guy Kawasaki didn't finish or get accepted into college.
    • Experience in the Same Industry or Function - a double edge sword - can be set in their ways.
    • Can ignore functional weakness, eg: Steve Job's does not have much compassion. Bill Gates cannot do aesthetic design. Find a candidate who has major strengths (even though he has major weakness) - everyone has major weaknesses (especially high-achievers!).
  • Use all Your Tools - when trying to hire the best people, use all your tools pursuing/"seducing" them
    • Your Vision - for many, money isn't the most important part of the job.
    • Your Team - add your superstars in other departments to seduction process.
    • Your Board of Directors etc - are often well known, respected and rich, and spending time with them can influence decision.
    • Resume-Building Potential - if you can get a few good years out of people an help build they resumes do it! They might stick around longer than you expect.
  • See all the Decision Makers - accepting a position usually depends heavily on the candidate's spouse and maybe other family/friends (eg: a parent who thinks it's risky!). Ask who these people are.
  • Wait to Compensate - offer letter should come at the end of recruiting process, not a way to make candidate say yes, but a the way to confirm the verbal agreement.
    • Interpret the Lies - Has a good list of "top ten lies". For example:
      • "I've got 3 other offers" = "I've had 3 interview, and no rejections yet"
      • "I've not been with any company >1 year as I get bored" = "after a year realize I'm a bozo"
  • Double Check Your Intuition - two common situations:
    • Your co-workers and rational side saw a candidate's background isn't quite right, but your intuition says "grab him".
    • Candidate is perfect on paper and team says yes, but your intuition says "pass".
    • Intuition is sometimes wrong (although we tend to forget these times) so:
      • Prepare a structure for the interview beforehand
      • Ask questions about specific job situations - eg: "how did you manage product introduction"
      • Stick to the Script - is often wise to minimize spontaneous follow-up questions.
      • Don't overdo open-ended, touch-feely questions -
      • Take copious notes - (don't depend on your memory)
      • Check references early - is a mistake to check after you decide.
  • Apply the Stanford Shopping Center Test - would you scoot over and say hello if you saw this person in the shopping centre the next day, or would you just carry on or avoid them - that's you answer.
  • Define an Initial Review Period - despite best efforts, recruiting is sometimes wrong and new hire does not perform as expected. Is very hard to admit this mistake and correct it. If you don't make course correction or terminate people who aren't working out, you'll increase the probably of having to lay off people who are. To make things easier, establish an initial review period with increasing milestones. Eg: for a salesperson: completion of product & sales training, participation in five sales calls. This period should be 90 days (> than hiring afterglow).
      • Don't Assume You're Done - people can resign straight away (especially people with "big company disease", so learn from mistakes and never assume you're done: not when he accepts your offer, quits his job, or starts. Every day is a new contract between a start-up and an employee.


Minichapter: The Art of Reference Checking

  • Goal of referencing is not to disqualify candidate, but look for consistency and clues. To paint a complete picture, you should speak with at least 2 subordinates, 2 peers, 2 superiors, and 2 customers! Ask: "How do you know this person? How long? General impression? How does he rand against peers? What is best/worst at? Work ethic? Would you hire him again? etc"


