At the SXSW Interactive festival, I had the chance to sit down with Guy Kawasaki and talk one-on-one about startups, the new VC environment, and his new website Alltop. Guy and I first met at Apple’s first Worldwide Developer Conference in San Jose in (I think) 1987 when he had just left the position of Evangelist at Apple, and started 4th Dimension. In this second part we talked about young CEO’s, and the potential acquisition of Yahoo by Microsoft. Guy was an Apple Fellow, has written several books including The Art of the Start, and is a Managing Director of Garage Technology Ventures.

If you were the sole venture investor in Facebook, how long would you let Mark Zuckerberg stay on as CEO before you got rid of him?
I don’t know Mark at all, but let’s talk about any young 23 year old entrepreneur or founder. I think the best model that’s proven to work is the Google or eBay model, where you bring in some adult supervision but you keep the founder as the guy that does the interviews and tells the story of how the company grew to become a market giant. That’s a better story than one where they hired some professional management to grow the company who worked for McKinsey or ran a division of Microsoft. I don’t think any of these young entrepreneurs want 50 direct reports asking them about company policies on maternity leave, and other things that are un-interesting to them. So I think that’s the model. You don’t get rid of them, and those types of people don’t like to run (and probably can’t run) 50,000 people organizations anyway. I think the Steve Jobs, Bill Gates, and Michael Dell’s of the world are the exceptions. Sometimes those founders will leave and come back, like at Apple, Dell, and Yahoo.

My opinion on Yahoo is that it’s a much better company than most people give them credit for. I think in a downturn they are very sustainable because so many different kinds of businesses would have to go wrong for them. They’re not wholly dependent on search. They have Yahoo stores, answers, Flickr, personals, auctions, and more. A lot of things would have to go wrong all at the same time to impact their business.

Do you think the Microsoft style would mesh with the Yahoo style of doing business?
I think they both need each other. In my interview with Steve Ballmer, you can see his intensity. If he says that with his last dying breath he pledges to beat Google, you can’t take that lightly. Microsoft has certainly shown the ability to get up every day and make the business a little better, and then one day suddenly they’re leading the market.

What if instead Microsoft took $45B and tried to invest it in companies that would grow to be the next big thing, rather than trying to dominate search?
They have the ability to invest in whatever they want. Even Kleiner Perkins has a $100M iPhone fund. Steve Ballmer has $100M in the ashtray of his Ford F150. The tricky thing is that you have to understand that the only way to control it is to not be in control. If someone is going to cure cancer by purifying the urine of goats in Afgantastan (for instance), and it’s only a $25K investment to check it out, go for it! You’re going to lose a lot, but it’s not going to move the earnings needle at Microsoft. And you only need 1 to hit.

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