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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 vers

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 doesn't exist yet (or they don't know about it)? Who are your competitors, and who might become competitors? Who do you fear most? What do you understand about your business that other companies in it just don't get? How do or will you make money? How much could you make? How far along are you? Do you have a beta yet? If not, when will you? Are you launched? If so, how many users do you have? Do you have revenue? If so, how much? If you're launched, what is your monthly growth rate (in users or revenue or both)? —- These questions cover product description, value prop, market analysis, financial projections and more, all of which are the core of a “business plan”. Sure, the application may be structured in a different way, but the sentiment that PG has never read a business plan seems very disingenuous.

sillysaurusx 5y ago
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.
- jcrben 5y ago
  This is all just semantic nonsense. YC has no more profound understanding of the noun "business plan" than anyone else in the business world. Don't overthink it
  - nouveaux 5y ago
    To be fair, there is a pretty concrete idea of what a traditional business plan looks like. Traditional business plans are needed if you want a small business loan from a bank. If you try to get a small business loan from the bank with a YC application, you'll get laughed out of the bank. A YC app is quite different from a business plan and most people would not see it as the same thing.
    - jcrben 5y ago
      In a prior life as a regulator I read formal business plans (legally required) which probably looked quite different from what you're talking about. It's a generic noun used in various business contexts. The business plan for a startup pitching to a VC will look different than the plan an SMB submits to a bank
      - nouveaux 5y ago
        I assure you its very different from the vast majority of business plans out there. Here is Dropbox's YC app: https://www.ycombinator.com/apply/dropbox https://www.ycombinator.com/apply/dropbox
        jcrben 5y ago
        Well, that business plan looks fairly similar (albeit more detailed) to the legally required plans I used to peruse as part of my old job. I've never been a banker so I don't know what the business plans you're talking about look like I do think the plan you linked to is more thorough than what the majority of SMBs will be writing. YC is another league of finance. Most SMBs I know are not very sophisticated
        nouveaux 5y ago
        That's interesting. Do you mind sharing an example of what you worked with?
        jcrben 5y ago
        I don't think they're public - it was just a narrative business plan (under a section titled business plan) required when an insurance company submitted an application for a license to sell insurance in the state of Alaska. Each state has similar requirements (NAIC model law). It also included a background check on the management IIRC Can you link to an example SMB business plan? I once tried to help a neighborhood grocer with financing and I can assure you they weren't writing a sophisticated business plan.
  - biorach 5y ago
    > This is all just semantic nonsense. No it's not. The point is that what most start-ups submit as a "business plan" is just a load of b.s. The questions that are asked in the YC interview draw out the information that _should_ be in a business plan.
- jacquesm 5y ago
  A typical 'deck' will cover all of these, and a typical deck has about as much relation to what will happen later on as most business plans do, ie: none whatsoever. In most cases though YC applications are meant as a way to evaluate the team, not the business and that's where the difference lies between the data they collect and what your typical business plan shows, even if there are superficial similarities the goal is an entirely different one. I think PG & Co would invest readily into a fantastic team with a crappy business plan knowing full well that they are effectively already investing in the first - or second - pivot. For them it doesn't matter: people driven to succeed will try to do so one way or the other and have a leg up on people that are not like that.
onion2k 5y ago
These questions cover product description, value prop, market analysis, financial projections and more, all of which are the core of a “business plan”. There is a key difference though - none of the YC questions are about the planning bit of a business plan. None of them are about what you're going to do in the near term future. It's all about what you've done so far and where you believe you could be when you exit. The issue with business plans isn't that they include a report on what you've done to date. It's the idea that you can reasonably predict what you plan to do over the next year or two. Lots of more traditional businesses can do that, and a business plan is appropriate for them, but a YC startup needs to be significantly more agile than that. Any plan will certainly be wrong, so there no point wasting time making one.
- indigochill 5y ago
  > Any plan will certainly be wrong, so there no point wasting time making one. There's a famous Eisenhower quote that goes something like, "Plans are useless, but planning is indispensable." The point being that any single plan is likely not to pan out because of unknowns and surprises, but by going through the process of planning, you have "cached" knowledge about your domain like what the opportunities and threats are and you can use that knowledge to adapt when the specific plan falls through.
  - nouveaux 5y ago
    A plan is very different compared to a business plan. The type of forecasting required in a business plan is good for something predictable, like a McDonald's franchise. Can you imagine trying to forecast the first 10 years for the first version of Google's search engine? It would be ludicrous.
    - exdsq 5y ago
      I bet they had one, Apple did https://historyengine.richmond.edu/episodes/view/5125 https://historyengine.richmond.edu/episodes/view/5125
daniel_iversen 5y ago
I would certainly hope that all founders have gone through these questions in detail, and may even internally have it written down (even if they didn't call it a business plan), but I guess in an "interview" people might (accidentally or intentionally) paint things very rosy, and sometimes as the owner of the plan you can stare yourself blind in the details.. Having someone like PG question and unpack things in real-time would probably be priceless for most startups! Also remember that when you invest in great people as much as (or even more than) ideas, then the moment-in-time plan matters less/differently somehow.
