I admit I’m a bit behind in my reading amidst end of year planning and all this holiday hoopla, so I’m just getting around to reading Sunday’s Wall Street Journal post asking “Should Start-Up Founders Forget About Business Plans?”

The post quotes HubSpot founder and CEO Brian Halligan saying that creating a business plan is a “fool’s errand,” noting that he has raised some $30million in investment capital without a formal business plan.  He added, “No venture capitalist actually asked us for a business plan.”

There’s long been a debate about the value of a documented business plan in fundraising.  VCs might ask for one, but really (and usually said with a wink and a snicker), we all know they never actually read them. In other words, as Halligan put it, business plans are “a waste of time.”

As business professors everywhere grab their pearls at the thought, let me jump in here and say that Halligan is right – and completely wrong.

A fully-documented, prose-polished, perfect-bound business plan adds little real value to a startup company. But that’s really not the point.

A documented business plan doesn’t simply appear, created from golden cloth as if by some Rumplestilskin-like magic.  Indeed, to say that a business plan is a fool’s errand is missing entirely the nature of the errand itself.  The thinking, measuring, investigating, validating, and actual planning that enables one to write a business plan is what matters.

Halligan goes on to say that startups need only three documents with which to raise money: a PowerPoint presentation, a one-page executive summary, and a “fictitious” pro forma income statement.  All of which, he stresses, are “simple.”

Let’s assume for a moment that Halligan is right.  The subtext of his comments presented at the Puerto Rico Venture Forum, is that the venture guys are kind of superficial and so you, dear entrepreneur, can be, too. Throw together some slides, whip up a couple of paragraphs, invent some numbers. Bob’s your uncle.

I dare you to build a business on that soft foundation. While business plans find their way to the dust bin of history, business planning is critical to the formation and growth of any company.  I’m not talking about lock-yourself-in-a-room-subsist-on-pizza-and-Red-Bull-ignore-incoming-calls-figure-out-every-nuance planning. I’m talking about common sense testing of assumptions, laying out a strategy, idenfitying tactics, and understanding milestones. It shouldn’t take weeks, but it ought to take days.

Without this level of planning, you can’t articulate your business in the infamous 10-slide deck or quick and dirty executive summary.  More importantly, you can’t articulate your business to your team, your potential hires, contractors, and others who will actually help you execute on the business.

It takes time – thoughtful, focused time – to plan a business, but so much less time than tacking from one spaghetti-against-the-wall experiment to the next.

Do I read massive business plans?  No.  Do I expect the companies who seek my help to have planned? Yes!

So while Mr. Halligan may be right that no one reads a business plan, you’ll be dead in the water if you interpret his remarks to mean you needn’t plan at all.

This morning, I kicked off my 24^th and last DEMO conference.  By the end of the day tomorrow, Venture Beat’s Matt Marshall will be the sole executive producer of the DEMO Conferences and I’ll be on to something new.

History shows that companies created in down economies are just as likely to be successful as those started when times are good.  According to research done by the Kauffman Foundation, 51% percent of companies on the Fortune 500 list between 1929 and the present were started during a recession, a bear market, or both. Nearly half the companies listed on the Inc. 500 list of fastest growing companies in 2008 were founded during an economic downturn.

It’s true that funding is less available and some people are unwilling to leave a good job to start a company. It’s also true that recessions can put an emotional damper on startups.  Starting a business is hard work regardless of the economy and this economy doesn’t make it any easier.

Still, many entrepreneurs – and I suspect all of those who are launching products at DEMO today — see even greater opportunity during a recession. They figure that the larger established companies that might pose competition have just as many woes as a brand new startup, which needs less money, can be more nimble, and doesn’t have to answer to Wall Street.

When unemployment rates are high – as they are now – there are really good people available to work in a startup, people who might feel that a startup poses less risk than it might have at other times.

Perhaps most importantly, startups can have a broad impact on the economic recovery and growth by stimulating innovation, and creating new industries and new jobs.

Of the more than 600,000 entrepreneurs in the United States – and many more around the world – who have or will start a company this year, some small number of them will in fact make it to the Fortune 500 list in 10 or 20 years.  And a few hundred will be on the Inc. 500 just a few years from now.  They will have created jobs and economic value not just for themselves, but for their communities near and far.

Bottom line: Now is a great time to start a company.

In many ways, that’s what we are doing at Guidewire Group: we are re-starting our company with a clear, sharp focus on entrepreneurs.   We have always held to a couple of core principles.  We believe in the power of entrepreneurship to drive the economy and, as we move on from DEMO, we’re devoting all our time and energy to helping entrepreneurs and the entrepreneurial ecosystem that supports them.  We believe that when entrepreneurs succeed, the entire ecosystem benefits from that success and so we align ourselves with startups to help ensure their success.

Today, Guidewire Group is taking advantage of this unique economic environment to launch new initiatives that will deliver on this promise:  the Guidewire Assessment Framework, Studio G, and Innovate!100.

