Guy Kawasaki on making meaning make money

Source: Exec March

Date :11/03/2008 06:20:41

Guy Kawasaki tells Exec why he believes in the power of enterprise to make the world better – discover why he took a step back from his venture capital firm to test new ways of democratizing information.

By John O’Hanlon

Guy Kawasaki and I first met in September 2001. Though seven years is a long time in a life as eventful as his, he hasn’t forgotten the occasion, not so much because of the honor of being interviewed by me, so much as because of what happened the next day.

After delivering a lecture at the London Business School he heard about the attack on the World Trade Center, and is unlikely ever to forget, he tells me now, the confusion, disbelief and frustration felt by every American that day, particularly when air transportation locked down and he couldn’t get back.

“At first, we all thought it was a Cessna that had flown into the building by accident,” he recalls. “Shortly thereafter, I got on an airplane to Frankfurt, and I was stuck there for a week. I’ve never seen, and hope to never see again, basically the entire world go into a deep depression. It affected people to the core, and it’s taken a good five or six years to recover from it.”

The tech market was depressed then, has rallied, and is now joining the rest of the economy in facing a possible deep recession. But Kawasaki never follows the herd. The co-founder of Garage Technology Ventures, a seed-stage and early-stage venture capital fund based in Palo Alto, California - down the road from the garage where Hewlett-Packard started in 1938 and the Los Altos garage where Steve Jobs and his partner Steve Wozniak first built Apple computers in the 1970s - is still the plainest speaking, straightest-to-the point communicator I have ever encountered.

Out with the crap

The author of eight books, he is a compulsive blogger and has a bi-weekly agony column in Forbes Magazine where he offers reality to any aspiring entrepreneur who risks it. A typical exchange: “I am 18 years old, attending a four-year college full-time and also starting my own LLC, with a focus on real estate investing. What is your best advice for me – and other young entrepreneurs – who want to start their own business?” – “Finish school, go to work for a company that sells a product or service (that is, not a venture capital firm or investment bank), get the crap beat out of you and then start a company.”

Kawasaki grew up in Hawaii, and as a kid was much more interested in football than in technology or making money. His plan at high school was to continue his education at a smaller university where he could pursue this early passion with more success than he might meet with at Stanford where he’d be up against too many awesomely big and fast players. Unfortunately, “My father told me that he was not about to fund me through college just to play football, though!”

He had no idea what he wanted to do. He started a course in medicine but when he fainted at the sight of blood changed to psychology, which he figured would be an easy option. After Stanford he had a brief flirtation with the law because “… like all Asian American parents, my folks wanted me to be a doctor, lawyer, or dentist. I only lasted one week because I couldn’t deal with the law school teachers telling me that I was crap and that they were going to remake me.”

His next stab at education suited him better because it coincided with his first real experience with business. While working at a jewelry manufacturer and at the same time pursuing UCLA’s MBA program, he learned about the real world of selling. “The jewelry business is the toughest business I’ve encountered,” he still says.

“It is an intensely personal, reputation-based business. It was a very valuable lesson to me because when you get into technology people think it is all about algorithms and paradigms and technical stuff like that, but it isn’t.

“The belief that technology is more important than good business practice sometimes holds entrepreneurs back. They need to remember that the purpose of a business is not to have the world’s coolest website or workstation or software, but to make people – especially themselves – happy.”

A holy war

In the years he spent as an evangelist for Macintosh, Guy was engaged in an epic struggle against IBM. “We were trying to change the world, make people more creative and more productive. It was a holy war!”

Marriage to Beth, whom he met at Apple, four children and a dog, tempered the crusading if not the passion and he says his job as Managing Director of Garage is to find other people who want to do battle and help them get some armaments. The Garage portfolio today is full of companies like The Motley Fool, Simply Hired, Kaboodle or Clear Fuels that have grown successfully and attracted investment.

But the battling Guy was far from dead. When we spoke in 2001 he was talking about retirement. He even told me the date – August 2004. So how come he is still CEO at Garage? More to the point, what made him step aside from the day job in 2007 to start his own Web 2.0 venture Truemors? “I wanted to actually ‘do something’ as opposed to ‘fund something.’ I missed selling and evangelizing something as opposed to simply being pitched to!”

