I wonder why it was surprising for some to read this tweet. Startups will change their priorities daily. Business plans are against the idea of running a startup.
Probably because many people who follow him on Twitter have no idea what running a startup is like, so they are imagining a completely different context. Business plans do make sense in other contexts.
Biz plans and Balance Sheets are more associated with a goal-oriented mindset.
PG's decision making obviously aligns more with a systems thinking. Founders are a major piece of a winning system to him, thus why he puts so much value in a 5-minute talk with them.
It's true that Cash Flow and Income Statement is used more often to assess financial goal achievement, but I don't think we can discard Balance Sheets.
In my interpretation, "Balance Sheet" is being loosely used in this context for Financial Statements in general.
I understand business plans, but balance sheets? It seems like you'd want to know the financial picture of a company. What else to you look at to, even at the most basic level, determine if the startup is going to be able to pay it's AWS bill and payroll that month?
I'm not sure what stage of company we're talking about here.
I'd argue that for ALL companies, in any industry, working capital--measured on the balance sheet--is a critical data point. That is, you may be booking revenue but not collecting cash from your customers (in an extreme case, the "revenue" may be fictitious, if the software doesn't work and the customer refuses to pay). And while you might have $x of cash on the balance sheet, you could also have a huge and looming payables balance because you're waiting to pay your bills until you're N days past due.
Also, revenue is just what you can actually book per the accounting standards, which has lots of specific tests for software companies. For most SaaS companies, a key number is also deferred revenue, a balance sheet item that records the difference between the cash you've collected (say, up-front for 12 months) and the remaining performance obligation to deliver software over the period. Or, if you have a big service component as part of your offering, a number to watch is the amount of revenue you've booked but not yet billed.
As an investor, I'd also be curious about the future obligations of the company that will consume cash, such as big leases, debt, and other liabilities (eg, legal judgements against the company).
Investors are free to ignore whatever information they'd like, I suppose. And a tiny two-person company probably has a very simple set of financial statements, if any. But those two founders have the ambition to build a big and successful company, I'd argue that understanding how to read financial statements with some mild degree of fluency just isn't that hard and is a very useful skill.
Why does it matter? You are changing the financial picture, probably by an order of magnitude or more. The question should be what the company will look like after the investment, not before.
And that two guys with laptops in a cheap apartment in mountain view might be a majority of the cases they see, but how will they know unless they see it? I've seen plenty of fake-it-til-you-make-it startups that immediately go out an sign a lease for AAA office space because they think they need a cool office before anybody will take them seriously. And that is a massive red flag to a VC...one that shows up on a balance sheet.
For an early stage company, nobody cares about your assets or your shit estimates of the value of your intellectual property or goodwill. But payables and receivables can definitely be a dealbreaker, and I've never known a single VC that would sign a check without an understanding of where the company, no matter how new, stands with them.
Financially, YC's decision made sense regardless of balance sheets or business plans: YC was investing at a $1.5M valuation (7% for $100k). By selecting a pair of smart engineers, the acquihire potential often exceeded the invested value.
Furthermore, their interviews cut to the underlying cause (scrappiness & maker mentality), which inherently eliminated certain effects (AAA office spaces) without ever seeing a balance sheet.
I raised $4M seed round on a SAFE from two well known multi $B fund and others. I don’t think anyone asked for a balance sheet. The company was 3mo old, so there wasn’t much (no revenue, hardly any expenses) and we didn’t even have an accountant yet.
There was some basic due diligence questions that us founders had to answer but very light still.
I’d assume most seed deals on SAFEs or even priced rounds are similar.
I've looked at several startup business plans and financial models. Not one has turned out to be even close to reality a few years later. At the early stages, the numbers are pure fantasy.
But a balance sheet is not a financial model. It shows how much money is in the bank, how much people owe the company - and how much the founders have loaned the company.
PG might not personally read balance sheets but if nobody checks them at all, it would be pretty weird.
Please don’t start comments in that patronizing way. This field is highly counterintuitive. It’s easy to feel smart by parroting the obvious-seeming positions whilst being utterly wrong.
To your point: when YC interviews companies, they are mostly very early stage and pre-revenue. What YC cares about is how much money they could make if everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. The current financial picture has minimal bearing on that. Obviously, to the extent that it does have a bearing, YC is smart/experienced enough to consider that. But again, you can glean this from a conversation better than an accounting document.
Even if you are an early stage company, you've still got to have something resembling the concept of a balance sheet, even if it's an excel spreadsheet with a list of two computers, a bank account, and an AWS bill that hasn't been paid yet. Maybe he's right that he personally has never read a balance sheet, but for literally any company that has already formed before the investment, they would be extremely foolish to overlook it.
I've personally seen A-rounds fall through because of balance sheets...turns out that when you promise hundreds of thousands of dollars in future services in exchange for a little bit of present cash flow, it can drastically affect your balance sheet and prospects for future investment.
I feel like this is something that’s really important to you for some reason, and as such you’re getting more wound up about it than necessary.
Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment.
The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, whereas one with incomplete bookkeeping but an incredible product and market opportunity is much more likely to be a good investment.
If that truly is the point he's trying to make, then he needs to say that. The message he actually conveyed is "these things aren't important". And while I'd agree with him on the business plan, telling prospective startup founders that they shouldn't ever worry about the balance sheet is pure negligence and he should be called out for it.
I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.
It could be interpreted in several ways, and you're choosing the worst possible way to argue against. And you're totally overlooking the fact that his career success since the very start of YC has hinged entirely on giving good advice to startups and focusing on the right things. You might think that after 17 years and countless successful companies, we might just think twice about presuming ignorance or malice in what he's saying.
The point of this tweet is just that balance sheets don't determine outcomes for early stage startups; good products and excited users do. Balance sheets matter later. Many of the teams PG invested in were not even incorporated when he invested in them.
He said _he_ is not going to look at it. That's all.
Tax authorities, YC's due diligence team and others will want to look at it. Anyone competent enough to start a company will know this.
Interpreting this as "pg says balance sheets don't matter at all to anyone" is.... weird. Repeatedly pushing this point is weirder. Maybe take a break from the internet for an hour or two
> What YC cares about is how much money they could make is everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term.
Isn't that what a business plan is? In some sense, it's a description of what your cash flow looks like in a couple of years.
By "business plan", he means a multi-page (usually at least 10 pages but often many many more) document with detailed predictions of what the company will do and how they will do it over the long term. That's what he's saying he doesn't ever read.
