Tweet

Jawwad Farid

27 May, 10 tweets, 4 min read

Here is what we are doing on 2nd Jun in Financial Modeling for Founders Workshop.

Day 1. Session 1.
Maya's Closet. Case Study.

Analyzing Growth in the middle of a pandemic Validating assumptions
Modeling growth
Dry run of Maya expansion model
Modeling downside.

Day 2. Session 2.
Maya continued.

Adding complexity and sophistication
Revenue drivers for an e-commerce business
Stress testing and scenario analysis
Using the distribution for stress scenarios
Founder models meet banking models.

Day 3. Session 3.
GEMS School Systems. A private equity case study.

The questions you want to answer?
Modeling GEMS's outlook
Sophisticated drivers, sophisticated models.
Modeling Debt Schedules. Fixed Asset Schedules.
Thou Shall not do? Rules to live by.

Day 4. Session 4.
GEMS Case Study continued.

Untangling the statement of cash flows
Reality checks. Bringing it all together
Calibrating the model
Using data tables for calibration
Shortfall. Downside. Cashflows
How much is GEMS really worth?
Answering the valuation question?

The 5th half day is a bonus day. Surprise day.

The 5 half day course on financial modeling has evolved over 20 years to get to its current fully remote edition.

The 2nd June cohort is sold out and closed. 14th June cohort is still open.

Interested in picking the full course up at a discount?

US$ 1,250 at half to 30% off?

We ran a flash Twitter auction last week.

If you missed it here it is again for the 14th Jun cohort

24 hour auction begins now. Opening bid US$625. By now price $1,000.

Bid increments $25. Top 3 bids win. Details 👇

Bid as a response to this tweet.
financetrainingcourse.com/education/fina…

For June 14th Cohort only. 7am to 10 am Pakistan time.

If you would like to DM your bid for consideration DM is open.

Let the games begin. Don't take it too seriously.

At these levels I don't expect any bids, please prove me wrong.

@Columbia_Biz

Who am I?

Built my first Lotus 123 model as a teenager. Taught financial modeling and entrepreneurship for 21 years.

@Columbia_Biz alumni but also a graduate of school of hard knocks.

linkedin.com/in/jawwad-fari…

@PalgraveFinance

The books I have written?

Founder Puzzles.
Reboot.
Models at Work (@PalgraveFinance)
Option Greeks Primer (@Palgrave)
Portfolio Optimization Models

financetrainingcourse.com/education/jaww…

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More from @rebootdude

Jawwad Farid

@rebootdude

27 May

@_QuratUlAin_

On incorporating Monte Carlo Simulation in your Excel models.

A thread. On request from @_QuratUlAin_

Remember our friendly e-commerce store that shared its live data for our growth in a pandemic series?

How or why should we add simulation to our growth analysis model?

Simulation does the same thing generating the distribution did for us.

It makes it possible for us to come with a broader range of values for stress testing and scenario analysis.

Our ability to do that is limited by our imagination and world view. Simulations broadens it up.

If you are a brand new venture with no prior data, numbers or figures but have industry benchmark and metrics, simulation is a good starting point.

When used correctly it can give you a range to work with for your model.

Read 31 tweets

Jawwad Farid

@rebootdude

26 May

Lessons today from our financial modeling workshop.

Building models is not enough, we also have to calibrate them to ensure that they behave well under a range of assumptions.

Relationships between model drivers are often set in a superficial manner. Which leads to challenges.

Give your self time to test and calibrate models.

Plug in extreme values to see if the model holds.

Identify expected behavior for a multiple data points and see if your model reproduces that when fed the right data.

User expectations also need to be calibrated.

Educate users on model behavior so they know that it can be broken, that it doesn't always give the right answers.

Walk them through anticipated results so you can also calibrate their expectations.

Read 10 tweets

Jawwad Farid

@rebootdude

26 May

If you have kids who want to work for health care make them read The Premonition.

If you are interested in how the world ended where it is today on account of Covid-19, read The Premonition.

Premonition does to CDC what Lewis earlier works did to SEC, Banking and Moody S&P.

The book is not just about Covid or US response to the pandemic.

It's a very worthy and relevant read at so many different levels.

How a small group of individuals can still impact global health, how we got to the vaccine so quickly and the future of the health care industry.

@dingramerm

@dingramerm we need to bring the Mann Gulch incident and the fire escape fire into the @SOActuaries ERM curriculum.

Maybe even get Lewis to come and speak at the next annual conference.

Read 12 tweets

Jawwad Farid

@rebootdude

26 May

@Gladwell

Mile time trial this morning.

What gets measured improves. Still a long way to go but it's a start.

Thank you @Gladwell

What does it take to run the mile in less than 9 minutes?

Not a lot if you are a fit 30 year old runner or fitness professional. Malcolm Gladwell the 57 year old author of Outliers ran it in 5:15 earlier this week beating out a much younger field.

One would think it's easy?

That depends on what your comparative peer group is? 50 year old Pakistani men?

60 year Boston Qualifier who have run the Boston Marathon every year for the last few years?

The middle distance team of Kazakhstan?

Or a younger you from a three years earlier?

Read 5 tweets

Jawwad Farid

@rebootdude

25 May

From today's session on Financial Modeling.

The models we build depend on the stories we want to tell and the questions we want to answer.

The most important of building the model is figuring out the question we are trying to answer.

Do that first before you start with Excel.

Our ability to generate scenarios for stress testing and sensitivity analysis is limited by acceptable and common ranges.

Understanding the distribution of drivers we are modeling can lead to richer and far more appropriate scenarios.

While most model builders are comfortable with putting together a balance sheet and income statement, quite a few struggle with statement of cash flows. If they can or could, they would skip it.

You can't balance your balance sheet or pass model cross checks without one.

Read 5 tweets

Jawwad Farid

@rebootdude

25 May

Breakthrough performance, when you improve a personal best, is difficult.

Consistent breakthrough performance two months in a row, is an even bigger feat.

While luck may play a role in the former, for the latter you need a process.

The first time may be an accident.

When evaluating ability or capacity for breaking records, take a look at how strong the underlying process is.

If you can find the process, you are in good shape.

If you can't find the process, don't expect miracles.

Taleb calls it the generator function for prices.

Understand what drives prices in financial markets.

Understand what drives performance in the metrics you are trying to measure.

Then put a process around your understanding.

Founder maturity is accepting performance comes from processes, not luck or talent.

Read 4 tweets

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