Guy Kawasaki’s latest startup a test for him – and for VCs

Guy Kawasaki’s latest startup a test for him – and for VCs

By Elise Ackerman / Mercury News
10/01/2007 05:54:29 PM PDT

Guy Kawasaki has founded a new website – Truemors.com. (Karen T. Borchers / Mercury News)

As
managing director of Garage Technology Ventures, Guy Kawasaki funded
all the really smart ideas he could find. None hit it big.

So earlier this year the guru of Silicon Valley startups decided to fund a really dumb idea that cost as little as possible.

In May, Kawasaki started Truemors, a site specializing in what it
calls "true rumors" submitted by readers. It cost less than $13,000 to
launch and was almost immediately dubbed "the worst site ever" by a
leading European technology news site.

Why would a respected venture capitalist and author of best-selling
business books make a site like Truemors his next act? Because
Kawasaki, 53, wanted to get first-hand experience with a
user-generated, long-tail, citizen journalism, Web 2.0, social-media
Web site.

He also felt that starting the site would illustrate what he saw as
a problem with venture capital – these Web 2.0 sites did not need lots
of funding, and even if they did it was becoming harder for VCs to pick
the winners.

For nine years, Kawasaki and his partners had invested millions of
dollars in companies that seemed like smart bets. They had their share
of successes, but nothing on the order of Google or Yahoo.

Meanwhile, ideas he dismissed became stock market sensations.

Like Yahoo. In 1995, venture capitalist Michael Moritz of Sequoia
Capital asked Kawasaki if he’d like to interview to be chief executive
of Yahoo. "It was a list of David and Jerry’s favorite Web sites,"
Kawasaki recalled. "It had no business plan."

Kawasaki said no. Years passed. Two guys from Stanford created yet
another search engine. "The fifteenth search engine – what a dumb
idea," Kawasaki quipped about his reaction. That turned into Google.

”The only thing you can conclude is that it’s a crap shoot," said
Kawasaki during a recent interview at his home office in Atherton. "You
have no idea what is going to succeed."

Bill Reichert, Kawasaki’s partner at Garage Technology Ventures,
said the tipping point for his partner came after Kawasaki chaired a
panel discussion featuring startups like Hot or Not – a Web site where
men and women submit photos to be rated by strangers – and Plenty of
Fish – a free dating site.

Neither site had raised venture capital, but both were enjoying
advertising sales of more than a million dollars a year. That made it
clear to the folks at Garage that the problem was the venture capital
model itself, which seemed out of whack.

Kawasaki decided to find out how little it cost to start a Web 2.0
company himself. He paid $4,500 to Web developers in North Dakota whom
he had met through his personal blog. He spent $4,824 on legal fees. He
spent almost $3,000 more on a logo, domain names and other
miscellaneous expenses.

And he began devoting himself to what he truly loved: Selling products and ideas.

At Apple Computer in the 1980s and 1990s, Kawasaki had helped turn
Macintosh users into Apple fanatics. He left the company in 1997, and
made a career as a venture capitalist and speaker. His book "The Art of
the Start" became a bible for would-be entrepreneurs.

Some of his key advice: "don’t be afraid of polarizing people," and "don’t let the bozos grind you down."

Two days after he launched Truemors, Kawasaki discovered the value of his own advice.

Kawasaki had wanted the site to be a place where news and gossip
met. He imagined his average reader as a Google programmer who was
about to go on a date with an East Bay nonprofit activist.

What would they talk about? Truemors could help. Its news items
covered everything from politics to sports, Hollywood gossip and
technology culled from the Web and, occasionally, first-hand accounts.

"I promise, if you read Truemors, it will make you a more interesting person," Kawasaki said.

Unlike Digg, a similar user-generated site that lets people rank
stories on its front page, Truemor’s lists stories in the order they
were submitted. Users can vote to move a story to a "Greatest" page –
or to the dumpster if they think something is untrue.

The blogosphere’s first reaction to Truemors was a blistering
attack. A hacker broke in. Obscenities were submitted as news. Kawasaki
himself was trashed.

"I have a very low opinion of the blogosphere," Kawasaki said. "I
think it is made up of about 250,000 people who are mostly 45-year-old
men who live with their mother and have dead cats in their
refrigerators."

Kawasaki didn’t let the bozos get him down. He cleaned up his site. The attacks quickly died down.

Earlier this month, the European news outfit with the scathing early
review recanted. "We’re big enough to admit that Truemors is definitely
not the world’s worst Web site any longer," Martin Veitch, executive
editor of IT Week, wrote in an article on Sept. 10 on theinquirer.net, a technology news site.

Kawasaki said the coverage was responsible for a huge spike in page
views, which are now averaging about 150,000 a month, according to
Google analytics.

Drew Curtis, founder of FARK, a Web site of interesting and amusing
news stories that was one of Kawasaki’s inspirations, said those
numbers are pretty good. He said FARK, which now gets 53 million pages
views a month, only got 50,000 pages its entire first year. FARK was
launched in 1999.

"He certainly has critical mass," Curtis said of Kawasaki.

Kawasaki insists he wants the site to be a success, but he
acknowledges that the stakes are not high. His monthly break-even point
is only $150.

Kawasaki is still a venture capitalist and continues working with
Garage’s portfolio of companies. "Truemors helps me understand Web 2.0
better than any other experience," he said. "Life is good for
entrepreneurs these days."

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