What he does read (or did, when he was still working), is the YC application form response, which is designed to glean the important information in a very succinct format.
If he likes what he reads, then he'd have a 5-10 minute conversation with the founders, and decide whether or not to invest based on that.
So, yes he wants to know what the founders' general plans are. That's very different from reading or recommending lengthy business plan documents.
We used to send lengthy, wordy updates to our investors, including YC/PG.
Then one time he replied, frustratedly, imploring us to just tell him how much money we were making, how much money we were spending, and how much we had in the bank.
How much you were making: seen on income statements as revenues and on balance sheets as accounts receivable.
How much you were spending: seen on income statements as expenses and on balance sheets in accounts payable.
How much cash in the bank: seen on cash flow statements as starting/ending cash position and seen on balance sheets as cash assets.
Paul graham didn't care about your poetry, he just wanted to see your income statement and balance sheet. He apparently just didn't want to call it that because then he couldn't get edgy contrarian soundbites in on Twitter.
You keep throwing barbs around but missing the important point.
He specifically didn’t want to see balance sheets or income statements as he knows they can be full of bullshit (FWIW my only university qualification is in accountancy, so I know what he means).
All he cared about the bank balance and whether it was going up or down, because that’s what indicates whether the company would survive or not.
He still cared most about users and how excited they were and how fast their number was growing.
Nobody's missing the "important point" because everybody who's been on Hacker News for five minutes has heard Paul Graham make that point. Indeed, people have made jokes about startup business plans for decades. Literally everyone knows that those things don't matter for super early stage startups.
The tweet, however, and very much like many of Paul Graham's latest essays and tweets, seems to purposely elude any context, make a very generic a debatable statement, and assert it with complete aplomb. For someone who just wrote an essay about putting ideas into words, if he can't see that this tweet will be interpreted as "balance sheets are useless", he needs to put in a bit more work.
That's what people react to, because the only conclusion is that since he doesn't want to tweet bromides, he must be trying to say something "controversial."
It's really bordering on trolling, which for a man with his age and reputation is kind of cringy, embarrassing, and frankly disappointing to people who enjoyed his past stuff.
"Literally everyone knows that those things don't matter for super early stage startups."
If literally everyone knows that then I don't need to be commenting, as my replies in this subthread are to someone insisting that balance sheets matter even before a company has a working product. Clearly they don't.
It seems the people "reacting" are imagining some deeper intention or elaborate plot or some complicated character weakness behind it all.
I just see him repeating what he's said for years: for early stage companies, you should just focus on making something people want.
Yes, the "character weakness" is a penchant for midwit /r/iamverysmart takes that are well below people's usual expectations. Surely we can agree the reaction is overblown, but as someone said, this is definitely eyeroll material.
I think perhaps the thing with PG is that people think the advice/wisdom he shares should be far more profound and complicated than it is.
As someone who has frequently made the mistake of overcomplicating things, I don't see anything wrong with repeatedly telling early stage founders, in all kinds of different ways, to just focus on building a product that people want.
But you just said that he actually didn't care much about that stuff, that he just wanted to know 3 specific datapoints. Datapoints that traditional financiers have gotten from traditional financial statements for centuries. Sure, there's lots of bullshit in financial statements. But there's also lots of bullshit in emails and slack messages. If someone is pumping up a balance sheet with dead receivables and check kiting and other forms of bullshittery, what's stopping them from saying the same thing over an email?
You're acting like PG is sitting on something profound here, but there's nothing profound in the slightest. Nobody has ever gotten rich writing financial statements, they get rich by creating value that didn't exist before. The financial statements don't get you customers, don't build revenues, don't develop products, don't manage your cash flows, and don't manage expenses. But they're still crucial because they communicate, in a fairly standardized way, all of the most important measurements of a businesses success...including the three things that you just said PG cared most about.
Telling people that financial statements don't matter is like telling a PhD-candidate astrophysicist that it doesn't matter that they can only communicate in Azerbaijani as long as their physics research is rock solid. It's already completely brain-dead obvious that the physics research quality is the most important thing...but it's a breach of duty to tell them that they don't need to know how to communicate it to their peers.
"You're acting like PG is sitting on something profound here"
I'm really not. You and others are acting is if he said something far more grandiose and potentially influential than he did.
He's just saying he focuses on teams and products when investing in super early stage companies. Finances matter only to the extent that the company can survive long enough to become sustainable. It's only then that GAAP accounting matters.
It's really not that big a deal. Seriously, which competent startup founder is going to make a decision to "never" take care of balance sheets for their entire company-operating career based solely on this tweet?
> Balance sheets or income statements as he knows they can be full of bullshit
Agreed.
However, I do have a question for you: what do you think can be more full of bullshit, an oral financial statement by the founder during a conversation, or his audited financial statements?
Yes, the notion that balance sheets and income statements don't tell the whole story and can be misleading is a fact. It's also a fact that they're useful tools, part of elementary due diligence, in combination with conversations with founders.
He asked financial questions that are in audited financial statements. Asking a founder and assuming it's all true is fine, but when making the investment he's surely having someone do due diligence on the finances to confirm. Yet he's denied that anyone else reads these documents for him, too.
I'm not sure how much you know about YC's history or PG's approach to investing, but in this and your other comment in this thread, you seem to be under a misapprehension.
The types of companies PG has normally invested in were barely even companies yet. They were small teams with an idea. Maybe a prototype. Maybe a few users. Often they were not incorporated as companies when he agreed to invest, or if they were, they weren't old enough to have audited financial statements. He didn't do "due diligence" as there was nothing to do diligence on; pretty much everything to know about the company was sitting in front of him.
Did he have to have a good bullshit detector? Yes, absolutely. But that was a skill he and the YC partners learned from doing thousands of interviews over many years. But also, it didn't matter if a few dud companies slipped through; they were investing such small amounts it didn't matter. That's the whole point of YC.
In another comment you wrote "at the scale of PG's investments...". That's what says to me you're misunderstanding things. PG's investments have always been very small. He just did many of them.
Sure, if you want to ignore the fact he was part of a C series funding round of $55 million, say just two months ago as an example, and believe he's solely done seed funding, be my guest.
If you want to ignore the fact he's been a director and has to sign off on balance sheets, also be my guest.
Sure, he makes some personal investments in later rounds of YC companies he particularly likes and believes in. I know that's the case with Rescale.
