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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

#301

Post by kevincox »

_xnmw wrote: post #298

Interesting to contrast this with PG's most recent essay "Putting Ideas into Words" where he argues that people who don't write don't have fully formed ideas. What else is a business plan besides a thoughtful writeup? I think it would give me a good idea into how a person thinks. [1] http://paulgraham.com/words.html

Of course these things aren't opposites. Writing a business plan can be incredibly valuable to the author but forcing themselves to really think though their words and formalize the ideas that are floating around in their head. That doesn't mean that it is valuable to investors or anyone else.

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

#302

Post by gitfan86 »

_xnmw wrote: post #298

Interesting to contrast this with PG's most recent essay "Putting Ideas into Words" where he argues that people who don't write don't have fully formed ideas. What else is a business plan besides a thoughtful writeup? I think it would give me a good idea into how a person thinks. [1] http://paulgraham.com/words.html

I know several entrepreneurs who could have saved themselves years of work and millions of dollars by just trying to fill out a business model canvas before starting their business. PG isn't saying that my above statement is false.

He is saying that it isn't useful for him when deciding who to invest in.

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

#303

Post by burrows »

_xnmw wrote: post #298

Interesting to contrast this with PG's most recent essay "Putting Ideas into Words" where he argues that people who don't write don't have fully formed ideas. What else is a business plan besides a thoughtful writeup? I think it would give me a good idea into how a person thinks. [1] http://paulgraham.com/words.html

I think if there seems to be a contradiction between the tweet and the essay it’s only a sort of psuedo-contradiction.

The point of the essay (as I understand it) is that writing about something (as for example in a business plan) helps the writer understand the topic. The tweet says that pg is not interested in descriptions written by someone else. That writing a business plan can be edifying for the startup founder and at the same time of no interest to an investor, is consistent with both the essay and tweet.

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

#304

Post by ksaj »

austenallred wrote: post #159

Seems like a lot of people are missing the point of this one. PG/YC invest at the earliest stages. The information they need is pretty much: 1. What are you doing? 2. Do people like it? 3. How big is the market? 4. What are you/team like? Could you cover all of those in a formal business plan? Sure, but you can also do so in a short-form application that's 1/20 the length or in a 10-minute back-and-forth conversation…

Exactly this. My understanding of Paul's philosophy is that sometimes a person or group has the right idea and all the gumption to do it, but might not be at that stage yet.

I used to work with a guy who was so hung up on business plans he always wrote me off when I scoffed at his obviously made-up numbers. "Kevin, you're just not going to be making a million dollars by the end of your first fiscal year." and he would arrogantly reply "Of course not, but you need the goal!" This is when one needs to understand the difference between "goal" and "dream" because his so-called business plans didn't support those numbers.

Paul has mentioned before that sometimes an idea is early and so there is no real competition to speak of, and very few metrics by which to measure the value. Just a hunch that this will take off to unknown lofty heights and therefore might be worth investing in.

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

#305

Post by tomhoward »

NoLinkToMe wrote: post #286
tomhoward wrote: post #265

Earlier quoted context omitted.

I'm not sure how much you know about YC's history or PG's approach to investing, but in this and your other comment in this thread, you seem to be under a misapprehension. The types of companies PG has normally invested in were barely even companies yet. They were small teams with an idea. Maybe a prototype. Maybe a few users. Often they were not incorporated as companies when he agreed to invest, or if they were, th…

Sure, if you want to ignore the fact he was part of a C series funding round of $55 million, say just two months ago as an example, and believe he's solely done seed funding, be my guest. If you want to ignore the fact he's been a director and has to sign off on balance sheets, also be my guest.

Sure, he makes some personal investments in later rounds of YC companies he particularly likes and believes in. I know that's the case with Rescale.

But again, his investment in Rescale isn't because he read their balance sheet and business plan; it's because he's been following their progress closely since YC invested in them in 2012. So he has at least 9 years of progress he's been following, via regular email updates and conversations with the founders. (You mention the $55M round as if it's evidence of the scale of investments he makes, but his share of that round was likely quite small. He really doesn't have a team to do due diligence on his personal investments. He just invests in people he personally believes in.)

As for being a director; he's explicitly avoided taking directorships in companies he's invested in, as he doesn't want to deal with the things that directors have to do, like read balance sheets. The only exception he made to that rule is Watsi, a non-profit - https://techcrunch.com/2013/04/19/paul-graham-watsi/

Please don't be patronising; I've been polite and respectful towards you and the others in this discussion, despite barbs being sent my way. I'm just trying to clarify misapprehensions as I have knowledge about the topic.

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

#306

Post by KineticLensman »

austenallred wrote: post #186
pfortuny wrote: post #184

Earlier quoted context omitted.

As a teacher, I would rather examine my students orally. Shorter and to the point. Much fairer. In that sense, what he says is normal.

It’s also a bit of an IQ test to see how you can hit balls back across the net with zero preparation.

> with zero preparation

Yes, but the students have had preparation time: the teaching and revision prior to the oral examination. They should be able to answer questions, even if the answers aren't as 'clean' as they might be if the questions had been shown to them beforehand.

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

#307

Post by [deleted] »

HWR_14 wrote: post #293
throwaway1777 wrote: post #277

Earlier quoted context omitted.

If you have so much anxiety you can’t pitch your idea and tell someone who you are you aren’t gonna make it as a founder unless you have a cofounder who can carry you.

The person was clearly responding to "as a teacher" and "students". We don't hold eighth graders to the same standards as founders.

[deleted]

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

#308

Post by devmunchies »

austenallred wrote: post #159

Seems like a lot of people are missing the point of this one. PG/YC invest at the earliest stages. The information they need is pretty much: 1. What are you doing? 2. Do people like it? 3. How big is the market? 4. What are you/team like? Could you cover all of those in a formal business plan? Sure, but you can also do so in a short-form application that's 1/20 the length or in a 10-minute back-and-forth conversation…

Yes, but how would he know business plans and balance sheets aren’t useful unless he’s looked at one and decided to never look at one again?

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

#309

Post by kristiandupont »

prea wrote: post #247

Am I missing something? What's the point of the tweet other than to elicit a reaction? And then in the replies: 'I CAN'T BELIEVE I ELICITED A REACTION!.

It might be something to point to if a startup talks to an angel investor who insists on seeing such documents.

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

#310

Post by daniel-cussen »

KerrAvon wrote: post #18

He says he interrupts the founders during live presentations instead of reading balance sheets. Founder: So we’re doing this rad new architecture- Paulg: In Lisp. It’s in Lisp, right? Founder: Huh, fuck no, it’s 2022, dude- Paulg: (frowning) Out. Thumbs down.

If only he did.

Many people took a lot of advice from him, but nobody took the advice on Lisp. That was exactly what I realized in 2007, when I started reading his essays, that the opportunity here was to take excellent advice that nobody else was going to take.

Now, some people do learn Lisp on his recommendation, the thing is too only a very few--perhaps only one--will actually also be able to turn that into the other thing he speaks of at length, becoming a great founder. I would say the two things pull away from each other. And technologic fashions have pulled in a direction diametrically opposite to his vision until only three years ago, to the point he announced in an interview Viaweb's technology "was a lot more sophisticated than it needed to be."

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