Art of Start - Guy Kawasaki (Category I)

Posted by Ravikiran K.S. on January 1, 2006

1. MAKE MEANING (inspired by John Doerr).

The best reason to start an organization is to make meaning—to create a product or service that makes the world a better place. So your first task is to decide how you can make meaning.

Meaning is not about money, power, or prestige. It’s not even about creating a fun place to work. Among the meanings of meaning are to:

  • Make the world a better place.

  • Increase the quality of life.

  • Right a terrible wrong.

  • Prevent the end of something good.

Complete this sentence: If your organization never existed, the world would be worse off because **_.

2. MAKE MANTRA.

Forget mission statements; they’re long, boring, and irrelevant. No one can ever remember them—much less implement them. Instead, take your meaning and make a mantra out of it. This will set your entire team on the right course.

Instead of a mission statement and all the baggage that comes with it, craft a mantra for your organization. The definition of mantra is

“A sacred verbal formula repeated in prayer, meditation, or incantation, such as an invocation of a god, a magic spell, or a syllable or portion of scripture containing mystical potentialities.”

In only the space provided, write your organization’s mantra,-

3. GET GOING.

Start creating and delivering your product or service. Think soldering irons, compilers, hammers, saws, and AutoCAD whatever tools you use to build products and services. Don’t focus on fetching, writing, and planning.

The hardest thing about getting started is getting started. Remember: No one ever achieved success by planning for gold. You should always be selling—not strategizing about selling. Don’t test, test, test—that’s a game for big companies. Don’ t worry about being embarrassed. Don’ t wait to develop the perfect product or service. Good enough is good enough. There will be plenty of time for refinement later. It’s not how great you start—it’s how great you end up.

Observe these key principles of getting going:
a. THINK BIG - Set your sights high and strive for something grand.
b. FIND A FEW SOUL-MATES - After the fact, one person may come to be recognized as “the innovator,” but it always takes a team of good people to make any venture work.
c. POLARIZE PEOPLE - When you create a product or service that some people love, don’t be surprised when others hate you.
d. DESIGN DIFFERENT - There is no single best way. Example:

  1. “I WANT ONE.” This is the best kind of market research—the customer and the designer are the same person. Example: Ferdinand Porsche said, “In the beginning I looked around and, not finding the automobile of my dreams, decided to build it myself.”

  2. “MY EMPLOYER COULDN’T (OR WOULDN’T) DO IT”

  3. “WHAT THE HELL—IT’S POSSIBLE!” This theory isn’t popular when times are tough, and microscopes are flourishing.

  4. “THERE MUST BE A BETTER WAY.” The organization born of this philosophy is based on the idealistic notion that you can make the world a better place by doing something new.

e. USE PROTOTYPES AS MARKET RESEARCH - In the early days of an organization, there is high uncertainty about exactly what you should create and exactly what customers want. The wisest course of action is to take your best shot with a prototype, immediately get it to market, and iterate quickly. If you wait for ideal circumstances in which you have all the information you need (which is impossible), the market will pass you by.

The expected outcome of the “get going” principle is a first release of a product or service. Remember: it won’ t be perfect. But don’t revise your product to get prospective customers to love it. Instead, revise it because customers already love it.

4. DEFINE YOUR BUSINESS MODEL.

No matter what kind of organization you’re starting, you have to figure out a way to make money. The greatest idea, technology, product, or service is short-lived without a sustainable business model. To do this you need to answer two questions:

  • Who has your money in their pockets?

  • How are you going to get it into your pocket?

Here are some tips to help you develop your business model:
a. BE SPECIFIC. The more precisely you can describe your customer, the better.
b. KEEP IT SIMPLE. If you can’t describe your business model in ten simple words or less, you don’t have a business model. Avoid whatever business jargon (strategic, mission-critical, world-class,enterprise-class, etc.) Think of eBay’s business model: It charges a listing fee plus a commission. End of story.
c. COPY SOMEBODY. You can innovate in technology, markets, and customers, but inventing a new business model is a bad bet. Try to relate your business model to one that’s already successful and understood. You have plenty of other battles to fight.

My final tip is that you ask women—and only women.