But again, his investment in Rescale isn't because he read their balance sheet and business plan; it's because he's been following their progress closely since YC invested in them in 2012. So he has at least 9 years of progress he's been following, via regular email updates and conversations with the founders. (You mention the $55M round as if it's evidence of the scale of investments he makes, but his share of that round was likely quite small. He really doesn't have a team to do due diligence on his personal investments. He just invests in people he personally believes in.)
As for being a director; he's explicitly avoided taking directorships in companies he's invested in, as he doesn't want to deal with the things that directors have to do, like read balance sheets. The only exception he made to that rule is Watsi, a non-profit - https://techcrunch.com/2013/04/19/paul-graham-watsi/
Please don't be patronising; I've been polite and respectful towards you and the others in this discussion, despite barbs being sent my way. I'm just trying to clarify misapprehensions as I have knowledge about the topic.
Perhaps he asks how much debt the company has and what the operating expenses are during the interview? You don't necessarily need to look at the balance sheet if you ask the right questions, I guess.
I read them to see how people think. You can learn most of the same by talking to them. He didn’t say he doesn’t read the P/L, i.e. budget.
Plus he has other ppl to read the balance sheets.
I did a $20MM A round with $BIG_FIRM after associate asked for business plan and parter said “they sent it to us already” meaning just the Excel model. Which was a relief since I never write a BP suitable for public consumption, only internal use. But the excel model included all our assumptions for headcount, cap ex, op ex, regulatory and revenue so really what use was a narrative?
A) I call BS on "never". It's one thing to not consider them, but another to say never ever. And what does that say if he's truly never even read one?
B) This isn't something to be proud of, and certainly not something others should emulate. Ignorance isn't what makes you successful. (likewise, neither is millions of data points).
c) Business plans and balance sheets are still very useful and applicable, and fair to say they aren't everything.
I think they're very useful and applicable. But they are basically irrelevant to evaluating startups for YC. The stage those startups are at, the exact amount of money they have at that given point in time doesn't really affect anything; YC also has a standard "this is the implied valuation we'll fund you at" rather than actually evaluating the details of "what does the business look like now". Similarly, the business plan is also less relevant for evaluating a startup for YC: knowing what the founders are building and how they see it is what's relevant, not the details of market analysis and monetization strategy.
We interviewed in late 2008. Then as now, it’s a conversation not a presentation. We were using PHP/Symfony then (changed to Python/Django later) but he didn’t ask anything about what language or platform we were using.
He did care a lot about the fact that we had users who were excited and unique insights into what was overlooked in the market.
Thanks for being the single datapoint of rationality in a sea of madness. It must be pretty surreal to read these comments as a founder. It certainly is for me, as someone who grew up with HN.
If Kim Kardashian started an ice creme company, she'd have a very good chance of succeeding.
Let's say she starts a few more businesses and they are successful. Is Kim someone we should take business advice from? She is one of the richest self-made women ever.
Kim would likely never have to make any ice creme either.
We need to stop treating people as unfallible. I used to idolize so many people when young. I still respect a lot, but now I understand that everyone is human and everyone has differing motivations, especially people in power.
Many people took a lot of advice from him, but nobody took the advice on Lisp. That was exactly what I realized in 2007, when I started reading his essays, that the opportunity here was to take excellent advice that nobody else was going to take.
Now, some people do learn Lisp on his recommendation, the thing is too only a very few--perhaps only one--will actually also be able to turn that into the other thing he speaks of at length, becoming a great founder. I would say the two things pull away from each other. And technologic fashions have pulled in a direction diametrically opposite to his vision until only three years ago, to the point he announced in an interview Viaweb's technology "was a lot more sophisticated than it needed to be."
Considering PGs track record if investing in very early stage start ups (better than anyone else in the world), you should probably consider your own arrogance here.
For what he is doing, biz plans and balance sheets are noise. Like testing the math skills of a real estate agent. Whether or not they failed in math probably won't impact the price they get for your house.
I think a more fitting analogy would be: The student that would read for hours upon hours, get good grades, only to brag / lie about not studying at all. "Easy test, I didn't even study. I guess I'm just really smart"
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.
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.
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'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.
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.
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.
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.
And both of them can be as ambiguous as anything. If anything, its impossible to predict who or what can become successful. Look at the historic interview of zuckerberg and his competitor: https://www.youtube.com/watch?v=cUNX3azkZyk
Competitor seems more outspoken, got more airtime, had already monetized yada yada but here we are.
Can’t read what he says as I was blocked years ago. I had expressed the mildest degree of cynicism one can possibly express in response to a straight up lie.
Not the op, I don't have any bans, and I'm not normally signed in to Twitter. But a side note on UX here...
When I land on this tweet the site takes long enough to annoy me before it loads the content (ie. everything below the "Log In / Sign Up" banner is delayed).
When I scroll down past the first few tweets the whole page disappears and is replaced with a nag screen implying I can't see more without signing up and/or downloading the app.
Pressing back once bumps me right out of the whole site (back to HN).
The behavior is non-deterministic. It worked this way the first few tries (with varying quantities of tweets loaded before the nag screen took over). Then I tried in Incognito mode and it worked, and after that going back to the site without Incognito seemed to fare better (did Twitter finally figure out I don't want to download their app?)
Seriously disheartened the majority puts up with this kind of horrible UX. As a content publisher, I don't want readers encountering friction preventing them from digesting my thoughts. As a consumer I want to see the content without hassles. The only party benefitted by their dark pattern is the platform.
Not putting users first = opportunity for someone else to do it better and eventually displace your business.
I used to respect Twitter engineers and was under the impression they cared about things like load times and user experience. Has the culture changed? Am I just getting old and grumpy?
What Twitter has been doing with blocking access without an account has reached the levels of being user hostile. It's like they're following the awful pinterest model.
I find the URL that they call just before they block access to be interesting:
Not something I’m going to dig into, sorry. People have every right to block others, without giving any explanation and I support that side of it completely.
It stood out from my pov because there’s very very few times I’ve noticed I’m blocked and I don’t generally mean to cause any offence. The most I would’ve been intending to cause was a little introspection.
You could probably just ask in some way (email maybe) to become unblocked. It's really easy to feel like you're under attack constantly with that many followers so I'm not surprised any of them go heavy on the blocking.
I wasn’t following him and don’t mind about that. I think people have every right to block people without that person reaching out on other ways — I’ve seen people demanding explanations etc and in those cases as in this case, you know why.
As a cautionary tale to others, in case they don’t want to be blocked by him, it might make them pause and consider before putting into writing any extremely mild criticism, on Twitter.
