311–320 of 346 posts
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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.
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There’s a difference between business plan and Business Plan, so to speak - a formalized document with a pretty standardized format you used to have if you, for example, wanted to get a loan from a bank. It’s mostly gone away, but there used to be endless arguments about whether a startup should have a formalized written business plan https://en.m.wikipedia.org/wiki/Business_plan . Business schools taught all the MBA…
We worked with Continuity for our raise. PG was not involved. They definitely required balance sheet, income statement, financial forecasts etc. Much more than a deck and a one page memo. It all has to do with what stage you are raising at.
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?
Then becoming a billionaire.
YC invests at $2m valuations, so Paul's take is very logical. This won't apply to startups raising seed rounds at 10x higher valuations.
At a 10x valuation, you (literally) need to show your startup is 10x more likely to win. Progress and pitching are part of that, but so are financial plans.
Some examples of what financial plans reveal:
- are the business model assumptions thoughtful or simplistic (e.g. ramp up team over time vs hire all on day one)? What ARE the key assumptions and levers?
- do you have buffer time set aside for a future fundraise?
- are you realistic about costs/salaries?
Addendum: basically if you're raising a seed round, you should expect that many investors will ask about financial models and projections. This is less about your predicted revenue in month 36, or whatever, and more about understanding how you think about the business for the next year or two.
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.
I once had a meeting with an investor years ago. I had a dream of starting an internet cafe back when broadband was hard to come by. So I spent a couple weeks writing a business plan to show him. In the process I came to realize the idea was a dog. At least, it didn’t align with my interests once I ran the numbers, and realized that charging by the hour to use a medium to high end gaming machine could never scale. You can’t easily over subscribe which meant you had a real limit on the ROI you could get from the machines. Which meant that all the profit was in selling consumables. That’s when I realized I had very little interest in running a profitable eatery, I just wanted to work with the computers.
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It’s also a bit of an IQ test to see how you can hit balls back across the net with zero preparation.
Zero response time. Tons of preparation required. See both Roger Federer and college debate teams.
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PG knows how to write good content. This tweet was just-vague-enough that people can both claim he did and that he didn't and many other things and argue and explain the view, etc. He got engagement - maybe that's all it was about. Or maybe I'm wrong and it was a random tweet. But what I'm sure about is that if he wanted this to be an idea that's well communicated and important, it wouldn't be ambiguous like this.
So basically, it's flamebait? That'd be a pretty disappointing circumstance. I don't know pg but the HN brand is certainly to rise above stating disinformation to start arguments and drive engagement. I guess maybe that's what Twitter is for, but then maybe the mods should stop that sort of thing leaking to HN ... Any chance you're mistaken?
Regarding the business plan part, it seems PG does indeed read[1] "business plans": not from some written document which has static form but from a source having a more dynamic form i.e. people who are primarily responsible for writing of those static documents if/when needed.
And, about the balance sheet part, I don't really know how useful it is for the kind of businesses (early stage startup) in which PG and YC are interested and primarily invests in.
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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 wonder If PG wrote deck/business plan when he pitched LPs for money.