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by Guy Kawasaki

The Art of the

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Everyone should carefully observe

which way his heart draws him,

and then choose that way with

all his strength.

continued

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I use a top-ten list format for all my speeches, and I would love to begin this

book with a top-ten list of the most important things an entrepreneur must

accomplish. However, there aren't ten--there are only five...

[ GREAT IDEAS FOR STARTING THINGS ]

1

MAKE MEANING.

The best reason to start an organization is to make meaning--to

create a product or service that makes the world a better place. So your first task is

to decide how you can make meaning.

2

MAKE MANTRA.

Forget mission statements; theyre long, boring, and irrelevant. No

one can ever remember them--much less implement them. Instead, take your meaning

and make a mantra out of it. This will set your entire team on the right course.

3

GET GOING.

Start creating and delivering your product or service. Think soldering

irons, compilers, hammers, saws, and AutoCAD--whatever tools you use to build

products and services. Dont focus on pitching, writing, and planning.

4

DEFINE YOUR BUSINESS MODEL.

No matter what kind of organization youre

starting, you have to figure out a way to make money. The greatest idea, technology,

product, or service is short-lived without a sustainable business model.

5

WEAVE A MAT (MILESTONES, ASSUMPTIONS, AND TASKS).

The final step is

to compile three lists: (a) major milestones you need to meet; (b) assumptions that

are built into your business model; and (c) tasks you need to accomplish to create an

organization. This will enforce discipline and keep your organization on track when

all hell breaks loose--and all hell will break loose.

GIST

This manifesto is an

excerpt from Guys

new book,

The Art of

the Start.

To learn

more, click here.

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MAKE MEANING

I have never thought of writing for reputation and

honor. What I have in my heart must come out; that

is the reason why I compose.

-- Ludwig van Beethoven

Many books about entrepreneurship begin with a rigorous process of self-examination, ask-

ing you to determine if you are truly up to the task of starting an organization. Some typical

examples are:

� Can you work long hours at low wages?

� Can you deal with rejection after rejection?

� Can you handle the responsibility of dozens of employees?

The truth is, it is impossible to answer questions like this in advance, and they ultimately

serve no purpose. On the one hand, talk and bravado are cheap. Saying youre willing to do

something doesnt mean that you will do it.

On the other hand, realizing that you have doubt and trepidation doesnt mean you wont build

a great organization. How you answer these questions now has little predictive power regard-

ing what youll actually do when you get caught up in a great idea.

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The truth is that no one really knows if he

1

is an entrepreneur until he becomes one--and

sometimes not even then. There really is only one question you should ask yourself before

starting any new venture:

Do I want to make meaning?

Meaning is not about money, power, or prestige. Its not even about creating a fun place to

work. Among the meanings of "meaning" are to

� Make the world a better place.

� Increase the quality of life.

� Right a terrible wrong.

� Prevent the end of something good.

Goals such as these are a tremendous advantage as you travel down the difficult path ahead.

If you answer this question in the negative, you may still be successful, but it will be harder to

become so because making meaning is the most powerful motivator there is.

Its taken me twenty years to come to this understanding.

In 1983, when I started in the Macintosh Division of Apple Computer, beating IBM was our

reason for existence. We wanted to send IBM back to the typewriter business holding its

Selectric typewriter balls.

In 1987, our reason for existence became beating Windows and Microsoft. We wanted to crush

Microsoft and force Bill Gates to get a job flipping fish at the Pike Place Market.

1 If only defeating sexism were as simple as throwing in an occasional he/she, she, her, or hers.

I use the masculine pronouns merely as a shortcut. Successful entrepreneurship is blind to

gender. Dont look for sexism where none exists

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In 2004, I am a managing director in an early-stage venture capital firm called Garage

Technology Ventures. I want to enable people to create great products, build great compa-

nies, and change the world.

The causation of great organizations is the desire to make meaning. Having that desire

doesnt guarantee that youll succeed, but it does mean that if you fail, at least you failed

doing something worthwhile.

EXERCISE

|

COMPLETE THIS SENTENCE:

If your organization never existed, the world would be worse off

because

MAKE MANTRA

Close your eyes and think about how you will serve your customers. What kind of mean-

ing do you see your organization making? Most people refer to this as the "Why" or mission

statement of an organization.

Crafting a mission statement is usually one of the first steps entrepreneurs undertake.