Ricky Gervais is reasonably well known for blocking people who criticize his work / attitude (by which I mean people who think he's a bad writer rather than blaspheming). He says he wants to be cancelled, but if he ever was he'd be making a teary apology within seconds.
I just logged in since ages to my twitter account and replied: “Wow you are trendy and cool Paul! Thank you for sharing…” [1]
I hope its not too much covered cynicism for him.. This is exactly the kind of stuff that degrades social media and particularly twitter. Just tweet something “smart”, “insigthful” and “prophetic”. Ohh, much wow (doge meme). Like someone here on this HN thread wrote, now the peasants are debating what the prophet said!
Does this, however, mean that no one in PG’s employ or in contract with read a balance sheet?
Because it makes complete sense that a balance sheet doesn’t tell you anything about how a business will do. But assuming it’s not falsified it helps identify red flags.
I suspect any due diligence almost certainly has someone reading a balance sheet.
Give it to an MBA to evaluate and they will come right back complaining about it. Guaranteed. And asking for a formal business plan with a detailed financial planning.
So, yes, in practice for someone who are familiar with startups it is a business plan. For everybody else it's just a generic description.
How in the world is a tweet about funding methodology even close to outrageous content that tip toes into banishment? You're losing the plot, friend.
It's simply a tweet to say he gets more value from talking directly with the founders about what he wants to know. Seems pretty reasonable to me, but I could see how a certain audience would say ** context and ignore to categorize it as "controversial edgy tweets". Easy to rile those people up though without challenging the algo.
In this case it isn't on the ban axis, but it's pretty obvious that Twitter likes edgy statements that are often in the "Ironic lie to make a point" (positive view) or "ironic lie shrouded in fog to let my avoid repercussions" (negative)
The whole point is that he didn't say it as you worded it, it's always about making a dramatic statement.
When you get into the "riling people up" part - like saying "Thanks I'll definitely listen to him now" in response to criticism of someones bona fides - it's very satisfying, but bad for the soul IMO. It subtly distorts how you view empathy because you're always arguing with a hyperreal snapshot of the other person (and them to you)
A business plan is literally the first thing you need to do when you have an idea for a business. The original idea needs to be developed so that you an others are able to see if it makes sense or is complete nonsense. That's a business plan. Whether the business is about tech or about something else doesn't make it any different in that regard.
Why would it be false ? It may be exaggerated (should read "I never use business plan or balance sheet to assess a startup") but not complete bullshit. Startups are not the same as traditional companies and the due diligence process reflects that. pg's arguments are reasonable in this context: business plans have info that is best discussed with the founders and balance sheets have little data that will be relevant in the future. Like it or not, startups business model is "exponential growth or die".
This really does not mean that you do not need a buesniess plan. You definitely need it. But in case of startups that should be only for you: not for investors. For investors you make a different version called pitch deck.
Honestly the value of a business plan is just writing it, because it focuses your ideas and forces you to consider things you may not have considered before. Who cares if paulg reads it? It's a tool for founders, not investors (apparently).
I have built a couple very successful SaaS businesses from scratch. 8 figure businesses. I have never in my life written a unit test or any kind of testing code in 20 years of professional software development.
I'd be curious to learn more about your experience, would you be open to a chat on sqwok.im? I'm somewhere in the middle with moderate unit tests and e2e for critical paths.
The idea that you need to throw unit testing out to be successful is kind of silly.
When you’re growing a very complex system (huge micro services pattern and dealing with sensitive data) you’ll be happy you have tests to save your ass.
Clearly the value of business being sold is not dependent on the application of standardized programming approaches to quality.
I mean, who would even think it is?
There are also alternative approaches to achieving quality, and there was that report/"study" circulating around that claimed Team Software Process actually beats most agile/extreme programming methodologies in at least one metric (or two: defect rate and time to completion, IIRC). Of course, none of the actual "agile" development teams do clear-cut TDD or Extreme Programming either, so you are never comparing apples-to-apples.
As a corollary, I'd also say that neither does the UI or UX matter that much to success, and there are simply a bunch of intangibles that can make or break a product.
But one "tangible" thing is that you've got to be serving some customers' needs, and need to continue to do that. And rare are businesses which have a need of "my button needs to be rounded and 10px away from the next button" or "my code needs to be unit tested": those are actually "my customer can get their work done through my product" and "it should rarely break".
None of this means that you should not invest in pretty/functional UI/UX or well-tested code. Just don't expect that to mean much in the grand scheme of things. They will affect your ability to hire top-level people once you are an established business, though.
(I personally am too attached to "high-quality" [as in well tested] code and would struggle to kick off a start-up for that reason only, even though ideas keep popping up :)
Product/market fit has more to do with functionality and the minimum quality design aesthetic required by the customer.
In our case, we disrupted a rather boring, traditional field. Our UI/UX was never great neither did we hire “frontend” people until post-acquisition but performance and data security were huge to our clients thus testing.
This is probably meant to be, partially, in comparison to Warren Buffet, who famously claims to invest based on reading of financial statements (and other documents) in search of “good businesses.” https://www.amazon.com/Warren-Buffett-Interpretation-Financi...
Suspect that both Buffet and Paul’s real methods rely heavily on instinct, context, relationship networks, combination potentials, personality and pattern matching which can’t be fully documented or quantified or imparted.
I remember having a conversation with my brother once about a protein powder being recommended by some bodybuilder or another. His response: “Yes, he says that he looks that way because of this powder, but what does he actually do?” Answer: Steroids.
Suspect the same is true of many great success stories in business.
Warren Buffet is not investing in startups. There is a big difference between an established business and a startup, insofar that established business has already demonstrated its potential. In startup potential is unknown, yet it's all that it has to offer
they fundamentally do different things. VC investors make money when a company goes public or is sold off, it's effectively a Keynesian beauty contest. Buffett tries to find companies that are long term viable.
Or all sorts of things you cannot publicly admit to without undermining your reputation.
For example, say that you have a resume packed with awards. The secret to getting nominations for awards and scholarships is usually to write it yourself and send it to a friend/teacher/colleague for signature, not waiting around hoping that someone deems you worthy.
As most wait for someone to deem them worthy, many awards are less competitive than they appear to be.
But you could never admit to this, as it would devalue you in the eyes of others.
Warren's conversations are also short though. The difference is he invests in mature companies. He studies their books, then asks the CEO a few questions. If he likes the answers he invests.
It's rather different from investing in a startup. Plus all of YC's startups presumably receive some boost from exposure on HN and reddit.
