Guy Kawasaki: Five most important lessons I've learned as an entrepreneur.(sun.com)

28 pointsby edw519vor 18 Jahren19 comments

Guy Kawasaki: Five most important lessons I've learned as an entrepreneur.

http://www.sun.com/solutions/smb/guest.jsp?blog=five_lessons

19 comments

Here's my most important lesson:

Treat equity carefully: it can be as much of a help as it can a hindrance to a firm's success.

Granting equity to staff is often needed when firms do not have the reserves to pay staff cash for remuneration. While enabling a startup as such, this can curb its success later as will be explained. Moreover, a well funded startup should not by default grant stock options to all its employees, and instead be highly discretionary by being both shrewd and frugal.

Equity is sometimes but not always a great motivator to perform, and even can lead to worse performance. From being in a couple of startups already with multiple equity holders, I have found that equity holders can become complacent of their positions within a company, taking for granted of their long-term status within it and relating to others as outsiders or tools, and also not fearing being fired or reprimanded. This opposes conventional wisdom that equity promotes the striving for excellence. In this case, the provision of equity changes nothing in terms of performance, maybe making it worse.

Additionally, any equity holder essentially becomes reasonably non-replaceable for their position, which is detrimental when a more fitting external candidate can take their place, or when it removes promotion opportunities internally for non-equity holders regarding that position.

In terms of motivation, for many startups the provision of equity should be unnecessary with staff already motivated enough by the vision, challenge, work practices, team and environment of their startup.

Equity is better seen as a source of retention by way of giving a sense of ownership. This is especially important in a firm's difficult times when the desire to leave a firm can increase, and also in bubbles when better offers may be easily acccessible elsewhere. It is also important for attracting the most valuable candidates who see themselves as highly contributory to a firm's success and demand a stake in it. Retention through equity also lowers the risk of the most valuable employees leaving to a competitor: however this can be mitigated through a restructuring of power or better information management, not through just equity provision. However, providing equity to the most strategically important employees could act as a hindrance if such a position can become commoditized or systemetized later.

When absolutely necessary, granting equity should be to staff who are a combination of the following:

- highly strategic, sought-after and niche

- clearly promotable or able to work in multiple areas that sometimes don't always offer the most satisfaction

- loyal: unwilling to be transitory, and instead show a long term capacity

- can value organizational needs above their own

It seems like granting equity is a norm in startup practices, but this is not always justified. Care should be used so that staff are treated fairly but not overly compensated: and not only for the company's success, but ultimately their own. People say they've seen bad hiring destroy a company: minimizing equity distribution makes firing easier.

tptacekvor 18 Jahren

Speaking of "shmexperts" (and, clearly, guilty as charged myself):

http://www.NowPublic.com/don_t_be_a_dude_yamaha_a_gripping_s...

rantfoilvor 18 Jahren

I remember reading this story in Valleywag, and thinking it might be plausible.

But recently I met Guy in person and got to know him probably a bit better than the people who wrote this nowpublic.com hit job. I've decided it couldn't be a true story... either that, or he was having a really bad day.

If you read Dude-- er, Guy's latest book Art of the Start, his last chapter is all about "The Art of Being a Mensch." It starts with a quote from Samuel Johnson -- "The true measure of a man is how he treats someone who can do him absolutely no good."

trevelyanvor 18 Jahren

Understandable that people take rejection personally. Having visited the site in question though, I don't think it reflects negatively on the investor to have passed. I would not have invested in it either.

If the story reflects negatively on anyone, it is the two colleagues, who presumably buttered up these kids and then used Guy's obvious dissatisfaction (why is my time being wasted by all of you???) to avoid having to disappoint them personally.

clickpasssuxvor 18 Jahren

I found the website they were pitching. I have to agree with Guy on this one.

brianlashvor 18 Jahren

"I used to believe in the big-bang theory of marketing: a fantastic launch that created such inertia that you flew to 'infinity and beyond.'"

Inertia? I think he was looking for a word more along the lines of momentum. Still a decent insight.

ericwanvor 18 Jahren

in physics inertia means both "not willing to move" and "not willing to stop"

eruvor 18 Jahren

Intertia and momentum are even different things in physics.

demallienvor 18 Jahren

Think of it this way: Whilst I'm creating inertia, what are the units that I will use to measure the quantity produced?

ojbyrnevor 18 Jahren

I was thinking today about how the problem with so many of these "what I learned about entrepreneurship" articles is that they never ever offer anything close to what a business student gets taught in the first class of an "introduction to entrepreneurship" course at any b-school worldwide.

You could literally pick a random 19 year old business undergraduate with a C average at any random college in the world and they'd have more to say than the random Guy Kawasaki/Jason Calacanis/flavor of the day entrepreneur.

gruseomvor 18 Jahren

Huh. I was thinking the problem with so many "entrepreneurship" programs is that they produce few actual entrepreneurs.

rantfoilvor 18 Jahren

Here's the real problem with entrepreneurship classes -- What's the point? People who take an entrepreneurship class are missing the point -- they're probably better off either taking more engineering classes so they can build something people want, OR taking that time and effort and actually working on something real.

I was president of an entrepreneurship society in college. It was great. I met a lot of great entrepreneurs, spent a lot of time THINKING about entrepreneurship, and met a lot of great people from it. But even today I kick myself... because if only I had spent all those untold hours on an actual startup instead, then who knows where I'd be now instead.

Reading/learning/thinking about entrepreneurship is meaningless and useless until you DO it.

ojbyrnevor 18 Jahren

I was making the point that the platitudes that come out of the mouths of many pundits are straight from the first day's class.

seunosewavor 18 Jahren

We can't be sure of your advice either: until you do something!

13renvor 18 Jahren

I needed to hear this today: Make a little progress every day - Try stuff - Ignore schmexperts

jmtamevor 18 Jahren

"Never ask anyone to do something that you wouldn't do. This goes for customers ('fill out these twenty-five fields of personal information to get an account for our website')"

Right... because Facebook doesn't have that many fields that people can fill out. And information directories don't either.

Ok, some of this is decent advice, but way too broad. You cannot apply some of this to every situation, which is why I tend to dislike generalizations in the first place.

adrianwajvor 18 Jahren

Does Guy walk the talk?

river_styxvor 18 Jahren

Im not asking this to troll, but has Guy ever actually had a successful entrepreneurial venture? I've heard about silly crap like Truemors, but nothing else, besides being loosely associated with Apple and the like.

acangianovor 18 Jahren

I think that Guy definitely has credibility. His Wikipedia entry (http://en.wikipedia.org/wiki/Guy_Kawasaki) mentions several real ventures.