What’s your plan?

Nassim Nicholas Taleb is a bit of a hit and miss for me. I love a lot of his ideas, but his

books tend to leave me cold. Around a decade ago, I read what arguably are his two most famous books — The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets — and found them both to be interesting and thought-provoking. But I also found Taleb’s constant ‘Look at me, I am so clever and none of you are!’ voice irritating, and did not read any more of his books. However, this is the exact kind of voice that is tailor-made for social media, and unsurprisingly, Taleb is extremely active on Twitter and Facebook — enjoying himself in an endless cycle of trolling and getting trolled. Of late, Taleb has been sharing on Facebook and Twitter, tiny snippets from his upcoming book, Skin in the Game: The Thrills and Logic of Risk Taking. The latest one went thus — “Owing to the funding and current venture capital mechanisms, many people mistaken for entrepreneurs fail to have true skin in the game, in the sense that their aim is to sell the company to someone, or ‘go public’ by issuing in the stock market. The true value of the company, what it makes, and its long-term survival, are of small relevance to them. This is a pure financing scheme and we will exclude this class of people from our ‘entrepreneur’ risk-taker class. We can easily identify them at their ability to write a convincing business plan.” What Taleb says about the flawed mechanisms of venture capital funding, and the spate of ‘fake’ entrepreneurs it creates, who just want to ride the right wave and profit, is all true. We have seen it happen often enough in the Indian startup scene too. But the real truth-bomb is in the last sentence of the brief extract. A convincing business plan means you have accounted for all the factors that may impact the business, and woven it into your plan. It means you have all the data you need, and even your unexpected contingencies are neatly accounted for in your plan. Your projections look pretty on a graph, and your narrative has no holes. And there are only two ways this can happen with actual businesses. One, you are copying a business model that has already been executed successfully in the exact same circumstances. For example, I will not call the dozens of e-commerce clones that came in the wake of Amazon’s success as copying a business model, because the operating conditions in India are very different from those where Amazon succeeded. Or two, you have made too many assumptions, pulling most of your numbers from thin air, in a way that best suits your business plan. Our business schools do a great job of teaching students on coming up with convincing business plans. And before you begin a venture of your own, it is definitely a great exercise to come up with a business plan that is ideal to your business. But as Taleb implies, your actual stint as an entrepreneur starts only when you watch your pitch-perfect business plan unravel in real time with all the uncertainties of actually running a startup.