THE ART OF THE START 2.0 by Guy Kawasaki, Lindsey Filby

• Learning by anecdote is risky, but waiting for scientific proof is too.
• Entrepreneurship is about doing, not learning to do.
• It’s much easier to do things right from the start than to fix them later.
• my observation is that great companies began by asking simple questions:
• THEREFORE, WHAT? This question arises when you spot or predict a trend and wonder about its consequences.
• ISN’T THIS INTERESTING? Intellectual curiosity and accidental discovery power this method.
• IS THERE A BETTER WAY? Frustration with the current state of the art is the hallmark of this path.
• WHY DOESN’T OUR COMPANY DO THIS? Frustration with your current employer is the catalyzing force in this case.
• IT’S POSSIBLE, SO WHY DON’T WE MAKE IT? Markets for big innovations are seldom proven in advance, so a what-the-hell attitude characterizes this path.
• WHERE IS THE MARKET LEADER WEAK? Three conditions make a market leader vulnerable: First, when the leader is committed to a way of doing business.
• Second, when the customers of the leader are dissatisfied.
• Third, when the market leader is milking a cash cow and stops innovating.
• Call me idealistic, but the genesis of great companies is answering simple questions that change the world, not the desire to become rich.
• There are two kinds of opportunities: an existing market and a potential one.
• Successful companies are usually started, and become successful, with the contributions of at least two soul mates.
• Founders should share the same level of commitment.
• At a minimum, a startup needs at least one person to make the product (Steve Wozniak) and one person to sell it (Steve Jobs
• It’s better to have too few founders than too many.
• make everyone (including yourself) vest his stock over time to prevent people who leave in less than four years from owning large amounts of equity.
• if you make meaning, you’ll probably also make money.
• All employees should understand that a startup either makes money or dies.
• A good business model forces you to answer two questions: Who has your money in their pockets? How are you going to get it into your pocket?
• The more precisely you can describe your customer, the better.
• If you can’t describe your business model in ten words or fewer, you don’t have a business model.
• The five most important milestones are: Working prototype Initial capital Field-testable version Paying customer Cash-flow breakeven
• everything is theoretical until you start testing them:
• Essential tasks include: Recruiting employees Finding vendors Setting up accounting and payroll systems Filing legal documents
• In the United States, if your goal is to create the next Google, you want to form a Delaware C corporation.
• If your goal is to create a small business that isn’t going to seek venture capital and you don’t aspire to go public, then consider an S corporation, limited-liability corporation, or sole proprietorship.
• A startup should unequivocally own or unequivocally have licensed its intellectual property.
• Also, the intellectual property and licenses should belong to the startup, not the founders.
• If you are not embarrassed by the first version of your product, you’ve launched too late.
• People who started their own company or worked at a company before an IPO can probably provide good advice. People who have not started a company or joined a company after it went public probably cannot.
• Experienced, successful, and savvy business executives at large companies don’t necessarily understand the particulars of startups and venture capital.
• If you aren’t scared, something is wrong with you, and your fears are not a sign that you don’t have the right stuff.
• Ideas are easy; implementation is hard.
• Start right away. By doing so you’ll be constantly mulling over your idea—as both a foreground and background task.
• This is why you need a cofounder—until you’ve convinced other people about your idea, you may be a nutcase.
• What you should worry about is a working prototype.
• A real business is one with something to sell—not one where people have business cards and letterhead.
• It’s better to spend two years in the trenches getting the shiitake kicked out of you than mastering business administration.
• Don’t wait for perfection. Good enough is good enough. There is time for refinement later.
• Entrepreneurship is at its best when it alters the future, and it alters the future when it jumps curves:
• What are the qualities of curve-jumping products?
• DEEP. Curve-jumping products provide features and functionality that customers might not appreciate or realize at first.
• INTELLIGENT. A curve-jumping product shows people that the company who created it understood their pain or problem.
• COMPLETE. Curve-jumping products are not isolated gizmos, online downloads, or web services. They include presales and after-sales support, documentation, enhancements, and complementary products.
• EMPOWERING. Curve-jumping products make people better by increasing their productivity and creativity. You don’t fight great products—they become one with you.
