8 ms·

He invests in seed rounds where those often go down the drain. The things that matter at this stage are: Founders and general market size. So sure, ignoring t

He invests in seed rounds where those often go down the drain. The things that matter at this stage are: Founders and general market size. So sure, ignoring the noise of those two makes sense.

tomhallett 5y ago
People really struggle to recognize context. I assume most people who are getting so upset about pg’s tweet are reading it as “business plans are stupid. Balance sheets are stupid. No company should ever make one because no one should ever read it. Anyone who reads one is stupid.” It should be implied that his advice is only relevant the type of investing which pg does. pg tweeted later on that his solution is something he does in YC interviews. So his comments are obviously scoped to companies which would apply to YC.
- Negitivefrags 5y ago
  I founded a company without a business plan. Raised money without a business plan. Ran the business profitably for a long time and then sold the majority of it without a business plan. I don’t see the value in a formal business plan at all and so I would almost agree with your made up quote there. I mean obviously you need to have a plan for your business. But writing it down in some formal way seems like a waste of time. Perhaps there is value in writing one in order to coalesce your own thoughts if you are that way inclined, but it’s certainly not going to convince anybody of anything that wouldn’t be convinced by the conversation you would have instead.
  - jfoster 5y ago
    Recording it in some form (written or otherwise) seems useful if you need to share it with lots of other people.
  - iratewizard 5y ago
    Your last paragraph sounds the most correct to me. It's a drafting exercise that helps a person get a deeper understanding of the value added, the marketing of, the selling of, the delivering of and the financing of said value add. It's necessary for a business like a mind mapping diagram is necessary for an essay.
  - alasdair_ 5y ago
    I found the process of writing a business plan to be a useful one. It’s really just a list of questions to ask yourself - who are the customers? What is the product? How will you sell it? etc. The plan itself was short enough that I could share it with a fee people for advice but I never showed it to any of my investors, other than perhaps as a way to give a pre-canned snippet of information on a specific thing. The process itself took about a day and a half, mostly spent getting specific answers. The knowledge gained helped a lot while pitching.
    - tommilukkarinen 5y ago
      Plans are not for reading but for writing. When you write stuff down you think about it = you plan. For others it should be enough that they know you made a plan. Unless they think they can deduce if it's a good one by reading it.
      - jdougan 5y ago
        I always like to quote Eisenhower on plans: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
    - syedkarim 5y ago
      I've found the process of writing a business plan to be a complete waste of time. I've also found the organizations and investors who require a business plan to be a complete waste of time. Specifically, I'm referring to early stage, high-growth (potential) businesses. The short-term questions that a business plan answers are basic and a lot of fluffy writing goes into stating simple answers. The bigger-picture statements are really just short-form fiction.
  - mrVentures 5y ago
    Not sure how many employees you had, but I'd say anywhere more than three or four it really helps to write something down so that you all can be sure you agree on it. Or I guess even if you don't agree on it, you know what it is.
  - bryanrasmussen 5y ago
    there are some sources of funding you need business plans to get, generally government ones need business plans, as to whether those sources are worth pursuing is of course up to the individual.
  - twelve40 5y ago
    I'd imagine a formal business plan would actually be very useful for some lower-margin traditional businesses like e.g. a food/retail franchise.
  - legutierr 5y ago
    Ok, you don’t need a business plan. But no balance sheet? You can’t file your taxes without a balance sheet. How can you run anything larger than a mom-and-pop business without ever seeing a balance sheet?
    - vertis 5y ago
      He's not saying you don't need a balance sheet. He's saying looking at one for an early stage startup as an outsider doesn't help him make a decision. I suspect if you asked him he would tell you that particularly as the startup grows the startup should be across the financials, just that it doesn't help an outsider with no context as to why you're in the red.
    - onion2k 5y ago
      pg saying he doesn't need to see your balance sheet isn't the same as saying no one needs to see your balance sheet.
      - trulyme 5y ago
        But this is not what he said. If he said that, it would have been reasonable. Instead he claims to have never read a balance sheet, which doesn't seem likely, and even if it was true, it would not be very smart. Why avoid them until you read them and formed your own opinion? Saying "I don't read those documents anymore" would have made sense too.
        biorach 5y ago
        > Instead he claims to have never read a balance sheet, It's pretty clear from the context that he means that he has never read the balance sheet of a company applying for VC funding as the information there is irrelevant at that time. It's highly unlikely, as the founder of several businesses, and long term investor in others, that he could have never read any balance sheet ever.
        trulyme 5y ago
  - jollybean 5y ago
    You obviously had a business plan even if it was 'Build product that does A and sell it to B via C channels'.
- vertis 5y ago
  He might have meant to scope them but he has a few bugs in his code^H^H^H^Htweet that mean it's completely unscoped. But yes I agree, he's talking early-stage startups. At that stage balance sheets seem like they would be obvious. If I had one and you looked at it. It would tell you that I'm draining my personal savings and should probably go and take a job at a FAANG and stop trying to build a startup.
- Foobar8568 5y ago
  This, not only people don't understand context, but they don't care, for them, context is noise (!).
ganeshkrishnan 5y ago
>Founders and general market size And both of them can be as ambiguous as anything. If anything, its impossible to predict who or what can become successful. Look at the historic interview of zuckerberg and his competitor: https://www.youtube.com/watch?v=cUNX3azkZyk https://www.youtube.com/watch?v=cUNX3azkZyk Competitor seems more outspoken, got more airtime, had already monetized yada yada but here we are.
- sumedh 5y ago
  The other guy did not say anything about the number of users while FB already had 100k users
quickthrower2 5y ago
So… then the tweet is clickbait.

