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Angels & Revolutionaries
CREATING & FINANCING
STARTUPS IN THE NEW ECONOMY


8. Think digital, act analog

The eighth thing—only two more to gut out—actually three, eight, nine and ten.

The eighth thing is to think digital and act analog. "Think digital and act analog" means that you use all the power of your SQL servers, your databases, your huge NT machines, your workstations, use all that digital power, but, fundamentally, you are using that power for very analog ends—to build relationships, to increase customer satisfaction, to increase efficacy and power and independence and productivity and creativity.

You have to think digital, but you have to act analog. A very good example is Ritz Carlton (http://ritzcarlton.com). Ritz Carlton keeps track of customer preferences as guests stay at their hotels. If you were to go to Ritz Carlton and say that you were allergic to down pillows, the next time you went to a Ritz Carlton anywhere in the world, they would pull up your record from this humongous database and give you the right kind of pillow. The digital power has been used to do a very, very analog thing. In garage.com's case, we have a lot of digital power. We have this whole digital database where there is matching and Web forms and generated emails and all this kind of stuff. It's all digital, but it comes down to very, very analog relationships. One of the strongest relationships is between garage.com and another company, Silicon Valley Bank (http://svb.com). I don't know their position here, but back in Silicon Valley, they are the bank for high-tech startups. We use our Web site and have all this stuff going on, but, fundamentally, it's because we get along really well with Silicon Valley Bank. They are a great banking company and their president sees the vision of garage.com. It came down to a very analog relationship. So you need to think digital, but you need to act analog and build those alliances. Alliances are analog; they are not digital.

 

9. Don't ask people to do things you won't

The ninth thing is this, don't ever ask people to do something that you, yourself, would not do. Many times in a revolution you are building this cool product or this cool site and you say, "Wow, it is so great. People will go through this 12-page questionnaire to get a password. They will go through the 10-week setup process. They will go through the $10,000 price point." But you know that you, yourself, would not do that, right?

Here's another negative example. There was a bank in California, not Silicon Valley Bank because Silicon Valley bank would never do such a stupid thing, that created a genius of a marketing program. They had a computer call people at their homes in the evening. If the computer detected a human voice that answered the phone, then the computer said, "Please hold, a bank representative will be with you shortly."

Now, let's review this process. Some computer is going to tell me to go on hold to wait for a pitch. You know, this is not rocket science here. Obviously, if that bank's vice president had gone home and received a call from American Express saying, "This is the American Express computer. Please hold. Someone will be with you shortly to explain the benefits of being a card holder of American Express," he or she would have hung up the phone.

Okay, so that's a negative example. I'm going to give you some positive examples. How many of you have children in this audience? Wow. See, most of the high-tech audiences I speak to, they don't have kids. Seriously. I don't think they have sex. I figured it out. I think that most audiences are largely Windows users and as a Windows you have a choice of either having sex or printing. I can do both. My wife and I have two kids, so we've had sex at least twice. I have to tie this back into the speech or . . . where the heck am I going right? You wonder. You are worried.

There is a point.

I have found that most audiences want a speaker to succeed, so when they see a speaker sort of going off topic, they get really nervous. "How is he going to pull himself back and rescue his own butt when he goes off on this?" But let me tell you. Keep calm. Keep calm.

So, as I said, my wife and I have these two children, and one of the things I discovered as a father in the early days was that kids generate a lot of laundry. I really didn't know this until we went on our first family vacation. A "family vacation," by the way, is like "Apple marketing," an oxymoron.

So, we go on this family vacation and I discover that kids generate a lot of laundry. I didn't know this at home, I guess, because at home there is a laundry fairy. You throw the laundry on the floor and the next day it's clean. Laundry fairy is usually associated with people with a Y-chromosome, I have been told. Anyway, we go to this resort city and I finally figured out that kids generate a lot of laundry. There are other consequences to kids generating a lot of laundry. First of all, sending laundry through a hotel laundry system is extremely expensive. Five dollars for a pair of socks, okay. There are also logistical issues. My boys each have their own blankie and, without those blankies, they won't take a nap or go to sleep. The logistics of sending out those blankies at 9:00 in the morning and maybe getting them back at 7:00 at night is frightening because if those blankets don't come back, they won't take a nap or go to sleep. If they won't take a nap or go to sleep, one has to ask the logical question, "Why go on vacation at all?" Stay home with the babysitter fairy.

