I now write on Medium here. You can find some of my old essays below.

The Long Game

I was having drinks with a few entrepreneurs last week, and the topic of business plan competitions came up. I ran Yale's competition for a year while I was a student there -- a sobering experience. Ostensibly, the winners of the contest were the best potential entrepreneurs. In reality, the top awards were often swept by Yale MBA candidates who spent the entire year perfecting a 30-40 page business plan with little intention of starting a real business. They'd take the award money alongside their McKinsey or Goldman signing bonus. Most experienced entrepreneurs -- or at least most of us around the table that night -- agree that business plan competitions suck. But is there a way to improve them? One CEO in attendance suggested that business plan competitions be revised to focus on the real tools of a VC pitch -- that is, a slide deck and in-person presentation. It's certainly a better basis than a business plan, but I don't think it solves the problem. Rather, it still perpetuates a false and harmful archetype of how venture money is raised.

In reality, raising capital is a long game -- a process to be measured across years and companies, not weeks and pitches. The people who "win" the real venture capital game are those entrepreneurs who spend years -- if not decades -- building their reputation and their relationships with investors. This doesn't mean that first-time entrepreneurs can't raise money, but that they're far better off spending their time setting metrics-driven goals and hitting those goals in order to build trust in the investor community than writing a business plan or shopping a deck.

Business plan competitions can't build a comparable experience, so they've created a generation of first-time entrepreneurs who falsely believe that money is raised in front of a Powerpoint rather than series of coffees and beers.

If you made me redesign the business plan competition, I'd do something pretty nontraditional: a unit economics competition. The contest would be in-person and just takes five minutes per contestant: explain your business concept in 1-2 minutes and walk through one Excel worksheet presenting the unit economics in the next 2-3 minutes. No long-form writing or slides, just the basic math that explains the core cost and revenue drivers and assumptions of your company. And no 3-5 year projections, either. While it might be beneficial for entrepreneurs to fully think through their company by spending 150 hours writing a business plan, modeling out your unit economics will provide 90% of the value at a fraction of the time.

Furthermore, the winners of a unit economics contest would be more likely to build successful companies. Unlike a business plan, with a 3-5 year projection at its core, a unit economic model tends to focus the entrepreneur on the near-term opportunities with the highest likelihood of success: the kind of things that will create grounded and focused businesses rather than speculative, multi-threaded companies. And if you're a broke student hoping to start a business straight out of a university-sponsored competition, which would you rather have?