He invests in seed rounds where those often go down the drain. The things that matter at this stage are: Founders and general market size. So sure, ignoring the noise of those two makes sense.

tomhallett 5y ago

People really struggle to recognize context. I assume most people who are getting so upset about pg’s tweet are reading it as “business plans are stupid. Balance sheets are stupid. No company should ever make one because no one should ever read it. Anyone who reads one is stupid.” It should be implied that his advice is only relevant the type of investing which pg does. pg tweeted later on that his solution is something he does in YC interviews. So his comments are obviously scoped to companies which would apply to YC.

Negitivefrags 5y ago
I founded a company without a business plan. Raised money without a business plan. Ran the business profitably for a long time and then sold the majority of it without a business plan. I don’t see the value in a formal business plan at all and so I would almost agree with your made up quote there. I mean obviously you need to have a plan for your business. But writing it down in some formal way seems like a waste of time. Perhaps there is value in writing one in order to coalesce your own thoughts if you are that way inclined, but it’s certainly not going to convince anybody of anything that wouldn’t be convinced by the conversation you would have instead.
- jfoster 5y ago
  Recording it in some form (written or otherwise) seems useful if you need to share it with lots of other people.
- iratewizard 5y ago
  Your last paragraph sounds the most correct to me. It's a drafting exercise that helps a person get a deeper understanding of the value added, the marketing of, the selling of, the delivering of and the financing of said value add. It's necessary for a business like a mind mapping diagram is necessary for an essay.
- alasdair_ 5y ago
  I found the process of writing a business plan to be a useful one. It’s really just a list of questions to ask yourself - who are the customers? What is the product? How will you sell it? etc. The plan itself was short enough that I could share it with a fee people for advice but I never showed it to any of my investors, other than perhaps as a way to give a pre-canned snippet of information on a specific thing. The process itself took about a day and a half, mostly spent getting specific answers. The knowledge gained helped a lot while pitching.
  - tommilukkarinen 5y ago
    Plans are not for reading but for writing. When you write stuff down you think about it = you plan. For others it should be enough that they know you made a plan. Unless they think they can deduce if it's a good one by reading it.
    - jdougan 5y ago
      I always like to quote Eisenhower on plans: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
  - syedkarim 5y ago
    I've found the process of writing a business plan to be a complete waste of time. I've also found the organizations and investors who require a business plan to be a complete waste of time. Specifically, I'm referring to early stage, high-growth (potential) businesses. The short-term questions that a business plan answers are basic and a lot of fluffy writing goes into stating simple answers. The bigger-picture statements are really just short-form fiction.
- mrVentures 5y ago
  Not sure how many employees you had, but I'd say anywhere more than three or four it really helps to write something down so that you all can be sure you agree on it. Or I guess even if you don't agree on it, you know what it is.
- bryanrasmussen 5y ago
  there are some sources of funding you need business plans to get, generally government ones need business plans, as to whether those sources are worth pursuing is of course up to the individual.
- twelve40 5y ago
  I'd imagine a formal business plan would actually be very useful for some lower-margin traditional businesses like e.g. a food/retail franchise.
- legutierr 5y ago
  Ok, you don’t need a business plan. But no balance sheet? You can’t file your taxes without a balance sheet. How can you run anything larger than a mom-and-pop business without ever seeing a balance sheet?
  - vertis 5y ago
    He's not saying you don't need a balance sheet. He's saying looking at one for an early stage startup as an outsider doesn't help him make a decision. I suspect if you asked him he would tell you that particularly as the startup grows the startup should be across the financials, just that it doesn't help an outsider with no context as to why you're in the red.
  - onion2k 5y ago
    pg saying he doesn't need to see your balance sheet isn't the same as saying no one needs to see your balance sheet.
    - trulyme 5y ago
      But this is not what he said. If he said that, it would have been reasonable. Instead he claims to have never read a balance sheet, which doesn't seem likely, and even if it was true, it would not be very smart. Why avoid them until you read them and formed your own opinion? Saying "I don't read those documents anymore" would have made sense too.
      - biorach 5y ago
        > Instead he claims to have never read a balance sheet, It's pretty clear from the context that he means that he has never read the balance sheet of a company applying for VC funding as the information there is irrelevant at that time. It's highly unlikely, as the founder of several businesses, and long term investor in others, that he could have never read any balance sheet ever.
        trulyme 5y ago
- jollybean 5y ago
  You obviously had a business plan even if it was 'Build product that does A and sell it to B via C channels'.
vertis 5y ago
He might have meant to scope them but he has a few bugs in his code^H^H^H^Htweet that mean it's completely unscoped. But yes I agree, he's talking early-stage startups. At that stage balance sheets seem like they would be obvious. If I had one and you looked at it. It would tell you that I'm draining my personal savings and should probably go and take a job at a FAANG and stop trying to build a startup.
Foobar8568 5y ago
This, not only people don't understand context, but they don't care, for them, context is noise (!).

ganeshkrishnan 5y ago

>Founders and general market size And both of them can be as ambiguous as anything. If anything, its impossible to predict who or what can become successful. Look at the historic interview of zuckerberg and his competitor: https://www.youtube.com/watch?v=cUNX3azkZyk https://www.youtube.com/watch?v=cUNX3azkZyk Competitor seems more outspoken, got more airtime, had already monetized yada yada but here we are.

sumedh 5y ago
The other guy did not say anything about the number of users while FB already had 100k users

quickthrower2 5y ago

So… then the tweet is clickbait.