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By Guy Kawasaki

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Opinions expressed by Entrepreneur contributors are their own.

Guy Kawasaki is the legendary founder of Garage Technology Ventures, a VC firm in Silicon Valley, and the former chief evangelist of Apple Computer. He has founded two software companies and has helped more than 100 companies raise venture capital.

His current best-selling book, The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything, reflects his experience as an evangelist, entrepreneur, investment banker and venture capitalist. Given his expertise, we asked Kawasaki to provide you with the ultimate startup checklist.

This list is for entrepreneurs who want to avoid getting bogged down in theory and unnecessary details. My assumption is that your goal is to change the world--not study it. If your attitude is "Cut the crap and just tell me what I need to do," then this checklist is for you.

The Art of Starting

  • Do you make meaning? Great companies change the world by fighting the status quo, inertia and ignorance. They make people's lives better, fix the bad and perpetuate the good. Mediocre and unsuccessful companies start out only to make money. Here's the acid test: If your company never existed, would it matter to the world?
  • Do you have a company mantra? Forget a mission statement. Think mantra--three words, tops. What three words capture the essence of what you do and why you exist? Great example: Mary Kay's mantra is "Enriching women's lives."
  • Are you typing or prototyping? You're spending too much time with Excel, PowerPoint and Word. Prototype and prospect instead. Don't have the funds to do this? There's no magical solution for this Catch-22, but the lack of funds never prevents a true entrepreneur from starting.
  • Have you defined a business model that is credible, simple and specific? This is a question that the entire high-tech sector skipped during the dotcom days. The salient questions are: Who's got your money in his or her pocket? And how will you get it?

The Art of Positioning

  • Can you describe your product or service without using acronyms or jargon? If it takes five years of industry experience to begin to understand what you do, you've got a problem. Your parents should be able to explain your product or service. Your grandparents should be able to use it.
  • Are you occupying the high ground? Focus on what you can do for your customers, not on what your competition can't. Nobody buys anything to help a company kill its competition, so resist the temptation to trash other companies.
  • Are you seizing a niche for your product or service? The ultimate business position is to provide a unique product or service that customers really need. This is called filling a niche. You can be unique in terms of features, service, pricing or location, but don't try to be all things to all people.
  • Does your positioning pass the "opposite test"? You claim your product is fast, secure and easy to use. Does the competition say its product is slow, dangerous and hard to use? If not, your positioning will only work in a vacuum--and a vacuum, no pun intended, sucks.

Pitching, Business Plans, Recruiting & Raising Money

The Art of Pitching

  • Can you explain what your product or service does in 60seconds? Buildings are getting taller, but elevators aregetting faster. Most investors have a short attention span forelevator pitches, so the longer it takes to explain, the lesslikely your pitch will succeed.
  • Are you answering the little man? Imagine there's alittle man sitting on your shoulder. Every time you say somethingin a pitch, he asks, "So what?" For example: You spew outa line about your "open-source, client-server, Java-basedtechnology." You think you've shocked and awed, but youraudience is wondering, "So what?"
  • Have you practiced so many times that you're notembarrassed to watch a video of yourself? You need to give apitch approximately 25 times to get good at it. Don't thinkyou'll "rise to the occasion" when you're infront of investors, because you won't.
  • When you're making a pitch, have you distilled yourpresentation to just 10 slides? Trust me: Your curve-jumping,paradigm-shifting, patent-pending way to sell dog food onlinedoesn't merit 50 slides. The crucial topics are the problemyou're solving, your solution, the business model, theunderlying magic, marketing and sales, the competition, themanagement team, projections and key metrics, and currentstatus.
  • Is the smallest font you use 30 points? Divide the ageof the oldest person in the audience by two to get the optimal fontsize. The number you'll come up with is approximately 30points. Can't fit everything on the slides in 30-point font?Then you're using too much text.

The Art of Writing a Business Plan

  • If you threw away page three and beyond of your businessplan, would it still attract investors? The executive summary,which is the first two pages of your business plan, is the mostimportant part of the document. If you do this well, investors willread the rest. If you don't, then nothing in the next 18 pageswill pull them in.
  • Is your business plan longer than 20 pages? The optimallength of a business plan is 20 pages. You're mistaken if youthink investors care that your 50-page financial model showsyou'll spend $65.25 on pencils in the fifth month of the fourthyear.
  • Do you provide key metrics as well as numbers? Let'sface it: You picked revenue numbers out of the air. The key metricsof your business--for example, the number of customers,installations and locations--are just as important to investors.Hint: If you indicate that you're going to close 50 percent ofthe Fortune 500 companies as your customers in the first year,you're hallucinating.
  • Did you build your financial projections from the bottom upor the top down? Top-down projections are easy because 1percent of a huge market is always an exciting number. Butyou're building a business from the bottom up, so forecast thatway: How many sales reps will you have? How many sales calls canthey make? What percentage will be successful?

The Art of Recruiting

  • Are the people you're hiring infected with a love ofyour product or service? I believe this is at least asimportant as a candidate's educational background and workexperience. Heck, my work experience was counting diamonds for ajewelry manufacturer when I went to work for Apple Computer as itssoftware evangelist. But I did love Macintosh.
  • Have you crossed the psychological barrier of hiring peoplewho are better than yourself? A players hire A+ players. Bycontrast, B players hire C players. C players hire D players.Pretty soon, you're surrounded by Z players, and this is called"The Bozo Explosion." If candidates can't do theirprospective jobs better than you can, don't hire them.
  • Does the candidate pass the "shopping-centertest"? If you happened to see a job candidate at ashopping center, would you rush over and say hello? Or would youjump in your car and go to another shopping center to avoid him orher? In a startup, you're going to be working many long hourswith employees, so you'd better enjoy their company.