Unfortunately, this process is usually a painful and frustrating experience that results in

exceptional mediocrity. This is almost inevitable when a large number of people are commis-

sioned to craft something designed to make an even larger number of people (employees,

shareholders, customers, and partners) happy.

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The fundamental shortcoming of most mission statements is that everyone expects them to

be highfalutin and all-encompassing. The result is a long, boring, commonplace, and point-

less joke.

2

In

The Mission Statement Book, Jeffrey Abrams provides 301 examples of mission

statements, which demonstrate that companies are all writing the same mediocre stuff. To

wit, this is a partial list of the frequency with which mission statements in Abramss sample

contained the same words:

� Best ..............................94

� Communities ...............97

� Customers ..................211

� Excellence .....................77

� Leader ........................106

� Quality ........................169

3

Fortune (or Forbes, in my case) favors the bold, so Ill give you some advice that will make life

easy for you: Postpone writing your mission statement. You can come up with it later when

youre successful and have lots of time and money to waste. (If youre not successful, it wont

matter that you didnt develop one.)

2 If you insist on creating a mission statement, go to http://artofthestart.com and click on the

mission statement generator link http://unitedmedia.com/comics/dilbert/career/bin/ms2.cgi .

This will take you to the Dilbert mission statement generator and save you thousands of dollars.

3 Jeffrey Abrams,

The Mission Statement Book

(Berkeley: Ten Speed Press, 1999), 25�26.

TIP:

Click on an underlined

hyperlink to visit that

site. For more tips like

this, visit

(

i

)

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Instead of a mission statement and all the baggage that comes with it, craft a mantra for your

organization. The definition of

mantra is:

A sacred verbal formula repeated in prayer, meditation, or incantation, such as an

invocation of a god, a magic spell, or a syllable or portion of scripture containing

mystical potentialities.4

What a great thing a mantra is! How many mission statements evoke such power and

emotion?

The beauty of a mantra is that everyone expects it to be short and sweet. (Arguably, the

worlds shortest mantra is the single Hindi word Om.) You may never have to write your

mantra down, publish it in your annual report, or print it on posters. Indeed, if you do have

to "enforce" your mantra in these ways, its not the right mantra.

Following are five examples that illustrate the power of a good mantra:

� Authentic athletic performance (Nike).

5

� Fun family entertainment (Disney).

6

� Rewarding everyday moments (Starbucks).

7

� Think (IBM).

� Winning is everything (Vince Lombardis Green Bay Packers)

4

The American Heritage Dictionary of the English Language

, 4th ed., s.v. mantra.

5 Scott Bedbury,

A New Brand World: 8 Principles for Achieving Brand Leadership in the 21st

Century

(New York: Viking, 2002), 51.

6 Ibid., 52.

7 Ibid., 53.

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Compare the Starbucks mantra, "Rewarding everyday moments," to the companys mission

statement, "Establish Starbucks as the premier purveyor of the finest coffee in the world while

maintaining our uncompromising principles while we grow." Which is more memorable?

EXERCISE

|

In only the space provided, write your organizations mantra:

Imagine that someone asks your parents or your organizations receptionist what you do.

Can it get any better than a three-word mantra such as "Authentic athletic performance"?

8

A final thought on mantras: Dont confuse mantras and tag lines. A mantra is for your

employees; its a guideline for what they do in their jobs. A tag line is for your customers;

its a guideline for how to use your product or service. For example, Nikes mantra is

"Authentic athletic performance." Its tag line is "Just do it."

8 Actually, it could. Back in the early days, we toyed with "We take the FU out of funding" for

Garages mantra, but we rejected it because it was too long. :-)

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ORGANIZATION

REAL MISSION STATEMENT

HYPOTHETICAL MANTRA

Southwest Airlines

"The mission of Southwest Airlines is

Better than driving.

dedication to the highest quality of

Customer Service delivered with a sense

of warmth, friendliness, individual pride,

and Company Spirit."

Coca-Cola

"The Coca-Cola Company exists to benefit

Refresh the world.

and refresh everyone it touches."

Wendys

"The mission of Wendys is to deliver

Healthy fast food.

superior quality products and services for

our customers and communities through

leadership innovation and partnerships."

Red Cross

"To help people prevent, prepare for and

Stop suffering.

respond to emergencies."

United States Air Force "To defend the United States and protect

Kick butt in air and space.

its interests through aerospace power."

United Way (Hawaii)

"The purpose of Aloha United Way is to

Bring people together.

provide leadership to bring people together

to create a healthier, more compassionate

community."

