Biznik Blog

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Leif Hansen:  Biznik Live, collaboration beats competition.

Hello, everybody, and welcome back after a short holiday, to Biznik Live, this is Leif Hansen and I am broadcasting from a very windy Seattle, Washington.  I think I just saw three cats fly by my front window here.  Well, Biznik Live connects you with nationally recognized authors whose powerful ideas will help you make successful choices for your business.  And in just a minute we’re going to be talking with Guy Kawasaki, author of “Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition”.  After the first half of our conversation, you’re going to have a chance to ask Guy questions yourself through the BlogTalkRadio chatroom or by calling (347) 884-8009.

In addition to today’s awesome guest, Guy Kawasaki, we’ve got three more amazing authors lined up this month;  Daniel Pink of “A Whole New Mind”, Barry Libert of “Barack, Inc.” and Matthew Fraser of “Throwing Sheep”.  So I really look forward to having you guys each Wednesday at 10:00 am Pacific Standard Time and at seeing you at Biznik.com.
 
So about today’s guest, Guy Kawasaki is managing director of Garage Technology Ventures, an early-stage venture capitalist firm and a columnist for Entrepreneur Magazine.  Previously, he was an Apple Fellow at Apple Computer and Guy is also author of nine books including “Reality Check”, which we’re focusing on today, “The Art of the Start”, “Rules for Revolutionaries”, “How to Drive Your Competition Crazy”, “Selling the Dream” and “The Macintosh Way”.  He has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College.

Guy is also co-founder of Alltop, which you might think of as an online magazine rack, or if you’re a geek, as an aggregator for top contents across the blogosphere and other sources.  And he also has been father, speaker and hockey addict.  So Guy, are you there?

Guy Kawasaki:  Yes, I am.

Leif Hansen:  And where are we catching you today?

Guy Kawasaki:  I am in San Francisco, in a hotel, the Palace actually, because it’s Macworld Expo here.  Actually, I signed books in Microsoft’s booth yesterday.

Leif Hansen:  Oh, fun!  How did that go?

Guy Kawasaki:  It was fun.  It was a very ironically situation where Steve Jobs isn’t at Macworld and Guy is, but in the Microsoft booth.  Who would have thought that would ever happen.

Leif Hansen:  So that is very interesting.  Have you been getting any flack for that or comments about that?

Guy Kawasaki:  A few here and there. 

Leif Hansen:  What’s been one of the most exciting things you’ve seen at Macworld?

Guy Kawasaki:  I have to say, you may find this a little bit ridiculous, but I found this great backpack in the, I don’t know how you pronounce the company.  It’s Booq.

Leif Hansen:  I guess it would be “book”.

Guy Kawasaki:  I guess.  Yeah, I guess backpacks have books.  So it’s the Booq booth have this great backpack that not only holds your laptop but has a very special area for a digital SLR and I need to carry both.  And so that was my find of the show so far.  Then last night I had dinner with the people from the Microsoft Office team.  And so I had some question about Entourage answered.

Leif Hansen:  Oh, nice.

Guy Kawasaki:  Yeah.  And the third thing, I met the people from TextExpander.  I think the company’s name is SmileOnMyMac.  And TextExpander is one of these things where you type in a couple of letters and it expands to a whole paragraph of answers.  So I got some of my questions about that answered.

Leif Hansen:  Cool.  Direct source.

Guy Kawasaki:  Yeah.  Can’t get much better than that.

Leif Hansen:  Seriously.  I was thinking about your book this morning, I think it’s one of the most practical, excellent business books you can get right now.  But I was thinking on the off chance that somebody didn’t like, it’s still so big that it can serve as a reality check by just whacking somebody upside the head with it.

Guy Kawasaki:  That would definitely be a felony, yes.  My previous book was “The Art of the Start” and it is twice as thick.

Leif Hansen:  So it’s twice as thick as “Reality Check”?

Guy Kawasaki:  Yeah.  “Reality Check” is 474 pages and “The Art of the Start” was about 220, 230.

Leif Hansen:  Wow!  So are you going go for a full bible for us next?

Guy Kawasaki:  No, I think this is it.  Basically I’ve tapped out all my knowledge.

Leif Hansen:  I kind of doubt that.

Guy Kawasaki:  No, I’m not being modest.

Leif Hansen:  Well you’ve got a number of years.  You’re going to continue to grow and things are going to change exponentially I’m sure.

Guy Kawasaki:  I would hope so.  Thank you.  We’ll see.

Leif Hansen:  So what kind of response are you getting to this book?  And give us a quick summary for those who haven’t had a chance to check it out yet.

