This week, we are very pleased to feature an interview with Featured User Guy Kawasaki. In the interview, Guy and I talk about his most recent books, the current start-up economy, Alltop.com, and how to get a standing ovation.

Guy’s “official” bio, from his website:

Guy Kawasaki is a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Entrepreneur Magazine. Previously, he was an Apple Fellow at Apple Computer, Inc. Guy is the author of nine books including Reality Check, 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.

Featured Users Interviews Guy Kawasaki

I want to give a big shout out to the guys at Wetoku, especially David Lee, for setting me up with an account, helping me test it out, and being generally awesome about the whole thing. It’s a sweet tool for doing online video interviews, and I had a lot of fun with it. If you’re looking for an embeddable video tool to conduct online interviews, this is it!

Interview Transcript:

Okay, I’m here with Guy Kawasaki…

…I don’t see my book on your shelf.

It’s there, Guy, I promise, it’s just…

Okay…

Actually it’s not there. Do you know what? I’ll tell you what I did. I downloaded it from the Kindle store. But I’m a cheapskate, so what I actually did is I downloaded the preview and I read about the first few chapters of Reality Check, and I watched your 40-minute video on YouTube where you pretty much condensed Art of the Start.

(Laughs) I did. Okay.

Because, you know, I’m checking in here from Austin, Texas, Guy, and we’re bootstrappers here in Austin. So we do things as cheaply as possibly. Guy I wanted to thank you very much for coming, and speaking with me today, and doing this interview for FeaturedUsers. Really appreciate it. You have a really interesting history. You started off in the jewelry business…

Mm hmm.

And then you went on to sell Macs. This is just for people who’ve been living under a rock and don’t know who you are. And you’re one of the founders of Alltop, and you now also run a VC firm called Garage Technology Ventures.

Yes.

So you’re a Silicon Valley kind of famous guy, and also a famous speaker as well. Famous especially I think for your irreverence, and for your no-bullshit attitude.

Okay.

All things that I admire. So one of the first things I wanted to ask you about is, I really am curious about what sort of an impact, if any, the economic downturn has had on startups and on the VC world.

There’s really no way you could build a case that we all want this to happen, or want this to continue. So it’s just much tougher to make a sale, to raise capital for any start-up right now.  That said, if you’re an entrepreneur and you’re waiting for the perfect economic conditions in a market with no competition that’s growing, with the perfect staff and the perfect model and the perfect product, you’ll never start a company.

So right now, if you look at the three key things that you need for a start-up, they’re probably cheaper than ever. Using open source you can get all sort of tools like MySQL and Drupal and PHP and WordPress; everything you need is free. You’d have to go out of your way to pay for something right now. So tools are free or cheap. Marketing is free or cheap, by sucking up the bloggers, or using Facebook, or using Twitter. So marketing is cheap or free. And there are so many unemployed people that they’re cheap or free. So everything is good! Except nobody’s buying anything.

So it’s not the worst time in the world to start a company, and you should start a company now when things are cheap, instead of waiting for this world when the economy’s back and then you start your company. Let’s face it, everything takes a year to create, so you need to be thinking a year in advance. When the U.S. Department of Commerce says the recession is over, if you start your company then, you may be into the next recession before you ship. Either you believe or you don’t believe.

I’m wondering what kind of trends you’re seeing in terms of business models also, and technology. If there’s anything new coming up that you’re really excited about.

To tell you the truth, first of all, venture capitalists are not visionaries, and I don’t consider myself a visionary. We’re supposed to be fast adopters as opposed to creators.  Having said that, I will tell you that a lot of times we see things and we just don’t know. If you look at some of the great successes: Apple computer, I mean who knew there was gonna be a personal computer market? We can look back now and say of course. YouTube. Did the world need the sixth search engine when Google was starting? There were ways for college students to connect before Facebook. So if you look at all these things at the time they’re starting, wow, it’s sometimes hard to make a case why this company would be successful.

I’m sort of convinced that if you have to choose between being smart or lucky, you should choose lucky. That’s the better thing to be. That’s a long answer to tell you that I don’t know. I think that two guys in a garage, two gals in a garage, or a guy and a gal in a garage, inside of UT or Stanford or Carnegie Mellon or MIT are much more likely to tell you what the future’s gonna be than I would.

Are people coming up with different ways for funding now? Not just cheaper ways, obviously. I know that bootstrapping is a big thing here in Austin, it’s a big buzzword, and a lot of people are trying to kinda do it on their own. I’m wondering if that’s becoming a trend more in Silicon Valley as well, if there’s less and less people looking toward venture capital resources.

Yes, because it’s harder and harder to raise venture capital. And for the factors I talked about before, it’s cheaper and cheaper to start a company. So you have this mother of all venture capital markets, where no one’s investing and you don’t need as much money. So guess what? You find other ways. The ultimate funding model is revenue.

You talk a lot in the book about having that sort of already in place. One of the things I think you mentioned, as a VC person, is not wanting people to walk in and say well, we have this great idea and we have all these plans…but really seeing something solid in place and ready to go. Are you seeing people responding to that more?