March of Dimes

"March of Dimes researchers, volunteers,

Save babies.

educators, outreach workers and advocates

work together to give all babies a fighting

chance against the threats to their health:

prematurity, birth defects, low birthweight."

EXERCISE

The following chart

contains the real

mission statements of

several organizations,

and hypothetical

mantras that I made

up for them. Which

do you think is more

powerful?

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GET GOING

The third step is not to fire up Word to write a business plan, launch PowerPoint to craft a

pitch, or boot Excel to build a financial projection. Wrong, wrong, wrong!

My goal in giving you this advice is not to reduce the sales of Microsoft Office--remember, Im

off the anti-Microsoft podium. Theres a time for using all three applications, but its not now.

What you should do is (a) rein in your anal tendency to craft a document and (b) implement.

This means building a prototype, writing software, launching your Web site, or offering your

services. The hardest thing about getting started is getting started. (This is as true for a writer

as it is for an entrepreneur.) Remember: No one ever achieved success by planning for gold.

Don't wait to

develop

the

perfect product

or

service

. Good enough is

good enough.

You should always be selling--not strategizing about selling. Dont test, test, test--thats a

game for big companies. Dont worry about being embarrassed. Dont wait to develop the

perfect product or service. Good enough is good enough. There will be plenty of time for

refinement later. Its not how great you start--its how great you end up. The enemy of acti-

vation is cogitation, and at this stage, cogitating the "strategic" issues of research and devel-

opment is a problem. Questions like, "How far can we leap ahead?" "What if everyone doesnt

like what we do?" and "Should we design for a target customer or make what we would want

to use?" are beside the point when youre getting a new venture off the ground.

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Instead, observe these key principles of getting going:

� THINK BIG. Set your sights high and strive for something grand. If youre going to change the

world, you cant do it with milquetoast and boring products or services. Shoot for doing things

at least ten times better than the status quo. When Jeff Bezos started Amazon.com, he didnt

build a bookstore with a paltry 25,000 more titles than the 250,000-title brick-and-mortar

bookstores. He went to 3,000,000 titles in an online bookstore.

�

FIND A FEW SOULMATES.

History loves the notion of the sole innovator: Thomas Edison (light

bulb), Steve Jobs (Macintosh), Henry Ford (Model T), Anita Roddick (The Body Shop), Richard

Branson (Virgin Airlines). History is wrong. Successful companies are started, and made

successful, by at least two, and usually more, soulmates. After the fact, one person may come

to be recognized as "the innovator," but it always takes a team of good people to make any

venture work.

�

POLARIZE PEOPLE.

When you create a product or service that some people love, dont

be surprised when others hate you. Your goal is to catalyze passion--pro or anti. Dont be

offended if people take issue with what youve done; the only result that should offend (and

scare) you is lack of interest. Car design is a good example of the love-versus-hate reaction;

consider the bifurcation of peoples reactions to cars such as the Mini Cooper, Infiniti Fx 45,

and Toyota Scion xB. People are either devoted fans or relentless critics, and thats good.

�

DESIGN DIFFERENT.

Depending on what management fad is hot, you might be tempted to

believe that there is only one ideal way to design products and services. This isnt true. There is

no single best way. Here are four different and valid approaches--and I am sure there are more.

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A.

"I WANT ONE."

This is the best kind of market research--the customer and the designer

are the same person. Therefore, the customers voice can reach the designers mind

uncorrupted by corporate politics, reliance on the status quo, and market researchers.

Example: Ferdinand Porsche said, "In the beginning I looked around and, not finding the

automobile of my dreams, decided to build it myself."

9

B.

"MY EMPLOYER COULDN'T (OR WOULDN'T) DO IT."

Not as romantic as "I want one," but

this is a credible path. You already understand the customer base, competition, supply

sources, and industry contacts because of your background. You still need to build the

product or service and get customers, but many questions are already answered. For

example, alumni of Unit 8200 of the Israeli Defense Forces went on to create companies

such as Checkpoint after developing security software for the military.

C.

"WHAT THE HELL--IT'S POSSIBLE!"

This theory isnt popular when times are tough,

and microscopes are flourishing. At these times, the world has turned conservative and

demands that every market be "proven." Markets for curve-jumping, paradigm-shifting

leaps are seldom proven in advance. For example, when Motorola invented cellular

telephones, no one leaped to buy them. At that time, portable phone was an oxymoron

because phones were always attached to places. There was no market for phones that

customers could move.

D.

"THERE MUST BE A BETTER WAY."

