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Angels and Revolutionaries get pep talk, practical advice

By Samuel Fromartz

"By definition, a revolutionary will piss people off," said Guy Kawasaki, former Apple Computer Inc. evangelist and current CEO of Garage.com. If the standing ovation after Kawasaki's talk at the Angels and Revolutionaries' conference Thursday was any indication, there were over 1,000 people who were ready and willing to go home, boot up and do just that as they create the products and services for the new economy.

    GUY KAWASAKI'S
TEN RULES FOR REVOLUTIONARIES
   
(These rules appear in greater depth in his book "Rules for Revolutionaries.")


1. Jump to the next curve, or better yet create the next curve.

Don't become complacent about your product or the market you serve, always look for new innovations and horizons.

2. Don't worry, be crappy.

Don't wait to perfect a product before you ship it. Put it out there when it is clearly better than anything else by a factor of 10, but before it's perfect.

3. Churn baby churn.

Don't deceive yourself that the first version of your product is great. Build in the means to revise and improve your product and do so continuously. Windows OS is a great example of this principle.

4. Be prepared to break down barriers.

Revolutionary products face barriers, including ignorance, inertia, complexity, tight sales channels, and price points. Don't get discouraged by these barriers.

5. Make evangelists not sales.

If your product is revolutionary, you must legitimize the revolution before you make sales. Build a community around your product, rather than sucking money out of your customers. Once the community is in place, sales will come.

6. Let a thousand flowers bloom.

When people use your product in an entirely new way, embrace the change.

(Guy's example: no one at Apple expected that Macintosh would become the mainstay of the desktop publishing industry).

7. Eat like a bird, poop like an elephant.

Birds eat 50% of their body weight per day—which is what revolutionaries should do with information. Don't rely on market research or ask people how they use products; rather watch how they use products. Once you've gathered this information, spread it around—like the elephant.

8. Think digital, act analog.

Your products may be digital, but to market them you have to rely on analogue relations like face-to-face meetings, which will help you find investors or build alliances.

9. Do not ask people to do things you won't do.

Don't expect others to pay for a product that you wouldn't pay for, or fill out a series of registration forms on a Web site you would never fill out.

People will not do things that you would not do yourself.

10. Don't let the bozos grind you down.

When people tell you you're going to fail, you're probably onto something. The status quo will always try to shoot down a good idea, especially if it threatens their position. Ignore them and press on. If you don't try you will never know if it would have worked.

 

Kawasaki's speech, full of colorful and hilarious revolutionary fervor, touched a nerve with the audience of netpreneurs in the Washington region, who got a one-day crash course in creating and financing start-ups.

Like any well-organized dissident movement, the event presented by the Morino Institute and Virginia's Center for Innovative Technology was heavy on both theory and practice.

Angel investment adviser Gerald Benjamin gave an extremely comprehensive two-hour seminar on how to raise money for a startup and later provided a run-down of the environment for private equity deals. Kawasaki, in his hour-long talk, gave his top-10 iconoclastic principles for creating an entrepreneurial venture.

A panel of angel investment gurus, including Benjamin; Ginger Lew, managing director of the Telecommunications Development Fund; John May, managing partner of New Vantage Partners; Mario Morino, chairman of the Morino Institute and Laura Sachar, co-chairman and founder of StarVest Management Inc. and founder of the New York New Media Association Angel Investors Program, also gave their spin on the market for private equity deals.

Kawasaki spoke to the gut competitive instincts driving entrepreneurs. While at Apple, he said, the publicly stated aim of the Macintosh was to unleash people's creative power. But the privately stated aim was to take on the status quo—the IBM-PC. Said Kawasaki: "We wanted to send IBM back to the typewriter business holding its Selectric balls."

Since he left Apple, Kawasaki has co-founded a Silicon Valley venture called Garage.com, which assists technology start-ups in getting seed financing. But true to his evangelistic roots, Kawasaki said that the aim of the venture was not to compete with "matching" services but to help create the high-tech entrepreneur revolution.

The focus on his talk was on the principles behind creating great start-ups, many of which were culled from his forthcoming book, "Rules for Revolutionaries".

Among them: "Don't Worry, Be Crappy" (get the product out the door, don't wait until it's perfect), "Churn Baby Churn" (continually revise your products), and "Jump to the Next Curve" (never become complacent with your product or market).

He also urged entrepreneurs to use their own products, much like a customer would. "How many of you have looked at your Web sites through AOL using a 28.8 modem?" he asked. A few hands in the ballroom went up.

"They're eating their own dog food," he said. "Everyone else, you're schmucks."

If Kawasaki was the evangelist, Benjamin was the drill sergeant. President of San Francisco's International Capital Resources, Benjamin has been trying to bring angel investors and entrepreneurs together for a decade. His seminars have also shed light on what has been the highly inefficient and secretive market for private equity deals.

His seminar, based on his book, "Finding Your Wings: How to Locate Private Investors to Fund Your Venture," laid out the steps to getting a deal done. About 350 attended this portion of the event held earlier in the day.

"A private placement," he said, "is any deal you can make that's legal. Your power lies in being able to make a deal. And then you find an attorney to write it up."

He laid out the topology of investors, ranging from the small checkbook angels—"this is a squeaky wheel who put in 10 grand who's going to call you every day"—to the more serious angel, who could put in a couple of hundred thousand and also line up four or five friends.

In the panel session, Morino—an angel himself—cautioned entrepreneurs about relying too heavily on "family, friends and fools" who might hold up a deal when it was time for the entrepreneur to seek funds from more sophisticated investors.

If evidence was needed of the entrepreneurial boom in the Washington region, the packed ballroom seemed to provide it. In that regard, May made a series of predictions for the coming year, including a rise of the number of "super-angels," a shake-out in online matching services, "and at least one gigantic home run" for an angel investor in the region.

"We have seen billions of dollars of net worth created here in less than three years," Morino said. That money, coming out of the information-technology, telecom and Internet sectors, will make its way to the next band of revolutionaries.

 

 


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