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Founder Puzzles. Financial Modeling for startups and founders
Founder Puzzles. Financial Modeling for Startups and Founders. Video review
Why should you read this book?
Why should anyone read this book?
Because as founders we often get financial modeling wrong. When we think we have it sorted, we build the wrong models, we ask the wrong questions.
At its heart Founder Puzzles is not a book about building better Excel models for businesses. It is a book about building better businesses, right from the start.
How? By asking and answering the right questions, leading to simple credible narratives that help us build worlds we want to build.
Much cheaper to do this in Excel than with blood, sweat, tears and capital. Founder Puzzles shows you how to do all this better as founders. How to use simple frameworks to identify winning choices by asking questions that matter.
Is that really difficult? We build models that run, value and optimize billion dollar portfolios. In our world complex is easy, simpler is difficult.
Startups are hard. Modeling them is harder. Which is why in this book we use live cases to walk through modelling revenues, unit economics, sizing markets, pricing basics, investor mindset, valuation land mines and founder risks.
Four years in the making the book summarizes twenty years of experience as a serial founder and as a mentor to startup teams in the region. Twenty years of committing and witnessing every single mistake in the book. Twenty years that saw us raising seven rounds across four ventures on two very different sides of the planet. Twenty years of taking the very complex and making it simpler.
Build models for founders, not investors. The investors won't mind. Build businesses, not models. The models would sort themselves out. Focus on asking the right questions, not answers. For the real reward of the journey, is the journey, not the destination.
Who is the Author?
Jawwad Farid has been building, implementing risk models and back office systems since 1993. Working with clients on four continents he helps bankers, board members and regulators take a market relevant approach to risk management.
Jawwad is a Fellow Society of Actuaries, (FSA, Schaumburg, IL), holds an MBA from Columbia Business School and is a computer science graduate from FAST NUCES.
Within the technology sector in Pakistan, Jawwad served as a national judge and mentor for the PASHA delegation to the Asia Pacific ICT Awards as well as a head judge for the Asia Pacific ICT Awards from 2006-2018. He was a member of the team that setup, raised funding and launched the The Nest I/O technology Incubator in Karachi and a mentor and advisor for multiple teams that went on to raise venture funding from local and foreign investors.
Jawwad’s expertise include investment management, valuation opinions, product development and risk models. He has advised multiple due diligence teams on risk assessment and valuation in banking, treasury, technology and insurance sectors, set up FX and commodity hedging desks, built fair value models for FAS 157 disclosures for portfolios valued in excess of USD 600 million, estimated contingent liability reserves, implemented treasury and enterprise risk platforms, designed Economic Capital allocation strategies across business lines and helped US$ 3 billion life insurance investment fund on allocation and bid patterns for 10, 20 and 30 year bonds, ALM mismatch and fixed income portfolio gap reduction.
Jawwad has been engaged by the Central Bank, the Securities regulators, the local bankers and treasury association to put together and run national capacity building programs specifically in the areas of treasury, capital allocation and credit risk modeling.
Jawwad is the author of four books of which Option Greeks Primer and Models at Work, were published by Palgrave Macmillan. His latest project is an advance Handbook on Portfolio Optimization Models that he uses to teach Executive MBA students, traders and bankers in Dubai and Karachi.
Founder Puzzles is his 5th book.
What is the book about?
As founders we often think about questions that we need to answer for our business. Stuff that often requires us to sit down and build a model in Excel.
- Who do we build that model for? For founders or for investors?
- How complex should it be? How much time should we spend on building it?
- What is the one thing we need to get right?
- What is the question we are trying to answer? How will this model help us do a better job?
- Where do we start? What do we assume? Who do we ask?
Real world questions. Real world models. Real world answers.
The 14 chapters from the book include:
- 7 lessons from finance for founders
- Modeling revenues
- Unit Economics for startups
- Pricing Fundamentals
- Value based Pricing
- Market Sizing
- Understanding Investor Mindset
- Revenue Models for content plays
- Disney Marvel Case study
- Products vs Services
- An introduction to valuations
- Real world Models. Bringing it all together.
- GEMS Education. A private equity case study
- Kelly criterion. Founders, Risk and bet size
Thesis behind the book
The core thesis of the book is:
- As founders rather than building better more complex excel models, we need to focus on building better businesses using simpler excel model.
- We need to build models for founders, not investors
- It is easier to test things out in Excel, than in the real world with scarce capital.
- Different location pins. Same challenges. Similar solutions.
These are simple statement but one that requires a mind shift. The objective is not to spend days building a model. The objective is to have specific questions and to build models to answer those questions.
Do the math but keep it simple, relevant, realistic and to the point.
The book comes with complimentary copies of Reboot, 3rd Edition and Better Excel Charts. The book package include 4 supporting Excel files for illustration and academic use.