The organization born of this philosophy is based on

the idealistic notion that you can make the world a better place by doing something new.

9

Forbes

FYI (Winter 2003): 21.

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In many cases, the founders had backgrounds with no logical connection to the business.

They simply got an idea and decided to do it. Example: eBay. Pierre Omidyar, the founder,

wanted to implement a system for a "perfect market" for the sale of goods. (The story of

his girlfriend wanting to sell Pez dispensers was an after-the-fact PR tale.)

�

USE PROTOTYPES AS MARKET RESEARCH.

In the early days of an organization, there is high

uncertainty about exactly what you should create and exactly what customers want. In these

times, traditional market research is useless--there is no survey or focus group that can predict

customer acceptance for a product or service that you may barely be able to describe. Would you

buy a new computer with no software, no hard disk, and no color that simulates the real world--

including a trash can?

10

The wisest course of action is to take your best shot with a prototype,

immediately get it to market, and iterate quickly. If you wait for ideal circumstances in which you

have all the information you need (which is impossible), the market will pass you by.

The expected outcome of the "get going" principle is a first release of a product or service.

Remember: it wont be perfect.

But dont revise your product to get prospective customers to love it. Instead, revise it be-

cause customers already love it. Let me put it in religious terms: Some people believe that

if they change, God will love them. Others believe that since God loves them, they should

change. The latter theory is the prototype to keep in mind for how to get going and keep

going for startups.

10 This isnt how we positioned the first Macintosh, but its a pretty accurate description of what

we had.

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DEFINE YOUR BUSINESS MODEL

You want to make meaning. Youve come up with a mantra. Youve started prototyping your

product or service. The fourth step is to define a business model. To do this you need to

answer two questions:

� Who has your money in their pockets?

� How are you going to get it into your pocket?

These questions lack subtlety, but they are a useful way to consider the reality of starting an

organization--even, and perhaps especially, not-for-profits, which have to fight for money

just to stay alive. You cant change the world if youre dead, and when youre out of money

youre dead.

More elegantly stated, the first question involves defining your customer and the pain that

he feels. The second question centers around creating a sales mechanism to ensure that your

revenues exceed your costs. Here are some tips to help you develop your business model:

�

BE SPECIFIC.

The more precisely you can describe your customer, the better. Many

entrepreneurs are afraid of being "niched" to death and then not achieving ubiquity.

However, most successful companies started off targeting specific markets and grew (often

unexpectedly) to great size by addressing other segments. Few started off with grandiose

goals and achieved them.

�

KEEP IT SIMPLE.

If you cant describe your business model in ten words or less, you dont

have a business model. You should use approximately ten words--and employ them wisely

by using simple, everyday terminology. Avoid whatever business jargon is currently hip

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(strategic, mission-critical, world-class, synergistic, first-mover, scalable, enterprise-class,

etc.). Business language does not make a business model.

11

Think of eBays business model: It

charges a listing fee plus a commission. End of story.

�

COPY SOMEBODY.

Commerce has been around a long time, and by now clever people have

pretty much invented every business model thats possible. You can innovate in technology,

markets, and customers, but inventing a new business model is a bad bet. Try to relate your

business model to one thats already successful and understood. You have plenty of other

battles to fight.

My final tip is that you ask women--and only women. My theory is that deep in the DNA of

men is a "killer" gene. This gene expresses itself by making men want to kill people, animals,

and plants. To a large degree, society has repressed this gene; however, starting an organi-

zation whose purpose is to kill another organization is still socially acceptable.

Hence, asking a man about a business model is useless because every business model looks

good to someone with the Y chromosome. For example, Sun Microsystems wants to kill

Microsoft. When is the last time you bought a computer based on whom the manufacturer

wanted to kill?

11 Inspired by Michael Shermer,

Why People Believe Weird Things

(New York: A.W.H. Freeman,

2002), 49.

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Women, by contrast, dont have this killer gene. Thus, they are much better judges of the vi-

ability of a business model than men are. Dont agree with me? The book The Darwin Awards

provides irrefutable proof of womens greater common sense. These awards commemorate

"those individuals who have removed themselves from the gene pool in a sublimely idiotic

fashion."

12

For example, in 1998 two construction workers fell to their demise after cutting a circular

hole in the floor while they were standing in the middle of the circle.

13

The Darwin Awards

contains nine chapters about the stupidity of men, and one chapter about the stupidity of

women. I rest my case.

