Vinod Khosla on the right way to execute a business plan

Vinod Khosla, who founded Sun Microsystems and Khosla Ventures, likes to say:

“Be obstinate about your vision, but be really flexible about your tactics.”

He explains what he means by this:

“It’s important to have a vision of where you’re trying to go, but how you get there is a series of experiments… What entrepreneurs do is effectual reasoning. They have a big vision, but they don’t try and get there in one leap… You take a step in the right direction so you can garner more resources and then try the next experiment… You try and garner resources for the next step, every step — not do the whole thing in one step.”

This, Vinod believes, is one of the reasons raising too much money can lead founders astray:

“People who raise too much money get too much confidence in their own plan, which is normally BS. The right way to do a business plan is flex-planning: have a vision, but plan the next 3-6 months to test every assumption you have. A business plan is about testing every assumption. Even if you’re sure it’s true, test it if you can in the marketplace by running an experiment.”

He gives another analogy for the point he’s trying to make:

“You want to shoot for Mount Everest, but nobody ever got to Mount Everest without getting to base camp first. You build a base camp of a stable place where you’ve learned a lot and where you can tread water for a while… Maybe you get to cash flow breakeven at base camp. But you want to set up base camp where it helps you scope out the path to Mount Everest.”

Full video: Startup Grind “Entrepreneurs, Don't Be Afraid to Fail | Vinod Khosla (Khosla Ventures)“ (Feb 2015)