Okay, so all of this is leading up to telling you about this great hotel in Kauai called the Kauai Hyatt Regency. If you go there, you will see that there are laundry rooms on every wing. That means that there are less guest rooms. It also means that less laundry is sent out through the hotel laundry system. Finally, if you went into the laundry rooms, you would see that the washers and dryers are free. I was just shocked that at a Hyatt Regency in Kauai they don't even want the quarters that you'd have to put in at any other hotel, if they had laundry rooms at all. That's a positive example of "don't ask people to do something that you wouldn't do."

You know, a lot of you have kids. I have to tell you some kid stories. Now, I know I'm getting off track. This is going to be purely irrelevant, all right, understand that. I understand that. Maybe I can pull it into biotech. Do we have any biotech people here? Okay.

I believe that there is a nesting hormone. This nesting hormone kicks in approximately three months before the due date. The nesting hormone has never been chemically identified, but I'm telling you, it exists. This is what the nesting hormone makes you do. First of all, you have to make this big decision about childbirth, and I'll tell you what happened with us. For our first child we were going to do natural child birth, right? So first child, you go to Lamaze class. How many of you have been to Lamaze class? Okay. I speak approximately 120 times a year. I'm very comfortable in front of audiences, but Lamaze class, I have to tell you, absolutely threw me for a loop. You are sitting in this room in bean bag chairs, and there is an instructor who is a Grateful Dead fan and her name is Moonbeam.

You had the same instructor, huh?

   

 

"...creating a baby that is statistically more drowsy, more sleepy, and less attentive."

 

So, Moonbeam goes around the room and asks my wife, Beth, "Why are you here?" and my wife says in her breathless fashion, "Well, I'm here because I want to learn how to give birth naturally using no drugs. I want to learn how to use relaxation and breathing techniques. I read in What To Expect When You Are Expecting that if you have an epidural, that the chemicals enter the baby's bloodstream, creating a baby that is statistically more drowsy, more sleepy and less attentive."

I'm hitting her at this moment, saying, "You know, Honey, those are features, not bugs."

So then Moonbeam comes to me and asks, "Guy, why are you here?" I said, "Well, Moonbeam, my wife said I got her pregnant and I had to be here."

That's one thing the nesting hormone does. The second thing the nesting hormone does is to make you make a decision about diapers. First child, you are going to use cotton diapers. How many had a first child and used cotton diapers that you wash yourself? Okay, this is how this works. First child, you are going to wash your own cotton diapers, biodegradable, hypo-allergenic soap, right?

It's born. Three weeks go by. You are trying do this, but you notice some problems. You have these difficult choices. Either your house stinks, or you feel guilty. Your house stinks because, one, you don't want to wash its stuff with your stuff, so you are keeping it separate. If you keep it separate, your house stinks. If you wash this little pile of stuff so that your house doesn't stink, you feel guilty because you are using all this rinse water. So these are the choices.

After three weeks, we go to a cotton diaper service, which also creates problems. Cotton diaper services create problems because you are in a daze for the first 10 or 15 years of a child's life, so you forget to take the diapers out, and, once again, your house stinks. Or they forget to deliver. It's a mess. After six weeks of our first child's life, we went from cotton diapers that we were doing ourselves in biodegradable, hypo-allergenic soap, to a cotton diaper service to, "Tell you what, we are going to use Pampers and we are giving money to the Sierra Club."

How many of you, when you had that first child, bought the beautiful plastic bathtub with that thing with the 45 angle, with the foam, so you could wash your child? Today, my kids are three and five. A whole new logic kicks in, which is, "You went swimming today, you don't need to take a bath. That's why they put chlorine in pool water."