12 Wendy Northcutt,

The Darwin Awards II

(New York: Dutton, 2001), 2.

13 Ibid., 70.

EXERCISE

STEP 1

Calculate your monthly costs to operate your organization.

STEP 2

Calculate the gross profit of each unit of your product.

STEP 3

Divide the results of Step 1 by the results of Step 2.

STEP 4

Ask a few women if they think you have a chance of selling that many units. If they dont,

you dont have a business model.

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WEAVE A MAT

(Milestones, Assumptions, and Tasks)

One definition of mat is "a heavy woven net of rope or wire cable placed over a blasting site

to keep debris from scattering."

14

Preventing scattering is exactly what you need to do as

the fifth, and final, step of launching your enterprise. In this case, MAT stands for milestones,

assumptions, and tasks.

15

The purpose of compiling the MAT is to understand the scope of what youre undertaking, test

assumptions quickly, and provide a method to find and fix the large flaws in your thinking.

MILESTONES

For most people a startup looks as if it must achieve a seemingly unlimited number of goals.

However, out of these goals are some that stand head and shoulders above the others. These

are the organizations milestones--they mark significant progress along the road to success.

There are seven milestones that every startup must focus on. If you miss any of them, your

organization might die.

14

The American Heritage Dictionary of the English Language

, 4th ed., s.v. mat.

15 Inspired by Rita Gunther McGrath and Ian C. MacMillan, "Discovery-Driven Planning,"

Harvard

Business Review

(July�August 1995).

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1

Prove your concept.

2

Complete design specifications.

3

Finish a prototype.

4

Raise capital.

5

Ship a testable version to customers.

6

Ship the final version to customers.

7

Achieve break-even.

There are

seven milestones

that every

startup must focus on. If you

miss any

of them,

your organization

might die.

These milestones apply to every kind of business. For example, a new school can prove its

concept by seeing if two teachers, working as a team, using a new curriculum, can provide

more individualized instruction and improve learning in a test classroom. With this proof of

concept, the school can then complete the design of its curriculum, raise funds, roll out the

prototype, and start teaching classes.

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There are other tasks (well come to them soon) that are also important to the survival of the

organization, but none are as important as these milestones. The timing of these milestones

will drive the timing of just about everything else you need to do, so spend 80 percent of

your effort on them.

EXERCISE

MILESTONES

Take down the corny framed mission statement in your lobby and replace it with a printout of

target dates for completion of the seven milestones listed above. Make sure that employees and

guests can read it.

EXTRA CREDIT

Repeat this procedure for every new product or service. Create a wall of fame to track the history

of your organization.

Asking a man

about a business model is useless

because every

business model looks good

to someone with the

Y-chromosome

.

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Assumptions

Second, create a comprehensive list of the major assumptions that you are making about the

business. These include factors such as:

� product or service performance metrics

� market size

� gross margin

� sales calls per salesperson

� conversion rate of prospects to customers

� length of sales cycle

� return on investment for the customer

� technical support calls per unit shipped

� payment cycle for receivables and payables

� compensation requirements

� prices of parts and supplies

� customer return on investment

Continuously track these assumptions, and when they prove false, react to them quickly.

Ideally, you can link these assumptions to one of the seven milestones discussed previously.

Thus, as you reach a milestone, you can test an assumption.

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Tasks

Third, create another comprehensive list--this time of the major tasks that are necessary to

design, manufacture, sell, ship, and support your product or service. These are necessary to

build an organization, though they are not as critical as the seven milestones. They include:

� renting office space

� finding key vendors

� setting up accounting and payroll systems

� filing legal documents

� purchasing insurance policies

The point of the list of tasks is to understand and appreciate the totality of what your

organization has to accomplish, and to not let anything slip through the cracks in the early,

often euphoric days.

Continuously

track

...

assumptions

, and when

they

prove false

,

react

to them

quickly

.

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Minichapter: The Art of

Internal Entreprenuering

Innovation often originates outside existing organizations, in part

because successful organizations acquire a commitment to the status

quo and a resistance to ideas that might change it.

--Nathan Rosenberg

A large number of aspiring entrepreneurs currently work for big companies. Like all entrepre-

neurs, they dream of creating innovative products or services and wonder if this can be done

internally. The answer is yes. The purpose of this minichapter is to explain how.

The "arts" that this book describes are equally appropriate for internal entrepreneurs--they,

too, must innovate, position, pitch, write business plans, bootstrap, recruit, raise capital,

partner, establish brands, make rain, and be mensches. But there are special recommenda-

tions that apply in this case.

