As the saying goes, “You don’t have to be great to start, but you have to start to be great.”. We all have ideas but what differentiates the great entrepreneurs from the wannabes is execution. The hardest part of starting anything worthwhile, especially a business, is starting, keeping the momentum, having the stamina to withstand the roller coaster and the endurance to keep going against all odds.
“Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.” - Ried Hoffman
In The Art of the Start 2.0: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything, American author and Silicon Valley venture capitalist, Guy Kawasaki distills lessons learned and strategies for starting a business from the ground up. Guy was an evangelist of the early Apple Macintosh computer, with fifteen books written on Entrepreneurship, and is also the chief evangelist of Canva (an online graphic design company).
Theme: A guide to starting a business and running it successfully. Create meaning and don’t focus on money.
“If you make meaning, you’ll probably also make money.”
Topics discussed include the Art of starting a business, leadership, bootstrapping, fund-raising, pitching, team building, Evangelizing, networking, rainmaking, partnership and Endurance.
Key Takeaways - The Art of the Start 2.0
On Entrepreneurship
Entrepreneurship is not a sprint because it takes years to win. It’s not a marathon because there are multiple events. A decathlon is closer, but a decathlon is not a team sport. No sports analogy does entrepreneurship justice. Entrepreneurship requires a team to do ten things at once. One aspect of a decathlon that does work as a metaphor is that it is a contest of endurance. In both cases, the winner is the one who has mastered the art of enduring.
Phases of Business Cycles: microscopes and telescopes.
In the microscope phase, there’s a cry for levelheaded thinking, returning to fundamentals, and focusing on short-term financial results. Experts magnify details, line items, and expenditures, and then demand forecasts, market research, and competitive analysis.
In the telescope phase, entrepreneurs bring the future closer. They dream up the next big thing, change the world, and make late adopters eat their dust. Money is wasted, but some crazy ideas stick, and the world moves forward.
When telescopes work, everyone is an astronomer, and the world is full of stars. When telescopes don’t work, people whip out microscopes, and the world is full of flaws. The reality is that entrepreneurs need both microscopes and telescopes to achieve success.
Entrepreneurs Start by asking great Questions:
“The genesis of great companies is answering simple questions that change the world, not the desire to become rich.”
THEREFORE, WHAT?
This question arises when you spot or predict a trend and wonder about its consequences. It works like this: “Everyone will have a smartphone with a camera and Internet access.” Therefore, what? “They will be able to take pictures and share them.” Therefore, what? We should create an app that lets people upload their photos, rate the photos of others, and post comments.” And, voila, there’s Instagram.
ISN’T THIS INTERESTING?
Intellectual curiosity and accidental discovery power this method. Spencer Silver was trying to make glue but created a substance that barely holds paper together. This oddity led to Post-it Notes. Ray Kroc was an appliance salesman who noticed that a small restaurant in the middle of nowhere ordered eight mixers. He visited the restaurant out of curiosity, and it impressed him with its success. He pitched the idea of similar restaurants to Dick and Mac McDonald, and the rest is history.
- IS THERE A BETTER WAY?
- WHY DOESN’T OUR COMPANY DO THIS?
- IT’S POSSIBLE, SO WHY DON’T WE MAKE IT?
- WHERE IS THE MARKET LEADER WEAK?
IS THERE A BETTER WAY?
Frustration with the current state of the art is the hallmark of this path.
Larry Page and Sergey Brin thought measuring inbound links was a better way to prioritize search results and started Google.
“In the beginning I looked around and, not finding the automobile of my dreams, decided to build it myself.” - Ferdinand Porsche
WHY DOESN’T OUR COMPANY DO THIS?
Frustration with your current employer is the catalyzing force in this case. You’re familiar with the customers in a market and their needs. You tell your management that the company should create a product because customers need it, but management doesn’t listen to you. Finally, you give up and do it yourself.
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.
Weave a MATT (Milestones, Assumptions, Tests, Tasks)
To stay in control, you need to weave a MATT, which stands for milestones, assumptions, tests, and tasks.
MILESTONES
Accomplishing a large number of goals is a necessary objective for every startup. However, some goals stand above the others because they mark significant progress along the road to success. The five most important milestones are:
- Working prototype
- Initial capital
- Field-testable version
- Paying customer
- Cash-flow breakeven
ASSUMPTIONS
This is a list of the typical major assumptions that you might make about your business:
Market size, Gross margin, Sales calls per salesperson, Cost of customer acquisition, Conversion rate of prospects to customers, Length of sales cycle, Length of sales cycle, Return on investment for the customer, Technical support calls per unit shipped, Payment cycle for receivables and payables.
TESTS
You can come up with a solid list of assumptions, but everything is theoretical until you start testing them:
- Does the customer-acquisition cost permit profitable operation?
- Will people use your product?
- Can you afford to support them?
- Can the product withstand real-world use?
TASKS.
Finally, there are tasks that are necessary to reach milestones and test assumptions. Any activities that don’t contribute to achieving them are not crucial and are low priority. Essential tasks include:
- Recruiting employees
- Finding vendors
- Setting up accounting and payroll systems
- Filing legal documents
“Entrepreneurship is at its best when it alters the future, and it alters the future when it jumps curves.”
DICEE (Deep,Intelligent,Complete,Empowering,Elegant)
Entrepreneurship is at its best when it alters the future, and it alters the future when it jumps curves:
- Typewriter to daisywheel printer to laser printer to 3D printer
- Telegraph to telephone to mobile phone to smartphone
- Cassette player to Walkman to iPod
“Does your product offer “better sameness” or does it jump to the next curve?”
DEEP
Curve-jumping products provide features and functionality that customers might not appreciate or realize at first.
“A deep product has lots of features because you’ve anticipated what people need as they come up the power curve.”
INTELLIGENT
A curve-jumping product shows people that the company who created it understood their pain or problem.
“An intelligent product reflects your insights on how to ease people’s pain or increase their pleasure.”
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.
“A complete product embodies everything a customer needs, such as support, documentation, and enhancements.”
EMPOWERING
Curve-jumping products make people better by increasing their productivity and creativity.
“An empowering product makes people better. Great stuff doesn’t fight you—it becomes 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.
“ An elegant product is not just functional; it’s also well designed so that people can use it easily and quickly.”
On Bootstrapping
Entrepreneurs can bootstrap almost any business—especially if they have no choice in the matter. A bootstrap able business model has the following characteristics:
- Low up-front capital requirements
- Short (under a month) sales cycles
- Short (under a month) payment terms
- Recurring revenue
- Marketable through social media and word of mouth
“Bootstrapping involves managing for cash flow, not profitability.”
Sweat the Big Stuff
Bootstrapping goes awry when entrepreneurs focus on saving pennies to the detriment of the Big Picture.
BIG STUFF
- Developing your MVVVP
- Selling your product
- Enhancing your product
SMALL STUFF
- Business cards and letterhead
- Office supplies
- Furniture
- Office equipment
On Team Building
The art of building a team requires looking beyond race, creed, color, sexual orientation, and religion. I’d even add formal education and work experience to this list. Instead, focus on these three factors:
- Can the candidate do what you need?\
- Does the candidate believe in what you’re doing?\
- Is the candidate likeable and trustworthy?
There are two theories:
- Find the candidate who lacks major weaknesses (even though he lacks major strengths).
- Find the candidate who has major strengths (even though he has major weaknesses).
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