When the first child is going to solid foods, we went to the whole foods market where we bought these organic carrots that have never even come within 50 feet of a pesticide. We took the carrots home, boiled them in Perrier and mashed them. Today, with kids who are three and five, did you know that French fries from Burger King is a vegetable? It's a whole different logic.

Anyway, those of you who are worried that I'm running out of time or that I'm off track, I'm coming back to the speech. You happy? Okay.

 

10. Don't let the bozos grind you down

The 10th thing is, don't let the bozos grind you down. Trust me, the bozos are going to try to grind you down. You could almost make the case that when stupid people tell you that you are going to fail, it means you are on to something. Let me give you some examples of bozo-sity, and this is bozo-sity from smart people.

"I think there is a world market for maybe five computers." Thomas Watson, chairman of IBM, said that in 1943. Five computers. I have five computers in my house, all printing. With or without sex, all printing.

"There is no reason anyone would want a computer in their home." Ken Olson, president, chairman and founder of DEC said that in 1977, a year after Apple had formed.

   

 

"The business plan for Federal Express got a 'C' from Yale."

 

"This telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." That's from a Western Union internal memo in 1876. Imagine the difference between Western Union's approach to telephone and telegraphs versus Sprint laying fiber optics near the locomotive.

"We don't like their sound, and guitar music is on the way out." That from a recording company rejecting the Beatles in 1962.

"A cookie store is a bad idea. Besides the market research says America likes crispy cookies, not soft and chewy cookies like you make." That was a response to Mrs. Fields' idea for Mrs. Fields' Cookies.

The business plan for Federal Express got a "C" from Yale.

In a second moment of humility in the same speech, which is really rare for me, let me tell you my own example of bozo-sity. About three years ago, a partner at Sequoia who funded Yahoo! called me up, and said, "You know, Guy, we have a company that we'd like you to interview for as a CEO." At the time, I was living in San Francisco. San Francisco is an hour from Menlo Park where Yahoo! was, so I said "Well, you know, where is the company?" Menlo Park. "What's the company's name?" Yahoo!. I said, "You know, Mike, I have two kids now. Best case, it takes an hour to drive each way, and what does Yahoo! do?" He says, "Well, they make a search engine."

I said, "How could you make a business out of a search engine? I'm just not interested. It's too far to drive and I can't believe you can make a business out of a search engine."

Now, the interesting thing is, it's not clear that I would have gotten the job. It is further not clear that if I had gotten the job, that I would have done the tremendous job that Tim Koogle has done, but I tell you something with almost total certainty, I would have been there long enough to vest some options.

So the point here is that even smart people can have moments of great bozo-sity. I just want to tell you that my interpretation of this nay-saying and bozo-sity and predictions of failure is that they may really indicate that you are on to something.

This is not to say that it's easy, that whenever people say you are going to fail, you are going to succeed. I wish that was the case. I fight some of this bozo-sity when people say, "Why does an angel network or garage.com have to exist? There are too many deals already. There's too much money." All that kind of stuff you just have to deal with, that bozo-sity.

But I'll tell you one thing for certain, no matter what people say, if you don't try at all, you will never know. That's what separates a revolutionary from a run-of-the-mill person, so don't let the bozos grind you down, okay?

I gave you 10 things, but if you cut the 10 things down to three, in the big picture they are:

• Create like a god
make a world class product or service

• Command like a king
make really tough decisions, fight the status quo and break down the barriers

• Work like a slave.

Those are the three things you have to do to be a revolutionary. If you have revolutionary potential, I believe that you have a moral imperative to try to make that revolution successful and make the world a better place. You will find that defeating bozo-sity is more satisfying than accumulating the economic trappings of success. Then you will find that making the world a better place is even more satisfying than defeating bozo-sity.

Then you will understand the greatest lesson of all, which is that being a revolutionary and making the world a better place is the greatest role that life can bestow upon you. That is how to be a revolutionary. Thank you very much.

[CONTINUED]

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Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, Netpreneur.org or any of their affiliates, agents, officers or directors. The transcript is provided "as is" and your use is at your own risk.  


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