Managing director and chairman, Garage technology ventures
My name is Guy Kawasaki, I’m the managing director of an early stage venture capital firm called Garage technology ventures. However I’m not really here today to talk to you about venture capital, I’m here to talk to you about entrepreneurship and start ups.
A little bit about my background. I’ve worked for Apple twice in my life: from 1983 to 1987 I was Apple software evangelist, and I also worked from 1995 to 1997, when I was Apple’s chief evangelist. My job essentially was to make sure that there was a lot of software for Macintosh. And I worked for Steve Jobs in Mac division that first time. It was very very interesting experience. For those of you who know people from Apple I don’t think you’ll find that surprising, but I consider the Macintosh division the largest collection of ego maniacs in the history of Silicon valley, and that’s saying a lot in this valley.
We worked for Steve, we had very special treatment, unlimited supplies of juice two dollars a bottle. On Thursdays and Fridays we had massage therapists come into our cubicles and give us backrubs. Unlike any other part of the Apple computer, the Macintosh division employee could fly first class for any flight over two hours. My definition of the two hours begins at the moment you leave your apartment. So I flew first class everywhere for years.
Back then the company was divided into product divisions. There was the Apple 2 division, which made all the money and Macintosh division which spent all the money. And the Apple 2 division… we really treated them lousy. I regret that… because of our arrogance… because of our NRH attitude… And so, Apple 2 division people weren’t even allowed into Macintosh division building. Arguably, they paid for the building, but they were not allowed into the building. And because of this the Apple 2 division people came over a great joke about Macintosh division people, which is “How many Macintosh division employees does it take to screw in a light bulb?” The answer is “One. The Macintosh division employee holds up the light bulb and expects the universe to revolve around him.”
How many of you use Macintoshes in this room? A lot of oppressed people, huh… So, I’ll tell you… Is Microsoft the sponsor of this conference? Well, they won’t be. The Microsoft version of this joke is “How many Microsoft employees does it take to screw in a light bulb?” The answer is “None, because Bill Gates has declared darkness the new standard.”
Early in my career I sat through many key note speeches. Comdex, Micro Expo… I saw many many high-tech CEOs speak. And I have to tell you one thing I noticed is that they pretty much suck, these speakers. And the second thing I figured out sitting in these audiences of sucky key notes was that if there is anything worse than a CEO who sucks as a speaker, it is a CEO who sucks as a speaker and you have no idea how much longer he or she will suck. And so I have adopted the Top 10 format for all my speeches. This way if you think I suck at least you can track progress through my speech. I hope you don’t think I suck, but… at least you can track progress.
So, I’m going to use the Top 10. This speech is loosely based on a book I wrote, called “The art of the start” And… I don’t know what’s on… Has the slides been up? Yeah… Oh, ok! So, I’m going to give you my Top 10 pieces of advice about the art of the start, about entrepreneurship. I’ll be the first to admit, you know, when you are a key note speaker and an author, you tend to start believing your own bullshit and thinking you did everything right in your career. You want the audience to perceive you as omnipotent and omniscient. “Look at all the things that I did. I’ve never made a mistake in my career.” And that’s a lot of crap. I made a lot of mistakes in my career. This book reflects what I should have done, what I could have done – sometimes, what I did, too. But generally speaking, I would like to pass on what I learned, in many cases the hard way, to you, a group of entrepreneurs. I hope that you can take this information and change the world.
So, the first thing that I’ve learned is that if you want to change the world, f you truly want to be a successful entrepreneur, the best reason to start a company is to make meaning, is to change the world. I think you can make meaning in fundamentally 3 ways. The first is to increase the quality of life. That’s what the Macintosh division was all about. We wanted to make people more creative and more productive. The second way is to right a wrong. We thought that MS DOS was immoral. It was wrong. It was the crime against humanity. And we had to fix that wrong. And the third thing that you could do to create meaning is to prevent the end of something good.
Now, as a venture capitalist I can tell you, that we meet many times the entrepreneurs and they come in and think they are saying what we want to hear, which is – “We want to make money. We believe, that with our P2P optimized Google adwords brand new model collecting millions of eyeballs, we can quickly flip this company and sell it to Google or Yahoo or Apple or Microsoft. If not… If not, if they don’t take us off the market in 18 months – than it is no problem – we will go public.” And when we hear that, it’s just so depressing, so disappointing, because I figured out that the companies that are successful, they start out to make meaning. To make meaning, not to make money. So, one tip for you, for those of you who are pitching VCs is – talk about how you’ll make meaning. Because the theory goes – if you make meaning, you will make money. But if you start out to solely make money, you’ll attract the wrong kind of employees. Typically when you say you are going to make money, you’ll attract MBAs and consultants. And there are no worse two kinds of people for a start up than MBAs and consultants.
