The Top 10
Lies of Entrepreneurs
Guy Kawasaki's Top 10 Reasons for Just About Everything Else
(Washington, DC --
November 14, 2000) Guy Kawasaki
always uses a “Top 10” format when he presents because, “most high-tech CEO's
suck as speakers. One thing I figured
out watching these guys, if you do a Top 10 list, at least the audience can
track progress through your speech.”
Kawasaki, a self-proclaimed iconoclast and revolutionary, is
the CEO of Garage.com, a venture capital
investment bank that has put together over 60 deals for high tech entrepreneurs
involving over $200 million in funding. He is also the author of seven books on
business and technology, a columnist for Forbes magazine, former Chief Evangelist for
Apple Computer and former CEO of Fog City
Software. With so many credentials, his expertise covers far more ground than
just his scheduled topic, “The Top 10 Lies Of Entrepreneurs,” so the team at Netpreneur.org cajoled him into giving not
one, but four presentations at this morning’s Coffee & DoughNets meeting.
To the Top 10 Lies, add the Top 10 Lessons Of Public Relations, Rules Of The
War For Talent and Principles of Business Development.
Kawasaki’s first appearance at a Netpreneur.org event was
almost two years ago to the day, when he presented his 10 Rules For Revolutionaries, but
40 rules in 45 minutes sets a new content benchmark for Coffee & DoughNets.
Here they are on the fly.
Top 10 Lies Of Entrepreneurs
At Garage.com they read over 12,000 business plans a year,
so Kawasaki has heard them all. He says
that these are the ones every institutional investor has heard over and over
again, so, if you’re going to tell lies (and sometimes you have to) at least
tell new ones. What are the Top 10 lies
of venture capitalists? “I have never been able to narrow it down to 10,” he
Our projections are conservative. Somehow, every entrepreneur seems to come up
with the same numbers, assuring potential investors that they’ll be doing “$50
million in three years.” VCs will
multiply that by .1 and add three more years.
IDC says our market will be $50
billion by 2003 (insert the name of
any other research firm). Avoid
outside market data like this. Another
remarkable coincidence is how just about every study from just about every
market research firm projects just about $50 billion by just about 2003.
3 Amazon.com will sign our contract
next week (insert the name of any
other major industry player). No one in this industry ever gives a rock
solid “no,” something that most entrepreneurs interpret as a “yes.”
Under-promise, over-deliver and only talk about deals you’ve signed.
Key employees will join as soon as we get
funded. If you tell this one,
better be sure they’ll say “yes” because VCs will check.
We have first-mover advantage. Even if you do, and you probably don’t, it’s
a tenuous advantage at best, good for maybe five weeks of lead time.
Several VCs are already interested. VCs only have two states: a term sheet has
been offered or they’re not interested.
And they will talk to each other.
Oracle is too slow to be a threat (insert the name of any other major industry
player). There’s a reason why Larry Ellison has a private jet and we fly
coach. Even if you’re right, no one will believe you.
the bubble has burst. Welcome to
Spin City. When is it ever better for
the Nasdaq to be at 3000 instead of 5000?
Our patents make our business defensible. That may be true in biotech, but not on the
Internet. Competitors will work around
any patents of real value. The key is
implementation, so hire engineers not lawyers.
10 All we have to do is get 1% of the market. Yeah, well that isn’t as easy as it sounds,
and, besides, VCs want the folks who chase 99%, not 1%, of the market.
Top 10 Lessons Of Public Relations
Getting the right attention at the right time can mean
everything. While the basics still
matter most, some of the rules of public relations are changing
Create buzz, not ink. Articles written about you used to cause the
industry to take notice, but now it’s the reverse. If you want press, create
if you want buzz, create a great product.
Be one thing to all people. Volvo is synonymous with safety, no matter
how much time and money they spend to convince us that it’s fast and sexy,
too. Let people know what you do best,
not what you think they want to hear.
Position yourself, don’t be positioned. You know that phrase between the
commas? “SuchAndSuch.com, a provider of cool stuff on the Internet, announced . . .” Get it right, and insist that the press
Cascade. Now that you’ve got the positioning right, make sure that
everyone from the board of directors to the receptionist gets it right as well¾and
the Web site and the collateral and the press releases and everything
else. No one should ever say about you, “Here’s kinda what
they do . . . .”
Cut the crap. Unless you’re AOL or Microsoft or another gorilla with money to
burn, ditch the press conferences, launch parties, gimmicks and gewgaws. Reporters want a story, period. And retire those paper press releases and
Make friends before you need them.
