Top 10 Mistakes Entrepreneurs Make

IMG_6550I had the pleasure of seeing Guy Kawasaki speak at the Startup Conference in May. He was the keynote speaker after lunch. I was checking people in when he breezed by so I took him inside to get all set up and chatted for a few minutes while people flocked to him to say hi, take pictures, and tell him about their latest start-up idea or venture. I was just trying to get him settled in before lunch and his speech, but the tech guys were all out for lunch so I sent him to the speaker’s lunch and then went back to checking people in. He gave me his mobile # so that I could text him when the tech guys could check his presentation and sound. No, I’m not sharing that #!

Guy Kawasaki has been around the valley for a long time and I first ran across him when I was at Intuit and he was leaving his post as the Chief Evangelist at Apple to found garage.com (now Garage Technology Ventures). I went through his boot camp for startups and found it helpful. I had also taken a class in law school called Legal Issues for High Tech Start-Ups so I had a good idea of the mechanics from a corporate standpoint. Although, more helpful was the school of hard knocks I “attended” over the last 15 years with various startups. The things I learned in the school of hard knocks are the things Guy focused on in his keynote speech. He labeled them as the “Top 10 Mistakes that Entrepreneurs Make” and I must say they are spot on! I’ve included a summary of his Top 10 mistakes. He is a very funny speaker and I’m not sure I can do his humor justice here:

Top 10 Mistakes Entrepreneurs Make

As presented by Guy Kawasaki and noted by me.

1. Very Large #s ($s)

1% market share of a very large market is a very big #.Guy recommended not going from the top down with numbers. He suggested going from the bottom up – starting with the price of your product or service, # of customers, etc. Rather than saying pet food is a $100B industry and if we just get one tenth of 1 percent, we’ll be huge, we’ll all get rich. Yeah, it doesn’t really work that way. Developing your #s from the bottom up requires real work and considered thought.

2. Scale Too Fast
Success is really built on eating what you kill, as you kill it. Serve the business you are selling. Don’t scale too fast or you’ll be left with unused capacity, empty space or facilities, or with people you don’t need and can’t keep busy. Scale as you need to.

3. Form Partnerships

According to Guy, partnerships are bullshit. Companies form partnerships because they don’t have sales. Focus on building sales and revenue. Sales fix everything… [My take on this is as long as your “partnerships” are leading to sales, then form partnerships, otherwise, there may be some truth to what Guy is saying.]
4. Focus on Pitch
You are wasting time perfecting your pitch…Focus on prototypes instead. Focus on showing that your idea is great in the flesh and that it works or can work. Stop focusing on making the perfect pitch, there isn’t one. In a perfect world you wouldn’t have to pitch, because your prototype works.
5. Use Too Many Slides
Guys says: “Obey the 10/20/30 rule” — 10 slides max, 20 minutes, 30 is font size… This formula forces you to use fewer words and to focus your pitch on what is important.In first 30 seconds say what you do in a clear manner.
6. Make Serial Progress
Guy really laid it out that most entrepreneurs focus on a linear way of thinking and doing things. I’ll do funding, then I’ll do team, prototype, sales, collections, etc. Things don’t work linearly. Make parallel progress on multiple things. Raising money, recruiting, god help you, partnering, selling. Guys used an example from writing a book. Even as you write your book, you have to build a marketing platform. It doesn’t all happen once the book is written, you have to build interest as you are writing it. It takes 6-9 months to build social media platform. You can’t wait until your book is at the printer’s to do this. A start up is no different, build/do multiple things in parallel.

7. Try to Retain Control
Guy really hammered on founders who know too much math and focus on the minutia or ownership as they try to retain 51% or more. There is an illusion of control. A start-up is not a democracy. Few decisions are made by boards and when they are, they are usually are unanimous. As soon as you take outside money you are working for those investors, not yourself anymore.Dilution happens, founders will end up with a single digit ownership percentage. Guys counseled the entrepreneurs in the room to focus on making a bigger pie, not retaining control. Bakers and eaters – bakers are successful and make more pie, cookies, cake. Eaters focus on getting a bigger piece to eat. Be a baker, make a bigger pie.
8. Use Patents for Defensibility
Trying to get and defend a patent as a way of differentiating yourself and protecting market share is a very, very long term play. A patent never goes through the PTO quickly… And trying to enforce it through the courts, to get to a damages phase is too long and too expensive. He suggested filing a patent to impress your parents. Use the success of your company for defensibility. File patents, but don’t depend on them for success. [As a patent owner of multiple patents, I can wholly agree with this one. File your patents, but don’t depend on them to stop others from stealing or copying your idea.]
9. Hire in Your Image
Entrepreneurs make the mistake of hiring in their own image, whether it is hiring from their fraternity or sorority or through another common bond. You will need to hire a diverse work force – engineers, sales, marketing, etc. These people won’t all be like you and they will have a different skill set and focus (take home a paycheck). You’ll hire younger, older, men and women. Guy suggested hiring all women because they are much better at making a company successful. [I personally loved this advice.] He said men have a deep desire to kill things, other people, animals, plants, environment… women don’t. Ask women what they think [and here he went on a bit of a tangent and said, “But that is another topic…”] Hire to complement. Think Steve Jobs and Steve Wozniak. Hire makers and hire sellers. Hire for expertise regardless of age, race, gender etc. and you will build a diverse workforce. [I find this advice timely given all of the Silicon Valley companies that are now reporting the whiteness and maleness of their workforce.]
10. Befriend your Investors
You will never be BFFs with your investors… Think of them more like an open Rolodex. Don’t be hostile to them, but you won’t be bosom buddies. You are merely a means to an end for them; namely, turning one dollar into twenty. Focus on exceeding their expectations. Guy suggested that you sandbag, but not too much!

Guy ended by saying a few things:

  1. Real men use android.
  2. He gave a little pitch and discount for a new startup he is working with.
  3. And then he focused on a marketing cliché of being in the upper right hand quadrant of his graph of offering something unique AND valuable. What would a presentation from a marketer be without a four-quadrant chart?

Seriously, if you have a chance to Guy Kawasaki in person, he’s a good and entertaining presenter. Even if you have heard what he has to say before. Entrepreneurs want to change the world – do so by being in the upper right quadrant by offering something Unique and Valuable.

 

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