MySQL Setup

I've been trying to setup mysql properly, but it isn't working. This won't be locally stored, so from my own understanding I shouldn't be using 'kai'@'localhost' rather I use @'%' correct? I have tried following guides everywhere I could find, but they don't get it working. I want to setup a database called 'eve' and have a user on it called 'kai' that I can use for my remotely hosted site (it's a VPS if that changes anything). It's not that I'm unwilling to learn but it's on Linux and I don't have cpanel with my host. I have set up the database, mysql, etc. I've also tried setting up phpmy admin but couldn't figure it out so I figure it should just be a few ssh mysql commands or no? So far:

create user 'kai'@'%' identified by password 'mypass' grant all privileges on . to 'kai'@'%' with grant option;

ERROR 1064 (42000): You have an error in your SQL syntax; check the manual that corresponds to your MySQL server version for the right syntax to use near 'grant all privileges on . to 'kai'@'%' with grant option' at line 1

that's one example

I've tried several different ways including @%, @localhost, etc. i tried going through the mysql guide they have in place, but it didn't help too much. I considered maybe I needed to use @192., etc, but I don't think that'd be secure.

Any pointers would be excellent, I'm sure I'm just skipping something easy and I don't know the proper terminology to google or I would have found it already ;). This is on Debian 7 64bit, dunno how important that is but everything is updated, etc.

I've been following this: http://dev.mysql.com/doc/refman/5.5/en/adding-users.html

errors I've been having: 1396, 1064 and a couple of others. I'm essentially wanting to do what someone would normally easily do through cPanel, etc. but in a ssh client. If there's a way to setup something like that to where I would have a gui to work with, that'd be something I wouldn't have a problem trying.

Should I be using localhost? My IP? sdnam.net?

error 1396 create user 'kai'@'%' identified by password 'mypass'; ERROR 1396 (HY000): Operation CREATE USER failed for 'kai'@'%

Cheers