Chapter 7: The Art of Raising Capital

  • Building a Business
    • Get and Intro - tilt the playing field by getting an introduction by sources that investors respect:
  • Current Investors -
  • Lawyers and accountants -
  • Other entrepreneurs - a call or e-mail from an entrepreneur to his investor saying "this is hot, you should talk to them" is powerful.
  • Professors - investors are impressed by the suggestion of professors.
  • Slow Traction - the higher you are in this hierarchy the better:
    1. Sales
    2. Field testing / pilot studies
    3. Agreement to field test
    4. Establishing contact to pursue field test
  • Clean Up Your Act - An investor may see 2,000 business plans. 200 are moderately credible. 100 are interesting. 40 undergo due diligence. 10 get funded. 1 makes a bundle. Most investors are looking for reasons not to deal / weed out rejects as early as possible. Areas where flaws abound:
  • IP - risk of lawsuits by patent infringement or former employees claiming they own your technology.
  • Capital Structure - dominant control by one investor.
  • Management Team - unqualified friends/roommates in CXO-level positions; lack of relavant industry experience.
  • Stock Offerings - already grants of stock to consultants/vendors/friends/relatives etc.
  • Regulatory Compliance
  • Disclose Everything - If there's crud that hasn't been/can't be cleaned up immediately discose it to investors early - the later you reveal it, the harder it will be and damage your credibility more.
  • Acknowledge, or Create, an Enemy - if sophisticated investors hear there is no competition they will assume: (a) there is no market or (b) founders are so clueless they can't use Google. Show how you are superior to your main competitor(s).
  • Tell New Lies - entrepreneurs often believe they are telling investors something new, when in fact they are just one of four meetings that day all with the same top ten "lies":
    1. "Our projection is conservative"
    2. "Yankee Group says our market will by $50 billion in five years"
    3. "Boeing is signing our contract next week"
    4. "Key employees will join us as soon as we get funded"
    5. "Several investors are already in due diligence"
    6. "Procter & Gamble is too old, big, dumb and slow to be a threat"
    7. "Patents make our business defensible"
    8. "All we have to do is get 1% of the market"
    9. "We have first-mover advantage" - if you're doing something good, chances are five other companies are doing the same.
    10. "We have a world-class proven team"
  • Don't fall for Trick Question - A few examples and what you should answer.
    • "What makes you think you're qualified to run X" = "I've done okay so far getting to this point. But if it ever becomes necessary I'll step aside."
    • "Is ownership control of the organization a big issue for you" = "No it's not. To make this successful I know we need great employees and great investors and they all need to have a significant stake. I'll focus on making the pie bigger, not on getting or keeping a big part of the pie"
  • Herd the Cats - Investors often won't give a clear rejection, instead prefer the SHITS technique (Show High Interest, Then Stall). E.g. "We don't have expertise in your sector", "You're too early for us" - often they're saying "when hell freezes over", but sometimes it can pay to chase up contact after the pitch and answer any try one last time to win them over.
  • Understand What You're Getting Into - Raising money, particularly from venture capitalists is long and difficult process -and that's if it goes well. The moment you take a dollar of outside money, you lose "control". You're not obligated to all shareholders (even the ones in a minority position).
  • Find Your Train Ticket - don't worry about the money, but know where you are going - give nice story (possibly urban legend) about Einstein losing his train ticket.


Minichapter: The Art of Raising Angel Capital

An angel investor = an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

  • Don't underestimate them - may care less about returns than professional inventions, but doesn't mean they are suckers - approach them with same level of professionalism.
  • Understand the motivation - often to make money and/or pay back society through you or your product's meaning.
  • Enable them to live vicariously - many seek to relive their youth/romantic past by watching you.
  • Make your story comprehensible to a spouse
  • Be a nice person - angles fall in love with entrepreneurs in a fatherly or motherly way.
  • Sign up people they know or have heard of - angel investing is often about socializing as much a profiting.


Minichapter: The Art of Managing a Board

Major investors will usually require a board seat, so some choice made for you. You need people with two kinds of expertise: company-building and deep market knowledge. Here are typical roles:

  • The Customer - understand the needs of your customers.
  • The Geek - provides reality check on development efforts.
  • Dad - the calming influence who brings wealth of experience.
  • The Tight-Arse - tells you when your full of it and pushes for totally legal and ethical practices.
  • Jerry Maguire - "Mr Connections."

In creating a good working relationship with your board members:

  • Save Trees - less paper is better - it's a mistake to bury your board in documentation as they are busy.
  • Provide Useful Metrics - financial reports alone are not enough - include number of customers, installations & site visits but no more than three-four pages of this.
  • Send these Reports two days before a board meeting
  • Never surprise a board (except with good news) - if there's bad news meet each member in advance and explain what happened.
  • Keep feedback in advance - as per previous, if there's a key issue at an upcoming meting, talk to each member first.


Chapter 8: The Art of Partnering

  • Partner for "spreadsheet" reasons - for example: speed entry into a new geographic area or market segment, open additional channels of distribution, accelerate new product development and reduce costs - called "spreadsheet reasons" because they change your financial forecasts. Many organization form partnerships for a halo effect or to silence critics.
  • Define Deliverable and Objectives - These may be: additional revenues, reduced costs, new products & services, new customers, new geographic markets, new support programs, training and marketing programs. Make sure you know: what, when and where each organization will deliver, and what intrum milestones each must meet.
  • Ensure the Middles and Bottoms like the Deal - if employees don't believe there is benefit, there is no point. The best partnerships form when upper management of each company is barely involved.
  • Find Internal Champions - To form a successful partnership, both organization need and internal champion to keep it going - someone who really believe in it. CEOs are seldom effective in this role as they ave attention-deficit disorder. Eg: John Scull became know as "Mr Desktop Publishing" - Aldus's desktop publishing champion inside Apple, providing the needs of both companies.
    • Identify a single point person in each organization -
    • Make success of the partnership the sole goal of the champion -
    • Empower the champion - involves cutting across internal departments, priorities and turf, and stepping on toes, thus people have to know he's empowered.
  • Accentuate Strengths, Don't Cover Weaknesses - eg: Apple's strength were marketing resources, field sales force and connections, Aldus's strength was knowledge of page composition software and publishing.
  • Cut Win-Win Deals - karma counts for everything in a partnership, win-lose deals won't last and the middles and bottoms won't support it.
  • Follow With the File - drafting a document early on, is a high-risk approach, as document can be forwarded straight to executive or lawyers and raise premature red flags. Better approach is:
    1. Get together face to face to discuss deal points
    2. When you start agreeing go to a whiteboard and write them down
    3. Follow up with a 1-2 page e-mail outlining the "framework" for a partnership
    4. Reach closure on details via e-mail, phone and follow-up meeting.
    5. Draft a legal document.