Ironically, many independent entrepreneurs envy the employees of big companies--they think

that these lucky souls have humongous financial resources, large sales forces, fully equipped

labs, scalable factories, and established brands, plus medical and dental benefits, at their

disposal. How wonderful it would be, guys in garages muse, to invent a new product or

service with the luxury of such an infrastructure already in place.

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Guess again. Creating a new product or service inside such a beast is not necessarily easier;

the challenges are just different. I happen to have been part of a "best-case" scenario: the

Macintosh Division of Apple. I can explain the success of this internal entrepreneurial effort

in two words:

Steve Jobs

. His off-the-scale design talents, maniacal attention to detail, and

reality-distorting personality (plus co-founder status) made Macintosh successful. Were it not

for Steve Jobs, Macintosh would not exist--or it would have taken the form of an Apple II with

a trash can.

But if it takes a Steve Jobs to innovate within large companies, you are undoubtedly

thinking, we might as well give up right now.

While that kind of visionary is in short sup-

ply in any business, anyone with guts, vision, and political savvy should be able to set up an

entrepreneurial outpost in an established business. I collaborated on this minichapter with Bill

Meade, a close friend who helped Hewlett-Packard organize its substantial vault of intellec-

tual property. We came up with this list of recommendations for internal entrepreneurs.

Anyone with

guts, vision,

and

political

savvy

should be able to set up an

entrepreneurial

outpost

in an

established business.

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�

PUT THE COMPANY FIRST.

The internal entrepreneurs primary, if not sole, motivation

should remain the betterment of the company. Internal entrepreneurship isnt about grabbing

attention, building an empire, or setting up a way to catapult out of the company. When you

have a good idea for a product or service, it will attract a large number of employees, from

the bottom up. They will support you if youre doing it for the company, but not if its for your

personal gain. If you can attract a large number of rank-and-file supporters, you might not be

totally dependent on what the "vice presidents" say.

�

KILL THE CASH COWS.

Dont announce this widely, but your charter is often to create the

product or service that would put an end to existing products or services. Still, its better that

its you whos killing your companys cash cows than a competitor or two guys in a garage.

Macintosh killed Apple II. Would it have been better for Apple if a competitor had created

Macintosh? No way. This recommendation is another reason why its so important that youve

put the company first: What youre doing is bound to be controversial. But if you dont kill the

cash cows, someone external will.

�

STAY UNDER THE RADAR.

Two guys in a garage should try to get as much attention as they

can. Awareness of their efforts makes it easier to raise money, establish partnerships, close

sales, and recruit employees. However, the opposite holds true for internal entrepreneurs.

You want to be left alone until either your project is too far along to ignore or the rest of the

company realizes that its needed. The higher you go in a company, the fewer people are going

to understand what youre trying to do. This is because the higher you go, the more people

want to maintain the status quo and protect their positions.

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FIND A GODFATHER.

In many companies, there are godfather figures. These are people who

have paid their dues and are safe from everyday petty politics. They are relatively untouchable

and usually have the attention and respect of top management. Internal entrepreneurs should

find a godfather to support their projects by providing advice, technical and marketing

insights, and protection--if it comes to the point where you need protection.

�

GET A SEPARATE BUILDING.

An internal entrepreneur, sitting in the main flow of a big

company, will die by a thousand cuts as each department manager explains why this new

project is a bad idea. "The new always looks so puny--so unpromising--next to the reality of

the massive, ongoing business."

16

The Macintosh Division started in a building that was far

enough away from the rest of Apple that it stayed out of the daily grind, but was close enough

to obtain corporate resources. A separate building will keep your efforts under the radar and

foster �sprit de corps among your merry band of pirates. The ideal distance from the corporate

pukes is between one-quarter mile and two miles--that is, close enough to get to, but far

enough to discourage overly frequent visits.

�

GIVE HOPE TO THE HOPEFUL.

Inside every corporate cynic who thinks that "this company

is too big to innovate" is an idealist who would like to see it happen. Good people in big

companies are tired of being ignored, forgotten, humiliated, and forced into submission. They

may be trampled, but they are not dead. When you show them that youre driving a stake

in the heart of the status quo, you will attract support and resources. Then your goal is to

advance these people from wanting to see innovation happen to helping you make it happen.

16 Peter F. Drucker,

Innovation and Entrepreneurship: Practice and Principles

(New York: Harper &

Row, 1985), 162.

