The Art of the Start

The Time-Tested, Battle-Hardened Guide for

Anyone Starting Anything

Author: Guy Kawasaki

Publisher: Portfolio
Date of Publication: 2004
About the Author ISBN: 1591840562
Number of Pages: 215 pages

Guy Kawasaki The Big Idea

You have the idea of a lifetime and yet you do not know where and
Guy Kawasaki is a managing how to begin. It is a dilemma shared by entrepreneurs everywhere
director of Garage Technology - what does it take to turn a great idea into action?
Ventures, an early-stage venture
capital firm and a columnist for Author Guy Kawasaki brings two decades of business experience
Forbes.com. Previously, he was to offer a definitive guide for anyone who dreams of starting
an Apple Fellow at Apple anything. Whether you are thinking of starting a start-up Internet
Computer, Inc. where he was one operation or a church group, The Art of the Start will provide you
of the individuals responsible for with everything you need to know from raising money to fostering a
the success of the Macintosh community.
computer.
Guy is the author of eight books
including The Art of the Start,
Rules for Revolutionaries, How to
Drive Your Competition Crazy,
Selling the Dream, and The
Macintosh Way. He has a BA from
Stanford University and an MBA
from UCLA as well as an honorary
doctorate from Babson College.
For more information, visit:
http://www.artofthestart.com/

Published by BusinessSummaries, Building 3005 Unit 258, 4440 NW 73rd Ave, Miami, Florida 33166
©2003 BusinessSummaries All rights reserved. No part of this summary may be reproduced or transmitted
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 The Art of the Start By Guy Kawasaki

Chapter 1 - The Art of Starting

There are five important things an entrepreneur must accomplish:
1. Make Meaning. The best reason to start an organization is to make
meaning. Meaning is not about money, fame or power. Instead, meaning is
about making the world a better place, increasing the quality of life, righting a
wrong and preventing good from ending.

2. Make Mantra. Instead of a mission statement, take your meaning and make
your own mantra. A mantra is defined as a sacred verbal formula repeated
in prayer, meditation, or incantations such as an invocation of god or a magic
spell. Examples of mantras include Disney's “Fun family entertainment”,
and Nike's “Authentic athletic performance.”

3. Get Going. Start creating your product or service and commence delivering
to your customers. Forget about writing long business plans or creating
complicated financial projections. Instead build your prototype and launch
your website.

4. Define Your Business Model. Define your customers and their needs.
Come up with a sales mechanism that will earn you more money than what
you are spending.

5. Weave a Mat (Milestones, Assumptions, and Tasks). Compile a list of the

milestones you need to meet, assumptions that are built into your business
model, and the tasks you need to accomplish to create your organization.

Chapter 2 - The Art of Positioning

With the right positioning, you should be able to see clearly why the organization was
started, why it should be patronized by customers, and why good people should
choose to work for the organization.

Before you begin dwelling into the art of positioning, you must first answer the
question, “What do you do?” You must be able to provide an answer that not only
seizes the high ground but shows exactly how your organization differs from its
competitors. It is only then that you can communicate this powerful message to your
chosen market.

Seize the High Ground

Good positioning must have the following qualities:
· Positive.
· Customer-centric.
· Empowering to your employees.
· Self-explanatory.
· Targets the intended customer.
· Must show the core competencies of your organization.
· Relevant to your core competencies and to the core needs of your

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customers.
· Long-lasting.
· Different from your competitors.

Other Positioning Tips:

· Position your product or service in the most personal manner you can.
· You must choose a remarkable name for your organization, product or
service.
· Use plain words that are easy to understand when describing what your
company can do for your customers. Avoid technical or insider jargon.
· Offer concrete points instead of mere overused adjectives when
distinguishing your products to competitors. Instead of calling your system
safe, say that your system has never been hacked.
· Ensure that each member of your organization understands your company's
positioning.

Chapter 3 - The Art of Pitching

For an entrepreneur, pitching is almost as important as breathing. Not only is
pitching a great tool for raising money, it is essential for reaching agreements.
Needless to say, agreements are common to any entrepreneur's daily life.

