Guy Kawasaki’s Top 10 Mistakes of Entrepreneurs

avrdan (44)in #entrepreneurship • 7 years ago

Multiplying big numbers by 1 percent
• How hard could that be, hypothetically speaking?
• Take a larger market, multiply by a small number and you say “how hard could that be”.
• Two fundamental flaws with this:
i. Getting 1% of any market is not that easy
ii. No investor wants to hear that you are only going to get 1%
Scaling too soon
• We are going to need facilities for shipping, colocation for servers, order processing, fulfillment, customer service
• Software is going to be late, the website is going to be late, and the product won’t be bought – but you have already ramped up
• I have never seen a company die because it didn’t scale fast enough – that would be a “high-quality problem”
• Predictions don’t come true, you are stuck with a big overhead and run out of money
An Obsession With Partnering
• Partnering is bullshit!
• Only one thing that counts in a startup – sales.
• Partnering means two organizations try to compensate for their weaknesses, by partnering with another – 2 + 2 =3 in this case.
• Want to make investors happy? Focus on the numbers – sales.
Pitching Instead of Prototyping
• There is too much on the pitch
• The key is the prototype in the real world, not the pitch
• This is especially important for a tech / software startup, where building a prototype is not very expensive, thanks to the development of so many platforms you can use for development, marketing, cloud services etc.
Using Too Many Slides And Too Small A Font
• The Guy Kawasaki Rule of 10/20/30
i. 10 slides
ii. 20 minutes presentation
iii. 30 point font size (don’t have lots of text and don’t read verbatim)
Doing Things Serially
• For example, most entrepreneurs think that they will do things one at the time – raising money, building a team, developing the software, shipping the product, collecting the rewards – this serial world does not exist in real life!
• Entrepreneurs will need to do all of the above at the same time – it is a parallel process!
Believing 51% = control
• Most entrepreneurs believe that if they have 51% of the shares of the company, they have control over the company
• They believe in board meetings – that things come down to a vote.
• In the real world decisions are usually reached unanimously, not by a vote.
• The moment you take outside money, you have lost control of the company!
• 51% is an illusion of control
Believing Patents = Defensibility
• Only user the patent word in your presentation once: “We have filled patents.”
• Patents will not help defensibility
• An acquiring company will like patents, your friends or family may like it
• In the real world, it will take several years to file them and you won’t be able to win in litigation against giants, like, for example, Microsoft. Don’t try to sell to investors using patents.
Hire In Your Own Image
• Balance out your own prowess
i. An engineering person should hire a sales person
ii. A sales person should hire an engineering person
• Always hire people that complement your skills
• Make it, Sell it, Collect it! – that’s what you need, balance all the talents
Befriending your VCs
• Believing that they are your friends because they “invested in people” is a mistake
• VCs and investors in general are not your friends – it is a business, the business of making money; Angels as friends? Maybe. VCs? Definitely not.
• Meet your projections – only make projections when you have 80% confidence that you will meet them
• Underpromise and overdeliver
• Venture Capital is not for everybody – it is only suited for certain types of businesses
Thinking VCs Can Add Value (BONUS)
• They are working with multiple companies, on multiple boards and are very busy people
• Very difficult to separate causation and correlation
• Most important things you should want from your VC:
i. Money
ii. Two to three hours a month
iii. The more successful you get, the more of their time you will get