The second point is to make a mantra for your organization. Because there are too many MBAs in this world, and I have an MBA, and too many of you have worked for Bain or Mc Kinsey or Arthur D Little, somehow you think you should make a mission statement. And the way you make mission statement is typically this:
You go on a two day offsite, with the executive team. The executive team… The first day of this offsite you are outdoors. You are at the Ritz Carlton Half Moon Bay, for example. Because that’s why you go on these offsites. So you go to Ritz Carlton Half Moon Bay, and there is a facilitator. The first day you create these cross-functional teams. And the facilitator says: “All right. One of you from each team come to the front, everybody else get behind him or her. Turn around, shut your eyes, open up your arms and fall backwards into their arms, because we are going to build trust. You are going to learn that your teammates are there for you, so turn around, shut your eyes, open up your arms and fall backwards.” So, after one day of this bullshit second day is – you are in a small room. There is a bunch of white papers – you know, these tablets of papers, and there is a facilitator who knows nothing about your industry, and that facilitator is going to help you craft this mission statement. And this mission statement is going to be good for the shareholders, for the employees, for the customers, if HR is there, it’s going to be good for whales and dolphins - it’ll take care of everything. And what happens is – you get a mission statement like this:
“The mission of Wendy’s is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships”.
Now… don’t get me wrong, I love Wendy’s. I have 4 children. By definition, I like Wendy’s, OK? But I have to tell you, in all the times that I’ve eaten to Wendy’s, it has never occurred to me that I’m participating in something involving leadership, innovation and partnerships. I daresay, if you ask Tricksy or Beef working at Wendy’s, “what is the mission statement of Wendy’s?” not one could repeat this. I also daresay that not even the founder of Wendy’s, Dave Thomas, could repeat this. I know that’s not true because he’s dead. This is a useless kind of statement: it’s too long, it’s not unique and it’s not memorable.
As an entrepreneur, some day, when you have 15 thousand employees, you’re trading on NASDAQ, and you spend 2 million dollars to build your annual report – fine, make a dumb ass mission statement like this. But right now, in the entrepreneurial stage, I submit to you, you should create a mantra – 3 or 4 words, a mantra. Of all audiences, not to be racist, you should understand what a mantra is. So, let’s have some mantras here. A mantra of Wendy’s should be “Healthy fast food”. In 3 words Wendy’s could explain to every employee and every customer what we stand for, healthy fast food. Admittedly, there was a woman here who thought she changed Wendy’s mantra to “Healthy finger food”. But in the long run, it’s “Healthy fast food”.
Fed Ex. Fed Ex has airplanes. They have vans. They have an incredible IT infrastructure. Fed Ex can tell you that your package is on the left side of the van, on the third shelf from the bottom, traveling South West on a Highway 101 at 65 miles an hour in the third lane from the right. That’s what Fed Ex can tell you. But all of that technology and all that infrastructure is for “Peace of mind”. That’s what that company stands for – when you absolutely positively want some thing some place.
Third example, Nike. Great customer slogan – “Just do it”. But the mantra is for employees: “Why do you work here? Why do you exist?” “Authentic athletic performance” – that’s why Nike exists.
And my favorite example is “Target”, or, where I’m from, we call it “Targè”. Because Target is not a price club. You go to price club to buy 500 rolls of toilet paper in case there is a nuclear war and you can’t get to the store for a few months. You go to Target to democratize design, to buy something of great design at an economical price.
These are four companies, very successful. These are the kinds of mantras I want you to create for your organizations; mantras, not mission statements.
Now, I also want you to have the easiest, cheapest, and most expedient way to create a mission statement. Because some day it may come to that, God bless you. Just remember me, when you go public, all right? Now, there is such a thing as friends and family stock, again. So, I’ll tell you how to get a great mission statement at no cost – no offsite, no Mc Kinsey, no nothing. No facilitator, nothing. No pads of paper, magic, marker, pens, nothing. You don’t even have to look at an advertising. Just go to Dilbert mission statement generator web site. Because there, for absolutely no charge, you can get a great mission statement, a $ 25 000 mission statement like this: “We exist to professionally build long term high-impact sources (I need to take a breath here), so that we may endeavor to synergistically leverage existing effective deliverables to stay competitive in tomorrow’s world ’. Is that a mission statement or what? 25 grand!
