Saturday, October 25, 2008

Interview with Guy Kawasaki. Next Gen Entrepreneur

He is Silicon Valley's original evangelist but that’s just one of Guy Kawasaki’s avatars. His others include being an entrepreneur, a venture capitalist, a sought after speaker, a blogger, a columnist, a best selling author — and during an interview, an excellent raconteur.

In his 25 years as a Silicon-Valley watcher, the 54 year old managing director of Garage Technology Ventures has seen trends come and go, fortunes made and unmade and in the journey, he himself made some costly mistakes (he was offered the CEO’s job at an internet company by Michael Moritz in 1995 and he refused it. The company’s name was Yahoo!). But trust a man of his ability and humility to distill all the ensuing learnings into remarkable insights and then pepper these with anecdotes to conjure up a racy account that is lapped up by the readers of his books — and the audience, if he is speaking. His tome on startups, The Art Of The Start, is considered a Bible among entrepreneurs.

In Mumbai recently to speak at a SAS leadership conference, he held the audience rapt — and occassionally in splits —with his witty remarks and suppositions (I believe in god as there is no other explanation for Apple’s existence till now). He confessed he loved India, and Mumbai especially, and during his visit, he happened to visit a Ganesh pandal decked in full glory and came back mesmerised by the sheer number of people and the ensuing madness. “It’s the Super Bowl for you guys’, he noted. The children peddling the latest best sellers at traffic lights at one tenth of their original prices had him wondering whether they already had his soon to be released book Reality Check: The Irreverent Guide to Outsmarting, Outmanaging & Outmarketing your Competition. “They are India’s very own,” he said. 

But the crowning glory of his Mumbai trip was a visit to Dhobhi Ghat that set him wondering about the ‘business analytics’ involved. “How can you send a pair of jeans there and get the same one back,” he wondered. “And that too without RFID chips, no barcode scanner,” he said. Well, its innovation at work Mr Kawasaki, Indian style. India still managed to surprise him and it takes a lot to surprise a man who has had pitches made to him about buying out Israel! In a candid interview with CD, Kawasaki discussed innovation, the art of entrepreneurship and Apple, where he was once Macintosh’s chief storyteller. Here’s Kawasaki unplugged:

What gives Apple that Midas touch?

Somehow that company has it in its DNA to create products that people see as extensions of themselves. I think that this is (points to his Apple notebook) something that makes me more productive and creative. People view iPods as something that makes them happy and iPhones as products that make people more productive … even though for a short while with that battery. While the battery is good you are more productive (laughs). I think it will be difficult to find someone who says my Vista machine makes me more creative and productive. It’s hard to imagine that conversation. Having said that Microsoft has 95% marketshare, so maybe that’s why you care about what people say, but that’s the difference.

What part of that ‘specialness’ is Steve Jobs himself?

One hundred and five per cent. Obviously, he has bright people working for him, but he attracts bright people. I don’t know where the company will be without him. In a sense he is to Apple what Lee Kuan Yew is to Singapore.

Can you trace any commonality between revolutionary companies like Apple, Mircosoft, and Google?

Yes, the commonality is completely contrary to most people’s idea of venture capital. Which is every one of the mentioned companies had two co-founders who were not proven. They were nerds. So Google was founded by two Phd students in computer science, and Steve was a college dropout.

The Start-Up Artist

Bill Gates was also a dropout. It was not like Bill Gates was VP of say Data General and decided to write personal computer software. Looking at these companies, you should invest in unproven teams, in unproven markets, and unproven technologies. Contrary to what VCs say, which is invest in proven teams, proven markets, and proven technologies. That’s the digital divide (laughs).

Every company is on the innovation bandwagon, but why have none of them been able to replicate Applestyle innovation?

Some of this is due to the financial structure. Most of the companies that are publicly traded have to show good financial results in 90 days and most of the innovation cannot take place in the 90 days. And number two — Apple is a rare exception — as you grow larger it becomes harder to innovate. The larger you get, the more the installed base, the more infrastructure you have. There are 26 million people out there saying build a better Macintosh and who are you to say I will build something different. That’s why it takes a Steve Jobs who doesn’t care — 26 million people say this, and he goes and builds an iPod. It’s very hard to do.

