Entrepreneur Guy Kawasaki doesn't accept failure

PALO ALTO, Calif. -- While many entrepreneurs and financiers boast fancier pedigrees, Guy Kawasaki still is a head-banging bruddah from a tough blue-collar neighborhood in Honolulu.

As a high school football linebacker, he slammed running backs to the turf. In hockey pickup games in Silicon Valley, he hammers opponents to the ice. And since gaining fame in the 1980s as Apple's "chief evangelist," he's earned his battle scars as a survivor in the technology realm.

"What I lack in talent, I compensate with my willingness to grind it out," says Kawasaki, flashing a huge grin. "That's the secret of my life."

Kawasaki brings his gung-ho Hawaiian spirit and laid-back generosity to technology, says Neenz Faleafine, chief evangelist at Alltop, a news aggregation website co-founded by Kawasaki.

"Guy's roots are still a part of his character and personality," she says.

Kawasaki, whose new business book, Reality Check, was released last week, is:

•An entrepreneur. His company, Nononina, last spring launched Alltop (www.alltop.com), an "online magazine rack" of sorts that lists popular websites and blogs by subject, from "Music" to the "World of Warcraft" online game.

•A venture capitalist. As managing director of Garage Technology Ventures, he makes investments up to $3 million in technology start-ups in Western states.

•A marketing machine. He's a globe-trotting speaker, author of the best-selling The Art of the Start and eight other books and a blogger who writes the popular How to Change the World blog (http://blog.guykawasaki.com).

In Reality Check, Kawasaki aims to show entrepreneurs how to learn from his failures. Kawasaki, 54, says that most executives write "glamorous biographies" that hail their successes, while ignoring their blunders. Not him.

"Reality Check is not about what Guy did well, trust me," he says. "I'm going to help a lot of entrepreneurs from making the same mistakes."

An expensive error in judgment

Look at his ill-fated Yahoo episode — one of his many investment boo-boos, he admits. When Yahoo was a tiny start-up in the late 1990s, venture capitalist Michael Moritz of Sequoia Capital, one of Yahoo's original investors, asked Kawasaki if he wanted to be CEO of the Silicon Valley firm.

Kawasaki was skeptical. He couldn't see how Yahoo's business model would generate revenue, and he declined the offer.

"I'd say that was a $2 billion or $3 billion mistake," Kawasaki says in his Palo Alto office, a short walk from Stanford University. "Now Michael doesn't call me. I can't say I blame him."

Moritz goes easier on Kawasaki, noting that no advertisers had spent a cent on Yahoo at the time. Moritz e-mails: "Guy didn't blow it — he understandably chose different paths" in his life.

Kawasaki often takes the offbeat path. Rather than study medicine or engineering like a good Asian-American kid, he earned a Stanford psychology degree and an MBA from UCLA. Hoping to please his folks, he enrolled in law school at U.C.-Davis, but hated it and dropped out.

True believer

At Apple, Kawasaki marketed the underdog Macintosh computer to hardware and software developers, who favored IBM's dominant technology. While Steve Jobs co-founded Apple, many credit Kawasaki for boosting the Mac's popularity and creating the cult of Apple, whose devotees still flock to flashy MacWorld shows to hear Jobs speak.

"Guy turned that into a reality," says Kyle Mashima, a former Apple manager and Stanford friend.

Kawasaki's fervent style has made him a popular draw at trade shows, business schools and corporate gatherings. During a graduation speech at Palo Alto High School a decade ago, he advised students "to pursue joy" and "live off your parents as long as possible."

Between speeches, Kawasaki is busy overseeing Garage with veteran entrepreneur Bill Reichert and former Adobe Systems manager Joyce Chung, both Stanford MBAs. Garage receives 3,000 start-up pitches a year but only invests in five or so.

One recent success story: Kaboodle (www.kaboodle.com), a popular online shopping community co-founded in 2006 by former Intel manager Manish Chandra and bought last year by media giant Hearst for an undisclosed sum.

When Kaboodle's co-founders made their presentation to Kawasaki, he ripped into them, questioning their business model and market, their consumer demographic, their company name.

Chandra says that Kawasaki "challenged our core assumptions" and shaped Kaboodle's business strategies, from aiming at female consumers to increasing its website traffic.

Garage and several other venture firms invested $5 million into Kaboodle and hooked up Chandra with marketing and technology advisers. Now Kaboodle is the No. 1 U.S. social shopping site, according to ComScore.

Colleagues say Kawasaki still believes in the classic Silicon Valley saga of entrepreneurship, the two guys in a garage dreaming big dreams.

"He loves fostering the entrepreneurial spirit," says Will Mayall, co-founder of several software start-ups with Kawasaki. "If he believes in a company, he throws everything into it."

Venture capitalists concede that most start-ups fail, with even survivors taking several years to turn a profit, to sell their stock or to get acquired.

Kawasaki preaches that good entrepreneurs stumble and try again, eye the next curve and ignore naysayers. If the founders of Apple, eBay, Google and Cisco Systems had heeded critics, their firms wouldn't exist.

"Ambitious failure, magnificent failure, is a very good thing," he says.

In the world according to Kawasaki, entrepreneurs shouldn't even fear the financial crisis now.

"It doesn't matter whether the Dow is 5000 or 50,000," Kawasaki says. "If you're an entrepreneur, there is no bad time to start a company."

Entrepreneurs used to need millions of dollars to launch start-ups. Now, many get started with online tools from free software to affordable Web-hosting and blogging services.

"You can do a lot of damage with less than $100,000," Kawasaki says.

Success by a different measure

Despite his business fame, Kawasaki says he's not yet a success by Silicon Valley standards.

He hasn't scored a megahit with Garage's start-ups or his own online business, Alltop, which was slammed as "just a big pile of nothing" by the influential TechCrunch blog. Nor has he attained the wealth of Jobs and other tech moguls.

"At the end of my life, is it better to say that I empowered people to make great stuff, or that I died with a net worth of $10 billion? " Kawasaki says. "Obviously I'm picking the former, although I would not mind both."