Don't try to go from step 1 to 5 directly!

  • Put an "Out" clause in the deal - Something like "either party can end this agreement upon 30 days notice" - although it seems counterintuitive, this allows people to chill and work harder to make partnership function - knowing that in the worst case it's easy to end the deal. Also: employees will take more chances with innovation when the partnership is not set in stone. It should be hard to get out of partnerships because of its importance to both parties, not merely because of a contract.
  • Get Out of the Belly - they say trying to form a partnership with a larger, established organization is like being "stuck in the belly of a snake". You make get it done, but all you'll have left is a pile of bones. It's rare the marketing department, engineering team AND lawyers will all be happy. Interpret the top ten lies. Eg:"We want to do this for strategic reasons" = "we can't figure out why this is partnership is important".


Minichapter: The Art of Schmoozing

Wise people think of networking as "discovering what you can do for someone else". World-class schmoozers adopt this attitude and build extensive, long-lasting connections. To get more people to know you:

  • Get out - attend trade shows, conventions, seminars, conferences and cocktail receptions.
  • Ask good questions then shut up - Good schmoozers don't dominate conversation, they start them off with an interesting conversation and then listen. The most fascinating people are good listeners, so start with "What do you do?".
  • Follow up - within 24 hours of meeting someone send an e-mail or call. So few people ever follow up the ones that do are clearly special and worth knowing.
  • Make it easy to get in touch - carry business card with e-mail and phone etc and reply to e-mails.
  • Unveil your passions - If you can talk only about your business, you are boring.
  • Read voraciously - if you have no passions at least read voraciously.
  • Give favors - there's a karmic scoreboard in the sky, so ensure your hugely positive on the scoreboard.
  • Return favors - great schmoozers return favors with joy.
  • Ask for the return of favors* - It seems counter-intuitive, but ask for return of favors. Doing so removes pressure from a person who feels he owes you and can clear the deck.


Minichapter: The Art of Using E-mail

  • Fix your subject line and name - eg: "Enjoyed your speech" or "Following-up our meeting" work well.
  • Answer within 24 hours - keep it fresh.
  • Don't use all caps - is considered SHOUTING.
  • Quote back - show what part of e-mail you are responding to.
  • Keep is short and simple - Cut the crap and get into it. Guy also suggest using plain text only.
  • BCC e-mails to large groups - The more people you CC the fewer respond, thus use BCC so they can't all see each other.
  • Reduce CC - CC can be meaningless middle ground.
  • Include a good signature - provide name, postal address, phone number, web site etc.
  • Don't forward something you think is funny
  • Wait when you hate - when you're angry or offended delay the response beyond 24 hours, it's even better to call in these situations.


Chapter 9: The Art of Branding

The classic Ps of marketing: product, place, price and promotion.