The Art of Raising Capital

  • Are you building a real business? Call me a romantic,but businesses that fill needs get funded. Those that don't,don't. This goes back to the first question on this checklist:Are you making meaning? Because if all you're trying to do ismake money, you'll probably fail to raise money, make money andmake meaning.
  • Have you been introduced to the source of capital? Theprocess of raising capital isn't a level playing field. Youneed to tilt the field in your direction--first of all, by gettingan introduction to the firm by a trusted source. This is where yourlawyer, accountant and vendors can earn their keep. No investorever funds a plan with a cover letter that begins with "DearSir."
  • Is your act together? In times of irrational exuberance,investors look for reasons to do a deal. In times of irrationaldepression, investors look for reasons not to do a deal. This is adepressed time, so clean up your act. For example, if your employerthinks it owns the technology you invented in your garage, resolvethis issue before looking for money.
  • Can you demonstrate revenue? These days, investors willtell you they're looking for proven teams, proven technology orproven markets. There's one factor, however, that cuts throughthe hype, and that's good, old-fashioned revenue. A companythat has significant revenue is always interesting, so focus onfinishing your product, and start selling. Maybe you won't haveto raise capital.
  • Do you acknowledge your competition? "We have nocompetition" means you're either serving an unattractivemarket or you're clueless--and neither is conducive to raisingmoney. A complete and insightful analysis of your competitionbuilds credibility. The best way to present a competitive analysisis with a three-column chart listing your competitor's name,what you can do that it can't, and what it can do that youcan't.

Partnering, Branding & Rainmaking

The Art of Partnering

  • How will the partnership affect your spreadsheet? As arule of thumb, if a partnership doesn't enable you to increasesales or decrease costs, you shouldn't do it.
  • Is your partnership a win-win deal? Are both partiestruly going to benefit, or did you pull a fast one? Because if youdid, rest assured that the partnership won't last.
  • Is there an "out" clause in the deal? At thebeginning of a partnership, you hope that it will last forever.Forever is a long time, and if the terms of the partnership are tooironclad, claustrophobia will develop. Include an easilyexercisable out clause to prevent this condition. It will helpeveryone relax and focus on making the partnership work.

The Art of Branding

  • Have you created a contagious product or service? Thefoundation of all great brands is a great reality. Think cool,effective, distinctive, disruptive, emotive, deep, indulgent andsupported. This is a long list, but the point is that branding iseasy when you sell something great. Branding is hard when you sellcrap.
  • Can a mere mortal get your product up and running right outof the box? The best and cheapest form of branding isword-of-mouth. To achieve this, customers must be able to use yourproduct or service without reading a manual--much less having aPh.D. in applied physics. Think of setting the clock on a VCR, andmake sure what you sell is easier to do.
  • Are you taking care of your evangelists? Customers whospread the word for you are called evangelists. Their compensationis the satisfaction of making the world a better place. Embraceevangelists with inside information, gifts and seminars becausethey will carry the battle forward for you.
  • Can your employees "talk the walk"? Let'sassume you have a meaningful product or service, and that you are"walking the talk." Don't assume your employees cantalk the walk. Ensure that they can tell your story as well as youcan, because a brand is built one conversation at a time.

The Art of Rainmaking

  • Are you "letting a hundred flowers blossom"?This is stolen from Mao Zedong, but it's not clear that hewalked the ideology. Startups often see that people who wereunintended customers use their products and services in unintendedways. Embrace this--don't freak out. These flowers arelighthouses that illuminate the markets where you can achievesuccess. Flow with the go.
  • Are you going after agnostics instead of atheists?Selling to big, well-known firms supposedly yields eye-openingnumbers and credibility. However, big companies seldom believe inthe products and services of startups. Spend some time on atheists,but focus on believers and agnostics instead.
  • Are you sucking down and sucking across? To make sales,most entrepreneurs suck up to people with impressive titles likeCEO, CIO, vice president and director. Unfortunately, the higheryou go in most organizations, the thinner the air, and thereforethe harder it is to support intelligent life. Focus instead on thepeople who do the real work: secretaries, administrative aides,customer service people and technical support people. Suck down andsuck across, and you'll reach the real decision-makers--anddifferentiate yourself from the clueless companies that only suckup.
  • Have you enabled people to test drive your product orservice? Instead of bludgeoning people into becoming yourcustomers, enable them to test drive your product or service withdemo versions or samples--whatever it takes for them to try beforethey buy.
  • Have you provided a safe, easy first step? Or are youtrying to force prospective customers to do something risky to tryyour product or service? Provide a slippery adoption curve so youcan suck people in. Don't force them to throw out everythingthey've done in the past or change a lot of infrastructure ifyou want them to convert.

For even more information about the various "arts" ofentrepreneurship, refer to my book The Art of the Start. Atthe very least, tear out this article, discuss it with yourco-founders and determine how you're doing, because doing--notwanting to do, learning to do or planning to do--is the essence ofentrepreneurship.

Guy Kawasaki

Evangelist, Author and Speaker

Guy Kawasaki is the chief evangelist of Canva, an online, graphics-design service, and an executive fellow at the Haas School of Business at U.C. Berkeley. Formerly, he was an advisor to the Motorola business unit of Google and chief evangelist of Apple. He is the author of The Art of the Start 2.0, The Art of Social Media, Enchantment and 10 other books. Kawasaki has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College.

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