jasfi 5y ago
Pro-tip for social media: be controversial.
- majani 5y ago
  And assertive. No ifs, buts or maybes
  - abnercoimbre 5y ago
    Slight tangent: I wish there were legitimate threats to kill social media as it stands today. Any threat to the current business model, from anywhere.
    - jasfi 5y ago
      A lot of what goes on with social media is a reflection of society, in my opinion. Can a new approach fix that? The only thing I can think of is targeting different users by various segments (which isn't new). E.g. HN is mostly for people that like tech and the startup scene.
      - synecdoche 5y ago
        Social media is part of society, and not a small part either, in my opinion. It’s ubiquitous and cross feeding.
    - lupire 5y ago
      EU is piling on threats to tracking for ads, data sharing, multinationalism.
  - csee 5y ago
    That's tied in with the need to be succinct. Expressing uncertainty often adds verbosity and cognitive load onto the reader. Often it also adds redundancy, given that uncertainty should be taken for granted in certain contexts. Note that in these last two sentences, the word "often" added verbosity, which is an example of what I am talking about. If someone is just expressing their opinion, I don't like to read a bunch of hedging. I get that you are uncertain and this is just your opinion, stop telling me that over and over and over. I wish there was a new shorthand/syntax/convention/notation for expressing uncertainty. All statements are delivered succinctly, with some notation for saying I am only 70% certain, perhaps by putting 0.7 as small superscript text.
heisenbit 5y ago
There is a different quality to the information you receive when reading a piece of paper vs. talking to people. Depending on who you are you may gain more one way or the other. Then there is the gap between plan and execution. A plan is only worth as much as the execution behind it. And with written plans you don't know the real authors and reviewers while when talking to someone you may be able to force them to original statements and can see their ability or lack to deliver them. Last but not least plans aim at completeness outlining the overall picture while when you talk to someone the dialogue develops a certain direction and has a thrust revealing understanding of the key building blocks of the plan.
baxtr 5y ago
That business plans are a bad thing is becoming a meme. It's great to get some (many in PGs case) likes on twitter and that's about it. A business plan is great to have because it forces you to think through all the important pieces of the business. Many great companies had one, e.g. Apple (as mentioned by someone else in this thread). Amazon has detailed Word documents for anything they dive into. Of course, planning should not becoming your core activity... There's a limit after which business planning is just an academic exercise.
- selfhifive 5y ago
  The question is not about the general utility of business plans. It's about whether they're good for early stage startups. These kind of organisations need to move fast and try a lot of stuff in a short amount of time to see what works. A business plan then seems expedient because the future direction is not set in stone anyway. That's the logic behind the argument.
  - baxtr 5y ago
    As I mentioned, amazon is doing those for any kind of business venture afaik.
fredgrott 5y ago
you miss what PG was stating, Audience and User is the balance sheet and the business plan nothing else matters.
- codingdave 5y ago
  That is half of the story. The other half is that he is looking at the people, not the product. Someone with the personality and perseverance to keeping pushing and pivoting until they hit success is going to drive YCs goals farther than someone with a solid business who won't fight through troubles or will stop instead of pivoting when needed. Now, we can talk all day about whether that is a healthy path, to constantly drive to build Y/VC-level growth no matter what. But whether or not you buy into the "startup" lifestyle, YC absolutely does run under that model, so they seek people who match, and those people aren't identified by snazzy spreadsheets.
viraptor 5y ago
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.
- pbhjpbhj 5y ago
  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?
  - aaaaaaaaata 5y ago
    Many of pg's writings could be categorized as flamebait — if you're not listening closely.
    - pbhjpbhj 5y ago
      What are you insinuating that I misunderstood here?
  - treis 5y ago
    One of PGs things is if you're default dead or default alive. So even if he has never literally read a balance sheet he cares about the information in it.
  - viraptor 5y ago
    Sure, I wasn't there with him. It could've been just an idle thought sent from the toilet, not a purposeful flamebait.
amznbyebyebye 5y ago
This can be summarized much more easily as: Why this idea? Why you? Why now? What have you done?
eloff 5y ago
It's tough to be properly nuanced and specific in a tweet. "I've never read a business plan , but I ask all the big questions that should be answered in a business plan." Just isn't pithy for a tweet. Honestly Twitter is a terrible idea in most cases that just leads to people shouting at each other - because 140 characters isn't enough to communicate anything in a balanced way.
- ImaCake 5y ago
  Yeah politics on twitter is awful. For outsiders like me it is often hard to even understand what a popular political tweet is even about. Twitter is good for pictures of nature though. And somehow a great deal of decent scientific discourse goes on twitter without descending into the crap that political twitter does.
  - aaaaaaaaata 5y ago
    Outsider, as in, not a person bubbled into social media derived feuds regarding politics?
    - ImaCake 5y ago
      I am just not engaged enough in day-to-day politics to know about the Issue of Day. So when people make angry quips about it, and can't fit a multi-paragraph explainer into it, I can't make any sense of their tweets. I find politics is best learnt from history books. There isn't that much about today's politics you can't learn from 19th-21st Century history books.
- gabrielsroka 5y ago
  > 140 It's been 280 for a while, but your point still stands.