  • Create a Contagion - contagious products should be:
    • Cool - eg: ipod
    • Effective - eg: TiVo
    • Distinctive - eg: hummer
    • Disruptive - i.e. upset the status quo
    • Emotive - makes it joyful
    • Deep - eg: TiVo - keep discovering features
    • Indulgent - makes you feel you've indulged yourself
    • Supported - providing exemplary service makes a product or service contagious
  • Lower the Barriers of Adoption
    • Flatten the Learning Curve - customer should be able to get basic functionality right out of the box
    • Write a good manual and index it thoroughly - think of every possible thing a customer will want to do and make sure there's and entry in the index.
    • Include pictures
    • Test it on your mother or father -
  • Recruit Evangelists - evangelists believe in your product as much as you do and want to carry the battle forward for you and with you. Recruiting them can help you achieve critical mass through sustained, continuous, and low-cost proselytization and branding. Many companies hesitate because they think if the ask they are weak - this is bogus. Key recruiting principles:
    • Ask! - Many people may be willing to help, and just waiting to be asked.
    • Ignore academic background and work experience
    • Focus on what's important: do they believe and do they want to help
    • Let a hundred evangelists blossom - another reoccurring theme in the book - don't be picky about how evangelists help you. They may show you ways to market you'd never have developed yourself.
  • Assign task and expect them to get done* - if they've signed up it's your obligation to make good use of them. Volunteering to help an organization and not hearing any call to action is demeaning.
    • Continue "Fellowship" - the relationship is almost like a good parent and a child.
    • Give them tools to evangelize - Make it easy for believers to help you by providing stacks of info and promotional material. Give great example: Bose includes 10 "courtesy cards" (see here) in the headphone case for owners to pass out to people who ask them about the product - explaining how to find out more, purchase, or get more cards on a toll-free number.
    • Respond to their desires - revise your product to reflect their wishes.
    • Give them stuff! - A free t-shirt, coffee mug, pen or notepad can have great power. Evangelists love these as it makes them feel part of the team. It's money well spent, but don't give away anything >$25 (eg: Motblac pen) as is over the line and looks like you are wasting money.
  • Foster a Community - in some cases companies will say "never heard of them - you mean people get together because of our product?" - this is suboptimal, you should actively bring one into existence.
    • Identify and recruit the "thunder lizards" of your product or service - the customers most enthusiastic and willing to serve leadership positions.
    • Hire someone whose sole purpose is to foster a community
    • Create a budge for community spirit - doesn't have to be much, but you do need to budget for meetings, newsletters and online presence.
    • Integrate the presence of the community into your sales and marketing efforts and your online presence - eg: your website should provide info on the community and instructions to join.
    • Hold a conference - allow community members to meet one another and interact with employees.
  • Achieve Humanness - consider the brands and how they achieve humanness: Apple (funkiness), Coca-Cola (joy), Levi Strauss (youthfulness), Nike (gutsy determination) and Saturn (buddy-buddy). Some successful companies (Microsoft & IBM) don't have this, but can be better/more fun to have a warm brand.
    • Target the young -
    • Make fun of yourself -
    • Feature your customers -
    • Help the undeserved and underprivileged - eg: Hallmark Cards, provides money and volunteers to community programs & advertizes on their website. It's a double win: fulfilling moral obligation to community and furthering the effectiveness of your brand.
  • Focus on Publicity - example: 4 weeks before debut of Ikea store in California, residents read story after story about its grand opening. "city braces for opening day".
  • Create buzz, get ink - First create something grand, get it into hands of people, and they will generate buzz, then the press will write about it.
  • Use a rifle, not a shotgun
  • Be a foul-weather friend - when things go bad or busy companies may suddenly disappear on the press and not return calls/e-mails - no matter the weather you should maintain good relations with the press.
  • Tell the truth - when things go bad, there's temptation to lie to press to get out of jam - but this damages your credibility. If you establish a record for being honest when times are bad, press will believe you when times are good.
  • Talk the Walk - To "walk the talk" means you deliver good product and meaning, but it's important to have some kind of program to "talk the walk" - a way of developing one-lines for employees to explain the company and enthusiastically proselytize the organization.


Minichapter: The Art of Speaking

Guy believes most executives are bad speakers because they're: (a) surrounded by people with no courage to say the emperor has no clothes, (b) typically egomaniacs, and (c) too busy to allocate time to practice. Principles of effective speech:

  • Say something interesting
  • Overdress - if you are too casual, audience will think they're not important enough
  • Cut the sales propaganda - give info instead
  • Tell stories - great peoples tell a stories. Tell a story, make a point, then repeat.
  • Circulate the crowd before you speak - A few friendly faces give courage.
  • Talk about kids - if there's a sure-fire way to endear yourself to the audience it is this. If you don't have kids - use relative's kids or when you were a kid.
  • Self-deprecate - win over audience by making fun of yourself a little.
  • Speak at the start of an event - (before people get bored)
  • Ask for a small room - audience energy is a function of how full the room is, not he absolute number of people.
  • Find out about what happened earlier at the event - weave this into your speeches.
  • Don't denigrate the competition
  • Practice - as rule of thumb, 25th time you give a speech is when it gets good.
  • Use a top-ten list format - allows audience to track progress

How to be a good panelist:

  • Control your introduction - bring a copy of your bio for the moderator - don't depend on what he comes up with.
  • Entertain, don't just inform - always ask yourself: "am I being entertaining"
  • Tell the truth - on a tough question, establish credibility with honesty.
  • Err on the side of being plain and simple - on a technical question, don't succumb to temptation for a technical answer - you'll lose >80% of the audience.
  • Never look bored - you never know when a picture will be taken.
  • Don't look at the moderation - play to the audience!
  • Make casual conversation - act as if you're not onstage and interact with audience in casual way.
  • Answer the question posed, but never limit yourself to the question posed - eg "Is this an important technology" say: "No, but let me tell you what is really hot"
  • Never say "I agree with what the other panelists have said" - try to add something new.