• ELEGANT. Elegance is the combination of power and simplicity. Elegance is what is not there, not what is. It cuts through the noise, captures our attention, and engages our hearts. Companies that create curve-jumping products obsess about design and user interface.
• Two websites are your best friends in the naming process: the U.S. Patent and Trademark Office and the Network Solutions WHOIS database
• In a perfect world your name enters the mainstream vernacular and becomes a verb.
• Names that work as verbs are short (no more than two or three syllables) and simple.
• your next step is to build a prototype of your product and get it to customers.
• Worry About Adoption, Not Scaling
• In the early days of starting up, the ability to scale is overrated.
• Your priority, in short, is proving that people will use your product at all.
• it. In the end, it’s not so much what you say as much as what people hear.
• Today brands are built on what people are saying about them on social media—not on what companies are saying about themselves.
• People want more than information. They are up to their eyeballs in information. They want faith—faith in you, your product, your success, and in the story you tell. Faith, not facts, moves mountains.
• Meaningful stories inspire faith in you and your product.
• Once you have people started and converted, the next step is to ensure that they can use and even master your product.
• Go and see for yourself how people are using them.
• The final action to take during the launch of your product is to file a provisional patent application for your technology, practices, and secrets.
• The gist is that the United States is a “first to file”—as opposed to “first to invent”—country, so you need to move fast. Once you file a provisional patent, you have twelve months to decide if you’re going to take it to the next level and seek a nonprovisional patent. It can take five years and $10,000 to finish the process.
• Incubators focus on providing office space and shared services. Accelerators focus on mentorship, training, and helping you make connections to customers, partners, and sources of capital.
• The difference between working in an incubator or accelerator versus in your garage is the difference between going away for college versus commuting from home.
• Incubators and accelerators are useful for first-time entrepreneurs who don’t know where to start, but the decision to join one is not simple.
• Demoing is an essential skill to launch a product, raise capital, make a sale, garner press, and recruit employees, so you must get good at it.
• If you want to be a demo god, create a great product to demo.
• Start with “shock and awe”—the absolute coolest stuff that your product can do. The goal is to blow people’s minds right up front.
• Few people are funny enough to pull off jokes in a demo.
• The ability to speak simply and succinctly is the best way to go.
• you should always take questions at the end because you never know what people will ask you—their
• Innovation often originates outside existing organizations, in part because successful organizations acquire a commitment to the status quo and a resistance to ideas that might change it.
• When you have a good idea for a product, it will attract a large number of your fellow employees, from the bottom up. They will support you if you’re doing it for the company but not if it’s for your personal gain.
• If you don’t kill your cash cows, someone else will.
• Two guys in a garage should try to get as much attention as they can.
• However, the opposite is true for intrapreneurs. You want management to leave you alone until your project is too far along to ignore or the rest of the company realizes that it’s needed.
• The day will arrive when a bean counter or lawyer is going to notice you and question the reasons for your project’s existence. If you’re lucky, this will happen later rather than sooner, but it will happen. Prepare for that day by (1) collecting data about how much you’ve spent and how much you’ve accomplished, and (2) then sharing it openly.
• The beauty of intrapreneurship is that it can develop new products in less time than mainstream engineering.
• launch when you have enough functionality to show how you’ve jumped curves and you have eliminated enough bugs for your product to be stable.
• The right attitude is to prototype now, seek forgiveness later.
• The easy stuff is finance, manufacturing, operations, and accounting.
• The hard stuff is managing, motivating, and leading people.
• Above all, leaders cannot have a bad day.
• As the leader of the organization, you are responsible for results, and results are the product of a culture of execution.
• The simple act of setting goals and communicating them increases the likelihood that your startup will achieve them.
• Goals only work if you measure progress in achieving them.
• Good people accept accountability. Great people ask for it.
• A person who knows he is being measured and held accountable is highly motivated to succeed.
• As a leader, you’re either part of the solution or part of the problem.
• The people you reward in a startup are the ones who deliver.
• Fixing bugs is tedium to you, but it’s not to the customer who recently bought your product.
• If you want to succeed, take the red pill and determine how deep the rabbit hole goes.
• What is our top priority?
• A Morpheus and a devil’s advocate are not the same thing. A Morpheus tells you the truth—good or bad. A devil’s advocate tells you what’s bad even if he doesn’t believe it himself.
