In preparing for battle I have always found that plans are useless, but planning is indispensable. – Dwight D. Eisenhower
In 1996 Sabeer Bhatia and Jack Smith had an idea – they wanted to access their email accounts through a web browser and Hotmail was born.
20 months later, in less than two years, Microsoft bought them for $400 million.
If you listen to what Bhatia says about that time a few things stand out.
The first is that he knows he was lucky, in the right place at the right time with a good idea.
The timing was right.
Looking back, he was also prescient about what might happen next – his other ventures have not seen the same kind of traction.
A second point is that it was hard work.
The team faced rejection from VCs, politics, competition and technology failures.
They found themselves fooled by legal trickery, double crossed by partners and didn’t make any money.
But they kept at it – and that seems to be another feature of successful entrepreneurs.
They keep going.
Then there is the paradigm that is a unique feature of the internet.
What matters is growth in users, not growth in revenue.
If you have people signing up to use your service quickly enough then that’s all that matters in the short term.
Because what matters is owning the user.
That’s something that people who use free services don’t always realise.
When you get something for free what’s happening is that you’re the product.
Or, actually, the asset.
Eventually, those assets can be sold to someone else who has the ability to monetise them.
Or you can figure out how to make money from them later.
The important thing for such a business is to own its customers.
But the sobering thing, looking back at examples of success like Hotmail, is that so much is impossible to predict at the start.
How do you know if you’ll get the timing right or create something viral?
How do you know if you’ll be able to keep going even when everything looks like its failing?
To some extent it’s pointless asking those questions before you have to.
The starting point, according to Bhatia, is to write a business plan.
The reason you do this is to “crystallize your thoughts to communicate with someone else.”
The point of the plan is not just for you to read or to send off to someone else.
It’s a way for you to talk to others and persuade them to work with you or invest in your business.
What you’re trying to do is answer the questions they will have and the very natural fears they have about whether you can do what you say.
And those questions, if you look at the picture above, haven’t changed since Bhatia first answered them.
They probably haven’t changed in a century or so actually.
And the point is you have no idea what will happen in the fullness of time.
But you can put in the thinking needed to get a good start right now.