The third thing is to get going. Ironically, many entrepreneurs have a difficult time getting going, because they want to be sure there is a market, they want to prove there’s a market. They want to do focus groups, research and all that crap. I tell you what – just get going. 3 key steps to getting going.
First, as the Apple commercial said, “Think different”. Don’t do better sameness. Don’t be content with doing things 10 or 15 percent better. Do things ten times better. Let’s go back in a printing business a few decades. Let’s say you are the best letter-quality printer company. And you decide one day you’re gonna be revolutionary. You gonna change the world. You are going to introduce 18 point Helvetica. Changing the world... That’s not changing the world! A printer company, a letter-quality printer company would not be content with introducing more type faces. A letter-quality printer company would jump to the laser printer curve. That’s what you need to do. When Jeff Bezos created Amazon, he didn’t go from 250 000 titles in an analogue bookstore to 275 000 titles in an analogue bookstore. He went to 2,5 million titles in a digital bookstore. Think different.
Second point. Don’t be afraid of polarizing people. Great products polarize people. If you try to create a product that appeals to everybody, 18 to 25, 25 to 35, 35 to 50, 50 to 75, 75 to dead, if you try to create this perfect product, you will create mediocracy. Do not be afraid to polarize. This is a picture of a Toyota Scion XB. You can have one of 2 reactions to this car. Either you think it’s a very cool design, or you think “Why? Did Toyota hire somebody who got fired from Volvo?” Those are the only two conclusions. Harley Davidson, Macintosh, NetFlix, TIVo, all those companies polarize people. I love TIVo because I love TV. There are advertisers who hate TIVo, because I haven’t watched an ad since “Superball’s Sunday”.
The third point of getting going is to find a few soul mates. The concept of solo entrepreneur is vastly overrated and untrue. Steve Jobs had Steve Wozniak. Bill Gates had Steve Ballmer. You need soul mates. You need people to balance you off. If you are a great engineer, you need a great marketer. If you have a great marketing and engineering, you may need an operations person. If you are a viewful visionary, you’ll need adult supervision. Balance yourself off. Three key points of getting going.
The fourth point is “Define a business model”. This is a step we all sort of forgot a few years ago, a minor detail. 3 key points to a business model. First: “Be specific”. The business models that say “We’ll collect 10 million eyeballs, and somehow we’ll figure out how to monetize those eyeballs, don’t worry about that” – that doesn’t fly any more. The reason why we’ve all heard about the facebook and myspace is not because we can all do that, that’s because they are unusual. We need to have specific business models. The question you need to ask yourself metaphorically is “Who is my customer, how do I get my money out of her purse?” It is your money in her purse. How do you get it out? That’s the question.
The second key point is that you need to keep it simple. You know, I hope you innovate on technology, on products, on services, all that good stuff… do not innovate on business models. If you believe, that it costs you a dollar, and you sell it for five dollars, and your gross margin is 20%, you will be successful. That’s the kind of math. Costs a dollar – think about it later – sells for five dollars, we only have 20% gross margin. You will always be rich. Keep it simple.
Third thing is to ask women about your business model. I believe you should not waste your time asking men about your business models and business ideas. I believe this is because men have a fundamental genetic flaw. We all have the “killer gene”. Men want to kill things. We want to kill plants, we want to kill animals, we want to kill other companies and products. To a large degree this killer gene has been suppressed by a society. One place it hasn’t been suppressed is entrepreneurship. It is socially acceptable to want to kill the competition. Thus, if you ask a man “Should I start the company to kill Oracle, to kill Google, to kill Microsoft”, all men always say “Yes! That’s a great idea!” Women do not have this fundamental genetic flaw. So when you come up with an idea for a business model, ask women. Do not waste your time asking men.
The fifth thing… I have to tell you, I’m whipping through this, because I usually have an hour for this speech, and this is mountain dew, and I didn’t even get paid to endorse this… The fifth thing is to weave a MAT. MAT stands for Milestones, Assumptions and Tasks.
