I see hundreds of business plans a year. Most people, not having studied philosophy, have no idea about the difference between a priori and empirical data. This will make the difference between whether your business succeeds or dies and whether you raise money or not and whether you waste months or not.
Some businesses can only be determined whether they work based on live experiments. We just don’t know if the human population will like them or not. Its psychology. We need empirical testing. Its like writing a pop song – you don’t know if it will be a hit – else everyone would always write hits. But you do know there are some rules eg don’t sing out of tune of course. Same with business. Some businesses, eg Facebook, Twitter, only worked once launched. In theory we could not tell if they would or would not be huge successes.
That’s why the sciences are divided between the empirical and theoretical. The problem is many entrepreneurs try to answer an empirical question, theoretically. Whereas investors want an empirical evidence not theoretical. The entrepreneurs lacks the funds but has the belief so is being theoretical and trying to convince the investor who has the funds but not the belief and so is looking for empirical evidence.
As with religion – those with faith, only need theory and no empirical proof and those without need empirical proof.
So decide – is your business something which needs essentially empirical evidence it works and will be popular and make money – if so, don’t try to raise money from investors until you have the empirical evidence.
Most entrepreneurs waste my time and theirs by trying to convince me of their faith. I am an agnostic at best and atheist at worst when it comes to your business.
Alpesh Patel·read Modern Greats at Oxford University (now better known as Philosophy, Politics and Economics). He is a former Visiting Fellow in Business at Corpus Christi College, Oxford, and alumnus of Boston University, and lectured in China, Hong Kong, Singapore, Guatemala and India on global economics. He has a degree in Law from King’s College, London, and is the author of 13 books. He is the founder of private equity and hedge fund firm, Praefinium Partners.