When Elon Musk has a new startup idea, he usually skips a crucial step in starting the business: he doesn’t create a business plan.
Over the past two decades, Musk has helped build a slew of successful businesses, from PayPal to Tesla and SpaceX, making him the richest person in the world, with a net worth of $258 billion. according to Bloomberg. And he did it while going directly against the conventional wisdom of entrepreneurship.
Musk admitted to rejecting the idea of developing a written roadmap that typically defines a company’s objectives and goals at the level South by Southwest conference in 2018. “I had a business plan back in the days of Zip2,” he said. “But those things are still wrong, so I just didn’t care about business plans after that.”
Zip2 was Musk’s first big start-up: He co-founded the company, which helped newspapers design city guides, with his brother Kimbal in 1995. It wasn’t exactly a flop: after four years , brothers sold Zip2 to Compaq for $307 million in cash.
But those four years have convinced Musk that things rarely go according to plan in the startup world. So before launching his next venture, X.com – which eventually merged with competitor, Confinity, become PayPal – Musk decided to abandon the plan altogether.
Musk and his partners would sell PayPal to eBay in 2002, in a $1.5 billion equity deal.
Many leading experts and startup icons disagree with Musk’s strategy: Not creating a business plan is often cited as one of the most common mistakes an entrepreneur can make, especially for anyone trying to fundraise.
Mark Cuban, another billionaire, says he believes in business plans – often conducting thorough research before launching or investing in a business. For him, the key is to leave him “open to change”, so that you can adapt when your original plan starts to go wrong.
Richard Branson, another billionaire, is also known as a big proponent of writing up his business plans. “A business plan doesn’t have to be a long, well-thought-out proposal,” Branson wrote in a blog post. “It can be as simple as a few notes in a notebook or a scribble on the back of an envelope.”
Branson added that you shouldn’t need to wait until you have a formal, polished plan to get started — an idea also championed by other billionaire entrepreneurs like Meta co-founder Mark Zuckerberg and LinkedIn co-founder Reid Hoffman, as CNBC Make It noted in 2017.
Instead of writing a business plan, Musk said, aspiring entrepreneurs should ask themselves a few simple questions before getting started. “You really have to ask yourself if something is true or not,” he said, and if your business idea “makes sense.”
“If you ever feel like it’s too easy, it probably is,” Musk added.
Musk did not immediately respond to CNBC Make It’s request for comment.
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