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 Amazon.com,” 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 amazon.com. 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 pets.com 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.

Interesting aspects of life - Warren Buffet.

Something to think about....


There was a one hour interview on CNBC with Warren Buffet, the second richest man who has donated $31 billion to charity

Here are some very interesting aspects of his life:


1. He bought his first share at age 11 and he now regrets that he started too late!


2. He bought a small farm at age 14 with savings from delivering newspapers.


3. He still lives in the same small 3-bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.


4. He drives his own car everywhere and does not have a driver or security people around him.


5. He never travels by private jet, although he owns the world's largest private jet company.


6. His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis. He has given his CEO's only two rules.

Rule number 1:

Do not lose any of your share holder's money.

Rule number 2:

Do not forget rule number 1.


7. He does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch Television.


8. Bill Gates, the world's richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had
scheduled his meeting only for half hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.


9. Warren Buffet does not carry a cell phone, nor has a computer on his desk.



His advice to young people:

'Stay away from credit cards and invest in yourself and

Remember:

A. Money doesn't create man but it is the man who created money.

B. Live your life as simple as you are.

C. Don't do what others say, just listen them, but do what you feel good.

D. Don't go on brand name; just wear those things in which u feel comfortable.

E. Don't waste your money on unnecessary things; rather, just spend on them whos really in need.

F. After all it's your life; then why give chance to others to rule our life.'

The Google of Mobiles

WILL COME FROM INDIA

Over the past decade, Google has been every entrepreneur’s benchmark for success through innovation. Besides its founding duo, Sergei Brin and Larry Page, there were a handful who saw the internet search engine’s potential and backed it when it was still being run from a garage. And here’s the Indian connection. Ram Shriram, who went to school in Chennai and later migrated to the Silicon Valley, was one of the pillars that built Google. Ram Shriram considers himself a guide for entrepreneurs rather than a mere cheque-writing angel investor. Known as the ‘Sherpa from Palo Alto’, he runs Sherpalo Ventures and also serves as the founder director at Google Inc.

Fundamentally two biggest applications on the internet are search and email. And there was a quantum order of magnitude improvement in quality of search at that time that Google presented that resonated with me and resonated with its early users. That is what prompted my interest in it. Agreed that we did not have a business model or a revenue model figured out at that point but you have to start somewhere small for you to grow later. And if u do that piece really really well then you may have a future as big as Google.

So was it their luck that they found an investor like you?

No, I would not call it luck. Not for me not for them. In my case, I do not think lightening strikes three times as it did for me. I had done Netscape and Amazon before I did Google. And then there have been more successes like Stumbleupon and mint which is a financial services portal aggregating personal financial information. Google is the most prominent one in my portfolio but it certainly was not just luck.

You have seen Google grow like no other dotcom in the internet space. Do you see another Google, may be, in India as entrepreneurship is on a high here?

Frankly speaking. No. Not in the internet space at least. The challenge in India to create another Google is not that somebody can not build a big internet company, I mean look at Naukri, it is a pure-play dotcom company. The market is limited by the size of the internet population which is somewhere between 30 and 40 million and unfortunately it is staying somewhat stuck at that level because we have a last mile problem. We don’t have an Digital Millennium Copyright Act equivalent law or a spectrum policy that opens up broadband spectrum. I have had conversations with the policy makers and unfortunately the pace at which it is moving is slower than I like. It is important for Indian dotcom space as the trickle down economics of having more Internet access is that it could generate more jobs, generate a great deal more new companies that can be bigger companies than Google. It not that the entreprenuership spirit is low so India is not getting a Google out, they can do it. Wipro and Infosys have shown that there can big companies build around outsourcing so Indian entrepreneurs can easily do it on the Internet.

Ok. So, what you are saying is if America’s Google was in the Internet space, India’s could be in some other?

Yes. Looking at the amount of innovation happening in India. I think there is a Google waiting to happen in the mobile space. I see somebody like Google coming about every 10 years. In the 80s it was Microsoft, in the 90s it was Cisco and Google in the period up to 2010 and there may be a garage start-up right now in some part of India in the mobile space that would set the tone for the coming decade. Lots of interesting content companies coming about as there are confluence of cellphones and entertainment content. The big success will happen on mobile and it would happen on mobile because the mobile market is growing by 8-10 million users a month and most importantly almost all users are attuned to the use of the technology on offer when you say mobile like it is with Internet in countries like the US.

But is there enough spark then in the Indian space for bigger companies to come out?

Absolutely. There is spark. We are in the age of entreprenuership in India. There are good market spaces to nurture businesses. But the Internet user base has to go up from 30 million to 100 million for any dotcom company to scale up like Google or may be also an Yahoo.

If any entrepreneur has to take lessons from Google, what would those be?

It’s not just about having a good idea and a vision. But it’s more about great execution as successes come with great execution. So what does great execution mean? Hiring great people, building right partnerships and more importantly than doing the right things success for a start-up, it is in figuring out the things not to do. This keeps you focused and finally making sure that you make the right choices in terms of capital i.e. making sure the right kind of people invest in you..

If you look at the dotcom players in India, there are a lot of ‘Me Too’s. For every Yaari.com , you have a Facebook. Comment.

I don’t think that you can make the characterisation that they are all ‘me too’s in the Indian market. What happens is that there are only so many market segments in the dotcom space, so you can only build companies in the market segments available to you. When you talk about segments like search, emails, social networking, since there are global giants like Google, Yahoo and Facebook. So the chances for scaling your own ‘me too’ here are far and few. But if you take something like jobs or travel, those are areas that need to be targeted more. Yes there is an Expedia for a Cleartrip, but those are not successful in India because they have not focused on India as a market. So just because a company exists in that space does not mean that you cannot build a success in the same space. Look at China, it has a company in each of these spaces where US dotcoms are dominant. There is 51jobs.com, then there is qqq for messaging. That proves that there can be a successes where the US already has a success. Having said this, there are growth areas like these but these areas have been invested in quite heavily. There are 6-8 companies invested in the same sector and there are all not going to be successes. I think there will be a shake out in terms of successes from the next set of venture backed companies. Nobody in India starting a web venture would die for lack of funding. There is a good angel network here as well. The law of averages however would now start to apply in the dotcom industry and only a small number would actually succeed. But this phase is still 2 years away.

A lot has been said these days about the US slowdown. Do you think the US recession affect the Indian start-ups?

I think the recession will affect the tech spendings. It hasn’t yet affected any start-ups and it won’t affect the start ups because unlike the 1999-2000 period it wasn’t the tech bubble that has caused the decline in the markets but a set of financial issues. Recessions are when great companies are built. If you look way back at Microsoft, Google, these were companies that were essentially born at the depths of the downturn because that is a great time to hire people and it is a time when valuations come back down to normal levels. It is, however, affecting the private equity companies and in turn the fund flow to Indian companies.

Article Resource:
Author: Ritwik Dhonde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".