In his classic text, The Art of the Start, he says that the only valid reason for starting anything, let alone a business, should be to ‘make meaning and change the world.’ Truemors was about taking a fairly big idea – to disseminate and democratize information – and allow people to publish stories, or rumors, and have them rated by others, according to which they rise or fall on the scale of truth.

He funded it himself to the modest tune of $12,000. A year on, the site has neither tanked nor turned into another Twitter, and is currently coasting along at around 15,000 visitors a day.

Truemors is continually evolving. “It’s turned into more of a filtering and editing function to enable people to read diverse stories that don’t always make it to the mainstream press. I guarantee that if you read Truemors, you will be a more interesting person!”

Democratizing information

More importantly, though, it led to another startup, Alltop, a site that is a collection of single-page aggregations of topics like science, gaming, sports, fashion, Macintosh (of course), and so on. “I just love the whole dissemination and democratization of information thing of Truemors and Alltop,” he says.

For readers not familiar with single page aggregation, Alltop collects stories from ‘all the top’ sites on the web, groups these collections, or aggregations, into individual Alltop sites and displays the latest five stories on a single page.

“Truemors is on an aggregation page called popurls and we noticed that it was sending us as much traffic as Google. So we figured out that single-page aggregation is a popular thing.

The first topic we thought of was celebrity gossip. Then we kept going: fashion, science, sports, gaming, Macintosh, green (environment), politics, news, moms, autos, and my favorite, Egos. We want to help the vast majority of people who hardly even bookmark sites much less create custom home pages or use NetVibes and Pageflakes to organize their information sources.”

For what it’s worth, since I learned about Alltop I have found it totally addictive, and I just know it is going to be a valuable source. Egos is a real winner – of course Guy has his own section. He didn’t do it to make money; after all he told me seven years ago that he made enough of that from his books and lecturing.

But it has proved something of value to him and to his many disciples: “Do things quick, dirty and decisively; don’t wait for the perfect time, the perfect market or the perfect product. Believe you are right even if people say you aren’t, or you’ll never find out. And do it cheap so you can make a lot of mistakes.” Many technology businesses need staged investment at a fairly high level – as a venture capitalist nobody knows that better than Kawasaki – but many more can be started inside your credit card limit, he says. “I hope I have proved that.”

Guy’s golden touch

Guy Kawasaki has consistently said that ‘making meaning’ comes first in any justification for a business. Meaning is not about money, power or prestige, he says in The Art of the Start but about making the world a better place, increasing the quality of life, righting a terrible wrong or preventing the end of something good.

That’s the primary motivation, but if an idea can’t generate value in money terms it can’t grow. That, rather than any mercenary or materialistic world view is why he once said: “Whatever is gold, Guy touches!”

“You need to understand the full context of when I said this. It was uttered in response to a question concerning the key elements of successful evangelism. It’s easy to evangelize a great product; it’s very hard to evangelize a piece of crap.

So Guy’s Golden Touch refers to the fact that no marketer can turn crap into gold; instead, you should start with something gold. One unsaid consequence of Guy’s Golden Touch is paying homage to engineers and inventors.” That reminds me of another answer he gave to someone who wanted to know how you assess the value of a startup – add $1 million for every qualified engineer, deduct $500,000 for every MBA.

“To some degree, I am mercenary and materialistic,” he continues.

“You can accuse me of many things but being delusionary isn’t one of them. I’m just not as obsessed with material things as some people, though I would like to drive something nicer than the Toyota minivan that I have now. For me money is a way to keep score of what you’re accomplishing. It is a natural outcome of performing well. The thrill is to get it—and then to do something good with it and, yes, make the world a better place.”

Running Garage, Truemors, Alltop, blogging, writing, constant traveling, and talking to people like me must take a lot of time. Guy always comes across as 100 percent focused, but he’s no workaholic, he insists.

“I love what I do: blogging, creating websites, helping entrepreneurs, writing books, and speaking. It is who I am. I don’t consider it ‘work.’ My leisure passion is hockey. I play hockey four to five times a week—almost everyday at lunch. You can ask people: I never have meetings from 11.00 am to 2.00 pm, and it’s because I’m at the rink. If I applied myself to writing the way I do to hockey, I would win a Pulitzer Prize.”

Not bad at 54, and it explains why Guy always looks so disgustingly fit. Nothing wrong with his judgement either – Alltop will soon develop its business site with Exec as an important feed. He says he is impressed by the Exec site and our business model, and I have known him long enough to know that’s an accolade worth gold and diamonds.