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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 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.

> 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.

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.

I bet they had one, Apple did

https://historyengine.richmond.edu/episodes/view/5125

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.

And now the thread loops

https://news.ycombinator.com/item?id=30320281

> 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.

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.

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.

>> 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.

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!)

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.

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.

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.

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?

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.

Sure, I wasn't there with him. It could've been just an idle thought sent from the toilet, not a purposeful flamebait.

Many of pg's writings could be categorized as flamebait — if you're not listening closely.

What are you insinuating that I misunderstood here?

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.

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

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.

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

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

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

That's interesting. Do you mind sharing an example of what you worked with?

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.

And YC isn't a venture capitalist or angel investor either: it is a company that provides funding and advice to startups.

> 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.

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.

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.

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.

Outsider, as in, not a person bubbled into social media derived feuds regarding politics?

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.

> 140

It's been 280 for a while, but your point still stands.

Pro-tip for social media: be controversial.

And assertive. No ifs, buts or maybes

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.

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.

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.

Social media is part of society, and not a small part either, in my opinion. It’s ubiquitous and cross feeding.

EU is piling on threats to tracking for ads, data sharing, multinationalism.

And don't forget that even if Paul doesn't read it. It's going to be read (probably) until it even reaches him

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.

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.

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.

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.

As I mentioned, amazon is doing those for any kind of business venture afaik.

This can be summarized much more easily as:

Why this idea?

Why you?

Why now?

What have you done?

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

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.