• Devil’s advocacy isn’t necessary on every decision—just the strategic ones.
• Steve Jobs had a saying that A players hire A players, B players hire C players, and C players hire D players. Using his logic, it doesn’t take long to get to Z players, and then you wind up with what’s called the Bozo Explosion.
• If there is one thing a CEO must do, it’s hire managers that are better than she is. If there is one thing managers must do, it’s hire employees who are better than they are.
• Many entrepreneurs don’t realize this, but startups need three kinds of A+ players depending on the stage of the organization: Kamikazes who are willing to work eighty hours a week to launch. Implementers who come in after the kamikazes and create infrastructure. Operators who are happy to run an ongoing system.
• If you wait until you have the perfect product or person, it may be too late. So you hire minimum viable people, and much like improving your minimum viable product, you improve your minimum viable employee.
• one of the key tasks of the art of leading is giving people a chance and making employees better.
• Hiring better than yourself means that you hire for strengths as opposed to hiring on the basis of the lack of weaknesses.
• A great leader hires people for their strengths and then assigns them tasks that take advantage of those strengths.
• Good leaders address their shortcomings before they criticize others.
• Don’t Ask Employees to Do What You Wouldn’t Do
• When leaders publicly change their minds, it shows that they’re smart enough to realize they made a mistake, secure enough to admit the mistake, and willing to risk their reputation to do the right thing.
• the three most important words during the recruitment process are “We want you.”
• The better the leader, the more she doesn’t hesitate to use these phrases: “I don’t know.” “Thank you.” “Do what you think is right.” “It’s my fault.”
• you should create a board when you accept other people’s money in order to establish high fiduciary standards.
• “The odds that you don’t need oversight because you know what you’re doing and it’s ‘your’ company are zero.”
• Less paper is better than more paper.
• The ideal length and frequency of board meetings is two to three hours once per month.
• Board meetings are the time and place for discussing strategic issues—not for conveying the factual information contained in reports. You should spend little time in the meeting communicating the facts—and a lot of time figuring out how to improve them in the future. Thus, it’s useful to send your reports in advance.
• Usually a leadership role is thrust upon you, and you grow into it.
• The most potent form of marketing is also the cheapest: social media.
• Entrepreneurs can bootstrap almost any business—especially if they have no choice in the matter.
• “Bootstrapping involves managing for cash flow, not profitability.”
• Bootstrapping involves managing for cash flow, not profitability.
• If you’re bootstrapping, forget about recruiting well-known industry veterans and building a dream team. Focus instead on affordability—that is, inexperienced young people with bushels of talent, energy, and curiosity.
• ignorance is not only bliss; it’s empowering.
• One of the advantages of a service business is that cash starts flowing within weeks.
• Positioning against the leaders or standard ways of doing business can save lots of marketing, PR, promotion, and advertising dollars, so pick the gold standard in your industry and identify an important point of differentiation in your own product,
• Bootstrapping goes awry when entrepreneurs focus on saving pennies to the detriment of the Big Picture.
• Here is a list of the big stuff and small stuff entrepreneurs must manage. BIG STUFF Developing your MVVVP Selling your product Enhancing your product SMALL STUFF Business cards and letterhead Office supplies Furniture Office equipment
• So take care of the small stuff in rapid, good enough—not perfect—ways.
• If you want to bootstrap your organization, then understaff it.
• To spend money wisely, focus on the function you need, not the form it takes.
• Everything is negotiable:
• This logic of focusing on function, not form, applies to almost every element of a startup.
• There’s greater danger of screwing up because of too much money than because of too little.
• The goal is to build something great, no matter how you raise capital.
• entrepreneurship is the art of doing whatever it takes.
• Fund-raising is a necessary evil of starting an organization.
• Crowdfunding is a good test of viability.
• The best kind of story is a personal one.
• One of the most valuable services a current investor can provide is to help find additional investors.
• Generally, investors are looking for a proven team, proven technology, and proven market.
• A moderate level of competition is a good thing because it validates the possibility of a genuine market and shows that you’ve done your homework.
• It’s your job to show how you are superior to the competition, not that it doesn’t exist.
• “When people see that they can believe you about bad stuff, they are more willing to believe you about good stuff.”