Here are some tips to help you make a perfect pitch:

1. Explain Yourself in the First Minute. Every single time you make your
pitch, take in mind that your audience is waiting for you to answer one
question: “What does your organization do?” The next time you make a
pitch, make sure that you answer that question in the very first minute.

2. Answer the Little Man. Picture a little man sitting on your shoulder the next
time you are giving a presentation. Imagine the little man whispering, “So
what?” in your ear every time you make a point. Always answer the little
man's question. To make it even better, right after you answer the so-what
question, move into “For instance…” and provide a real-world use or
scenario.

3. Know Your Audience. Do your research before any meeting starts. Find
out who you would be pitching to and learn what's important to your
audience. You must also visit the organization's website and gather core
information about the people you would be speaking to.

4. Observe the 10/20/30 Rule. Use the following the next time you are giving
a presentation: ten slides, 20 minutes, 30-point font text. The 10 slides that
are necessary for a pitch to investors are:
a. Title slide
b. Problem
c. Solution
d. Business model
e. Underlying magic
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 The Art of the Start By Guy Kawasaki

f. Marketing and sales

g. Competition
h. Management team
i. Financial projections and key metrics
j. Current status, accomplishments, timeline and use of funds

5. Set the Stage. Remember that everything and anything that goes wrong
would be your fault. Therefore, you must be prepared. Make sure you bring
your own projector and your own written materials. It might even be
advisable to bring two laptops (both with your loaded presentation) and a
memory card with a copy of your presentation just in case.

6. Let One Person do the Talking. In a pitch, it would be advisable for the
CEO to do 80% of the talking. As for the rest of the team, one or two slides
that pertain to their expertise are more than enough.

7. Pitch Constantly. The best way to achieve familiarity is to keep doing your
pitch over and over again. Try out your pitch in front of your employees,
relatives and friends.

Chapter 4 - The Art of Writing a Business Plan

An entrepreneur will soon discover that a business plan is not really as important as
most people deem it should be. However, the fact remains that most investors,
recruits, potential board makers and decision makers expect a business plan and will
not rest until they are given one.

Focus on the Executive Summary

When writing a business plan, use the ten slides that are necessary for a pitch to
investors (previous chapter) and use them as your framework. Instead of a title slide,
provide an executive summary. Remember that this executive summary is the most
important part of your business plan.

An executive summary is a concise and clear description of the problem you wish to
solve. It also states how you wish to solve the problem, your business model and the
underlying magic of your product or service. Remember, your executive summary
will determine whether or not people will read the rest of your business plan.

Keep It Clean
Here are other tips you should use when creating your business plan:

· Do not exceed twenty pages. The shorter your plan is, the more likely it is to
be read.
· Only one person should write the entire business plan.
· Use staples to bind the plan. Forget about leather, embossed portfolios.
· Simplify financial projections to two pages. After all, it is simply impossible to
know how much you'll spend on office items in your fourth year of operations.
· Include key metrics. Remember, the number of customers you have,
locations and resellers are important to your investors.
· Provide the right numbers. Your cash flow statement for the first five years is
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 The Art of the Start By Guy Kawasaki

very important.

Chapter 5 - The Art of Bootstrapping

Most people are surprised to learn that industry giants Microsoft and eBay are two
companies that started with a bootstrap model. A bootstrappable business model
has:

· Low up-front capital requirements.

· Short (under a month) sales cycles.
· Short (under a month) payment terms.
· Recurring revenue.
· Word of mouth advertising.

Bootstrapping might mean passing up profitable sales that may take a long time to
collect or stretching your payments for everything you buy. This might mean a
decline in “paper” profits but for a bootstrapper, paper profits are not as important as
cash flow management.

Ship, Then Test

If you are bootstrapping, you obviously are not sitting on a pile of money. Therefore, it
is imperative that you get your product or service to the market immediately. When
using this philosophy, you are opting to fix the problems of your product later rather
than now.

The good news is, with this method, you will receive immediate cash flow and
feedback from the real world. Unfortunately, this method might also tarnish your
image if there are quality problems.

It is not easy to make this decision. If you feel that you would allow the people you
love to use the product or service as it is right now, then it might be correct to ship it. If
you are running out of money, it might also be advisable to ship the product and deal
with the consequences later.