Yeah the day of walking in with a PowerPoint or a napkin and saying, “this is what we will do, give us five million dollars and leave us alone for a year, we promise you.” Those days are gone. Because VC’s know that marketing is free, and tools are free, and people are cheap too. So they expect you to show up having bootstrapped, and at least launched your product, and have some proof that the dogs will eat the food. That’s very different than ten years ago when you were just dreaming of creating the food, much less having any dogs eat it. So it’s a very different world. Venture capitalists have higher expectations of what you come in with and what you show. Now this also works to the advantage of entrepreneurs because the more mature your company can be, the less risk that there is, the higher the valuation, and the less you will have to sell, per dollar, for your investors.

I want to switch gears a little bit and ask you about Alltop. First, I’m just curious about why you started it. What gave you the idea to get it going?

Previously we had a website called Truemors, and it was a user-generated news content site. And we were lucky to be listed, or aggregated, by a website called popurls. And we noticed that popurls was sending us as much traffic as Google. So we looked at what popurls was, and I got in touch with the founder, and I asked him what’s the deal here, how come you send us so much traffic? And basically thousands of people go to popurls to look at the latest things about tech and business. And I asked him, you’re covering tech and business, how come you don’t do celebrities, and fashion, and baseball, and football, and adoption, and health, and you name it. And he said I’m really not interested in those, I’m only going to do tech and business, and I’m going to now deploy popurls on more platforms. And I said okay, if you’re not going to do it I’m going to do it. And that was about two years ago.

Since then we’ve gone from 18 sites to 700. We go from A to Z. we go from adoption to zoology. It’s unlikely that you would be able to think of a topic that we have not covered yet. The way to think of Alltop is that it is an online magazine rack, if you will. Imagine when you go to a Borders, or a Barnes and Noble, there’s a section of magazine racks, and there’s the home magazines, the news magazines, the car magazines, the sports magazines, the celebrity magazines. We have the same things. We have sports.alltop, celebrities.alltop, finance.alltop, news.alltop, politics.alltop. We aggregate the news feeds from blogs and sites, and organize them by topics. So, it is I think, arguably, the easiest way to stay on top of a topic.

Now, we differ from Google. Google, you would ask the question, how can I get a discount ticket, airplane ticket? What are the discount fares. So imagine if you were somebody, you’re into travel. So you want to read the travel blogs, you want to read the travel sites. If you went to Google and typed in travel, you would get literally a billion matches. And the first  pages would all be discount airplane tickets. That’s not at all what you’re looking for. If you went to travel.alltop you would find about 200 travel blogs, already organized. The last five headlines from each blog, in nice, three-column format. and so we’ve taken one billion Google matches down to about 200 websites that you can easily scan. And that’s the value. So, Google answers a question like “How many people live in China?” We answer the question “What’s happening in China right now?”

Are people who are using Alltop using it in ways you didn’t anticipate at all? is there anything new happening with Alltop that came out of this?

A lot of people in PR firms and marketing firms, they use it for competitive analysis and for prospecting. Let’s say you’re a PR firm and a new client comes in and they’re interested in social media. So they’re a new social media company. If you wanted to see who the people are who cover social media, if you went to socialmedia.alltop, you would see all the top bloggers and all the top websites about social media. It’s a very easy way to use curated collections of magazines to find out who’s in the market, who might blog about my client.

Reality Check was a big hit, Art of the Start was a big hit. Do you have a book that you’re writing now? Anything new coming?

Yeah, I’m writing a book that is going to be about persuasion, and influence, and wooing people. I still don’t know the title, but that will be the subject. That’s probably at least a year away from publication.

One of the teasers for Reality Check was “How do you get a standing ovation?” As you know I downloaded the first three chapters, so I didn’t get there.  So I’d like to know how do I get a standing ovation?

There’s several key tips to getting a standing ovation. First you have to have something interesting to say. That’s 90% of the battle. Then some tips for you are, if you have a chance, try to get a room that’s small. What you want is a lot of people jammed into the room. If you had a choice of a 500-person room with 500 people in it, or a thousand-person room with 600 people in it, you would prefer the 500-person room that’s standing room only. One second, say hello to the people here, say hello…

(Guy’s daughter makes an appearance.)

That’s tip Number One. Tip Number Two is circulate with the audience prior to the speech so that people can warm up to you and you’ll feel more at home. And tip Number Three is get moving. Tell stories, get moving, rip through it. Don’t have this whole introduction and warm-up and all that. Just get right to it. And I think if you do those three or four things, you’ll massively increase the possibility of a standing ovation.

Terrific, thank you Guy. I’m going to let you get back to your family. One last question, will we see you here in March in Austin for South by Southwest?

Yes, yes. South by Southwest, I’ll absolutely be there. South by Southwest is my favorite conference every year. I’m assuming they’re gonna invite me to speak again, and if they do I’ll be there.

Oh I think they will! I look forward to seeing you then, and thanks so much for doing the interview, I really appreciate it Guy.

Okay, bye bye.