PG is a very, very bright guy and has left an outsized mark on the first two decades of 21st century consumer tech: his legacy is secure. I'll even grant that pre-A business plan decks are relatively low signal based on what I've seen.
But to just toss out the idea that balance sheets and discounted cash flows should have any bearing whatsoever on the value of an equity is so friggin Bitcoin.
I've been reading a few Lean Startup books recently, and this morning I went to the local government's website to see what advice they could give to register and start a business...
From all the Victoria Government's main business website and to all of their small business grant websites, all I could find was advice on how to write a business plan. This was in complete contrast to all the Lean books that not once talked about business plans but instead focused on customer development.
... maybe it's no wonder 9/10 of new businesses fail if they start with planning documents that take weeks vs "getting out of the building".
I think that is an important fact to know considering the confusion in this thread.
There are people commenting that pg surely can't be a genius because this or that he engages in isn't ethical (to them).
But that's the thing, the IQ says absolutely nothing about ones ethical responsibility or the amount of empathy one has.
It is purely measuring "logical thinking ability". Things like "continue this sequence", "recognize a pattern", etc.
I also often see this dangerous assumption that ones political opponents or everyone with a different opinion than the one which seems most rational to ones own must be "stupid". In reality, the problem is that we focus on something as (arguably) unimportant as the IQ, which measures only something very narrow.
Another misconception about IQ is that those who are more poor or have less favourable job positions must have a lower IQ. To give just one counter example to that, very often, people who have some sort of handicap (ASD, ADHD, etc.) are also "gifted", have a high IQ, are good when it comes to logical thinking. But their handicaps still make their lives more difficult in general, so they face more adversity than someone who is "normal".
Sorry that i wrote a wall of text, was just thinking out loud.
In my personal opinion, the IQ is already a little dangerous, because it assigns a "value" to a human life, but that is an entirely different discussion.
People considering him a genius as opposed to a narcissist who accidentally got rich likely fuels his need to drop nuggets of "wisdom" to the peasants like this.
His essays are usually a big pile of “focus on the important things and add value or whatever”-type platitudes. It’s funny that each one has been proofread and revised based on comments from the Who-is-Who in SV, a typical Emperor and His New Clothes situation.
To be fair though, 99% of wisdom books from successful people are like this.
Calling it platitudes is harsh. The Airbnb founders have repeatedly said that their company was going no where but for Paul Graham's mentorship and the series of advice he gave them, amidst an economy in dire recession.
And btw, before YC, the whos-who of SV were a closed-knit, exclusive group. You underestimate the very radical nature of YC when they started in 2004.
I'm no particular fan of pg and for sure I'm not all that knowledgeable when it comes to VC, but it is my understanding that at the very early stages of investment pitch-decks are pretty much useless, it surprised me when I saw all those people attacking pg for this particular issue.
That's not what most people mean when they say pitch deck, IMO. Most people are talking about a multiple-slide PowerPoint, covering a bunch of standard topics (team, market, etc).
I don't find that particularly hard to believe. Reading a pitch deck is like reading presentation slides - you can't really know what the author had in mind unless it's really good, and you tend to fill in the blanks with your own biases. That makes reading most decks a bit redundant. It's probably better just to talk to the founders and actually see their pitch.
Maybe he’s read one for Viaweb or to help someone pitch? But I believe it in the context of PG as an investor, similar to how Warren Buffett could say he’s “never read” an investment banker’s report.
There's an obsession with pitch decks and whitepapers in some communities that borders on form over function.
Imagine showcasing a complete Dapp with a tutorial, basically ready for launch excluding some UX changes, and then getting questions about, "What's your roadmap?" or, "Where's your whitepaper?"
I appreciate his perspective here. Words must mean action. Talk is cheap.
That’s why there are multiple people on a company board, but it’s also telling how narrative-driven rather than economics-driven the startup world is. It doesn’t matter if a company is hemorrhaging money as long as it fits in a good storyline.
That board oversight in silicon valley is largely a joke is no surprise, particularly because it is a joke everywhere else too. Still if this isn't just an inflammatory statement, which it probably is, it's showing how negligent you can be for very long if only you talk a good talk.
I agree he makes his point sharply, but I suspect he's probably asked weekly where he got his MBA, so mentioning that he can't even read a balance sheet is a fun way to show that boards aren't always a bunch of soulless accountants with MBAs; that in the case of YC, those aren't the critical skills; but instead being able to quickly assess an idea and the people around it is what matters.
That’s a worse confession. I’m sure PG can read an income statement just fine and likely used his to sell ViaWeb.
Looking at things like Uber, though, they’re coming up with ways of making these basic reports harder to read critically. It reminds me of the pre-SEC financials covered in “Security Analysis” by Benjamin Graham. Companies claimed all sorts of things, especially treating one-time events as operating revenue, and toed the line of fraud.
To be fair, I once heard Richard Branson on the radio telling a story that he was pretty far along in building his empire when he had to be taught the difference between gross revenue and operating profit. I found it hard to believe but there’s other interesting facts out there, like David Boies is dyslexic and prefers not to read.
It’s not really a confession because it takes very little effort or knowledge to read either, and he is obviously a smart and hard working person. Any MBA student can read these; obviously Sam could too.
What he is saying is that he doesn’t read them (i.e. chooses not to), and the implication is that he does not need to.
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[ 3.0 ms ] story [ 164 ms ] threadI mean his article on "The Equity Equation"[1] seems to be written by someone who has read a balance sheet.
[1]http://paulgraham.com/equity.html
I don't think a "business plan" is literally just any words, written down, that are related to "business".
It is likely a specific and defined thing.
>What is your company going to make?
This question is asking what your business is planning on making.
Edit: This comment includes more relevant questions https://news.ycombinator.com/item?id=30319753
afaik there is no legislation defining a business plan. It might say business plan at the top, it might be a whitepaper, it might be a tweet.
Make money, lots of money
There we go, a business plan, its not a good business plan, nor a traditional one nor even a very comeplete one, but a plan nevertheless.
Biz plans and Balance Sheets are more associated with a goal-oriented mindset.
PG's decision making obviously aligns more with a systems thinking. Founders are a major piece of a winning system to him, thus why he puts so much value in a 5-minute talk with them.
[1] https://medium.com/@flaviorump/systems-vs-goals-a67fcd937370
Business plans are vague, balance sheets are very concrete.
In my interpretation, "Balance Sheet" is being loosely used in this context for Financial Statements in general.