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�

ANTICIPATE, THEN JUMP ON, TECTONIC SHIFTS.

Structural deformations in a company are a

good thing for internal entrepreneurs. Whether caused by external factors such as changes in

the marketplace or internal factors such as a new CEO, tectonic shifts signal changes and may

create an opportunity for your efforts. Effective internal entrepreneurs anticipate these shifts

and are ready to unveil new products or services when they occur: "Look what weve been

working on." By contrast, corporate pukes say, "Now I see the shift. If you give me permission,

six months, and a team of analysts, I can come up with a new product strategy."

�

BUILD ON WHAT EXISTS.

The downside of trying to innovate within a big company is clear

and well documented, but there are also benefits to doing so. Dont hesitate to utilize the

existing infrastructure to make innovation easier--start by stealing, if you have to. Youll not

only garner resources, but also make friends as other employees begin to feel as if they are

part of your team. If you try to roll your own solutions (as an extreme example, building your

own factory), youll only make enemies. The last thing a startup inside a big company needs is

internal enemies--there will be enough enemies in the marketplace.

�

COLLECT AND SHARE DATA.

The day will inevitably arrive when a bean counter or lawyer is

suddenly going to take notice of you and question the reasons for your projects existence. If

youre lucky, this will happen later rather than sooner, but it will happen. Prepare for that day by:

(1) collecting data about how much youve spent and how much youve accomplished and

(2) then sharing it openly. In big companies, data suppresses antibodies, but it might be too

late to get the data once the antibodies appear.

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�

LET THE VICE PRESIDENTS COME TO YOU.

Quick question: Do you think that your first step

should be to get your vice president to sign off on your project? It shouldnt be. This is one

of the last steps. A vice president will "own" your idea and support it more if he "discovers" it

and then approaches you about sponsoring it. You may have to ensure that a vice president

"accidentally" makes that discovery when the time is right, but this is not the same as seeking

permission to get started.

�

DISMANTLE WHEN DONE.

The beauty of an internal entrepreneurial group is that it can rapidly

develop new products and services. Unfortunately, the very cohesiveness that makes it so

effective can lead to its downfall later if it remains separate (and usually aloof) from the rest

of the organization. Its effectiveness declines further as its members come to believe that only

they "know" what to do, and the entrepreneurial group creates its own, new bureaucracy.

17

If

the product or service is successful, consider dismantling the group and integrating it into the

larger organization. Then create a new group to jump ahead again.

�

REBOOT YOUR BRAIN.

Many internal entrepreneurs will find that the rest of this book

prescribes actions that are contrary to what theyve experienced, learned, and maybe even

taught in big companies. The reality is that starting something within an existing company

requires adopting new patterns of behavior--essentially, rebooting your brain. The following

table (next page) will prepare you for whats to come:

17 Andrew Hargadon,

How Breakthroughs Happen: The Surprising Truth About How Companies

Innovate

(Boston: Harvard Business School Press, 2003), 116�17.

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TOPIC

BIG COMPANY

STARTUP

Positioning

Being all things to all people

Finding a niche and dominating it

Pitching

Sixty slides, 120 minutes, and

Ten slides, twenty minutes,

fourteen-point font

and thirty-point font

Writing a

Two hundred pages of extrapolation

Twenty pages of wishful

Business Plan

from historical data

thinking

Bootstrapping

Staying in a Hyatt Regency instead

Staying with a college buddy

of a Ritz Carlton

instead of a Motel Six

Recruiting

Corporate headhunters screening

Sucking in people who "get it"

candidates with Fortune 500 or

and are willing to risk their

Big Four track records

careers for stock options

Partnering

Negotiating I-win/you-lose deals

Finding a way to increase sales

that the press will like

by piggybacking on others

Branding

Advertising during the SuperBowl

Evangelizing in the trenches

Rainmaking

Spiffs for resellers and commissions

Sucking up, down, and across

for sales reps

Being a mensch

Calling the legal department

Helping people who cant help you

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FAQ

(FREQUENTLY

AVOIDED

QUESTIONS)

Q. I ADMIT IT: I'M SCARED.

I cant afford to quit my current job. Is this a sign that I dont have

what it takes to succeed? Am I not truly committed?

A.