I happen to love ice hockey. I happen to love ice hockey, and there are two of my friends here from Ice OS where I play ice hockey in Ridwood city. And one of the pleasures of ice hockey is to be the first person on the ice after the Zamboni. Because after the Zamboni has shaved the ice, the ice is just pure, smooth, virgin ice. No cuts, no rots. It’s a beautiful thing – when you skate, you can see exactly where you’ve skated. It’s a lovely feeling. It’s like being the first person down the mountain in skiing or snowboarding. A new company is largely like that. It’s a pure sheet of wonderful smooth ice. There is no pain in the ass – customers, who are trying to get a free upgrade, there is no stupid employee you made a mistake hiring, there is not a crappy commercial real estate that you paid 50 bucks a month for in the hype of the dot.com phenomena. There is no that crappy furniture you have bought at “Office Depot” one day. It’s pure wonderful ice. It’s not a crappy logo that your sister in law designed for free. You are starting from scratch. It’s beautiful, beautiful, the Zamboni just left the ice.
When you have that situation, it’s very difficult to prioritize. This is about prioritization. The first thing you should do is come up with a handful of milestones.
Milestones are things like finishing the design, shipping the software. When you’re starting a company, you often think “My God, we could either finish a design today or go order stationery”. Seems like they are both about the same importance. It’s not true. A milestone is something that you would call up your spouse and say “Honey, today we shipped”. It’s very different than calling up your spouse and saying “Honey, today we ordered stationery”. It’s not quite the same.
Next thing you do is you write down the assumptions of your company. How many sales calls can you make per day? What’s the customer ROI? How much does it cost to install our software or product? These assumptions change your business model. Very few companies are start ups. Write them down and test them, write them down and test them.
And the third thing is than to do tasks. Tasks are things that help you either accomplish a milestone or test an assumption. But the priority for an entrepreneur is milestones – assumptions – tasks, MAT.
The sixth thing is to niche thyself. How many of you have MBA’s in this audience? That’s too bad. I’ll teach you all you need to know about marketing in one slide. You don’t need to know anything else about marketing if you understand this next slide. Ok, this is the Holy Grail of marketing. I have saved you 25 000 dollars in mission statement creation, now I’m going to save you a 100 000 dollars in MBA.
There are two axis on this graph. The vertical axis is your ability to provide a unique product or service. The horizontal axis is the value of this product or service for the customer. As you might suspect, this is going to be two by two matrix. And I’ll take the suspense away: we are going to end up high and to the right. Surprise, surprise.
Let’s go through the other corners first. In one corner, where you have a great value to the customer, but you are not doing something unique – there you will always compete on price. Not such a bad place to be: at least you are creating something of a great value. But you’ll be competing on price. Dell made a lot of money here. It’s a margin pressure business.
The second place is where you create something of no value to the customer… Luckily, you are the only person doing it. There, you’re just stupid. You are just plain stupid. Only you are doing this stupid thing. The next corner is even worse. That’s a dotcom corner because in that corner not only you produce something of no value to the customer, there are 16 other companies that VC’s have founded to do the same stupid thing. This is a picture of dog food, cause I don’t know about you but remember when there were something like 16 ways to buy dog food online. Every one of them – curve-jumping, paradigm-shifting, patent pending, SQL based, Google adwords optimized, P2P… Think, Jesus, just buy dog food online… There is only one problem with pets.com, ipets.com, epets.com, ourpets.com, spet.com, interpets.com – you name it! There is only one problem. Yes, you could disintermediate… maybe that was Julia Weinright… Yes, you could disintermediate the stupid pet food store that had this analogue presence, brick and mordant. There is only one problem. Sure, by taking this store out of equation and being a digital store you could reduce prices, but the problem with it is that dog food weighs so damn much, that the shipping and handling of the dog food cost more than the discount you could give. Hence it had no value. That’s the dotcom corner.