So this isn’t the kind of book that you read once, you put down and you never return to.  This is more the kind of book that you read one chapter at a time over the course of probably years because you don’t need everything at that moment.  So at the moment you’re raising funds, there’s a whole section about raising funds.  But six months from now, you may be invited to serve on a panel and there’s a chapter about how to be a great panelist.  And six months after that you may be asked to moderate a panel, there’s a chapter about how to moderate a panel.  And it just goes on and on 94 times.  There are 94 chapters.

Leif Hansen:  Yeah.  I’m not going to lie and say that I’ve read the whole thing.  I’ve read the first third and then I’ve done some skimming.  And speaking of so many points, for our entrepreneurs that are listening out there in this current economic climate, what would be let’s say three top pieces of advice or action points that you would choose out of there to share with somebody right now?

Guy Kawasaki:  In this economic environment, the good news is it’s cheaper than ever to start a company because of MySQL, WordPress, Rails, PHP, all that kind of stuff.  So the biggest piece of advice I can give an entrepreneur now is you either believe or you don’t.  And if you’re an entrepreneur that’s going to start a company only when all the conditions are right, the economy is doing well, commercial real estate is cheap, there’s a lot of people who are well qualified to hire, sales are easy, everybody is buying everything and it’s a large market and there’s no competition.  Basically I just defined mission impossible.  That’s never going to happen.

So it’s easy to be an entrepreneur in a good time where everything is getting funded.  It’s much harder to be one now.  But arguably, these kinds of times create better companies than the days where if you had a PowerPoint pitch you could raise $5 million.  It’s a very different world.

Leif Hansen:  All right, well what about another one?

Guy Kawasaki:  Piece of recommendation?  Then my recommendation, there’s sort of two classic plans in tech startups.  Plan A is you raise a boatload of venture capital, you assure the investor that you’re going to ship in six months and conservatively speaking you’ll have a million registered users by the end of seven months.  So because you know conservatively you’re going to have a million users you get three collocation sites, three IT staffs, three customer service shifts.  They build up this great infrastructure because God knows you’re going to have a million people in seven months.

And then six months go buy and you’re still six months from shipping.  And at the end of seven months, instead of having a million registered users you have zero but you still have all the infrastructure.  So then, you have to raise another round and the venture capitalist will give you the benefit of the doubt one more time.  Then you finally ship a year later and guess what, even though your conservative estimate was a million, you get 10,000.

So at that point, the venture capitalist fires the CEO and comes up with this brilliant idea of taking two dogs and his portfolio, putting them together and trying to get, to completely switch metaphors, you get two dogs in your portfolio.  You put them together and you end up with a pig with lipstick.  So that’s plan A and that’s how it happens most of the time.

Plan B would be two guys in a garage, two girls in a garage, a guy and a girl in a garage, they raise $100,000 or $250,000 credit cards, friends, fools, family.  They prototype in their garage.  They use MySQL.  They host it at Media Temple, S3, Amazon Web Services, Salesforce.com or whatever.  They don’t have any room full of servers.  They don’t have an IT staff.  They don’t have all this bandwidth that they’ve dedicated to themselves and space and all that.

And then they, knock on wood, they go from 10,000 to 15,000 to 25,000 month to month.  And then they raise money to expand the business because now they do need more people.  Which is very different than raising money to finish a product and hire people in anticipation of conservative one million installed race.  So that would be my second piece of advice.

And then third piece of advice is you can’t let the bozos grind you down.  You cannot listen to all these people who say it can’t be done, it shouldn’t be done, it’s a lousy time to start the business.  You either believe or you don’t believe.

Leif Hansen:  Yeah.  You seem to be someone who definitely has passion about what you’re doing and don’t get intimidated by the bozos.  What’s your secret?  What does Guy do when he wakes up in the morning?  Do you have those days where you wake up and you just don’t want to get out of bed or the voices are there inside your head of you can’t do this and you’re crazy?

Guy Kawasaki:  I would be lying and almost everybody would be lying if they said they didn’t have doubts.  Everybody has doubts.  There are doubts when you have a low traffic day, there are doubts when your server won’t respond.  I mean that’s life.  I bet you Bill Gates had doubts.  Steve Jobs had doubts.  The question is not whether you have any doubts, the question is if in those days that you have doubts, you still keep pushing and that’s the test.  So some of being a good entrepreneur is just to be in denial.

Leif Hansen:  What gives you that kind of courage to be in denial?  The courage to be denial or to not listen to the doubt?

