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Video interview with Guy Kawasaki, Founder Alltop. Alltop.com is an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. Kawasaki has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College. You can find Guy @ his blog & on Twitter @GuyKawasaki
Transcript follows & video above.
- I so enjoyed reading your new book Enchantment recently & I think it would be great if women entrepreneurs could enchant venture capitalists. (It’s such a great concept & word, kudos on you for coming up with it.) So I wondered if I could ask you some questions about the shortfall in funding for women in line with the themes of the book. One of the issues that women entrepreneurs face is the fact that they are different from the funders to whom they are pitching i.e., not white & male. How could we achieve likeability & trustworthiness?
I wouldn’t say it was women entrepreneur’s fault & that they have to achieve likeability & trustworthiness because they haven’t achieved it so far. In this case in this particular instance, it may be the fault of the receiver not the sender if you know what I mean?
No I’m not pointing any fingers in this project, but I’m really getting some really valuable information from everyone, both the women founders & the venture capitalists & angel investors. That is adding value to the female startup community! So I was just thinking about your model in the book really. I was just wondering if you could adapt that & give me some suggestions.
Well the model in the book is that the 3 pillars are likeability, trustworthiness & the product. I’ll tell you as a male venture capitalist although obviously not white, one thing that you can depend on from venture capitalists, one quality all the time is greed. I don’t know if greed is good! Greed is consistent! What an entrepreneur needs to do of any gender is appeal to the greed of the venture capitalist. I don’t mean in the sense of surreptisiously taking stuff as much as 90% of the decision is made because the venture capitalist falls in love with the product or service & sees that he or she can make a lot of money with it. So 99.9% of all people pitching to venture capitalists are rejected. You shouldn’t think ‘I was rejected because I was black, white, male, female, gay, lesbian whatever’ the odds are you’re going to be rejected so don’t take it personally.
Ok that’s a good point!
The key is show them how your product or service will succeed. I’ll tell you I think that most venture capitalists if you were to show how your product will succeed, they won’t care if you are male, female, black, white, brown, yellow, purple, straight, gay, bi…
or from Mars?
yeah, hetro, homo whatever. They don’t care. They just want to make money.
OK so that’s a really good point. So people should keep their focus on that.
If you believe in your mind that you’re getting rejected because you’re a woman, or black, or white…
you’re going to create that reality? And undermine your confidence?
You’re going to feed it already. So the most important thing you could do for a pitch is the fundamentals of likeability: a good smile, a good handshake,appropriate dress, trustworthiness that you have an open mind are defaulting to a yes & positive attitude. That you want to make a bigger pie not just take a larger slice of an existing pie. Then the 3rd pillar in a pitch that will support it, is your product. Is it good? The most important way to prove that is a demo! So many entrepreneurs believe that the starting point of entrepreneurship is powerpoint or word or excel. They are so wrong! The starting point is Drupal or php or your compiler or autodesk! It’s not excel, word or powerpoint! This is especially true now because other than life sciences, if you’re going to create this humungous act of computing that takes decades of research & all that? (First of all you shouldn’t even go to a vc for that, but anyway.) Within reason a tech startup today is in the best position than its ever been because almost everything today is either free or cheap. So we’ll just go down the list.
Callous as this may seem in this recession people are free or cheap (just the way it is ok?)
Marketing, if you use Twitter & facebook & blogs, is free or cheap (I guess you could hire a PR firm & spend $20,000 a month so an Oriental Art History major from Wellesley will be working for you? I understand that but I think that’s a waste of money.) So marketing is free or cheap.
Now we need infrastructure & infrastructure before meant you would have 2 locations with 50 servers on racks. Today it means you call up Amazon & you go with Amazon services or you use Rackspace. So infrastructure cloud is free or cheap.
Then what else do you need? You need office space. Office space itself is much cheaper now. Arguably you don’t need office space because everybody is working virtually. So there goes office space.
So the last thing is tools. In the old days you’d have to spend a $1m & buy tools from Oracle so you could have a database. Now there’s MySQL, ironically now owned by Oracle. There’s all these Drupal tools, theres PHP all this stuff. It’s hard to pay for a tool today. You’d really have to work at it right?
So we’ve just gone down the list: people, real estate, marketing, infrastructure & tools, all free or cheap. So you have no excuse if you show up to a venture capitalist without a prototype. The expectation is you show up with a prototype. The day of ‘Well this is my envelope & this is my vision of the future & if you give me $2m & leave me alone for a year, I’ll come back & show you what I have.’ That day is gone, gone forever! Maybe in Life Sciences you can say ‘We’re going to find the cure for Cancer, give us 10 years.’ Even that I doubt, but give us $2m & 10 years & we’ll come back with a facebook killer? I don’t think so?
- I am also told that women often lack confidence & aggressiveness from the compilation of my interviews. How can we prepare pitches & launch our startups to enchant? You’ve already covered the issue of demos & I totally agree with you on that, & prototypes. Is there anything else that we could do to bolster our confidence & be a bit more aggressive to encourage that trustworthiness in vcs & angels?
The best way to do it, is to have a good reality, you know. So enchantment is not about putting lipstick on a pig.
So it’s about authenticity?
Well the connotation of authenticity is that the opposite is inauthentic or you’re lying or you’re acting like somebody you’re not. You may be a shy person. I’m not suggesting that you take a lot of caffeine & speed or something & all of a sudden you’re a hyper aggressive. That’s not the point! The point is to be what you are & you may be passive, you may be shy, you may be effacing, you may be bold. I don’t think all women should say ‘You know we didn’t get that funding because we weren’t bold enough.’
Or you haven’t got enough testosterone?