Bootstrapping Tips
Here are other things to consider when you are on a bootstrapper's model:

1. Forget the “Proven” Team. When you're bootstrapping you must almost
always go for what's affordable. Keep this in mind when you are choosing
your team. Forget about hiring well-known industry veterans who would
cost you an arm and a leg on wages alone. Instead, choose young
inexperienced people with moldable talent and endless energy.

2. Focus on Function, Not Form. Do not focus on form when it comes to

spending money. If you need proper accounting, you don't need to hire a big
name firm. You also don't need to buy $700 office chairs when cheaper
ones would do.

3. Go Direct. Take the opportunity to sell directly to your customers. Only use

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resellers once you have ensured that your product and service is bug-free.
Remember, you have to establish your product on your own.

4. Position against the Leader. As a bootstrapper, positioning against the

market leader or going against accepted ways of doing things might be the
smartest thing to do.

5. Understaff and Outsource. Overstaffing can cause you a multitude of

problems. It is better to understaff and outsource. Do not outsource
research and development, marketing and sales. Instead, outsource your
payroll management.

6. Build a Board. A board of directors is always a source of good guidance and

superb direction. You don't need to worry about your lack of capital to attract
high-quality board members. If your products are innovative enough, the
board members will come.

7. Sweat the Big stuff. Save on office space, furniture, computers, and office
equipment. However, make sure you spend enough on product
development, sales, billing and collection.

8. Execute. The failure to execute can be disastrous to a bootstrapper. To be

able to execute, you must be able to:
· Set and communicate goals.
· Measure progress.
· Establish a single point of accountability.
· Reward the achievers.
· Follow through until an issue is done or irrelevant.
· Heed reality.
· Establish a culture of execution.

Chapter 6 - The Art of Recruiting

Recruiting good people is one of the most enjoyable and yet most critical tasks that
you must face as an entrepreneur.

When recruiting, you must look beyond race, color, education and work experience.
Instead you should focus on three factors:

1. Can the candidate do what you need?

2. Does the candidate believe in your meaning?
3. Does that candidate have the strengths you need?

Recruitment Tips:
1. Hire people better than you.

2. Remember that there are very few A players out there. Don't make the
mistake of disqualifying A prospects because of gender, race, sexual
orientation or age.
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 The Art of the Start By Guy Kawasaki

3. Ignore the following factors: experience in a big, successful organization,

experience in a failed organization, educational background, experience in
the same industry, experience in the same function, and functional
weakness. They are unimportant.

4. It is best to hire candidates who possess major strengths even if they have
major weaknesses.

Chapter 7 - The Art of Raising Capital

A start-up business is usually on a constant look-out for capital from outside
investors. Investors include venture capitalists, foundations, friends and family
members.

Although pitching plays a major role when you are trying to raise capital, the realities
of your organization are so much more important. You must offer a product or
service that is meaningful and long-lasting.

Here are some tips you can use when raising capital:

1. Build a Business. The best way to get investors is to build a business

immediately. How do you build a business without money? Have a
bootstrapper model.

2. Get an Intro. Have current investors, lawyers, accountants, other

entrepreneurs and professors introduce you to investors. This way, they will
learn about you from sources they respect.

3. Clean Up Your Act. Get rid of obvious flaws in your system. Flaws often
occur in your intellectual property, capital structure, management team,
stock offerings and regulatory compliance.

4. Disclose Everything. Don't attempt to hide problems that can not be

cleaned up immediately. Do not allow anything to damage your credibility.

5. Acknowledge, or Create, an Enemy. Believe it or not, investors do not

want to hear that your organization has no existing competitors. This only
tells them that there is no existing market out there for your service, or that
you are too stupid to use Google.

6. Don't Use Old Lies. Here are some examples of lies start-ups tell investors.
Refrain from using them and be prepared to come up with new ones:
a. “Our projection is conservative.”
b. “All we have to do is get 1 percent of the market.”
c. “P&G is too old to be a threat.”
d. “Several investors are already in due diligence.”
e. “Key employees will join as soon as we get funded.”