The Guidewire Startup Assessment Framework assesses a young company’s business viability, business and product execution, team, and business model.  We developed this consistent, objective assessment framework based on interviews with more than 30,000 startups over the past 25 years.  It is the codification of the selection criteria and methodology I’ve used to select companies to launch at DEMO over the last 13 years.

The Innovate!100 is a ranked order list of the most promising early-stage technology, media and telecom startups in the world. The Innovate!100 will be selected from among hundreds of eligible startups by Guidewire Group analysts and a world class network of advisors using the Startup Assessment Framework during the course of the Innovate!2010 Program.

Mike Sigal, Guidewire Group’s co-founder and president, will be leading those initiatives and other soon-to-be announced products, as I turn my full energies to Studio G.

Studio G is a high-performance workspace for high-potential startups.  It is both a physical workspace and a private Web community, guided by the key principles that innovative technology needs business innovation to reach its full potential; that smart people working collaboratively in dynamic workspaces with experts, mentors and community can build business value more rapidly; and that collaborative creative process, coupled with performance-driven metrics, drives innovation and business success.

Studio G is a best-practices community of smart, talented entrepreneurs, mentors, service providers, and investors who work virtually and physically together to rapidly build value into emerging businesses. Engagement in Studio G moves companies from market validation to customer adoption, wrapping smart business strategy around innovative teams and technologies.   Studio G works with both early-stage companies and established-brand spinouts to help them get it right from the start when making the critical transition from developing a product to marketing, selling and creating other business opportunities.

I’m thrilled to usher in this new era for Guidewire Group and hope you’ll watch this space, as we share more about these initiatives in the coming days.

I’ve always known that Josh Kopelman is smart, but his April Fools’ prank, TheUnFunded.com, is brilliant.

Had he wanted to open a dialog on the deteriorating relationship between Venture Capitalist and Entrepreneurs he could not have found a better catalyst. While the site was intended as a joke, its coverage and commentary on TechCrunch speaks volumes about the way in which entrepreneurs and investors view one another.

In admitting to the gag, Josh acknowledges the growing divide:

The fact that so many smart people actually believed that such an outlandish site could be legitimate speaks volumes about the state of the relationship between entrepreneurs and venture capitalists. . . . while I don’t want to read too much into a silly April Fool’s Day joke, I think it does shine a little light on the level of mistrust and ignorance within the VC/entrepreneur ecosystem.

If the commentary and controversy stirred by TheUnFunded.com is to be believed, entrepreneurs believe most VCs are a waste of skin and VCs believe most entrepreneurs are a waste of time.

Hyperbole to be sure. Still, the dialog does suggest that the co-dependent relationship between entrepreneur and investor is shrouded in misunderstanding and misrepresentation. As much as these firms position themselves as partners and catalysts for great ideas, VCs really aren’t in the business of building companies, except as a vehicle for making money. And there really are only one or two “next Googles” in any given fund life; most startups will be lucky to survive beyond their first 3 years and those that do will be luckier still to provide a respectable exit to their investors. Most of the vituperative commentary, I expect, comes from first-time fund-raisers who believe that because investors have money, they should invest it in their firms. And those who don’t are blindingly stupid for missing the golden opportunity which, frankly, may not be as golden as the next guy and certainly is not likely as golden as the entrepreneur believes.

While Josh intends to take down TheUnFunded at the end of the week, I’d love to see it stay, but as an open, transparent platform for an honest and constructive dialog between investors and entrepreneurs. Because if ever there were an industry that needed more transparency and a lot more trust, it’s this one.

When you earn your keep vetting startups, it can come as a shock to hear someone say that the startup landscape isn’t as fully formed as it should be. The volume of companies sprouting up these days feels overwhelming at times. But my conversation with YouNoodle CEO Bob Goodson this morning put a new spin on the startup ecosystem. YouNoodle’s assertion is that, while there are plenty of ideas and companies floating around, there aren’t nearly enough being funded. That the entire entrepreneurial process could benefit from more efficiency, created in some part by computers.

YouNoodle launched last week to plenty of blog discussion, with everyone caught up in the idea of predicting the future. Goodson says that’s not exactly what the company is aiming for. (That’s a fine line to walk, though, in the hot field of prediction markets. When you claim the ability to valuate a startup three years in the future, you can’t blame journalists for going where they did.) Goodson asserted that the company never aims to replace humans in investing; the idea is simply to create an industry of tools that should already exist in the startup world. Though he won’t share specifics on what information is needed to crunch the numbers, others have stated that the algorithms may focus on the people within a startup and how connected they are.

The current YouNoodle community was in private beta for close to a year before launching and it shows. There are about 1000 companies in the community, each with their own contingent of team members and followers. Though it’s difficult for a newcomer to get acclimated, the site begins to gel once you really start swimming around in there. As someone knee-deep in startups, it’s already proving an excellent resource for me for company leads. (In fact, I stumbled on this company as I was writing this. Definitely worth investigating…) When YouNoodle launches the actual startup valuation tool, planned for next week, the site will likely merit an upgrade to my bookmarks toolbar.