What stage of the entrepreneurship cycle do you think we in India are?

I haven’t been in India long enough to say. Statistically there should be four Steve Jobs in India because we have 300 million people, and you have 1.2 billion. So there are four Steve Jobs in India. You just have to find them.

A programmer in India shouldn’t want to be just a recipient of American outsourced work. That’s not entrepreneurship. The Indian entrepreneurs should not say I want American outsourced work or I will build an Indian version of Youtube, Flickr, or Twitter. The product should be such that people in Silicon Valley say I am an American version of this thing that they built in India. And I can’t think of any such example.

Who would you blame more for the internet fiasco in early 2000s, the entrepreneurs or the VCs?

It was no one’s fault. Life is cyclical, it goes through a growth phase and there is a death phase. Not everyone died, right? I would make a call that the world is a better place today because of an So it was a great biological experiment, most of the life-forms died, but some lived. The ones that survived are doing great. Yes, there was a lot of waste, yes, there was a lot of stupidity but fact is that people can now say that was a stupid idea. I will tell you that when people were starting Yahoo, Google, and Cisco, somebody was saying that’s a stupid idea. So it’s very easy for us to say what went wrong now. A very good example is Webvan (a defunct web grocery business); now we can say it was a bad idea of supplying celery to the doorstep and that $200 million went down the drain. Sitting here I can tell you it’s a flip of a coin whether Webvan was going to be a success or not. We could easily be saying that Webvan changed the world. So the message is you just don’t know. Since you don’t know you as an entrepreneur can try and if you fail you fail.

What’s your take on Web 2.0?

I don’t know what that means. People call me to attend Web 3.0 conferences and I tell them I don’t know what even 2.0 is. My comment to these kinds of labels is that I don’t think that any customer wakes up in the morning and says I need a Web 2.0 application. They may say I need something to balance my cheque-book, I need something to manage my inventory, I need to create a personal profile. I can understand that; but nobody wakes up and says I want a Web 2.0 experience today.

What are the few steps that an entrepreneur should get right?

Prototyping is the first thing. That’s the first, second, third, fourth, and fifth thing. The sixth thing is to write a business plan. And don’t even think of the exit plans, it’s a joke. Statistically, the logical exit plan is bankruptcy. Entrepreneurs should focus on the prototype because a prototype will tell you whether people will use the product/service or not. It proves to the investor whether you are serious or not. It enables you to find out whether customers want it or not. Prototype is the key, not the business plan and definitely not the research either.

A lot of companies seem to be promoting the concept of Intrapreneurs aggressively and it hasn’t lead to something very substantial. What seems to be the problem?

Some of it works. In the US, when people talk about great examples of intrapreneurship; one of the most cited examples is 3M sticky notes. But that was 30 years ago. Tell me that in last 30 years all you have is stickies. It’s not easy. For all factors, in a publicly traded large company all that the sales force hears from the customers is that we want better, faster, cheaper existing products. So, in a sense you don’t have to listen to your customers, they will always ask for better, faster, cheaper products. No one will say I am an Apple II customer, create something that that will make my existing product obsolete. Nobody says that … and that’s why it’s hard to jump curves for companies.

A practical problem that entrepreneurs face is too much advice. VC’s, peers, bloggers, i-bankers, everyone is doling out advice. How does one segregate bad advice from the good?

As a general rule of thumb do the opposite of what a venture capitalist says. If he says go for market share, do the opposite. If he says build infrastructure because you need to service your best customers better; don’t. You will end up spending precious dollars on IT staff and other things. If the VC says outsource to Bangalore; do it internally. Generally speaking, it’s pretty good advice to do the opposite of what VCs tell you.

Article Resource:
Author: Vinod Mahanta is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns Guru Speak dated: 19th Sept 2008.

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