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I have never read a business plan or balance sheet

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Re: I have never read a business plan or balance sheet

#111

Post by darksaints »

tomhoward wrote: post #89
darksaints wrote: post #79

Earlier quoted context omitted.

Even if you are an early stage company, you've still got to have something resembling the concept of a balance sheet, even if it's an excel spreadsheet with a list of two computers, a bank account, and an AWS bill that hasn't been paid yet. Maybe he's right that he personally has never read a balance sheet, but for literally any company that has already formed before the investment, they would be extremely foolish to…

I feel like this is something that’s really important to you for some reason, and as such you’re getting more wound up about it than necessary. Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment. The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, w…

If that truly is the point he's trying to make, then he needs to say that. The message he actually conveyed is "these things aren't important". And while I'd agree with him on the business plan, telling prospective startup founders that they shouldn't ever worry about the balance sheet is pure negligence and he should be called out for it.

I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.

Re: I have never read a business plan or balance sheet

#112

Post by tomhoward »

darksaints wrote: post #94
tomhoward wrote: post #49

Earlier quoted context omitted.

We used to send lengthy, wordy updates to our investors, including YC/PG. Then one time he replied, frustratedly, imploring us to just tell him how much money we were making, how much money we were spending, and how much we had in the bank. He later put that concept into this essay http://www.paulgraham.com/aord.html

How much you were making: seen on income statements as revenues and on balance sheets as accounts receivable . How much you were spending: seen on income statements as expenses and on balance sheets in accounts payable . How much cash in the bank: seen on cash flow statements as starting/ending cash position and seen on balance sheets as cash assets . Paul graham didn't care about your poetry, he just wanted to see y…

You keep throwing barbs around but missing the important point.

He specifically didn’t want to see balance sheets or income statements as he knows they can be full of bullshit (FWIW my only university qualification is in accountancy, so I know what he means).

All he cared about the bank balance and whether it was going up or down, because that’s what indicates whether the company would survive or not.

He still cared most about users and how excited they were and how fast their number was growing.

Re: I have never read a business plan or balance sheet

#113

Post by moontear »

Neverending wrote: post #71

He later goes on to claim he's "never read a pitch deck". https://twitter.com/paulg/status/1492696791434731529?s=20&t=... What an eye roll.

That one was more puzzling to me. Every one liner people would use to pitch their idea, every elevator talk essentially is a „pitch deck“.

Re: I have never read a business plan or balance sheet

#114

Post by tomhoward »

darksaints wrote: post #111
tomhoward wrote: post #89

Earlier quoted context omitted.

I feel like this is something that’s really important to you for some reason, and as such you’re getting more wound up about it than necessary. Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment. The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, w…

If that truly is the point he's trying to make, then he needs to say that. The message he actually conveyed is "these things aren't important". And while I'd agree with him on the business plan, telling prospective startup founders that they shouldn't ever worry about the balance sheet is pure negligence and he should be called out for it. I've long respected PG for his role in transforming the VC industry from it's…

“telling prospective startup founders that they shouldn't ever worry about the balance sheet”

He said nothing of the sort.

Re: I have never read a business plan or balance sheet

#116

Post by edanm »

moontear wrote: post #113
Neverending wrote: post #71

He later goes on to claim he's "never read a pitch deck". https://twitter.com/paulg/status/1492696791434731529?s=20&t=... What an eye roll.

That one was more puzzling to me. Every one liner people would use to pitch their idea, every elevator talk essentially is a „pitch deck“.

That's not what most people mean when they say pitch deck, IMO. Most people are talking about a multiple-slide PowerPoint, covering a bunch of standard topics (team, market, etc).

Re: I have never read a business plan or balance sheet

#117

Post by sillysaurusx »

guynamedloren wrote: post #106

I’m surprised the YC application hasn’t been more of a focus in this discussion. The following questions are pulled from the application (perhaps an older version): What is your company going to make? Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making? What's new about what you're making? What substitutes do people resort to because it does…

If all business plans were as thorough and as revealing as YC’s application forces you to be, then YC would have called it one. But there’s a separate name for a business plan. Most are useless.

I suspect pg is referring to the plans founders make to impress investors, rather than to figure out which problems to solve.

Re: I have never read a business plan or balance sheet

#120

Post by davidivadavid »

tomhoward wrote: post #112
darksaints wrote: post #94

Earlier quoted context omitted.

How much you were making: seen on income statements as revenues and on balance sheets as accounts receivable . How much you were spending: seen on income statements as expenses and on balance sheets in accounts payable . How much cash in the bank: seen on cash flow statements as starting/ending cash position and seen on balance sheets as cash assets . Paul graham didn't care about your poetry, he just wanted to see y…

You keep throwing barbs around but missing the important point. He specifically didn’t want to see balance sheets or income statements as he knows they can be full of bullshit (FWIW my only university qualification is in accountancy, so I know what he means). All he cared about the bank balance and whether it was going up or down, because that’s what indicates whether the company would survive or not. He still cared…

Dude, everyone knows that. Seriously.

Nobody's missing the "important point" because everybody who's been on Hacker News for five minutes has heard Paul Graham make that point. Indeed, people have made jokes about startup business plans for decades. Literally everyone knows that those things don't matter for super early stage startups.

The tweet, however, and very much like many of Paul Graham's latest essays and tweets, seems to purposely elude any context, make a very generic a debatable statement, and assert it with complete aplomb. For someone who just wrote an essay about putting ideas into words, if he can't see that this tweet will be interpreted as "balance sheets are useless", he needs to put in a bit more work.

That's what people react to, because the only conclusion is that since he doesn't want to tweet bromides, he must be trying to say something "controversial."

It's really bordering on trolling, which for a man with his age and reputation is kind of cringy, embarrassing, and frankly disappointing to people who enjoyed his past stuff.

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