• Be bold: openly discuss your strengths and weaknesses. When people see that they can believe you about bad stuff, they are more willing to believe you about good stuff.
• You need a lawyer, and not just any lawyer, but one who routinely does venture capital and early-stage financing deals.
• The best mentality is to assume that you’ll never be able to raise money again.
• Anyone can survive when everything is going right. Great entrepreneurs can survive when everything is going wrong.
• Whatever the first offer, ask for a 25 percent higher valuation because you’re expected as part of the negotiation to push back—
• the CEO should not be paid more than four times the lowest-paid full-time employee.
• Investors are looking for people who can implement ideas, not only come up with them. Ideas are easy. Implementation is hard—and where the money is.
• Pareto’s Principle is that 80 percent of the effects come from 20 percent of the causes.
• Metcalfe’s Law is that the value of a network is proportional to the square of the number of users.
• The 10/20/30 Rule of Presentations is that you should use ten slides in twenty minutes with a minimum of thirty-point text.
• The purpose of a pitch is to stimulate interest, not to cover every aspect of your startup and bludgeon your audience into submission. Your objective is to generate enough interest to get a second meeting.
• “‘If a picture is worth a thousand words, a prototype is worth ten thousand slides.’”
• Describe the technology, secret sauce, or magic behind your product. The less text and the more diagrams, schematics, and flowcharts the better.
• Explain how you make money: who pays you, your channels of distribution, and your gross margins.
• Because people can read faster than you talk, if you put too much detail on the slide, the audience will read ahead of you and not listen to what you’re saying.
• If you have to use a small font to accommodate your material, you’re putting too much detail on the slide.
• Never read your slides.
• Use your body, not PowerPoint effects and animations, to communicate expressiveness, emotion, and enthusiasm.
• Use only one level of bullets.
• In a pitch the CEO should do 80 percent of the talking. The rest of the team (and there should be no more than two others) can present the one or two slides pertaining to their specific area of expertise. They can also provide detailed answers if any questions arise.
• Simply provide enough detail to prove you can deliver and enough aerial view to prove you have a plan.
• Twenty-five repetitions are what it takes for most people to reach this point.
• Generally venture capitalists want three to five years of projections to help them do three things: first, understand the scale of your business; second, examine the assumptions of your business model; and third, determine how much capital you’ll require.
• One way to improve your forecasts is to build them from the bottom up instead of from the top down.
• “The visible act of taking notes says, ‘I think you’re smart. You’re saying something worth writing down. I’m willing and anxious to learn. I’m conscientious.’”
• Shutting up, taking notes, and listening for ways to improve are good things to do in a pitch because even the smallest actions can create a big impression.
• My recommendation is that after five or so pitches you throw away your pitch and start with a clean slate.
• Cut the industry jargon. Tell people what you do, how you do it, and who your customer is in the simplest language possible.
• Practice until you’re sick of your presentation. Few people can wing it. The probability that you’re one of them is zero.
• Explain what your product does in the first thirty seconds. Explain the problem or pain that it addresses in the second thirty seconds. You’re going to win or lose in the first minute or so.
• Screenshots are also powerful because they make your idea seem more real.
• By all means, file for patents if you can, but don’t depend on them for much more than impressing your parents unless you have the time (years) and money (millions) to go to court.
• As a rule of thumb, if you’re doing something good, five other startups are doing the same thing.
• The problem is that pitches all begin to sound alike because they all make the same claims. You can make yours memorable by adhering to the basics: a short (ten-slide, twenty-minute) presentation with a compelling story of how you aim to solve real pain or tap an attractive opportunity.
• there are few factors that are more critical to success than great people.
• There is a shortage of great employees in the world.
• Hiring employees:
• 1. Can the candidate do what you need?
• 2. Does the candidate believe in what you’re doing?
• 3. Is the candidate likeable and trustworthy?
• Employment in big organizations is not a reliable predictor of success in a startup environment. The skills needed in each context are different.
• You want smart people, not necessarily degreed people. The two are not the same.
• Find the candidate who has major strengths (even though he has major weaknesses).
• Performing well in one area is tough enough; trying to find people who can do everything is Mission: Impossible.