The corner you want to be in is over here: it’s high and to the right. It’s where you have a unique product - only you can do this product, and it is of great value to the customer. My example is Fandango. Fandango is that online movie ticket buying service. As I’ve told you, I have 4 children. We love to go to movies. And you know, when we go to the opening show of “Mission impossible”, we need to know before we go that we have a ticket. Because when you put 4 kids in a minivan, that takes 20 minutes. You don’t want to get to the theatre and see there is a line and it’s sold out. You want to know before you go. Fandango enables you to print the ticket at home. High value, and in Northern California anyway, the only way you can get this ticket is Fandango. So I’m telling you this is the Holy Grail of marketing. Every entrepreneur should understand this. If you are an engineer, you need to create a product that is unique and of great value to customers. If you are the marketing person, you need to be able to convince the customers that this is true. You need to be high and to the right. Yesterday you heard Arnold Schwarzenegger talk – a political speaker. I’ll give you a political analogy. You want to be successful as an entrepreneur – from a marketing perspective, you need to be like our president, George W. Bush – high and to the right.
Seventh thing. The seventh thing is you need to follow what I call the10/20/30 rule. I have this thing called Meniere’s disease. Meniere’s disease has 3 symptoms. Hearing loss, tinnitus, which is a constant ringing in my ear, and sometimes I get dizzy, or vertigo from this inner ear affliction. Medical science is trying to figure this disease out. They think it may be too much salt in your diet, too much retention, too much caffeine (that’s why I don’t drink too much Mountain Dew), too much stress, allergies. There’s a bunch of theoretical medical reasons. I’ve tried to cure it with all of these, controlling all these factors. I’ll tell you though, I have another theory about what causes Meniere’s disease. I am a venture capitalist. By definition, it means that I have to listen to pitches day in and day out. And day in and day out entrepreneurs come to me, and they pitch me, and they have 60 slides in a pitch. And in that 60 slides they are convincing me that all they need is one percent of the market, that they have first mover advantage, that they have patents pending, that they have a unique proven team with a proven technology in a proven market. Every one of them, whether it’s for shrimp farming, fabric semiconductor, social networks, every one of them says that. Because I have to listen to such crap, I have ringing in my head, I’m going deaf and I get dizzy. So, before there is an epidemic of Meniere’s disease in venture capital industry, I came up with a 10/20/30 rule. This is the 10/20/30 rule. You should have 10 slides in your Power Point pitch, 10, not 50. I don’t care if you have curve-jumping, paradigm-shifting, P2P, Google adwords social network, optimized, SQL based way to sell dog food online.10 slides. That’s all we can handle. Those 10 slides you should be able to give in 20 minutes. You may have a one-hour meeting, but you’re using a Windows lap top, it’s going to take you 40 minutes to make it work with a projector. All right? 20 minutes. And the smallest font you should use is 30 points. You see, 20, 14 and 12. You should use 30 points for two reasons. First, the kind of people you are pitching to looks like that. Second reason is – by having a 30 point font you can put a lot less text. This forces you to actually know your presentation and just put the core of the text on your slide. If you need to put 10 point or 8 point fonts up there, it’s because you don’t know your material. If you start reading your material because you don’t know your material, the audience is going to very quickly figure out that you are a bozo. They are going to say to themselves: “This bozo is reading his slides. I can read faster than this bozo can speak. I will just read ahead.” If you don’t buy that 30 points is the right font size, I’ll give you an algorithm. Find out who is the oldest person in the audience, divide his or her age by 2 – that’s your optimal font size. Unless you’re pitching to 16 year olds, don’t use the 8 point font.
The eighth thing is to hire infected people. Hiring infected people means that you hire people who not only have work experience, educational background… but love your product. Most people only consider two factors: work experience, educational background. I suggest you consider a third: are they infected with love of the product? This means you need to ignore the irrelevant. Sometimes it’s irrelevant that they have this background. Sometimes it’s irrelevant that they don’t have this background. There are two diamond rings in this picture. This is because I come from jewelry business. I’ve never taken a computer class in my life. I’m living proof that you can fool some people most of the time. So, ignore the irrelevant. I never took a computer class. I was in jewelry business when Apple recruited me. Can you imagine HR person who went to Steve and said: “ Listen, let’s hire this guy. He’s down in LA, he has never taken a computer class in his life, he has psycho degree from Stanford cause that’s the easiest major that he could find in Stanford, he has been schlepping diamonds for the past 5 years. Why don’t we make him evangelist for our new software platform? ” That’s what they did. I was successful because I loved Macintosh. When I saw Macintosh, the clouds parted, angels started singing – it was a religious moment in my life.
The second point is you need to hire better than yourself. “A” players do not hire “A” players. “A” players hire “A+” players. “B” players hire “C” players, “C” players hire “D” players, and “D” players hire “E” players. If you start hiring “B” players, you are going to wake up one day, and you will be surrounded by “Z” players. That’s what we call “The bozo explosion”. Fight the bozo explosion.