sillysaurusx 5y ago

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.

jcrben 5y ago
This is all just semantic nonsense. YC has no more profound understanding of the noun "business plan" than anyone else in the business world. Don't overthink it
- nouveaux 5y ago
  To be fair, there is a pretty concrete idea of what a traditional business plan looks like. Traditional business plans are needed if you want a small business loan from a bank. If you try to get a small business loan from the bank with a YC application, you'll get laughed out of the bank. A YC app is quite different from a business plan and most people would not see it as the same thing.
  - jcrben 5y ago
    In a prior life as a regulator I read formal business plans (legally required) which probably looked quite different from what you're talking about. It's a generic noun used in various business contexts. The business plan for a startup pitching to a VC will look different than the plan an SMB submits to a bank
    - nouveaux 5y ago
      I assure you its very different from the vast majority of business plans out there. Here is Dropbox's YC app: https://www.ycombinator.com/apply/dropbox https://www.ycombinator.com/apply/dropbox
      - jcrben 5y ago
        Well, that business plan looks fairly similar (albeit more detailed) to the legally required plans I used to peruse as part of my old job. I've never been a banker so I don't know what the business plans you're talking about look like I do think the plan you linked to is more thorough than what the majority of SMBs will be writing. YC is another league of finance. Most SMBs I know are not very sophisticated
        nouveaux 5y ago
        That's interesting. Do you mind sharing an example of what you worked with?
        jcrben 5y ago
        I don't think they're public - it was just a narrative business plan (under a section titled business plan) required when an insurance company submitted an application for a license to sell insurance in the state of Alaska. Each state has similar requirements (NAIC model law). It also included a background check on the management IIRC Can you link to an example SMB business plan? I once tried to help a neighborhood grocer with financing and I can assure you they weren't writing a sophisticated business plan.
- biorach 5y ago
  > This is all just semantic nonsense. No it's not. The point is that what most start-ups submit as a "business plan" is just a load of b.s. The questions that are asked in the YC interview draw out the information that _should_ be in a business plan.
jacquesm 5y ago
A typical 'deck' will cover all of these, and a typical deck has about as much relation to what will happen later on as most business plans do, ie: none whatsoever. In most cases though YC applications are meant as a way to evaluate the team, not the business and that's where the difference lies between the data they collect and what your typical business plan shows, even if there are superficial similarities the goal is an entirely different one. I think PG & Co would invest readily into a fantastic team with a crappy business plan knowing full well that they are effectively already investing in the first - or second - pivot. For them it doesn't matter: people driven to succeed will try to do so one way or the other and have a leg up on people that are not like that.

