Why Foresight Exists
The reason was simple. I started builing financial models in 1998 when I worked in private equity, and eventually moved into building financial models for startups at the first startup I worked for in 2000. A couple years later, after finishing my MBA from Carnegie Mellon University in finance and accounting I was working as a part-time CFO at a startup and also building financial projection models for friends’ startups and companies. I found myself creating dozens of models from scratch and knew it wasn’t sustainable since at this point I had a full-time job at a global strategy consulting firm.
I decided to build a template, something that could be simple to use but had the ability to help solve complex problems, and released that version online in 2008. Since then, 17,600+ people from 73+ countries have downloaded the financial models I have online or taken a class on financial modeling from me. 1
Over the past seven years, I’ve continued to modify and revise the models based on feedback from people who have downloaded the models and used them for their startups. I’ve directly worked with thousands of entrepreneurs as a venture capitalist, advisor, or mentor, and between my financial models and personal advice I have helped startups secure over $100 million in funding. Nearly every day I talk to someone using the models, and I’m am always looking for ways to improve the models to handle specific business issues.
Why are financial models important?
The common refrain about financial models, within the context of early-stage entrepreneurs and startups, is that financial models are useless because predicting the future is too hard and the resulting numbers are always wrong. I disagree. Creating a financial model forces an entrepreneur to outline very specifically how a business works: how a company creates their products, how users and customers find and use their products and how those processes create revenues and costs. The result, a set of operational metrics, financial statements and the “equation of the business”, creates a set of views of the business’s potential future. While any one view of a speculative future is inevitably wrong, digging deeper, analyzing the key drivers and testing a range of assumptions can help an entrepreneur build the necessary insights into making crucial product, marketing, organizational and strategy decisions.
I care about financial modeling because I believe that financial models are one key way for us to make “strategy” actionable. Financial models can help even the earliest entrepreneurs with business decisions. We can build “minimum viable models” the same way we build “minimum viable products”. Financial model literacy can and should be a part of startup culture but first we have to rethink how financial models are built. Financial models can help entrepreneurs make critical business decisions. But they have to be done right.
That’s why I built these templates.
More about me, my investing activity and professional background. Questions or thoughts, contact me anytime at hello (at) foresight.is or call / text +1 646 770 0052 with questions.