Guy Kawasaki:  Well some of it is just plain stubbornness.  It’s a very good question that I’ve never figured out the answer to is like when do you know it’s not going to work and you shut it down.  That is a very hard question because you read about these things where Fred Smith is on his last payroll.  He goes to Las Vegas, wins $15,000, makes another payroll, FedEx and the company now this huge success.  So should’ve he had given up or should’ve he gone for that one last shot?  Maybe the reason why we know that story because it doesn’t happen that often.

Leif Hansen:  Yeah.  And I remember in one of your chapters in “Reality Check” talks about how you really can’t predict the whole concept of the close system and open system.  And there’s really no totally closed, predictable system.

Guy Kawasaki:  No, there really isn’t.  A lot of it is you just have to believe and take the shot.  I don’t know if there’s any other way to do it.

Leif Hansen:  Yeah.  Well I’m going to go ahead.  We’ve got a ton of people joining us in the chatroom and on the phone.  So I’m going to self sacrificially give up all my questions here and jump in.  So let’s see, one of our first questions here from Andrew Lippert says, “Guy, what is the next project you plan to take on?”

Guy Kawasaki:  I don’t have any next projects planned right now.  Frankly, doing Alltop and Garage is pretty much full time, more than full time.  So honestly, no, I have nothing on the horizon.

Leif Hansen:  And that’s one of the things that you emphasize in the book, isn’t it.  That you really need to keep a certain focus and not try and add on a million projects and widgets to your site or your business or whatever.

Guy Kawasaki:  Yeah.  And that is one of the hardest things too.  For example with Alltop, some people are asking us, “Why don’t you make it a social networking site?”  So now, people create profiles and then they come and they rate things like Digg.  And then you get scored for how many times you rate things that are popular.  And then you have pictures and then you can have dating and all that.  And we don’t want to do any of that.

Leif Hansen:  Maybe.

Guy Kawasaki:  Yeah.  Maybe if we can be sponsored by Hooters, there’s a lot of opportunities there.  So do we make it a social networking site?  Do we add all that profile, passwords and registration or do we just keep it what it is?  You come in, you look for news and you leave.  So it’s that kind of question that happens everyday.

Leif Hansen:  Yup.  You heard it here folks.  Alltop to be sponsored by Hooters.  [Laughter]  So another question here from Dan McComb from Biznik.  “Is it possible to build a successful Web 2.0 company completely by bootstrapping?  That is by avoiding outside funding all together.”

Guy Kawasaki:  Absolutely.  Without question.  You can make the case that Hot or Not did that, PlentyofFish did that, Fark did that.  That’s the model.  When I got to know James Hong and Marcus Frind, that’s where I said, “Wow!  These guys are on to something.”  And in a sense I think Y Combinator also proves the point, because Y Combinator gives you $15,000, $20,000, $25,000.  And a lot of those companies have reached, raked in profitability with $15,000 or $25,000 so it can be done, absolutely.

Now the flip side is if you raise $5 million, does it guarantee you success?  And the answer to that is absolutely not.

Leif Hansen:  A bit of a tangent but I was thinking maybe you might want to say something about using social media particularly we all know that you’re a big time Twitter evangelist and how you actually use that to market and get the word out.  Do you want to say something about your passion for Twitter?

Guy Kawasaki:  Yeah.  I’m a late comer to Twitter.  I started using Twitter in September of 2007.  So it’s been about a year or so or a little more than a year.  And I now have 44,000 close friends on it.  I don’t think I could do Alltop without Twitter because the Twitter suggest topics, they suggest feeds for the topics.  They also spread the word about Alltop.  For me, Twitter is this amazing marketing weapon that you can reach hundreds of thousands of people basically immediately and free.  And yes, if you had unlimited budget you’d advertise on the Super Bowl and probably waste all your money.  So Twitter for me is like a poor man’s Super Bowl commercial.  It can’t get much better than that.

Leif Hansen:  It’s not as easy though for the rest of us to get that kind of following on Twitter or maybe our business isn’t directed to related to, you know.  Here you are aggregating all these news feeds and people are pinging you on that.  What type of businesses do you think are best suited to use Twitter?

Guy Kawasaki:  Well you described something, right?  So it takes something that is primarily online.  It also takes something that people can easily share, quickly share.  But at an extreme, if I were Joe the plumber, assuming I got licensed and paid my back taxes, could I use Twitter.  You know that’s kind of a stretch honestly.  But anything that has a digital footprint, that doesn’t have geographic boundaries should be able to use Twitter.