The third point is you plot a “shopping center test”. The Stanford shopping center test works like that. You go to Stanford shopping center, you see a job candidate. The job candidate has not yet seen you. Let’s say you are fifty feet away. At this point you have several possible reactions. I can go just straight over there, say “Hey, hello, how are you. I’m glad you’re at interview. We are going to kick ass in our company. I hope you join our company”. That’s one reaction. Second reaction is: “Stanford shopping center isn’t that big. If I’ll get face to face with her, I’ll say hello.” Third reaction is “I’m going to get in my car and drive to Valco”. If you don’t have the first reaction of seeing that person and saying “Man, I’ve got to go over there, because I like her. I like team”, if you don’t have that reaction, don’t hire that person.
- I know, we are running out of time.
- Two more minutes.
- What are you going to do? Not invite me back? The next speaker’s some Googol. She has infinite money. Why do you care?
The ninth thing is to lower the barriers to adoption. There are 3 key ways to lower the barriers to adoption. The first is to flatten the learning curve. The theory is that you plug your device in and it works. How many of you can change time on a VCR? These are the liars in the audience. Nobody can change time in a VCR. Flatten the learning curve.
Second point is “Don’t ask people to do something you yourself would not do”. You know, what… You may have a great web site, great content, but you ask people to fill out 65 lines of personal information… to get the free password… aren’t going to do that. The reason why there’s laundry in this picture is because at the Hyatt Regency there is a laundry room in every wing of a hotel. This means there is one less revenue-producing rental room. It means that people send out less laundry to the hotel laundry system. And if you went into that laundry room, you would see that the washers and dryers are free. That hotel is not asking you to do something you yourself would not do.
And the third point is to embrace your evangelists. These are the people who carry the battle forward for you. Evangelism is based on a word, Greek word, of “bringing the good news”. So when you have a great product, there’ll be people who’d bring the good news with your product. You need to pay them. They are people who want to change the world with your product or service. Embrace those people, create programs for them, open the kimono for those people.
The tenth point is to seed the clouds. This is about rain making and sales. Three key points.
First, to rip off a chairman Mao, though I can’t see how he implemented this, let a hundred flowers blossom. At a start of a revolution, at the start of your company, you may seek people, who are not your intended customers, use your product in unintended ways. This makes many people freak out, “My God, the wrong people are buying our products in large quantities”. You know, “we need to hire new agency, we need to reposition our product, because they are not the customer”. For one thing if you are an entrepreneur, the first lesson is: when this happens, take the money. Take the money. Listen, Apple was supposed to have a spreadsheet database order processing machine. It produced a desktop publishing machine by mistake. We didn’t intend that. Desktop publishing saved Apple computer. Aldus PageMaker was a gift of God to Apple computer, and it saved Apple computer. I believe in God. One of the reasons why I believe in God is that there is no other explanation to Apple’s continued survival.
Second thing is that you need to enable test drives to enable sales. Let people take your product home, download it. Somehow you are saying to people: “I think you’re smart, and because I think you’re smart, I’m going to enable you to test-drive my product.”
The third way to break down the barrier is to find true influencers. Many entrepreneurs believe that they need to work at the CXO level. I need to talk to CIO, CTO, CMO or CEO. I have found in my career that the higher you go in most large organizations, the thinner the air. The thinner the air, the more difficult it is to support intelligent life. So, as an entrepreneur, if you focus on CMO-level people, CXO-level people, you’ll be dealing with the dumbest people. Look at tax support, secretary, administrator of aids. Those people really do the work, they really are the key influencers. Find those people.
And my eleventh point – I’m really going to go over time… I’m giving you a bonus to my friend’s attire. This is the eleventh point – don’t let the bozos grind you down. They are going to try to grind you down. They are going to tell you: “It can’t work”, “It won’t work”, “We don’t need another search engine” – to Google”. We don’t need another search engine… Who thought we needed another search engine in 1995? I didn’t.
