Scenarios

Three questions every founder should be able to answer in under a minute: What if we raise 50% less than we want? What if we double our growth rate? What if we hire 3 more engineers? These are not hypothetical exercises. They come up in board meetings, investor calls, and late-night planning sessions. But answering them usually means opening a dialog, changing a number, saving, waiting for projections to recalculate, and then undoing everything because you were just exploring. Or worse, if you are using a spreadsheet: changing a cell, scanning downstream formulas for breakage, and hoping you did not miss one three tabs over. Most founders skip it. ...

Most founders build one financial model. They spend weeks getting the numbers right, defend it to their board, and treat it as a plan to execute. This is exactly backwards. A financial model isn’t a prediction. It’s a tool for thinking through possibilities. And the most useful part of it isn’t the base case you built first. It’s the scenarios you run after. The anchoring problem Daniel Kahneman’s research on cognitive bias identified something called anchoring: once you see a number, it distorts your judgment about what the right number should be. The first estimate you encounter becomes a reference point that’s hard to escape, even when you know it’s arbitrary. ...

“What if we only raise half of what we planned?” “What if churn drops by 5 points after we ship the new onboarding flow?” “What if we double the engineering team and bet on faster growth?” These are the questions that shape a startup’s trajectory. But in a spreadsheet, answering any of them means duplicating your entire model, changing the numbers, recalculating runway, and then trying to compare two 14-tab spreadsheets side by side. Most founders either skip the exercise or do it in their head, which is worse. ...