If my software company's treasury gains were realized it would make up almost a third of our revenue.
Though I suppose a case could be made that this would make us a holding company with a cash-flowing SaaS, and not actually a "software company"
I'd argue that for ALL companies, in any industry, working capital--measured on the balance sheet--is a critical data point. That is, you may be booking revenue but not collecting cash from your customers (in an extreme case, the "revenue" may be fictitious, if the software doesn't work and the customer refuses to pay). And while you might have $x of cash on the balance sheet, you could also have a huge and looming payables balance because you're waiting to pay your bills until you're N days past due.
Also, revenue is just what you can actually book per the accounting standards, which has lots of specific tests for software companies. For most SaaS companies, a key number is also deferred revenue, a balance sheet item that records the difference between the cash you've collected (say, up-front for 12 months) and the remaining performance obligation to deliver software over the period. Or, if you have a big service component as part of your offering, a number to watch is the amount of revenue you've booked but not yet billed.
As an investor, I'd also be curious about the future obligations of the company that will consume cash, such as big leases, debt, and other liabilities (eg, legal judgements against the company).
Investors are free to ignore whatever information they'd like, I suppose. And a tiny two-person company probably has a very simple set of financial statements, if any. But those two founders have the ambition to build a big and successful company, I'd argue that understanding how to read financial statements with some mild degree of fluency just isn't that hard and is a very useful skill.
For an early stage company, nobody cares about your assets or your shit estimates of the value of your intellectual property or goodwill. But payables and receivables can definitely be a dealbreaker, and I've never known a single VC that would sign a check without an understanding of where the company, no matter how new, stands with them.
Furthermore, their interviews cut to the underlying cause (scrappiness & maker mentality), which inherently eliminated certain effects (AAA office spaces) without ever seeing a balance sheet.
There was some basic due diligence questions that us founders had to answer but very light still.
I’d assume most seed deals on SAFEs or even priced rounds are similar.
PG might not personally read balance sheets but if nobody checks them at all, it would be pretty weird.
To your point: when YC interviews companies, they are mostly very early stage and pre-revenue. What YC cares about is how much money they could make if everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. The current financial picture has minimal bearing on that. Obviously, to the extent that it does have a bearing, YC is smart/experienced enough to consider that. But again, you can glean this from a conversation better than an accounting document.
I've personally seen A-rounds fall through because of balance sheets...turns out that when you promise hundreds of thousands of dollars in future services in exchange for a little bit of present cash flow, it can drastically affect your balance sheet and prospects for future investment.
Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment.
The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, whereas one with incomplete bookkeeping but an incredible product and market opportunity is much more likely to be a good investment.
I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.
He said nothing of the sort.
The point of this tweet is just that balance sheets don't determine outcomes for early stage startups; good products and excited users do. Balance sheets matter later. Many of the teams PG invested in were not even incorporated when he invested in them.
Tax authorities, YC's due diligence team and others will want to look at it. Anyone competent enough to start a company will know this.
Interpreting this as "pg says balance sheets don't matter at all to anyone" is.... weird. Repeatedly pushing this point is weirder. Maybe take a break from the internet for an hour or two
Isn't that what a business plan is? In some sense, it's a description of what your cash flow looks like in a couple of years.
What he does read (or did, when he was still working), is the YC application form response, which is designed to glean the important information in a very succinct format.
If he likes what he reads, then he'd have a 5-10 minute conversation with the founders, and decide whether or not to invest based on that.
So, yes he wants to know what the founders' general plans are. That's very different from reading or recommending lengthy business plan documents.
Then one time he replied, frustratedly, imploring us to just tell him how much money we were making, how much money we were spending, and how much we had in the bank.
He later put that concept into this essay http://www.paulgraham.com/aord.html
How much you were spending: seen on income statements as expenses and on balance sheets in accounts payable.
How much cash in the bank: seen on cash flow statements as starting/ending cash position and seen on balance sheets as cash assets.
Paul graham didn't care about your poetry, he just wanted to see your income statement and balance sheet. He apparently just didn't want to call it that because then he couldn't get edgy contrarian soundbites in on Twitter.
He specifically didn’t want to see balance sheets or income statements as he knows they can be full of bullshit (FWIW my only university qualification is in accountancy, so I know what he means).
All he cared about the bank balance and whether it was going up or down, because that’s what indicates whether the company would survive or not.
He still cared most about users and how excited they were and how fast their number was growing.
Nobody's missing the "important point" because everybody who's been on Hacker News for five minutes has heard Paul Graham make that point. Indeed, people have made jokes about startup business plans for decades. Literally everyone knows that those things don't matter for super early stage startups.
The tweet, however, and very much like many of Paul Graham's latest essays and tweets, seems to purposely elude any context, make a very generic a debatable statement, and assert it with complete aplomb. For someone who just wrote an essay about putting ideas into words, if he can't see that this tweet will be interpreted as "balance sheets are useless", he needs to put in a bit more work.
That's what people react to, because the only conclusion is that since he doesn't want to tweet bromides, he must be trying to say something "controversial."
It's really bordering on trolling, which for a man with his age and reputation is kind of cringy, embarrassing, and frankly disappointing to people who enjoyed his past stuff.
If literally everyone knows that then I don't need to be commenting, as my replies in this subthread are to someone insisting that balance sheets matter even before a company has a working product. Clearly they don't.
It seems the people "reacting" are imagining some deeper intention or elaborate plot or some complicated character weakness behind it all.
I just see him repeating what he's said for years: for early stage companies, you should just focus on making something people want.
As someone who has frequently made the mistake of overcomplicating things, I don't see anything wrong with repeatedly telling early stage founders, in all kinds of different ways, to just focus on building a product that people want.
You're acting like PG is sitting on something profound here, but there's nothing profound in the slightest. Nobody has ever gotten rich writing financial statements, they get rich by creating value that didn't exist before. The financial statements don't get you customers, don't build revenues, don't develop products, don't manage your cash flows, and don't manage expenses. But they're still crucial because they communicate, in a fairly standardized way, all of the most important measurements of a businesses success...including the three things that you just said PG cared most about.
Telling people that financial statements don't matter is like telling a PhD-candidate astrophysicist that it doesn't matter that they can only communicate in Azerbaijani as long as their physics research is rock solid. It's already completely brain-dead obvious that the physics research quality is the most important thing...but it's a breach of duty to tell them that they don't need to know how to communicate it to their peers.
I'm really not. You and others are acting is if he said something far more grandiose and potentially influential than he did.