Step 1: Calculate your monthly costs to operate your organization.
Step 2: Calculate the gross profit of each unit of your product.
Step 3: Divide the results of Step 1 by the results of Step 2.
Step 4: Ask a few women if they think you have a chance of selling that many units. If they don’t, you don’t have a business model.

5. WEAVE A MAT (MILESTONES, ASSUMPTIONS, AND TASKS).

The final step is to compile three lists: (a) major milestones you need to meet; (b) assumptions that are built into your business model; and © tasks you need to accomplish to create an organization. This will enforce discipline and keep your organization on track when all hell breaks loose and all hell will break loose.

The purpose of compiling the MAT is to understand the scope of what you’re undertaking, test assumptions quickly, and provide a method to find and fix the large flaws in your thinking.

a. Milestones:

There are seven milestones that every startup must focus on. If you miss any of them, your organization might die.

  • Prove your concept.

  • Complete design specifications.

  • Finish a prototype.

  • Raise capital.

  • Ship a testable version to customers.

  • Ship the final version to customers.

  • Achieve breakeven.

Take down the corny framed mission statement in your lobby and replace it with a printout of target dates for completion of the seven milestones listed above. Make sure that employees and guests can read it. Repeat this procedure for every new product or service. Create a wall of fame to track the history of your organization.

b. Assumptions

  • product or service performance metrics

  • market size

  • gross margin

  • sales calls per salesperson

  • conversion rate of prospects to customers

  • length of sales cycle

  • return on investment for the customer

  • technical support calls per unit shipped

  • payment cycle for receivables and payables

  • compensation requirements

  • prices of parts and supplies

c. Tasks

create another comprehensive list of major tasks that are necessary to design, manufacture, sell, ship, and support your product or service. They include

  • renting office space

  • finding key vendors

  • setting up accounting and payroll systems

  • filing legal documents

  • purchasing insurance policies

List of recommendations for internal entrepreneurs.

a. PUT THE COMPANY FIRST. - When you have a good idea for a product or service, it will attract a large number of 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.
b. KILL THE CASH COWS. - if you don’t kill the cash cows, someone external will.
c. STAY UNDER THE RADAR. - If you are unnoticed, you might be fired.
d. FIND A GODFATHER. - Internal entrepreneurs should find a godfather to support their projects by providing advice, technical and marketing insights, and protection—if it comes to the point where you need protection.
e. GET A SEPARATE BUILDING. - A separate building will keep your efforts under the radar and foster esprit de corps among your merry band of pirates.
f. GIVE HOPE TO THE HOPEFUL. - Inside every corporate cynic who thinks that “this company is too big to innovate” is an idealist who would like to see it happen.
g. ANTICIPATE, THEN JUMP ON, TECTONIC SHIFTS. - When organization structure change happens, instead of saying “Look what we’ve been working on.”, corporate pukes should say, “Now I see the shift. If you give me permission, six months, and a team of analysts, I can come up with a new product strategy.”
h. BUILD ON WHAT EXISTS. - Don’t hesitate to utilize the existing infrastructure to make innovation easier—start by stealing,
i. COLLECT AND SHARE DATA. - The day will inevitably arrive when a bean counter or lawyer is suddenly going to take notice of you and question the reasons for your project’s existence. 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. In big companies, data suppresses antibodies, but it might be too late to get the data once the antibodies appear.
j. LET THE VICE PRESIDENTS COME TO YOU. - A vice president will “own” your idea and support it more if he “discovers” it and then approaches you about sponsoring it.
k. DISMANTLE WHEN DONE. - If the product or service is successful, consider dismantling the group and integrating it into the larger organization. Then create a new group to jump ahead again.
l. REBOOT YOUR BRAIN. - Forget all old stories and things told by organizations before. Start with fresh mind.

FAQ

  1. Everybody has fear of starting. Start with small. Gradually you will get rid of it.
  2. Discuss your idea with as many people as you can. It will enhance your idea and also keep you in lime light.
  3. If three close friends as you to give up. You should listen. Its okay to fail as long as you try again.
  4. Two people essential to your business:

  1. An elderly person who can advice you on things, but wouldn’t do the work.

  2. A friend who has complementary skills and is willing to help you with your work.

  1. Make business cards and letterhead right away. They are essential.
  2. Create a web site of your own ASAP. That is the first place your customers will go to at first.
  3. GIST Acronym - GREAT IDEAS FOR STARTING THINGS