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Comment by swombat | Hacker News Reader

37S keep on insisting on the whole "don't write a business plan" thing. In this talk, DHH puts up a strawman.. "Build something good enough that people want to pay us money for, and charge them monthly.. that's my business plan." That's not a business plan, that's a business model.

A business plan is simply the result of doing basic research like:

* estimating the size of the market * checking out the competition * estimating your costs * figuring out what drives your costs * figuring out just how much you need to sell, and at what price, to cover your costs * agreeing who's gonna do what when, roughly

and a number of other things..

A "business plan" is just a piece of paper. Business planning, on the other hand, is essential - unless you like to fly with your eyes closed.

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According to that definition, we enjoy flying blind, then. We never did any substantial research in any of the areas that you suggest and we managed to do just fine.

Doesn't mean that you should never do those things, just that I generally find them overrated as your ability to gauge market sizes for non-consumption products is very limited (which is what we try to do almost exclusively, attract people who haven't used a product in the category before).

Yep I think that's the key problem with business plans: estimating sales. You can make a reasonable prediction of costs, but most revenue forecasts are a mix of wishful thinking and random number generation.

The "we did it and we do just fine" argument to me is really what's overrated here.

How do you know you are doing just fine? How much of the market have you captured? How big is that market? What if you had created your business plan 5 years ago and today you did triple your sales? Would that extra 2-3 weeks of work be worth it?

How do you know you are doing just fine?

I'm pretty sure they just look at their bank accounts.

In all seriousness, there's doing fine and being greedy. There will always be a step to climb, a market to reach or revenue to grow. The goal is to do enough to enjoy life and be comfortable, not to be the richest man in the world. At some point, you can do "well enough" and not worry about what "could have been".

I'm sure their investors would disagree.

They are their investors. :-)

They're not the only investors. They've taken outside funding (only because they wanted to, not because they had to). Either way, I doubt their investors care much because 37s wouldn't have taken them on if they didn't have compatible values.

http://www.37signals.com/svn/archives2/bezos_expeditions_inv...

My point is this: Though they may have taken Jeff Bezos on for his expertise, Bezos made his investment to earn a return. You don't invest in private or public stocks in a capitalist world to do just fine. You don't start a business for that reason either. That's not greed, that's entrepreneurship.

From everything I've gathered, they are doing just fine. However I still agree with the doubts about "we did it and we do just fine", because they're outliers in some ways, rather than just a couple of average guys working on an average software product.

Fair enough, but it's a fallacy to link the "flying blind" to the "not crashing".

I flew blind in my first business too, but I didn't have the gut instincts built up over years of consulting, like you did. So my first business failed, for a variety of reasons that included the fact that the product didn't fill any real need. If we'd done a bit of market research earlier on, we might have figured it out early enough to adjust.

Now, of course, if someone follows all the best bits of "Getting Real", they'll have a better chance of figuring out these kinds of problems ahead of time, even without a business plan. But Getting Real is not necessarily all that easy for everyone to follow. You need to already be a moderately experienced entrepreneur to make the most of it, imho.

For the neophyte entrepreneur, then, I'd still recommend spending a couple of weeks putting together a business plan, simply as an additional safety net.

Depends on the person and timing.

I always see the recommendation to spend a huge effort on business planning, etc., up front before you start. This can often lead to giving up on the idea, though. Yeah, you might say then that the person doesn't have the passion to be successful if that is the case but alternatively, I've found that with software, simply doing it and getting something working is what really generates the motivation.

Maybe business planning is good but it doesn't necessarily need to be the first thing you do and it's not worth it if the result is that you do nothing instead.

I'd argue to just do something first.

I just wonder how many 5 years business plans written in 2007 had "the global financial crisis" item in them. So much of planning. Flying with your eyes covered by a paper with some wishful thinking on it isn't any better.

I knew some folks a few years ago who were writing a plan that started with "When the housing crash happens".

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