• A team of people with major and diverse strengths is what you want in the early days when head count is low and there’s little room for redundancy. High achievers tend to have major weaknesses. People without major weaknesses tend to be mediocre.
• A realistic description is that startups take four to five years of long hours at low pay with incredible highs and depressing lows with the constant fear of running out of money.
• “You should use reference checking as a means to decide whether the candidate is good, and not as a confirmation of a choice that you’ve already made.”
• “Life is too short to work with people you don’t like—especially in a startup.”
• Life is too short to work with people you don’t like—especially in a startup.
• However, if there’s one thing that’s harder than firing someone you don’t want it’s laying off people you do want.
• Recruiting doesn’t stop when a candidate accepts your offer, or when he resigns from his current employer, or on his last day at his current employer—not even after he starts at your organization. Recruiting never stops.
• Reference checking is a crucial part of recruiting a great team.
• The goal of referencing is not to disqualify a candidate but to look for consistency in how the candidate represented himself and what his references have to say.
• Always tell it like it is.
• Remember: entrepreneurship is a parallel process.
• There may come a time when you should step aside. Deal with it.
• The longer you wait, the harder it’s going to get to put a legal agreement in place. Difficulty will peak around the time you need it the most.
• Customers don’t care if you want to destroy the competition. They want to know what benefits they derive from using your product.
• If you’re an engineer, you should be thinking about how to make a product that is valuable that no other company can make.
• The difference between evangelists and most people is that evangelists have the best interests of others at heart. They believe in their product so much that they want others to use it too.
• No matter who buys your product, targeting young people forces you to build a human brand.
• Most companies are incapable of making fun of themselves.
• position your product in a personal way.
• Positioning is more powerful when it’s personal, because it’s easier for potential customers to imagine how a product fills a need.
• “No one is more fascinating than a good listener.”
• No one is more fascinating than a good listener.
• Follow up within twenty-four hours of meeting someone.
• The ideal length for e-mail is five sentences.
• Don’t be picky about how evangelists help you. Let them help in any way they can.
• Have something interesting to say. This is 80 percent of the battle. It’s much easier to give a great speech if you have something to communicate.
• The technique that has helped me the most in public speaking is customizing the first three to five minutes of every speech. This demonstrates that you’ve done your homework and have made an effort to craft a speech that is a valuable and special experience.
• My theory is that the goal of a speech is to entertain.
• never dress beneath the level of the audience.
• The best way to relax when giving a speech is to tell stories.
• Good speakers are good storytellers; great speakers tell stories that support their message.
• The way to heighten your audience’s concern for your success is to circulate with the audience before the speech.
• It is better to have two hundred people in a two-hundred-person room than five hundred people in a thousand-person room.
• You need to give a speech at least twenty times in order to get good at it.
• If you’re invited to a panel about a subject that you don’t know, decline the invitation.
• The funnier you are, the more people will think you’re smart because it takes intelligence to be funny.
• Reduce the most complex and technical issues to something plain, simple, and short, and you’ll stand out.
• Never look at the moderator. The moderator is a proxy for the audience. When you answer, look at the audience because the audience doesn’t want to see the side of your head.
• Social media is the trifecta of marketing: fast, free, and ubiquitous.
• Social media is the best thing that ever happened to entrepreneurs.
• What’s more important than planning is grinding—that is, working long and hard and experimenting.
• Optimize for five seconds. People do not study profiles. They spend a few seconds looking at them and then make a snap decision.
• So the most important test of anything you do in social media is: Will people reshare your posts?
• The biggest daily challenge of social media is finding content to share.
• Most companies define too narrowly what they believe will be relevant and interesting to their followers, which hinders their ability to feed the Content Monster.
• Brevity beats verbosity in social media.
• Every post—literally every post—should contain eye candy in the form of a picture, graphic, or video. According to a study from Skyword, “On average, total views increased by 94 percent if a published article contained a relevant photograph or infographic when compared to articles without an image in the same category.”
• Using tools to automate and schedule posts isn’t cheating. It’s what smart companies do to optimize sharing.
• you are either building a brand by adding followers and racking up reshares, or you’re not.
• “You can never go wrong by taking the high road, because winning the war for class and credibility is more important than winning the battle with one commenter.”