He's just saying he focuses on teams and products when investing in super early stage companies. Finances matter only to the extent that the company can survive long enough to become sustainable. It's only then that GAAP accounting matters.
It's really not that big a deal. Seriously, which competent startup founder is going to make a decision to "never" take care of balance sheets for their entire company-operating career based solely on this tweet?
Agreed.
However, I do have a question for you: what do you think can be more full of bullshit, an oral financial statement by the founder during a conversation, or his audited financial statements?
Yes, the notion that balance sheets and income statements don't tell the whole story and can be misleading is a fact. It's also a fact that they're useful tools, part of elementary due diligence, in combination with conversations with founders.
He asked financial questions that are in audited financial statements. Asking a founder and assuming it's all true is fine, but when making the investment he's surely having someone do due diligence on the finances to confirm. Yet he's denied that anyone else reads these documents for him, too.
The types of companies PG has normally invested in were barely even companies yet. They were small teams with an idea. Maybe a prototype. Maybe a few users. Often they were not incorporated as companies when he agreed to invest, or if they were, they weren't old enough to have audited financial statements. He didn't do "due diligence" as there was nothing to do diligence on; pretty much everything to know about the company was sitting in front of him.
Did he have to have a good bullshit detector? Yes, absolutely. But that was a skill he and the YC partners learned from doing thousands of interviews over many years. But also, it didn't matter if a few dud companies slipped through; they were investing such small amounts it didn't matter. That's the whole point of YC.
In another comment you wrote "at the scale of PG's investments...". That's what says to me you're misunderstanding things. PG's investments have always been very small. He just did many of them.
If you want to ignore the fact he's been a director and has to sign off on balance sheets, also be my guest.
But again, his investment in Rescale isn't because he read their balance sheet and business plan; it's because he's been following their progress closely since YC invested in them in 2012. So he has at least 9 years of progress he's been following, via regular email updates and conversations with the founders. (You mention the $55M round as if it's evidence of the scale of investments he makes, but his share of that round was likely quite small. He really doesn't have a team to do due diligence on his personal investments. He just invests in people he personally believes in.)
As for being a director; he's explicitly avoided taking directorships in companies he's invested in, as he doesn't want to deal with the things that directors have to do, like read balance sheets. The only exception he made to that rule is Watsi, a non-profit - https://techcrunch.com/2013/04/19/paul-graham-watsi/
Please don't be patronising; I've been polite and respectful towards you and the others in this discussion, despite barbs being sent my way. I'm just trying to clarify misapprehensions as I have knowledge about the topic.
Plus he has other ppl to read the balance sheets.
I did a $20MM A round with $BIG_FIRM after associate asked for business plan and parter said “they sent it to us already” meaning just the Excel model. Which was a relief since I never write a BP suitable for public consumption, only internal use. But the excel model included all our assumptions for headcount, cap ex, op ex, regulatory and revenue so really what use was a narrative?
(It worked out for them)
B) This isn't something to be proud of, and certainly not something others should emulate. Ignorance isn't what makes you successful. (likewise, neither is millions of data points).
c) Business plans and balance sheets are still very useful and applicable, and fair to say they aren't everything.
How?
Founder: So we’re doing this rad new architecture-
Paulg: In Lisp. It’s in Lisp, right?
Founder: Huh, fuck no, it’s 2022, dude-
Paulg: (frowning) Out. Thumbs down.
He did care a lot about the fact that we had users who were excited and unique insights into what was overlooked in the market.
Let's say she starts a few more businesses and they are successful. Is Kim someone we should take business advice from? She is one of the richest self-made women ever.
Kim would likely never have to make any ice creme either.
Here's a pg speech. Make your own conclusions:
https://www.youtube.com/watch?v=f4_14pZlJBs
Many people took a lot of advice from him, but nobody took the advice on Lisp. That was exactly what I realized in 2007, when I started reading his essays, that the opportunity here was to take excellent advice that nobody else was going to take.
Now, some people do learn Lisp on his recommendation, the thing is too only a very few--perhaps only one--will actually also be able to turn that into the other thing he speaks of at length, becoming a great founder. I would say the two things pull away from each other. And technologic fashions have pulled in a direction diametrically opposite to his vision until only three years ago, to the point he announced in an interview Viaweb's technology "was a lot more sophisticated than it needed to be."
like bragging about failing at math and then succeeding hugely at something math-related
The things that matter at this stage are:
Founders and general market size. So sure, ignoring the noise of those two makes sense.
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.
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.
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.
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.
Saying "I don't read those documents anymore" would have made sense too.
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.
>> 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.
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.
And both of them can be as ambiguous as anything. If anything, its impossible to predict who or what can become successful. Look at the historic interview of zuckerberg and his competitor: https://www.youtube.com/watch?v=cUNX3azkZyk Competitor seems more outspoken, got more airtime, had already monetized yada yada but here we are.
When I land on this tweet the site takes long enough to annoy me before it loads the content (ie. everything below the "Log In / Sign Up" banner is delayed).
When I scroll down past the first few tweets the whole page disappears and is replaced with a nag screen implying I can't see more without signing up and/or downloading the app.
Pressing back once bumps me right out of the whole site (back to HN).
The behavior is non-deterministic. It worked this way the first few tries (with varying quantities of tweets loaded before the nag screen took over). Then I tried in Incognito mode and it worked, and after that going back to the site without Incognito seemed to fare better (did Twitter finally figure out I don't want to download their app?)
Seriously disheartened the majority puts up with this kind of horrible UX. As a content publisher, I don't want readers encountering friction preventing them from digesting my thoughts. As a consumer I want to see the content without hassles. The only party benefitted by their dark pattern is the platform.
Not putting users first = opportunity for someone else to do it better and eventually displace your business.
I used to respect Twitter engineers and was under the impression they cared about things like load times and user experience. Has the culture changed? Am I just getting old and grumpy?
I find the URL that they call just before they block access to be interesting:
https://twitter.com/i/api/1.1/onboarding/fatigue.json
Onboarding Fatigue
It stood out from my pov because there’s very very few times I’ve noticed I’m blocked and I don’t generally mean to cause any offence. The most I would’ve been intending to cause was a little introspection.
Is that a normal thing, to be blocked more than once on Twitter?
There are sometimes quite wide blocklists - I know I was at some point on a blocklist composed of anyone who had ever followed a particular person.
I was already aware, from things he’d said about me, that he was not a person I would ever do business with.