onion2k 5y ago

These questions cover product description, value prop, market analysis, financial projections and more, all of which are the core of a “business plan”. There is a key difference though - none of the YC questions are about the planning bit of a business plan. None of them are about what you're going to do in the near term future. It's all about what you've done so far and where you believe you could be when you exit. The issue with business plans isn't that they include a report on what you've done to date. It's the idea that you can reasonably predict what you plan to do over the next year or two. Lots of more traditional businesses can do that, and a business plan is appropriate for them, but a YC startup needs to be significantly more agile than that. Any plan will certainly be wrong, so there no point wasting time making one.

indigochill 5y ago
> Any plan will certainly be wrong, so there no point wasting time making one. There's a famous Eisenhower quote that goes something like, "Plans are useless, but planning is indispensable." The point being that any single plan is likely not to pan out because of unknowns and surprises, but by going through the process of planning, you have "cached" knowledge about your domain like what the opportunities and threats are and you can use that knowledge to adapt when the specific plan falls through.
- nouveaux 5y ago
  A plan is very different compared to a business plan. The type of forecasting required in a business plan is good for something predictable, like a McDonald's franchise. Can you imagine trying to forecast the first 10 years for the first version of Google's search engine? It would be ludicrous.
  - exdsq 5y ago
    I bet they had one, Apple did https://historyengine.richmond.edu/episodes/view/5125 https://historyengine.richmond.edu/episodes/view/5125

daniel_iversen 5y ago

I would certainly hope that all founders have gone through these questions in detail, and may even internally have it written down (even if they didn't call it a business plan), but I guess in an "interview" people might (accidentally or intentionally) paint things very rosy, and sometimes as the owner of the plan you can stare yourself blind in the details.. Having someone like PG question and unpack things in real-time would probably be priceless for most startups! Also remember that when you invest in great people as much as (or even more than) ideas, then the moment-in-time plan matters less/differently somehow.

jasfi 5y ago

Pro-tip for social media: be controversial.

majani 5y ago
And assertive. No ifs, buts or maybes
- abnercoimbre 5y ago
  Slight tangent: I wish there were legitimate threats to kill social media as it stands today. Any threat to the current business model, from anywhere.
  - jasfi 5y ago
    A lot of what goes on with social media is a reflection of society, in my opinion. Can a new approach fix that? The only thing I can think of is targeting different users by various segments (which isn't new). E.g. HN is mostly for people that like tech and the startup scene.
    - synecdoche 5y ago
      Social media is part of society, and not a small part either, in my opinion. It’s ubiquitous and cross feeding.
  - lupire 5y ago
    EU is piling on threats to tracking for ads, data sharing, multinationalism.
- csee 5y ago
  That's tied in with the need to be succinct. Expressing uncertainty often adds verbosity and cognitive load onto the reader. Often it also adds redundancy, given that uncertainty should be taken for granted in certain contexts. Note that in these last two sentences, the word "often" added verbosity, which is an example of what I am talking about. If someone is just expressing their opinion, I don't like to read a bunch of hedging. I get that you are uncertain and this is just your opinion, stop telling me that over and over and over. I wish there was a new shorthand/syntax/convention/notation for expressing uncertainty. All statements are delivered succinctly, with some notation for saying I am only 70% certain, perhaps by putting 0.7 as small superscript text.