You should be scared. If you arent scared, something is wrong with you. Your fears are not

a sign that you dont have the right stuff. In the beginning, every entrepreneur is scared. Its

just that some deceive themselves about it, and others dont. You can reduce these fears by

diving into the business and making a little progress every day. One day youll wake up and

you wont be afraid anymore--or at least youll have a whole new set of fears. No matter what,

never admit that youre scared to other employees. A CEO can never have a bad day. But dont

go overboard, either, and act as if you have no concerns, because then they will know youre

scared stiff.

Q. SHOULD I SHARE MY SECRET

ideas with anybody other than my dog?

A.

The only thing worse than a paranoid entrepreneur is a paranoid entrepreneur who talks to his

dog. There is much more to gain--feedback, connections, opened doors--by freely discussing

your idea than there is to lose. If simply discussing your idea makes it indefensible, you dont

have much of an idea in the first place. (See the FAQ section of Chapter 7, "The Art of Raising

Capital," for a detailed discussion of nondisclosure agreements.)

Q. HOW FAR ALONG

should I be before I start talking to people about what Im doing?

A.

Start right away. By doing so youll be constantly mulling over your idea--as both a foreground

and background task. The more people you talk to, the richer your thoughts will be. If its just

you staring at your navel, all youll see is lint building up.

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Q. HOW DO YOU KNOW IF IT'S TIME TO GIVE UP

rather than continuing to pursue a doomed

venture?

A.

The old platitude is that good entrepreneurs never give up. This is fine for books and

speeches, but not for the real world. If three close friends tell you to give up, you should listen.

As the saying goes, when three people tell you youre drunk, you should take a cab home. Its

okay to fail as long as you try again.

Q. I THINK THAT I HAVE A GREAT IDEA

, but I dont have a business background. What should I

do now?

A.

First, if all youve done is come up with a great idea--for example, "a new computer operating

system thats fast, elegant, and bug free"-- but you cant implement it, then you have nothing.

In this case, dont waste anyones time until youve found other people who can do the

engineering. Assuming that you can implement, there are two kinds of people you can recruit.

First, you can get a mentor. This would be an older person who is willing to coach you from

time to time but never actually do any work. Second, you could get a business partner. This is

someone whos willing to work side by side with you--even on a part-time basis--whose skill

set complements yours. Either kind of person can make a big difference in your business.

Q. WHEN SHOULD I WORRY

about looking like a real business, with business cards, letterhead,

and an office?

A.

Make business cards and letterhead immediately. Spend a few bucks and get them designed

by a professional or dont do them at all. Ensure that the smallest type size is twelve points.

An office isnt necessary until customers are coming to see you, or you run out of space for the

team.

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Q. DO I NEED A WEB SITE?

A.

Yes, particularly if youre going to raise money, serve lots of customers, change the world in a

big way, and achieve liquidity. Customers, partners, and investors will look for your Web site

from the very start.

RECOMMENDED READING

Christensen, Clayton.

The Innovators Dilemma: When New Technologies Cause Great Films to Fail.

New York: HarperBusiness, 1997.

Drucker, Peter F.

Innovation and Entrepreneurship: Practice and Principles

. New York: Harper & Row,

1985.

Hargadon, Andrew.

How Breakthroughs Happen: The Surprising Truth About How Companies

Innovate

. Boston: Harvard Business School Press, 2003. Kuhn, Thomas.

The Structure of Scientific

Revolutions

. Chicago: University of Chicago Press, 1962.

Shekerjian, Denise.

Uncommon Genius: How Great Ideas Are Born

. New York: Penguin Books, 1990.

Ueland, Brenda.

If You Want to Write

. St. Paul: Graywolf Press, 1987.

Utterback, James M.

Mastering the Dynamics of Innovation: How Companies Can Seize Opportunities

in the Face of Technological Change.

Boston: Harvard Business School Press, 1994.

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ABOUT THIS AUTHOR

Guy Kawasaki is CEO of

http://garage.com

, a Silicon Valley based firm that assists high-technology

startups find startup capital using the Internet. Prior to this position, Kawasaki was an Apple Fellow at

Apple Computer, Inc. A noted columnist (Forbes), speaker, and founder of various personal computer

companies, Kawasaki was one of the individuals responsible for the success of the Macintosh com-

puter. Kawasaki is the author of seven books:

The Macintosh Way, Database 101, The Computer

Curmudgeon, How to Drive Your Competition Crazy, Hindsights,

and

Selling the Dream

. His

most recent book is called

Rules for Revolutionaries

, published in January. 1999.

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BUY THE BOOK

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Kawasakis book,

The Art of the Start

,

click here.

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your website, or any other means). You can print out pages and put them in your favorite coffee

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