I hope its not too much covered cynicism for him.. This is exactly the kind of stuff that degrades social media and particularly twitter. Just tweet something “smart”, “insigthful” and “prophetic”. Ohh, much wow (doge meme). Like someone here on this HN thread wrote, now the peasants are debating what the prophet said!
Ehh… will go have breakfast.
https://twitter.com/iamsanteri/status/1492779569102966788?s=...
obviously, at the early stage growth will matter more than the balance sheet
Because it makes complete sense that a balance sheet doesn’t tell you anything about how a business will do. But assuming it’s not falsified it helps identify red flags.
I suspect any due diligence almost certainly has someone reading a balance sheet.
Give it to an MBA to evaluate and they will come right back complaining about it. Guaranteed. And asking for a formal business plan with a detailed financial planning.
So, yes, in practice for someone who are familiar with startups it is a business plan. For everybody else it's just a generic description.
It's simply a tweet to say he gets more value from talking directly with the founders about what he wants to know. Seems pretty reasonable to me, but I could see how a certain audience would say ** context and ignore to categorize it as "controversial edgy tweets". Easy to rile those people up though without challenging the algo.
The whole point is that he didn't say it as you worded it, it's always about making a dramatic statement.
When you get into the "riling people up" part - like saying "Thanks I'll definitely listen to him now" in response to criticism of someones bona fides - it's very satisfying, but bad for the soul IMO. It subtly distorts how you view empathy because you're always arguing with a hyperreal snapshot of the other person (and them to you)
So basically it's all fluff as he mentioned it in a later tweet.
https://news.ycombinator.com/newsguidelines.html
I'd be curious to learn more about your experience, would you be open to a chat on sqwok.im? I'm somewhere in the middle with moderate unit tests and e2e for critical paths.
The idea that you need to throw unit testing out to be successful is kind of silly.
When you’re growing a very complex system (huge micro services pattern and dealing with sensitive data) you’ll be happy you have tests to save your ass.
…speaking from experience.
I mean, who would even think it is?
There are also alternative approaches to achieving quality, and there was that report/"study" circulating around that claimed Team Software Process actually beats most agile/extreme programming methodologies in at least one metric (or two: defect rate and time to completion, IIRC). Of course, none of the actual "agile" development teams do clear-cut TDD or Extreme Programming either, so you are never comparing apples-to-apples.
As a corollary, I'd also say that neither does the UI or UX matter that much to success, and there are simply a bunch of intangibles that can make or break a product.
But one "tangible" thing is that you've got to be serving some customers' needs, and need to continue to do that. And rare are businesses which have a need of "my button needs to be rounded and 10px away from the next button" or "my code needs to be unit tested": those are actually "my customer can get their work done through my product" and "it should rarely break".
None of this means that you should not invest in pretty/functional UI/UX or well-tested code. Just don't expect that to mean much in the grand scheme of things. They will affect your ability to hire top-level people once you are an established business, though.
(I personally am too attached to "high-quality" [as in well tested] code and would struggle to kick off a start-up for that reason only, even though ideas keep popping up :)
Product/market fit has more to do with functionality and the minimum quality design aesthetic required by the customer.
In our case, we disrupted a rather boring, traditional field. Our UI/UX was never great neither did we hire “frontend” people until post-acquisition but performance and data security were huge to our clients thus testing.
Suspect that both Buffet and Paul’s real methods rely heavily on instinct, context, relationship networks, combination potentials, personality and pattern matching which can’t be fully documented or quantified or imparted.
I remember having a conversation with my brother once about a protein powder being recommended by some bodybuilder or another. His response: “Yes, he says that he looks that way because of this powder, but what does he actually do?” Answer: Steroids.
Suspect the same is true of many great success stories in business.
For example, say that you have a resume packed with awards. The secret to getting nominations for awards and scholarships is usually to write it yourself and send it to a friend/teacher/colleague for signature, not waiting around hoping that someone deems you worthy.
As most wait for someone to deem them worthy, many awards are less competitive than they appear to be.
But you could never admit to this, as it would devalue you in the eyes of others.
It's rather different from investing in a startup. Plus all of YC's startups presumably receive some boost from exposure on HN and reddit.
But to just toss out the idea that balance sheets and discounted cash flows should have any bearing whatsoever on the value of an equity is so friggin Bitcoin.
From all the Victoria Government's main business website and to all of their small business grant websites, all I could find was advice on how to write a business plan. This was in complete contrast to all the Lean books that not once talked about business plans but instead focused on customer development.
... maybe it's no wonder 9/10 of new businesses fail if they start with planning documents that take weeks vs "getting out of the building".
What an eye roll.
But that's the thing, the IQ says absolutely nothing about ones ethical responsibility or the amount of empathy one has.
It is purely measuring "logical thinking ability". Things like "continue this sequence", "recognize a pattern", etc.
I also often see this dangerous assumption that ones political opponents or everyone with a different opinion than the one which seems most rational to ones own must be "stupid". In reality, the problem is that we focus on something as (arguably) unimportant as the IQ, which measures only something very narrow.
Another misconception about IQ is that those who are more poor or have less favourable job positions must have a lower IQ. To give just one counter example to that, very often, people who have some sort of handicap (ASD, ADHD, etc.) are also "gifted", have a high IQ, are good when it comes to logical thinking. But their handicaps still make their lives more difficult in general, so they face more adversity than someone who is "normal".
Sorry that i wrote a wall of text, was just thinking out loud.
In my personal opinion, the IQ is already a little dangerous, because it assigns a "value" to a human life, but that is an entirely different discussion.
To be fair though, 99% of wisdom books from successful people are like this.
And btw, before YC, the whos-who of SV were a closed-knit, exclusive group. You underestimate the very radical nature of YC when they started in 2004.
Imagine showcasing a complete Dapp with a tutorial, basically ready for launch excluding some UX changes, and then getting questions about, "What's your roadmap?" or, "Where's your whitepaper?"
I appreciate his perspective here. Words must mean action. Talk is cheap.
> I probably shouldn't admit this--I'm on the Board of a public company: I can't read a balance sheet or income statement or anything like that.
[1] https://www.youtube.com/watch?v=JAYXUgNHHc4&t=1656s
Looking at things like Uber, though, they’re coming up with ways of making these basic reports harder to read critically. It reminds me of the pre-SEC financials covered in “Security Analysis” by Benjamin Graham. Companies claimed all sorts of things, especially treating one-time events as operating revenue, and toed the line of fraud.
What he is saying is that he doesn’t read them (i.e. chooses not to), and the implication is that he does not need to.