[gavinray]

Aren't business models complete bullshit?

I've spent a decade in startups, and pitch decks along with projections are more or less riding-the-edge-of-grifting fluff.

If it were possible to accurately forecast cost and revenue, then everyone would start a profitable business, right?

[mdorazio]

You're conflating startups with the broader business world. Startup models are shit because there are so many unknowns and it's in the interests of the people making them to fluff them up as much as possible. In the other 99% of businesses, business models can be quite accurate and are valuable tools for decision making and evaluation. For example, public companies often issue revenue guidance and analysts do their own earnings projections based on models.

[xyzelement]

Ideally your business model is evidence (including to yourself) that you've done some hard thinking about who your customers, suppliers, and competitors are - and about some basic dynamics of your space.

It doesn't mean anyone should expect it to go that way exactly and the deviation from projection could be quite large, but it's still miles ahead of someone who's not bothered to think through it at all in most cases.

[refurb]

Everyone knows the forecasts don’t accurately predict the future. That’s not the point of forecasts.

The value of models is the assumptions you put in. How big is the potential market? What price do you think you can charge? How much of the market will go to competitors.

The value of forecasts is in pressure testing assumptions and opportunity.

[cqqxo4zV46cp]

There is a world outside of the Bay Area, I assure you.

[fsckboy]

>If it were possible to accurately forecast cost and revenue, then everyone would start a profitable business, right?

that doesn't follow: it's just as likely if you could accurately forecast cost and revenue, then you wouldn't start many businesses because you'd know they wouldn't be profitable

[dsr_]

Both of you get to the same place: if it's possible to accurately forecast cost and revenue, then all the businesses started by people who can do that will be profitable.

And there are so few serial entrepreneurs in existence that we have the following pair of conclusions:

A. It isn't very probable (we are mostly seeing survivor bias)

B. People who can do that start exactly one business, which is sufficiently profitable that they never bother to do it again

Both of these conclusions lead to the situation that picking a serial entrepreneur to invest in is just buying a lottery ticket.