You know those young reporters at the East Nowheresville Gazette you’ve
been ignoring? Well, some of them are
really talented and one day may be writing for The Wall Street Journal.
Block and tackle. PR is a process, not an event, and the
basics are what count. Return phone
calls, answer email and never, ever lie.
pitch; don’t pitch then read. Know
what individual journalists care about and cover before you waste your time and
Shoot bullets, not pellets. Good PR is a targeted rifle. Don’t blanket the newsrooms because you’ll
just hurt yourself when the shotgun blows up in your face.
10 Be a source. When journalists know they can trust and count on you to help
them write their stories, you’ve created a relationship with big
dividends. Being unnamed background for
a story will pay off later.
Top 10 Rules In The War For Talent
In today’s market you get the great executives and employees
after you get the money, not the
other way round. The test for getting
funding is a CEO’s ability to recruit talent without money. It’s not easy, so keep the following in
Recruit 24x7. Just like PR, recruiting is a process, not an event. You should have only two modes: asleep and
Kiss a lot of frogs. In today’s tight market and with the
additional pressures to scale up and move fast you’ll be tempted to take the
first or second person through the door if they look plausible. Avoid temptation and keep looking.
Use all your weapons. Recruiting is a job for everyone, not just
the HR department. Do you have
high-powered directors or advisors?
Impress your candidates with an introduction.
Trust your gut. If someone looks great on paper but the little
angel on your shoulder says, “I dunno” listen to the angel.
Sell all the decision-makers. Sometimes a spouse, parent or significant
other will have as much to say in the decision as a candidate. Find that out. You do it in a sales situation, right?
Recruit outside the lines. The flip side of rule number four. Some of the industry’s greatest success
stories didn’t look so great on paper, but the CEO’s instincts were right. Look for talent, not a rote job description.
Wait to compensate. Pay whatever it takes to get the people you
need. If you lock in on salary ranges,
you’ll miss some great people who can help and want to, but who never respond
because they see a barrier.
Pay for what you get. Or else you get what you pay for. Top talent costs, there’s no two ways about
with the offer letter. Never send
it early to start negotiation. The
offer letter should merely be written confirmation of what you’ve already
agreed to verbally.
10 Never assume you’re done. In an industry of free agents, minds get
changed and counter offers get made.
There are plenty of horror stories about losing people who already
started working. The deal’s not closed until
you’ve engaged someone’s personal commitment to your company.
Top 10 Principles Of Business Development
Everybody’s doing deals, and lots of them blow up. Here’s how to create partnerships that work
for everyone involved.
Ensure that the middle and bottom like the
deal. It’s not the high-profile,
egomaniac CEOs that make a partnership successful; it’s the people on the
ground who do the work. Make sure those
people buy in.
Build for strength, not to cover weakness. Sometimes 2 + 2 = 3, like when deals are
done to cover mutual holes rather than to make combined strengths even
Find a champion. You need an evangelist, a true-believer who
drives this agreement to reality. And
it’s not that egomaniac CEO, either.
Cut win/win deals. Even if you can get away with it in the
negotiation, every win/lose deal blows up. Period.
Find a lawyer who wants to do business, not
prevent it. They’re a rare bird
because the natural inclination of lawyers is to stop things from happening.
Establish the right legal framework. Now that you’ve got the rare bird, never
ask, “Can I do this?” The correct
direction is, “Here’s what I want to do.
Keep me out of jail.”
Put an “out” clause in the deal. You need a pressure valve. Our natural inclination is to lock things up
over time, but an out actually makes it more likely a deal will ultimately be
successful because both parties know they have to keep working at it.
Explain it to a woman. Forget the sexist, politically-correct
rap. It doesn’t mean “your spouse,” it
means a woman. Men think that making
deals is the modern equivalent of killing a mastodon with a flint spear. They want to close the deal, but women have
better judgement when it comes to picking mates.
Don’t expect people to do something you
wouldn’t do. The biz dev equivalent
of the golden rule.
10 Don’t form partnerships with people who
have two or more of the following characteristics:
- drive a German car
- have a goatee
- use cologne
- wear Armani suits
“You think I’m kidding. You’re laughing,” said Kawasaki. “I know the
difference between correlation and causation, and I’m telling you with 100%
certainty there is a 100% correlation that it will not work.” Who can argue with the numbers?
Copyright © 2000 Morino Institute. All rights reserved.