Don’t let these bozos grind you down. There are two kinds of bozos: slavingly, disgusting, stinky, nerdy, dandruff-covered looser of a person. That bozo says you can’t succeed – it’s easy to ignore that bozo. You look at that bozo, you say: “Why should I believe you? You are a loser.” That’s not the dangerous bozo. The dangerous bozo is skinny, dresses in black, drives a German car, Barthelay watch, plays ice hockey, Macintosh power book… You know – that’s the dangerous bozo! That’s the dangerous bozo! Because when that bozo tells you that you can’t succeed, won’t succeed, it’s not necessary, you might be tempted to believe that bozo. Let me give you some documented bozosity to show you how dangerous the bozosity is.
“I think there is a world market for maybe five computers” Thomas Watson, Chairman of IBM allegedly said this in1943. Five computers in the world… I have 5 computers in my house – all the computers Thomas Watson anticipated.
“This telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Western Union internal memo, 1876. Well, what was Western Union going to do in 1877? Train everybody on the Morse code? But telephony had too many shortcomings. Western Union should be Pay-Paled today. But how could you be Pay-Paled today if you wrote off telephony? They wrote off telephony.
“There is no reason why anybody would want a computer in their home”. Ken Olsen, founder of DECs in 1977. How many of you have a computer in your house? I don’t know why. Why don’t you just drive down to your office and use Quicken on a minicomputer?
And then my final bozosity is my own bozosity. “It’s too far to drive, and I don’t see how it can be a business”. I said this to Michael Moritz from Sequoia Capital when he asked me: “Would you like to interview for a position of CEO of Yahoo?” I told him this. At that time my wife and I – well, obviously, we were married, that’s why she was my wife – were living in San Francisco, we had one child – my son. My second son was in beta, in other words, she was pregnant. And I just… I didn’t want to drive from San Francisco to Menlo Park every day, it’s like an hour each way, and… I looked at what they were doing, it was collection of Jerry Yang and David Filo’s web sites… How can that be a business? Unproven team, unproven technology, unproven business model. Besides that it was great. So I said this. Now, let’s suppose I didn’t say this. Let’s suppose I took an interview. Let’s further suppose I got a CEO job. Then let’s be conservative. Let’s say that I lasted only two years out of four years vesting period. Peter Principle kicked it’s ass, you know, kicked my ass. Two years into it, and the board says “You know, Guy, you’ve done a great job. We now need real adult supervision. We need someone from New York or Los Angeles who’s worked with big media, who could take Yahoo to the next step. So we are firing you today.” And I would have said: “You know, I hope you understand, I’m not a bitter, litigious person, but I am Asian American, you can not fire me.” Right? “You try to fire me.. – just like pulling me off stage…
– May I ask you something? If Arnold Schwarzenegger went 8 minutes over, would you pull him off stage?
– All right. And I guarantee – I’m giving them more information, than Schwarzenegger gave.
So… OK, so now they are trying to fire me, I tell them “You can’t fire me. It’s California. I’m Asian American. You piss me off – there’ll be little Japanese ladies picketing Yahoo’s offices”. So now they are going to executive session. They come back, they say “All right, Guy, you are right. Let’s not make this big Broo Ha Ha legal battle. What do you want?” I’d say “I’m two years into my vesting, just give me four years vesting and I’ll walk away happy.” By my calculation, this answer cost me 2 billion dollars. Now, two billion here, two billion there and after a while you don’t have to work any more. If I had done this, today I would own San Jose Sharks. I would own San Jose Sharks. So, I’ve been thinking of this for ten years now. Why was I so stupid? And I’m thinking about it, and thinking about it, and I’ve come to this conclusion: I did a right thing for the love of my wife, for being there when my two boys were growing up… Now I have four children… To be there, not working 80 hours a week, not commuting two hours a day… I did the right thing for my family. This explains one billion. It’s the second billion that pisses me off. Pardon all my French today. It’s the second billion. The second billion because I was a bozo. Because I could not see. I had Ken Olsen disease…
- I don’t know, he is really getting angry… What are you, Democrat?
Ken Olsen couldn’t see the next curve… I thought that Yahoo was part of the personal computer curve, not the next curve – the Internet. I too was a bozo. Don’t let the bozos… oh, they are really… now it’s two on one… All right, so… This is really my last line. If you want more information like this, I have a blog – Blog.guykawasaki.com. If you want to copy this presentation, it’s email@example.com. Just send an email, and we’ll send you PDF. You can’t open PDF – than you’re on Windows - tough luck. And finally my stuff retiling was my buddy’s from iStockphoto and I’m obviously being pulled off. Thank you very much.