heisenbit 5y ago

There is a different quality to the information you receive when reading a piece of paper vs. talking to people. Depending on who you are you may gain more one way or the other. Then there is the gap between plan and execution. A plan is only worth as much as the execution behind it. And with written plans you don't know the real authors and reviewers while when talking to someone you may be able to force them to original statements and can see their ability or lack to deliver them. Last but not least plans aim at completeness outlining the overall picture while when you talk to someone the dialogue develops a certain direction and has a thrust revealing understanding of the key building blocks of the plan.

baxtr 5y ago

That business plans are a bad thing is becoming a meme. It's great to get some (many in PGs case) likes on twitter and that's about it. A business plan is great to have because it forces you to think through all the important pieces of the business. Many great companies had one, e.g. Apple (as mentioned by someone else in this thread). Amazon has detailed Word documents for anything they dive into. Of course, planning should not becoming your core activity... There's a limit after which business planning is just an academic exercise.

selfhifive 5y ago
The question is not about the general utility of business plans. It's about whether they're good for early stage startups. These kind of organisations need to move fast and try a lot of stuff in a short amount of time to see what works. A business plan then seems expedient because the future direction is not set in stone anyway. That's the logic behind the argument.
- baxtr 5y ago
  As I mentioned, amazon is doing those for any kind of business venture afaik.

fredgrott 5y ago

you miss what PG was stating, Audience and User is the balance sheet and the business plan nothing else matters.

codingdave 5y ago
That is half of the story. The other half is that he is looking at the people, not the product. Someone with the personality and perseverance to keeping pushing and pivoting until they hit success is going to drive YCs goals farther than someone with a solid business who won't fight through troubles or will stop instead of pivoting when needed. Now, we can talk all day about whether that is a healthy path, to constantly drive to build Y/VC-level growth no matter what. But whether or not you buy into the "startup" lifestyle, YC absolutely does run under that model, so they seek people who match, and those people aren't identified by snazzy spreadsheets.

viraptor 5y ago

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.

pbhjpbhj 5y ago
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?
- aaaaaaaaata 5y ago
  Many of pg's writings could be categorized as flamebait — if you're not listening closely.
  - pbhjpbhj 5y ago
    What are you insinuating that I misunderstood here?
- treis 5y ago
  One of PGs things is if you're default dead or default alive. So even if he has never literally read a balance sheet he cares about the information in it.
- viraptor 5y ago
  Sure, I wasn't there with him. It could've been just an idle thought sent from the toilet, not a purposeful flamebait.

amznbyebyebye 5y ago

This can be summarized much more easily as: Why this idea? Why you? Why now? What have you done?

eloff 5y ago

It's tough to be properly nuanced and specific in a tweet. "I've never read a business plan , but I ask all the big questions that should be answered in a business plan." Just isn't pithy for a tweet. Honestly Twitter is a terrible idea in most cases that just leads to people shouting at each other - because 140 characters isn't enough to communicate anything in a balanced way.

ImaCake 5y ago
Yeah politics on twitter is awful. For outsiders like me it is often hard to even understand what a popular political tweet is even about. Twitter is good for pictures of nature though. And somehow a great deal of decent scientific discourse goes on twitter without descending into the crap that political twitter does.
- aaaaaaaaata 5y ago
  Outsider, as in, not a person bubbled into social media derived feuds regarding politics?
  - ImaCake 5y ago
    I am just not engaged enough in day-to-day politics to know about the Issue of Day. So when people make angry quips about it, and can't fit a multi-paragraph explainer into it, I can't make any sense of their tweets. I find politics is best learnt from history books. There isn't that much about today's politics you can't learn from 19th-21st Century history books.
gabrielsroka 5y ago
> 140 It's been 280 for a while, but your point still stands.