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Comment by tomhallett | Hacker News Reader

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.

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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.

Recording it in some form (written or otherwise) seems useful if you need to share it with lots of other people.

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.

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.

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.

I always like to quote Eisenhower on plans: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

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.

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.

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.

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.

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?

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.

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.

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.

> 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.

This is not how I understand it. From the twitter thread:

>> Have you ever written one though?

> PG: I'm not sure. I wrote something for Viaweb that I called a business plan, but never having seen one, I didn't and still don't know if it contains what business plans are supposed to contain.

It doesn't matter though. The title is clickbait at best.

> 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.

Glad we agree.

You obviously had a business plan even if it was 'Build product that does A and sell it to B via C channels'.

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.

This, not only people don't understand context, but they don't care, for them, context is noise (!).

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