Thanks for this feedback. Re real-world examples of startups that went awry for lack of a plan, the classical music video one is of a standard kind—he thought ‘this would be a cool product for people like me’ but never thought how many there were like him, i.e. the market size. I assume similar examples exist for each of the headings in a business plan—people who didn’t think about e.g. marketing, distribution, risks, and especially financials. But though I’ve advised various startups, I don’t know many such examples, because I find if I insist on a business plan and they don’t want to write one, I tend not to hear from them again and never find out what happened. Many founders seem to find writing one an insurmountable obstacle.
I agree maybe I should steelman the opposing arguments, though I don’t know how strong they are. I thought a bit about the lean startup process, as it appears to contradict writing plans, but it’s largely about the earlier stage of finding a plausible idea for a business. So it’s not inconsistent with writing a plan once you’ve found one (even though people often don’t). I sense the anti-planning mindset is more of an ‘attitude’ than a rationale, with the negatives that suggests. I don’t think I’m too strawmanny though, as the lame excuses I give seem widespread (even if not always articulated).
As it happens I also had a poker software startup a few years ago (AI for playing/training with), which never succeeded—not for lack of a business plan, it was that making the software good enough took far longer than we expected (it being a particularly hard problem, and research as much as development), and we were chasing a moving target as the standard of online poker play was increasing fast. I spent a long time estimating companies’ market sizes via various proxies, including indeed multiple of employees. I had a rare chance to test this, as I’d estimated PokerStars’ revenue (from various things including traffic), which no-one knew since they were very secretive and published no figures—but when they were bought by Amaya they had to file accounts, and it turned out I had been only about 10% out. This was helped though by the fact various poker companies already published accounts, from which I had been able to calibrate the proxies quite well.
Re writing to think, indeed years ago a corporate finance company gave me this justification for writing a business plan. It forces you to think it all through.
I’m not sure a startup’s business plan is that different from an established business’s one—I’ve never noticed much difference when writing them myself, but maybe haven’t thought about the differences enough. (Other than that a startup is naturally more speculative, and has to create departments & processes that would often already exist in an existing business.)
Many founders seem to find writing one an insurmountable obstacle.
Hm, people seem to feel that way about writing “long” things in general, and I’ve always found that weird. For example, I’ve received “ugh, you want me to read all of that?” responses from multi-paragraph text messages before. When you actually think about how much time it takes, it isn’t that long, so maybe it’s the shock value, but that doesn’t feel like the right explanation either.
I don’t think I’m too strawmanny though, as the lame excuses I give seem widespread (even if not always articulated).
Hm, I agree. At least that it’s worth directly addressing the lame excuses due to them being widespread.
I agree maybe I should steelman the opposing arguments, though I don’t know how strong they are.
Even if they aren’t strong enough to win out, I think it’s useful to go through a longer, more thorough steelman for the purpose of educating + convincing the reader. Eg. I see the lean startup stuff + wide error bars stuff as the big counterpoints, and you only spent a few paragraphs talking about them. Well, it was actually a decent length relative to the overall length of your post, so maybe this point is tied to my other point about anti-conciseness.
As it happens I also had a poker software startup a few years ago
Cool! That makes sense about the software’s complexity. It’s difficult to have good estimates there. When I worked on Premium Poker Tools I spent a few weeks trying to estimate how long it’d take to complete my tasks. For a while I was doing good, but then there were some tasks where the complexity just spiraled out of control, which caused me to lose motivation and stop trying to estimate. Right now I’m really liking Basecamp’s idea of uphill vs downhill work as a substitute for estimating how much longer a task will take.
Thanks again for the detailed feedback. In practice I don’t think I’m going to improve this post further as I’ve spent far too much time on it already (I find assembling coherent thoughts painfully slow), but it’s useful for my future posts.
Thanks for this feedback. Re real-world examples of startups that went awry for lack of a plan, the classical music video one is of a standard kind—he thought ‘this would be a cool product for people like me’ but never thought how many there were like him, i.e. the market size. I assume similar examples exist for each of the headings in a business plan—people who didn’t think about e.g. marketing, distribution, risks, and especially financials. But though I’ve advised various startups, I don’t know many such examples, because I find if I insist on a business plan and they don’t want to write one, I tend not to hear from them again and never find out what happened. Many founders seem to find writing one an insurmountable obstacle.
I agree maybe I should steelman the opposing arguments, though I don’t know how strong they are. I thought a bit about the lean startup process, as it appears to contradict writing plans, but it’s largely about the earlier stage of finding a plausible idea for a business. So it’s not inconsistent with writing a plan once you’ve found one (even though people often don’t). I sense the anti-planning mindset is more of an ‘attitude’ than a rationale, with the negatives that suggests. I don’t think I’m too strawmanny though, as the lame excuses I give seem widespread (even if not always articulated).
As it happens I also had a poker software startup a few years ago (AI for playing/training with), which never succeeded—not for lack of a business plan, it was that making the software good enough took far longer than we expected (it being a particularly hard problem, and research as much as development), and we were chasing a moving target as the standard of online poker play was increasing fast. I spent a long time estimating companies’ market sizes via various proxies, including indeed multiple of employees. I had a rare chance to test this, as I’d estimated PokerStars’ revenue (from various things including traffic), which no-one knew since they were very secretive and published no figures—but when they were bought by Amaya they had to file accounts, and it turned out I had been only about 10% out. This was helped though by the fact various poker companies already published accounts, from which I had been able to calibrate the proxies quite well.
Re writing to think, indeed years ago a corporate finance company gave me this justification for writing a business plan. It forces you to think it all through.
I’m not sure a startup’s business plan is that different from an established business’s one—I’ve never noticed much difference when writing them myself, but maybe haven’t thought about the differences enough. (Other than that a startup is naturally more speculative, and has to create departments & processes that would often already exist in an existing business.)
Hm, people seem to feel that way about writing “long” things in general, and I’ve always found that weird. For example, I’ve received “ugh, you want me to read all of that?” responses from multi-paragraph text messages before. When you actually think about how much time it takes, it isn’t that long, so maybe it’s the shock value, but that doesn’t feel like the right explanation either.
Hm, I agree. At least that it’s worth directly addressing the lame excuses due to them being widespread.
Even if they aren’t strong enough to win out, I think it’s useful to go through a longer, more thorough steelman for the purpose of educating + convincing the reader. Eg. I see the lean startup stuff + wide error bars stuff as the big counterpoints, and you only spent a few paragraphs talking about them. Well, it was actually a decent length relative to the overall length of your post, so maybe this point is tied to my other point about anti-conciseness.
Cool! That makes sense about the software’s complexity. It’s difficult to have good estimates there. When I worked on Premium Poker Tools I spent a few weeks trying to estimate how long it’d take to complete my tasks. For a while I was doing good, but then there were some tasks where the complexity just spiraled out of control, which caused me to lose motivation and stop trying to estimate. Right now I’m really liking Basecamp’s idea of uphill vs downhill work as a substitute for estimating how much longer a task will take.
Thanks again for the detailed feedback. In practice I don’t think I’m going to improve this post further as I’ve spent far too much time on it already (I find assembling coherent thoughts painfully slow), but it’s useful for my future posts.
Sure thing. That makes sense.