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These questions cover product description, value prop, market analysis, financial projections and more, all of which are the core of a “business plan”. There i

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
    - onion2k 5y ago
      They may well have done, and plenty of other startups will have done too, and their experience of how wrong it would have been is likely to be the sort of evidence that pg has used to inform his position.
      - lupire 5y ago
        And now the thread loops https://news.ycombinator.com/item?id=30320281 https://news.ycombinator.com/item?id=30320281
notahacker 5y ago
Lots of business plans are quite vague about what is to be done in future, and but I'm pretty sure, YC will ask questions on customer acquisition routes and costs, [planned] revenue model, development priorities, long term growth aspirations, when the product will come out of beta and what they'd spend the cash on. They might not require a bullshitty chart of next year's P&L, but if you already have a clear idea what the metrics that are supposed to lead to it are (growth rate, CAC vs CLV, untapped market size) you'll be at an advantage and if you can't tell a plausible growth story about your most likely route to growth you won't (not even if your deck has the chart!)
phekunde 5y ago
> None of them are about what you're going to do in the near term future. Okay, let us look again at some of the questions posted by OP: 1. How do you know people need what you're making? 2. Who might become competitors? 3. How do or will you make money? How much could you make? These all look future tense to me.
- onion2k 5y ago
  They're not though. They're all questions about your market. They're asking you to demonstrate domain knowledge. If you put something forwards-looking like "Google are really big so they might become a competitor!" it wouldn't look great. It's technically true, but it's not interesting. It doesn't demonstrate that you know your market. If you put "Lithuanian Startup X has launched a product in this market 60 days ago, which reached position 3 on Product Hunt, and had a successful Show HN post" then you start to look like you actually follow what's happening. You know your market, and can show you research it. No vague guesses about the future, just demonstrable knowledge about the present.
  - TheOtherHobbes 5y ago
    Traditional business plans are fantasy with numbers. "By Q4 2025 expected turnover is..." No one should take that kind of prediction seriously. (Although VCs sometimes do, which is unfortunate.) Plans exist to show you know what a market is and that you can research the details enough to know who else is in the space, what they've done, how they did it, and what they missed. If no one else is in the space - still possible, but rare - you should at least be able to point to some comparable efforts, some of which should be your own. The point is to show that you're capable of thinking strategically and not just nailing some code to the wall and hoping someone will pay to get some use out of it.
greatgib 5y ago
The point about the business plan and planning, is not really to be able to 'predict' accurately the future, but to ensure of having a well known project: Ensuring that you did think well about the threats, menaces, and what could impact your future growth. And so you have already evaluated mitigations for them.
phkahler 5y ago
>> It's all about what you've done so far and where you believe you could be when you exit. YC was never about an exit. It's about building something people want. Only after that can you decide what to do with it. Continue running a business was a serious consideration before it got overrun by VCs.
deleted 5y ago
[deleted]
WastingMyTime89 5y ago
There is very little short term detailed planning in an actual formal business plan. It remains very much at the strategic level and is mostly about your value proposition, your go-to market strategy and financial projections (which necessarily include market sizing). All of these things are actually part of the YC interview. I agree with OP that PG’s comment is somewhat disingenuous.

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
  - onion2k 5y ago
    They may well have done, and plenty of other startups will have done too, and their experience of how wrong it would have been is likely to be the sort of evidence that pg has used to inform his position.
    - lupire 5y ago
      And now the thread loops https://news.ycombinator.com/item?id=30320281 https://news.ycombinator.com/item?id=30320281

notahacker 5y ago

Lots of business plans are quite vague about what is to be done in future, and but I'm pretty sure, YC will ask questions on customer acquisition routes and costs, [planned] revenue model, development priorities, long term growth aspirations, when the product will come out of beta and what they'd spend the cash on. They might not require a bullshitty chart of next year's P&L, but if you already have a clear idea what the metrics that are supposed to lead to it are (growth rate, CAC vs CLV, untapped market size) you'll be at an advantage and if you can't tell a plausible growth story about your most likely route to growth you won't (not even if your deck has the chart!)

phekunde 5y ago

> None of them are about what you're going to do in the near term future. Okay, let us look again at some of the questions posted by OP: 1. How do you know people need what you're making? 2. Who might become competitors? 3. How do or will you make money? How much could you make? These all look future tense to me.

onion2k 5y ago
They're not though. They're all questions about your market. They're asking you to demonstrate domain knowledge. If you put something forwards-looking like "Google are really big so they might become a competitor!" it wouldn't look great. It's technically true, but it's not interesting. It doesn't demonstrate that you know your market. If you put "Lithuanian Startup X has launched a product in this market 60 days ago, which reached position 3 on Product Hunt, and had a successful Show HN post" then you start to look like you actually follow what's happening. You know your market, and can show you research it. No vague guesses about the future, just demonstrable knowledge about the present.
- TheOtherHobbes 5y ago
  Traditional business plans are fantasy with numbers. "By Q4 2025 expected turnover is..." No one should take that kind of prediction seriously. (Although VCs sometimes do, which is unfortunate.) Plans exist to show you know what a market is and that you can research the details enough to know who else is in the space, what they've done, how they did it, and what they missed. If no one else is in the space - still possible, but rare - you should at least be able to point to some comparable efforts, some of which should be your own. The point is to show that you're capable of thinking strategically and not just nailing some code to the wall and hoping someone will pay to get some use out of it.

greatgib 5y ago

The point about the business plan and planning, is not really to be able to 'predict' accurately the future, but to ensure of having a well known project: Ensuring that you did think well about the threats, menaces, and what could impact your future growth. And so you have already evaluated mitigations for them.

phkahler 5y ago

>> It's all about what you've done so far and where you believe you could be when you exit. YC was never about an exit. It's about building something people want. Only after that can you decide what to do with it. Continue running a business was a serious consideration before it got overrun by VCs.

deleted 5y ago

[deleted]

WastingMyTime89 5y ago

There is very little short term detailed planning in an actual formal business plan. It remains very much at the strategic level and is mostly about your value proposition, your go-to market strategy and financial projections (which necessarily include market sizing). All of these things are actually part of the YC interview. I agree with OP that PG’s comment is somewhat disingenuous.