Yeah, certainly not that because you know what, 99.9% of the men are getting rejected too. So what are they saying ‘We’re not feminine enough, whatever’? Face it most people get rejected don’t take it personally. So my thing is, you be what you are & what you’re comfortable with. Now what would boost confidence is? I can’t build a case where you should act not confident, you know. What would boost confidence is, if you really know your stuff. What a concept!
And also have passion for it. I see that that’s just an instant confidence builder.
Yes so if you really know your stuff, meaning that you could really demo your product. This is one instance where if the CEO doesn’t know her stuff & has to turn to her CTO to do the demo, whose fault is that, that she’s not confident? Especially if the CTO was male. Whose fault is that? So it’s preparation & knowing your stuff. To be able to, when a venture capitalist sits across the table & says who’s your competition. Does the CEO have to turn to the VP of Marketing & say ‘Well I’ll let Tom handle this!’ Whose fault is that? So confidence comes about because you can demo your product. You really know the competition. You really know the market. You really understand the guts of how your product or service works.
So it’s getting down & dirty in all facets of your business?
Life is down & dirty! It really is!
Thank you that’s great!
- I have also heard that it could be harder for women to network with venture capitalists. How can we overcome the resistance of others & leave a positive, lasting impression.
Again, you know venture capitalists are not looking for friends.
No, that’s a good point!
I hate to tell you. So I come back to it, show them the path to make money. You don’t need to be friends. Truly you will not be friends!
So holding that focus of what your intent is? Rather than trying to make people like you? That would be a great way to do networking?
A venture capitalist is a very, very simple beast, OK. It’s more like Jerry Maguire, just show me how to make money. That may be an overstatement. It’s not that transactional. Well what I don’t want, is I don’t want people going away thinking well geez I’m a woman, I won’t get funded. You’re gonna fail! You will fail.
It doesn’t preclude you?
No it does not at all. If you believe it does? Even if it does preclude you, you shouldn’t believe it precludes you. You should think of professional sports, it’s a very good analogy. So roughly 3,000 companies are funded a year by venture capitalists. So the first step is, are you truly ‘a venture capital deal’? And I use that in quotes. So ‘a venture capital deal’ is something that without being on cocaine you can imagine that this company might someday do hundreds of millions of dollars of business. So it’s difficult to conceive of a restaurant doing hundreds of millions of dollars of business. It’s difficult to conceive of a company that has custom made socks doing hundreds of millions of dollars of business. I would say this to a male entrepreneur too. If you think you’re going to create a restaurant, a garment store, a web design company? You know venture capitalists are all looking for the next Google. That’s the standard Google, Cisco, Yahoo!
So it has to scale basically?
Right, so if you’re a man or a woman & you’re starting a restaurant. You go to venture capitalists & you get rejected. Don’t say I got rejected because I was a woman, a male chef would have gotten funded! It’s not true. Venture capitalists aren’t interested in restaurants. If a venture capitalist funds a restaurant it’s because the venture capitalist has so freaking much money that they took a liking to you & they like your style of food. They want to be able to say to their friends ‘I’m part owner of that restaurant, I can get you in any time.’ It’s not because they’re going to take it to the partnership & say ‘Listen partnership we’re going to invest $5m because I think that that restaurant that specializes in waffles is going to go public. Cause it ain’t OK!
Yes, point taken, point taken!
So the initial test is, is it a venture capital deal? Now the irony is that many companies that were not ‘meant for venture capital’ turn out to be huge successes, OK. That’s because you started as a web design firm. Lo & behold you built a tool that helped you design websites better & lo & behold people were asking for the tool than for the websites. So you made the tool commercial & next thing you know you’re autodesk. Hallelujah! But in that scenario what happened was, a product of one of hundreds of flowers bloomed. You could make the case that when Bill Gates started Microsoft, he didn’t know what the hell? Do you think Bill Gates when he was arrested for speeding in New Mexico or whatever & he sold his operating system to IBM. Do you think he sat there & said ‘OK I’ve got the operating system from IBM, next I’m going to go get phones & then I’m going to get application software & then I’m going to get an Xbox & dominate games. That’s the massive plan! When Jobs was building the first computer, he was thinking how can I make a breadboard or motherboard. He wasn’t thinking worldwide domination: phone, pad, pod & desktop. It evolves! So I’m not saying that you can’t evolve into a billion dollar company. I’m just saying that at the moment you’re raising venture capital you have to present a picture that without too much hallucination you could be hundreds of millions of dollars. That’s Plan A. Plan B is you start small, you worry about cash flow & lo & behold one day you wake up & hallelujah, you’re the next IBM, Microsoft, Apple or whatever. But it’s not because you got that initial funding. It’s because you got on a rocket & by god it took off!
I’ve had women pitch me. I’ll give some advice. First of all don’t think you need to play the role! Some people come & say I have to be a hard ass bitch because men are hard ass. Hard asses succeed so I need to be a hard ass. It doesn’t work! People don’t like hard ass men too! If a hard ass man got funded it’s because he showed the path to make money. So he would have probably succeeded anyway if he wasn’t a hard ass. So it’s very tempting to confuse correlation with causation.
Thank you, thank you that’s a really good point!
So don’t believe that you need to play this bitch role. On the other hand don’t think you need to play the ditsy role either, the hot woman babe whatever. That also is like…..
The femme fatale, no one is going to trust that, yeah!
So basically be what you are. I would tell this to a man too & the book says this too, dress as an equal. Don’t dress under, don’t dress over, whatever.
Yes I read that!
I would not play the bitch card. I would not play the ditsy card. I would not play the hot babe card. Play the card that you have a great fricking product! Simple as that.
And it also implies a lot more confidence because you’re at home, aren’t you? You’re coming from who you are.
So I guess this is like the homeopathic pitch. Be yourself!
Very good thank you.