Now, I’m going to give you some big company examples but I think small companies could be inspired by these.  So Amazon has this thing where they push out sales announcements or sales Tweets and that’s been successful for them.  Dell has done that with clearing hardware.  ComcastCares uses it to monitor what people are saying about Comcast can help their customers.  Now all of  those are large companies but they’re doing small company things.  They’re servicing their customers, their offering specials, all this. 

It helps to have 44,000 followers, there’s no question about that.  But I really have two answers for that.  One is, yes, it is an unfair advantage but entrepreneurship is about unfair advantages.  Entrepreneurship is not about creating a level playing field.  Entrepreneurship is making the field tilt towards you.  So it would be like saying to Michael Jordan, “Jordan, the only reason people buy your basketball shoes is because you’re Michael Jordan.  And if you were Joe Schmoe they wouldn’t buy the Air Schmoe.”  Well, yeah, that’s true.  So what do you want Michael Jordan to do?

Leif Hansen:  Say, “Can you play a little less good?”

Guy Kawasaki:  Yeah.  “Could you suck so that you don’t have an unfair advantage selling shoes?”  The whole point is to have an unfair advantage.  So in my case, I started in the computer business in 1983, so it’s roughly 25 years later – 25th anniversary of Macintosh, right?  So it took me 25 years to get to this point where I could get 44,000 followers by whatever means.

And so, yeah, it’s an unfair advantage but I’ve been doing it for 25 years to get that unfair advantage.  At this point do you want me to say, “Yeah, guys, it’s unfair.”  I’m not going to use that advantage?  Don’t be an idiot.

Leif Hansen:  Good point.  And there’s got to be some sort of strategy where you can get similar followers but I think like you say, it really does depend on your industry whether it makes sense or not.

Guy Kawasaki:  Yeah.

Leif Hansen:  I’m curious; Biznik is a social networking site.  And we’re looking at different advertising models as well as many social networking sites.  The very nature of a social networking site is this place where you want to be safe and authentic.  And you want things to be organic and you want to have genuine offers to your people that aren’t in a rut marketing and that really are a good match.  What are some alternatives to advertising that you see as successful business models for social networks?

Guy Kawasaki:   Somebody just sent a Tweet saying, “I’m picturing you in a Hooters’ outfit.”

[Laughter]

Leif Hansen:  That’s great!  Well pictures will be sent to the show.  No, I was kidding.  Go ahead.

Guy Kawasaki:  So I think that the advertising model for any social network is very challenging.  And people are making the case that even for MySpace and Facebook which are the successes in social networking.  It’s a challenging business.  Now obviously they have the page views but, I don’t know.  Even with billions of page views, not enough people click on them or the CPM’s are too low or whatever.  So if Facebook and MySpace can’t do it, how the hell is anybody going to do it?  And that is a very good question.

I don’t know how you could do it but I think that in many social networks, what’s the most interesting business is digital goods.  So when my friends at XAT, this is an online chat site that has millions of users and billions of page views.  So they sell things like in the middle of a chat session you can pay a few pennies or something and, I’m not making this up.  You can put in a message so that a hippo walks across the chatroom and then poops out your message.

Leif Hansen:  Oh, I’ve been looking for that! 

[Laughter]

Guy Kawasaki:  Yeah.  Something you’ve always wanted right? Yeah.  Literally, the hippo would walk across the chat session and then poop out, you know, “Check out Alltop.”  And you pay, I don’t know, a nickel for that.  So your laughing, I’m laughing but I’ll tell you what man…

Leif Hansen:  They’re making money.

Guy Kawasaki:  Those nickels add up.  So with Gaia Online, I guess Facebook has these digital goods too.  You buy somebody a bouquet of roses or you get the new sword, whatever it is.  I think that’s interesting because if you think about it, you have infinite inventory with no spoilage and basically infinite margin.  You pay some college kid, I don’t know, $20 an hour to design a new bouquet of roses and you sell it for a nickel unlimited times.  Wow!  I like that business.

Leif Hansen:  That’s good.  And someone just also mentioned, Gianna Borgine says, “Speaking of digital goods, what’s your take on virtual worlds like Second Life?”  And obviously Second Life is doing something similar where they’re selling fashions and clothes and digital products and that way.

Guy Kawasaki:  Yeah, I’ve never done this virtual world thing because I have so much trouble managing my real world that I don’t need another world to manage. 

Leif Hansen:  There could be a virtual Guy with a Hooters’ top on though.

[Laughter]

Guy Kawasaki:  Could be.  I’ll license that.  I have never used the virtual world.  Twitter is as virtual as I get.

Leif Hansen:  Yeah.  So we’ll take that answer.  So we’ve got a ton of calls coming in, we won’t go into further into the potential of Second Life.  I’m going to be taking some calls so I’m going to call off the area codes and if you’re in that area code, be ready to ask your question.  So we’re starting with a 415 area code.  415 you are on the air.  Do you have a question for guy?

