“These things are always wrong”

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When Elon Musk comes up with a new start-up idea, he usually skips a crucial phase in getting the company off the ground: he doesn’t create a business plan.

Over the past two decades, Musk has helped build a number of successful companies, 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’s done so while going directly against the grain of conventional entrepreneurial wisdom.

Musk admitted to scrapping the idea of ​​developing a written roadmap, which typically defines a company’s goals, at the 2018 South by Southwest conference. “But those things are always wrong, so I just didn’t bother with business plans after that.”

Zip2 was Musk’s first major startup: he co-founded the company, which helped newspapers design city guides, in 1995 with his brother Kimbal. It wasn’t exactly a failure — after four years, the 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. Before founding his next company, X.com — which eventually merged with a competitor, Confinity, to form PayPal — Musk decided to scrap the plan entirely.

Musk and his partners sold PayPal to eBay in 2002 in a $1.5 billion stock deal.

Many prominent pundits and startup icons disagree with Musk’s strategy: not having a business plan is often cited as one of the most common mistakes an entrepreneur can make, especially when trying to raise money.

Mark Cuban, a billionaire, says he believes in business plans — he often does extensive research before starting or investing in a company. For him, the key is to keep it “open to change,” so you can adjust if your original plan goes awry.

Richard Branson, another billionaire, is also known to be a big proponent of writing down his business plans. “A business plan doesn’t have to be a lengthy, well-thought-out proposal,” Branson once wrote in a blog post. “It can be as simple as a few notes in a notebook or a doodle on the back of an envelope.”

Branson added that you don’t have to wait until you have a formal, perfected plan to get started — an idea also championed by other billionaire entrepreneurs like Meta co-founder Mark Zuckerberg and LinkedIn co-founder Reid Hoffman, like CNBC’s Make It noted in 2017.

Instead of writing a business plan, aspiring entrepreneurs should ask themselves a few simple questions before getting started, Musk said. “You really have to ask if something’s right or not,” he said, and if his business idea legitimately “makes sense.”

“If it ever feels 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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