4 ms·

The result of a model is no better than a gut estimate. But the process of developing the model, working out what the factors are that will impact market size

• jonnathanson 11y ago
  Exactly. I'm not sure if there is any investor consensus on this, but I'd be willing to stake a claim that a well-reasoned market analysis is superior to a putatively "accurate" market analysis. And by well-reasoned, I mean an estimate that accounts for and emphasizes the critical and necessary variables in the sizing and in the approach. Perhaps with some sensitivity analysis thrown in for good measure. If your model is logical and flexible, you can work with investors to adjust it and play around with different scenarios. If your model depends on an inflexible degree of supposed precision, you're at high risk of deluding yourself. Savvy investors can probably sniff that out. All things being equal, it's probably best to present a model that is simple enough to be easily grokked; flexible enough to be adjusted on the proverbial back of an envelope; and dependent on a set of factors that you've thoroughly researched and confidently believe are the factors to focus on. So you steer the conversation to the factors, and less to the outcome of the model under your presented scenario. If you've got the right factors, you can model out any number of scenarios. (And you should probably have done this already prior to the pitch, so that you're prepared to speak to a given range of hypothetical outcomes).