Minichapter: Art of Designing a T-shirt

Making T-shirt to announce products or companies is a Silicon valley tradition. Unfortunately many are ugly, so do it right!

  • Don't use white shirts - they quickly turn to grey.
  • Minimize text - no more than 6-10 words.
  • Use a bit (60 point) font
  • Spend a few bucks on design - make them bold and beautiful and something even women might wear.
  • Make them in kid's sizes


Chapter 10: The Art of Rainmaking

A Native American rainmaker = medicine man who uses rituals to make it rain. For start-ups the rainmaker is who generates large quantities of business. Get a good version 1 of the product to market then overcome resistance.

  • Let One Hundred Flowers Blossom - try every market and nurture the ones that surprise you. Don't get so single focused you miss an opportunity.
  • Pick the Right Lead Generation Method - think outside advertising and telemarketing - some methods: * conduct small-scale seminars. * give speeches. * get published. * network in a proactive way. * participate in industry organizations.
  • Find the Key Influencer - Gives an example where the rainmaker of BMC software was "database administrator III", influencing major purchases for his company. The higher you go in a company, the thinner oxygen - harder to support intelligent life, so ignore title and find the true key influencer.
    • Suck Down - CEOs ask their secretaries for advice and their opinions on people. These people at as an umbrella and "block" you from seeing their superior, so "suck down" to these people (sucking up is over-rated).
    • Understand them - their job is to enable their boss to do his job and guard his time from everyone (not just you).
    • Don't try to buy them - don't send gifts or bribes! The way in is to have a credible introduction and rock-sold proposition then treat every contact in the organization with respect.
    • Empathize with them - they're probably being paid less than their worth.
    • Never complain about them - it will circle back to the umbrella and your access will be gone forever.
  • Go after agnostics, not atheists - agnostics typically aren't using anything because of high cost or skill requirements of current offerings.
  • Make prospects talk - often the prospect will tell you what it will take to close the deal - so shut up and hear it! Ask the right question and take notes.
  • Enable Test Drives - best way to overcome "status quo" (eg: we all have a system already) which people rely on.
  • Provide a Safe, Easy First Step - typically mean asking customers to use your product or serve in small pieces of the business, in a limited and low-risk manner.
  • Learn From Rejection - best rainmakers make more pitches thus more rejections, some common rejections:
    • "You're not one of us, stop trying to be" - eg: Apple attempted to sell to IT departments.
    • "You don't have your act together" - either true or you stepped on someones toes and must make amends.
    • "You are incomprehensible" - go back to basics.
    • "You're asking us to change, and we don't want to hear this" - probably in the right marked but talking to the wrong customers - talk to those feeling pain, not those enjoying the high life.
    • "You're a solution looking for a problem"
    • "We've decided to standardize on another product (or service)" - avoid the gatekeeper and find the user.
  • Manage the Rainmaking Process
    • Encourage Everyone to Make it Rain
    • Set Goals for Specific Accounts
    • Track Leading Indicators
    • Recognize and Reward True Achievements


Chapter 11: The Art of Being a Mensch

  • Help Many People - The big karmic points, and what separates a Mensch from a good schemer, come from helping people who cannot help you. You do this because:
    • You never know, they may help
    • Your karma points build
    • You derive intrinsic joy from helping your fellow man
  • Do What's Right
    • Observe the spirit of agreements -
    • Pay for what you get - eg: you get billed for 14-karat gold, but they sent you 18-karat rings. You call them and report the discrepancy.
    • Focus on what's important - you're playing beginners soccer and in the lead. You offer to swap a couple of your best players on the last-place team. What's important is everyone having fun, not winning the championship.
    • A Mensch does the right thing - not the easy thing, expedient thing, money-saving thing, or I-can-get-away-with-it thing. Right is right and wrong is wrong.
  • Pay Back Society - the kind of gains a Mensch seeks is paying back society (for good health, family, friends, fulfillment and success), not reaping additional money. A Mensch does not have to be wealthy - in fact money usually renders a person unmenschionable. There are many "currencies" to pay back society. Money is only one of them - others include giving time, expertise and emotional support. The key concept is that a Mensch paysback (for goodness already received) as opposed to paysforwards, in expectation of return.


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