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Marc Andreessen’s Partly Wrong on Business Plans

This morning Marc Andreessen (PMARCA) blogs on “Why a startup’s initial business plan doesn’t matter that much.” In his post he argues primarily that (a) on a fundamental level, you can’t know how well your idea will do, and (b) executing well will require a bunch of changes during that opening period anyway.

Perhaps the problem isn’t business plans in general, but rather the type of plan. Certainly, a static, rigid document full of income statements and cash position projections has less relevance in today’s startup environment. However: there is a lot of thinking that one should do before launching a product, and a business plan is a good place to capture that thinking.

One one hand, there’s fundamentals: segmentation, a marketing plan of some kind (even if its the absence of a formal plan), etc. Then, there’s what we might consider “Business Plan 2.0″ features: contingencies and forward thinking strategizing. What if: your product takes off, such as in the case of iLike? What if: It doesn’t, and you have to switch target markets entirely?

Andreessen positions these what-if’s as justification for abandoning business plans entirely; IMHO they’re all the more reason to have a modern business plan. Well structured, forward looking, flexible thinking, and scenario analysis can only assist a startup, however shaky their initial concept may be.

UPDATE: Tim Berry questions Andreessen as well.

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