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Comment by mauricio | Hacker News Reader

Not creating a business plan and making up prices out of thin air is definitely the most fun and least time consuming. I think DHH nails that aspect of it.

But, how feasible is it to start companies this way? Sure it may have worked well for them and it may even work incredibly well for your business. As hackers though, we know that just because something worked once, twice or 500 times doesn't mean it's the truth or will always work.

It's best to be prudent wherever possible and do some research into your market and pricing strategies. I'm not saying go off and create 5 year business plans, I'm just saying it definitely deserves some of your time cycles.

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Why? Is there an identifiable increase to your chance of success if you have a business plan over not having one?

In the traditional business, I suppose the answer would probably be yes (although I haven't really seen anything that supports this). Working in tech however, is much more of a crapshoot. Most of the time, you can't really research a market you're creating. This alone makes the whole process a giant guessing game.

If forming a business plan is just a series of guesses, you'd be better off moving straight into the part where you're actively testing those guesses with a workable product.

I think you make the assumption that the tech you are creating here is inexpensive. If you can make your idea with $5k and a few months time, go for it. Make up prices and make up numbers.

What if your new product, that has never been done before, will costs tens of millions? Surely those products have existed, and yet are still somehow able to do the prudent 'guesswork' to convince venture capitalists.

What if your new product, that has never been done before, will costs tens of millions?

Bluntly, my opinion here would be that this isn't a viable option for a startup, unless they have access to easy angel capital or can self fund to that amount.

Developing an idea with that price tag is an is a risk orders of magnitudes higher than a low cost startup. Having a hit is hard enough, but you'd need a run-away smashing super hit to even break even.

Even if you choose that path, there are still aspects of the idea that can be harnessed and build at much lower costs to begin income generation to help fund the remainder of the idea.

Investing money of that amount into an idea that has yet to prove itself is not my idea of a good move, really.

EDIT - Curious, what problem space are you thinking about/working in that requires that level of funding?

I'm not particularly working in that type of space, but we are generalizing here.

If you look into startups in the medical, pharmaceutical, chemical and energy fields, you will see very high startup costs while sharing the high risk attached to software startups.

Even in software though, there are companies working on solving difficult problems that would require the work of scientists, engineers and administrators for 1-2 years. This would place you into that multi-million dollar category pretty quickly.

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