Successful businesses have a business plan

Lately I’ve seen quite a few articles (including this one sent to me by James Cherkoff) talking about how the most successful startups and entrepreneurs – tech startups in particular – didn’t have a business plan. Part of the popularity of this idea seems to be coming from certain VC’s who – in a perfectly reasonable bit of marketing – are trying to look “a bit maverick” in order to appeal to young startups.

However, every example I’ve seen so far proves to me the opposite; that a business plan is in fact an essential ingredient in the success of a business.

Take the example of Edison from Marc Andreessen’s blog – by the end of the article you see clear examples that Edison’s got a handle on:

• building a team: he might have started on his own, but eventually had a number of people working with him (one of which is named in the article).
• building a business: his company appears to have an income from the telegraph industry.
• appreciation of resource planning: he does not divert all resources to the phonograph the moment he comes up with it because at first it is not clear to him if it is worth it.
• cash flow planning: he understands when money is coming in, and when he needs to save

Now I doubt for one minute that Edison actually wrote his plan down – and if he did it was probably on the back of a napkin (the equivalent of the 10 PowerPoint plan) – but it sounds to me like he did in fact have some sort of plan.

What all these entrepreneurs have done (Edison, Ellison, Gates) is build strong teams that enable them to react to forced/serendipitous changes. Once they reacted, the “business plan” is adjusted and off they go on the new path. As many people have said, the reason investors are so interested in the “team” is that a good team is capable of reacting to such opportunities.
So in the end I’m with Tim Berry and Guy Kawasaki and others on this one: writing a business plan is a good thing to engage the team and enable transparency and clarity in the figures/assumptions. However, for a startup that probably ought not to be much more than can be written on a napkin – after all it’s much more useful (not to mention more fun) actually getting the customers now rather than spending time and money trying to estimate exactly how many you might get at Year 3.

Social Media and the Mainstream

After a rather nice barbeque at a friend’s house today, I thought I’d take a small diversion on the way home to snap this bit of local graffiti:

The site it refers to is not my cup of tea, but the statement it makes is really strong: “I’d like you to know more about me, and this is how you can”.

It’s great that Myspace, Facebook and the rest are so mainstream now that an unsigned rapper can reasonably assume that passers-by will know what it means, and what’s more he can do so for free (I’m assuming he owns the fence of course).

For me, this is important, because as the owner of a startup I need to be certain that the products we develop are of value to people.  I am glad that “Chalk” is able to, like countless others, find his voice through the sorts of products in which we are involved.

Musicianship v. Entrepreurship

Last year I realized that there was three things about being a corporate slave that didn’t sit well with me:

1. There’s a poor locus of power and rewards in a pyramid-structured large corporation.
2. I’d never have enough money to buy a house and a recording studio.
3. Retiring early to do more interesting things probably wouldn’t be an option.

I figured that to solve all these (plus a dozen other things, broadly-themed around the words “power”, “flexibility” and “rewards”), I had to start [another] business, and that’s how BrainBakery was formed.

However, one thing I thought I’d lament is the loss of my free time to continue my music.  But, one year on, I don’t find I’ve missed it quite as much as I thought I would.  This surprises me, but I think I know why – it’s because entrepreneurship, for me, satisfies exactly the same things I like about playing/writing music, namely:

• Creating something new/unique
• Creating something about which people have opinions and ideas
• Building a band/team
• Socializing/networking
• Collaborating with other teams
• Building success, recognition and fame
• Having people interested in what your doing

And both of them give me aching fingers at the end of the day.

Monetizing Facebook

I read this article about Bay Partners launching a Facebook app fund.  What’s most interesting for me is not the article itself, but the comments.  It seems to me that not one of the 50-something people who’ve responded have any idea how to monetize Facebook beyond PPC – which as many people have discovered isn’t exactly an ideal platform for it.

There’s developers out there like this one who are actually going round telling people they won’t develop Facebook apps.  Well, good luck to them, but it looks to me these guys are going to be kicking themselves down the line: this is the democratization of gold-star marketing data!  It is not, IMHO, an opportunity to miss.

The Power of Blog Friends

Obviously I can’t talk about BlogFriends – the purpose of this post is to check out whether or not the filtering algorithm is exactly how we’d like it. This is why this post randomly contains the words “startups”, “VC”, “venture capital”, “tech”, “Web2.0″, “investment”, “entrepreneur”, “iPhone”, “insider”, “Luke Razzell”, “identity” and other things I’ll add later.

If you’ve arrived at this post through the BlogFriends Alpha, please add a comment here to tell me.  Thanks

Alpha, alpha; testing, testing

Between the 9pm BST on Thursday the 12th July, and roughly one week later, the only way you could have ended up at this blog is through the alpha testing of the awesome Facebook app Blog Friends.

If that’s the case, then let me take the opportunity to say “thank you” and I hope you enjoy the app. We, BrainBakery Ltd., are the development company Luke Razzell hired to develop BlogFriends into the software you see today.