All right, we’re going to try the next one and if his happens again then we’re going to stick with our text questions.  OK, I’m going to move into area code (484) 638 and you are now live.  Do you have a question for guy?

All right, yup.  This is a problem, this is a limitation with this technology that I’ve found.  So let’s see.  Sal Brown asks, “I’m new to blogging and looking for any insights and tips you might have about blogging.”

Guy Kawasaki:  OK, so I’ll give you everything you need to know in three words about blogging.

Leif Hansen:  Nice.

Guy Kawasaki:  And I won’t even charge you for it.  [Laughter]  The three words are, write good, well I’ll use a better word, shiitake.  The key to all of blogging is write a good shiitake.  It’s not SEO black magic.  It’s not the keywords in your URL.  It’s not the H4 header.  It’s not all the stuff and trying to figure out what Matt Cutts is thinking about what gives you better ranking in Google and all that.  Just write good shiitake.  That’s all you need to know.  And if you want more advice just go to blogging.alltop.com.

Leif Hansen:  Yeah.  And I think you go into some blogging into “Reality Check” too.

Guy Kawasaki:  Yes.

Leif Hansen:  A related question from Judd Ree here is “Guy, how can individual blog entries get on Alltop?”

Guy Kawasaki:  It can’t.  We only take feeds and we permanently aggregate a feed.  So if you have a blog and you have a feed, we’ll take the feed and we stick it in Alltop.  And unless you have not posted for 28 days, we continue to display your post.  There is no way for you to put just one post in there.  I mean, yeah, I guess could put you in Alltop and then take you off manually.  But the goal of Alltop is that we aggregate feeds as opposed to post or as opposed to sites.  So if you have a site, Apple.com is not in Alltop.  Apple.com’s RSS feeds further down the page are.

Leif Hansen:  In different categories.

Guy Kawasaki:  Yeah.  Google or DMOZ is a directory of sites.  We aggregate feeds.  It’s different.

Leif Hansen:  Got you.  And can you maybe tell us a little bit, those who aren’t familiar with Alltop as far as how it does sort of float the best content to the top or measure traffic?  How is it all organized?

Guy Kawasaki:  So Alltop is a digital magazine rack.  And to use the magazine rack analogy, if you go to Borders or Barnes and Noble, you walk in the store and you see these racks of magazines and they’re organized.  There’s the home section, the celebrity section, sports section, news section, wood working section, boating section and car section.  And so essentially we have the same thing.  Our sections are called topics.  So we have wine, food, autos.  We have 450 topics right now ranging from autism and ADHD to Zoology.  And so when you come to any of those topics, we have aggregated the best blogs and sites with feeds about those topics.  We display the five most recent stories.  If you mouse over the headline of the story, you’ll see the first paragraph of the story.

Leif Hansen:  Got you.  You’re offering a very needed service right now with people having information overload.  I mean we’re inundated with information and in the context of our audience, if you’re an entrepreneur, there’s just so much changing and happening particularly in the tech world.  What I think I hear you saying is that you’re offering us a way to scan this massive amount of information and find the top information for industry, the news and things like that.

Guy Kawasaki:  Yes.  And this is a very good example.  So if you went to Google and typed in “entrepreneur” you would find, I don’t know, 35 million matches.  But it would be Entrepreneur Magazine, it would be because Michael Arrington used the word “entrepreneur” in TechCrunch.  It would be because the University of Massachusetts announced the summer entrepreneurship course, all that.  Who knows, 35 million of them.  So if you wanted to keep on top of the topic of entrepreneur, wow!  Google search is not so efficient.

If you went to startups.alltop.com where we have aggregated the blogs and site about entrepreneurship for you, it would be a much more efficient search.  Because the assumption is if you go to startups.alltop, you’re interested in what’s happening in startups and entrepreneurship.  That is very different than just searching for the keyword “entrepreneur” which could be the magazine, it could be Michael Arrington’s column, it could be the University of Massachusetts’ summer course.  And many of those matches are irrelevant to what you’re trying to find.

Leif Hansen:  That’s great.  We’ve got dozen of questions coming in here and I just want to say quickly on that note, a great example of what Guy was talking about for how effective Twitter is.  Is that the number of people that have joined this chat and this show is exponentially, the same with Timothy Ferriss because he uses Twitter too.  Simply by the fact that it’s a now sourcing tool.  Guy was able just to go “click” join me now and look at all of you here now.  So think of how you can use that for your business.