Here’s why I’m not declaring it FAIL just yet (you’re missed, Ted), as others have been quicker to do. I doubt any of us in the tech sector – pundit, blogger, investor, or entrepreneur – think the current method of vetting and funding is foolproof. Forget foolproof, how about just plain enjoyable? If a recent heavily circulated VC-wear site is to be believed, the startup firehose needs a funnel. It remains to be seen whether YouNoodle’s AI can deliver that help but I’ll be keeping a close eye on the company. Like others in the space of idea/product/company valuation – Spigit, Virtual Ventures and Ideablob to name a few – the technology they’re honing could have significant ramifications for the tech landscape as we know it.

We were so consumed with all things DEMO last week, that we almost overlooked Sun‘s announcement that it was expanding its “Startup Essentials” program to Canada, France, and Germany. The program gives developers substantial discounts on Sun hardware and software services in a bid for Sun to be the dominant platform for Web 2.0 applications and services.

Seeded in the U.S. in 2006 and expanded to China, India, Israel, and the U.K., the Startup Essentials program has had about 1,600 startups register to date, according to the company, with some 200 companies submitting new applications each month. Sun Startup Essentials is free to eligible companies, those in business fewer than four years and with less than 150 employees. In addition to deeply discounted hardware, participant companies have access to low-cost Web hosting services provided by Sun partners in the communities supported by the program, along with free technical support via e-mail. Sun also hosts occasional “Startup Camps” in key geographies; the next will be held in London in early March.

I talked with Sun’s director of Startups and Emerging Markets Sanjay Sharma about the program prior to the announcement, mostly curious about the country-by-country roll out of the program. After all, in the Web 2.0 world that Sun hopes to conquer, every application is potentially a global one. Why cherry-pick regions when a program like this can blanket the planet with electronic resources?

“For this program to be successful,” Sharma said, “we have to have feet on the street. ”

Sun identifies regions with significant startup activity and an engaged community. “We don’t want the first without the second,” he said.The company enlists Web hosting providers to service the program, and puts people on the ground in these communities.

The program is having an impact, according to Sharma, who claims that now two-thirds of Web 2.0 companies are using some combination of Solaris, mySQL (acquired by Sun in January), and other Sun infrastructure.

With the expansion of the Startup Essentials program, Sun is tasking its place among the platform providers wooing the global startup community. Microsoft’s Startup Accelerator program, launched last fall, is gaining momentum worldwide (Disclosure: Guidewire Group is a member of the Microsoft Startup Accelerator program) and Adobe has long supported startups with direct investment and services.

Each of these efforts is new enough that we foresee that all three will begin a full-court press to attract startups to their platforms. That can only be good for entrepreneurs who will have a range of choice in architecture at greatly reduced cost and with the further upside of go-to-market support.

I was speaking yesterday to an as-yet stealth startup and doing what I usually do in these settings: sussing out business synergies and suggesting connections to other startups, investors, or even larger companies.. And again, I found myself asking this company if they’d come across Booking Angel, the Sydney-based startup that opens restaurant and service appointment bookings to the mass market.

The company kicked around Silicon Valley a bit last summer (I met them in Sydney in August) and built a little momentum. But as is too often the case, the Valley-centric mentality loses interests in event the smartest of companies when they’re not an immediate neighbor. This is one of those cases where local-search companies, among others, would be wise to cast a wider net.

Booking Angel is an online reservation system with integrated phone confirmation. Once a customer requests a reservation online, the business, such as a restaurant, automatically receives a phone call with a voice dictating the reservation request. The receiving party can press ‘1’ to accept, ‘2’ to reject, ‘3’ to enter a different time, or ‘4’ to talk to the customer. If all goes smoothly, the reservation is confirmed within one minute. Businesses are charged only for completed bookings. Booking Angel kicks back a percentage of the fee to the site or directory that facilitated the booking.

If your view of the world is Valley centric, then you know Booking Angel’s top competitor, OpenTable.com, which can confirm book­ings instantly even outside of business hours and allow customers to quickly see which restaurants have availability. But OpenTable requires restaurants to invest in hardware and software. After operating a restaurant himself, Booking Angel founder and CEO Dean McEvoy realized that restaurant owners would prefer little change to their usual custom: taking reservations by phone. That realization became the inspiration for Booking Angel. It’s also the realization that makes Booking Angel applicable beyond the restaurant category.

While restaurant reservations are an obvious first step, Booking Angel’s real growth potential to be with small appointment-based businesses such as doctors, dentists, plumbers, and other contractors. With nearly two years of restaurant reservations experience in Australia under its belt, Booking Angel is looking to expand into the U.S by licensing Booking Angel’s technology to directories that already have established relationships with appointment-based businesses.