• You can never go wrong by taking the high road, because winning the war for class and credibility is more important than winning the battle with one commenter.
• Life is too short to fight all the time, and most battles are not worth the trouble.
• My suggestion is to embrace the rules of amateur boxing and fight for only three rounds.
• The opening bell is when you share a post. Ding-ding.
• Round 1: commenter comments.
• Round 2: you respond.
• Round 3: commenter responds to the response. End of fight.
• A good rule of thumb is to never take the advice of someone who has fewer followers than you.
• Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important.” Not only will you succeed in sales, you will succeed in life.
• Unfortunately, many companies freak out when unintended people use their product in unintended ways. They react by trying to reposition the product so that the intended customers use it in intended ways. This is dumb—first of all, on a tactical level, take the money!
• One of the most effective ways to make it rain is to educate people about the use of your product.
• My experience is that sales prospects who are willing to buy your product will often tell you what it will take to close a deal. All you have to do is shut up and listen.
• The most difficult barriers that startups face are inertia and a reliance on the status quo.
• “It’s easy to know where you’ve been—it’s harder and more valuable to know where you’re going.”
• Rainmakers are expensive, but if they can deliver, they’re worth it.
• Good partnerships should accelerate cash flow, increase revenue, and reduce costs.
• The lopsidedness of many partnerships is not born of necessity but occurs because the larger entity can muscle the smaller one into accepting an unfavorable deal.
• Do favors before you need favors back.
• Don’t hesitate to ask for a favor in return when you need it.
• You know your product has arrived when you’re big enough to hold a conference for it.
• Once again, the key to evangelism, sales, presentations, and now ecosystems is a great product.
• The bottom line is that you should do everything you can to foster an ecosystem around your product. It is a powerful tool to increase the satisfaction of your believers and to attract new believers with greater ease—in short, making your product endure.
• Underpromise and overdeliver for great support.
• Underpromise and overdeliver for great support.
• Mensches help people who cannot reciprocate. They don’t care if the recipient is poor or powerless. This doesn’t mean that you shouldn’t help rich, famous, or powerful people (indeed, they may need the most help), but you shouldn’t help only rich, famous, and powerful people.
• Mensches do what’s right. This means taking the high and, sometimes, difficult road. For mensches, “situational ethics” is an oxymoron. Right is right, and wrong is wrong. A mensch does the right thing—not the easy thing, the expedient thing, the money-saving thing, or the I-can-get-away-with-it thing.
• The Top Ten Mistakes of Entrepreneurs
• MISTAKE: MULTIPLY BIG NUMBERS BY 1 PERCENT.
• FIX: CALCULATE FROM THE BOTTOM UP.
• MISTAKE: SCALE TOO FAST.
• FIX: EAT WHAT YOU KILL.
• MISTAKE: FORM PARTNERSHIPS.
• FIX: FOCUS ON SALES.
• MISTAKE: FOCUS ON FUND-RAISING.
• FIX: FOCUS ON PROTOTYPING.
• MISTAKE: USE TOO MANY SLIDES.
• FIX: OBEY THE 10/20/30 RULE.
• MISTAKE: PROCEED SERIALLY.
• MISTAKE: RETAIN MATHEMATICAL CONTROL.
• FIX: MAKE A BIGGER PIE.
• MISTAKE: USE PATENTS FOR DEFENSIBILITY.
• FIX: USE SUCCESS FOR DEFENSIBILITY.
• MISTAKE: HIRE IN YOUR IMAGE.
• FIX: HIRE TO COMPLEMENT.
• MISTAKE: BEFRIEND YOUR INVESTORS.
• FIX: EXCEED EXPECTATIONS.
• Unless a partnership enables you to alter your spreadsheet, it’s bullshiitake. Most partnerships are a PR exercise and a waste of time.
• Instead of spinning your wheels with partnerships, focus on sales.
• “Sales fix everything.”
• Building a prototype is the most important goal in the early days of your startup.
• The optimal number of slides is ten. You should be able to give your presentation in twenty minutes. The ideal font size is thirty points.
• The way to make money is to increase the size of the pie, not to hold on to as much of the pie as possible.
• Patent protection is a game for big companies with lots of lawyers and money.
• A startup needs a variety of skills, perspectives, and backgrounds to succeed.