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 The Art of the Start By Guy Kawasaki

Chapter 8 - The Art of Partnering

Partnerships - a word that is actually more complicated than it sounds. Although
good partnering can increase cash flow, accelerate revenue and reduce costs, a bad
partnership can very well mean the other way around.

Here are some tips that can help you master the art of partnering:

1. Partner for “Spreadsheet” Reasons. Partnering can accelerate your

entry into a new area, open up new distribution channels, speed up product
development and reduce your costs.

2. Define Deliverables and Objectives. These include additional revenues,

reduced costs, new products and services, new customers, new markets,
etc.

3. Ensure that the Middles and Bottoms Like the Deal. It is not enough that
upper management believe that the partnership is a good idea. Make sure
that the partnership is understood by all the members of the organization.
Everyone must contribute to make a partnership work.

4. Find Internal Champions. Choose one person from each organization to

become an internal champion. Ensure that the main goal of the chosen
champions is to achieve success. Nothing but the partnership counts.

5. Cut Win-Win Deals. Both partners have to win. Do not enter into win-lose
partnerships.

6. Wait to Legislate. Don't ask for legal advice too early. Legal experts will
always give you more reasons not to go through the deal. Agree on
business terms on your own before you bring in your lawyers.

7. Put an “Out” Clause in the Deal. The assurance that both parties won't be
trapped into a partnership that is not working actually promotes longevity.

Chapter 9 - The Art of Branding

The classic Ps of marketing (product, place, price and promotion) pretty much sums
up the art of branding. Some people add prayer to the list, but the author prefers
proselytization which is the art of converting others to your belief or doctrine.

For today's start-ups, proselytization is the core of branding. You must be able to
create something contagious that would make people enthusiastic and eager to try
your product or service. You must be able to make other people spread the word
around.

Create a Contagion
The secret to branding is aligning with a product or service that is already gold or

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enhancing your product and service until it becomes gold. You must be able to
create or find products and services that are contagious. Contagious products and
services are:

· Cool.
· Effective.
· Distinctive.
· Disruptive.
· Emotive.
· Deep.
· Indulgent.
· Supported.

Branding Tips

1. Lower the Barriers to Adoption. You have to make your product or service
simple and yet effective. You must flatten the learning curve. Your
customers must be able to get basic functionality right almost immediately.

2. Recruit Evangelists. Evangelists are people who believe in your company

and what you do. Take advantage of the customers who wish to help you
and your business. Assign them tasks and expect them to get done.
Provide them the tools they need to evangelize.

3. Foster a Community. Identify and recruit customers who are enthusiastic

about what you do. Hire someone whose sole task is to foster a community.
Integrate the presence of your community in all your sales and marketing
tools. Allow members to use your building for their events and conferences.

4. Achieve Humanness. Target the young and don't be afraid to make fun of
yourself. Feature your customers and help the underprivileged.

5. Focus on Publicity. To attract publicity, create something grand and get

them into the hands of people. Make friends even with reporters from
publications you have never heard of. Additionally, make sure you maintain
good relations with the press all year round.

Chapter 10 - The Art of Rainmaking

A rainmaker is a person who generates large quantities of business. The first step of
rainmaking in a start-up business is to get the very first version of the product or
service out to the market. After you do this, you must observe where your product or
service will sell the most.

The second step of rainmaking is to be able to sell the product or service well.
Remember, as a start-up, people are not aware of your products and services. You
must overcome resistance.

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 The Art of the Start By Guy Kawasaki

Here are some tips you can use to master the art of rainmaking:

· Pick the right lead generation method.

· Find the key influencer. Ignore titles. They really don't mean much.
· Be nice to secretaries and administrative aids.
· Make your prospect talks. This way, they'll be able to tell you what you need
to do to close the deal.
· Ask customers to test drive your products and services.
· Give your customers a slow and easy adoption curve.
· Do not be fazed when you are rejected.

Chapter 11 - The Art of Being a Mensch

Mensch is a Yiddish term for an ethical and admirable person. In some cultures, it is
considered the highest form of praise. To be a mensh, you must help people, do
what's right and contribute to society.

Here are some tips on becoming a mensch:

· Help people who can not help you back.

· Observe the spirit of agreements, pay for what you get and focus on what is
important.
· Help society by giving money, time, expertise and emotional support.

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