4 ms·

A strong business plan is most important when investing in start-ups

4 points by ph0rque 18y ago

JeremyChase 18y ago
Where is the data supporting this conclusion? This sounds like it was written by someone theorizing about startups rather than someone living it. I have always heard that people invest in the team. I think a poor product with a good team has a better chance than a great product and a poor team. I think this is because a good team will recognize that they have a poor product, and will change it until it is good. Where a poor team may not even realize they have a good product. Jeremy
pg 18y ago
This is misleading. It's based on the earliest business plan they were able to find, but that probably dates from the series A round.
- ph0rque 18y ago
  Yup: > The first sample consisted of 50 start-ups that went public in an initial public offering for which there was a very early business plan. The second sample included all start-ups that went public in 2004. They only sampled startups that went public... that's a very small sample of all the startups.
sr3d 18y ago
On the same HN page, couple items a part is the link to the article "New Research Finds Business Plans Are Virtually Useless: Advice to Entrepreneurs: Perfect the Business, Not the Business Plan" (http://www.rhsmith.umd.edu/news/releases/2009/040809.aspx http://www.rhsmith.umd.edu/news/releases/2009/040809.aspx). This article said to have a larger sample size or 700 dot-com companies from the late-1990s to early-2000s boom era. Is this an example of interpretation of statistics?
payne92 18y ago
Anyone have a link / pointer to the journal article? It's a surprising conclusion (but hard to react without seeing the article). My anecdotal experience: most successful startups change strategy & business plans a few times. The ones that fail are the ones that cling to the original plan in the face of changing assumptions. My Fundamental Theory of Startups: "A startup is about staying in business long enough to get to the third version of the idea."
- payne92 18y ago
  Found the original article here: http://www3.interscience.wiley.com/cgi-bin/fulltext/121660523/PDFSTART http://www3.interscience.wiley.com/cgi-bin/fulltext/12166052...

4 points by ph0rque 18y ago

Where is the data supporting this conclusion? This sounds like it was written by someone theorizing about startups rather than someone living it. I have always heard that people invest in the team. I think a poor product with a good team has a better chance than a great product and a poor team. I think this is because a good team will recognize that they have a poor product, and will change it until it is good. Where a poor team may not even realize they have a good product. Jeremy

pg 18y ago

This is misleading. It's based on the earliest business plan they were able to find, but that probably dates from the series A round.

ph0rque 18y ago
Yup: > The first sample consisted of 50 start-ups that went public in an initial public offering for which there was a very early business plan. The second sample included all start-ups that went public in 2004. They only sampled startups that went public... that's a very small sample of all the startups.

sr3d 18y ago

On the same HN page, couple items a part is the link to the article "New Research Finds Business Plans Are Virtually Useless: Advice to Entrepreneurs: Perfect the Business, Not the Business Plan" (http://www.rhsmith.umd.edu/news/releases/2009/040809.aspx http://www.rhsmith.umd.edu/news/releases/2009/040809.aspx). This article said to have a larger sample size or 700 dot-com companies from the late-1990s to early-2000s boom era. Is this an example of interpretation of statistics?

payne92 18y ago

Anyone have a link / pointer to the journal article? It's a surprising conclusion (but hard to react without seeing the article). My anecdotal experience: most successful startups change strategy & business plans a few times. The ones that fail are the ones that cling to the original plan in the face of changing assumptions. My Fundamental Theory of Startups: "A startup is about staying in business long enough to get to the third version of the idea."

payne92 18y ago
Found the original article here: http://www3.interscience.wiley.com/cgi-bin/fulltext/121660523/PDFSTART http://www3.interscience.wiley.com/cgi-bin/fulltext/12166052...