Tom Tunguz wrote a great post yesterday sharing the frameworks he uses to evaluate and analyze startups. For this post, I’m not interested in the content (which is great for anyone building a company) but I am interested in the concept of business frameworks and their application. When I was younger and came across a “business” framework I would dismiss it as obvious and move on. Now, I’m aware of how valuable a good framework can be. A good framework imposes structure that leads to a clearer though process with better results. At the same time, it needs to be simple to apply but be expressive enough to describe the complexity of a business. Being human, we also don’t want to think about our own fallibility and weaknesses which makes it difficult to critique our businesses. We also want to solve problems on our own rather than share our uncertainties with others. A framework serves as an impartial third party where you go through and fill in the blanks until you discover you aren’t in as good of a shape as you thought. Now you can work on growing your company instead of avoiding self-criticism.
I recall struggling to fill out the Lean Canvas for Pressi after reading one of the lean startup books. It took me a few hours with multiple breaks and online searches but I ended up with a much better understanding of our business. It became easier to see where the risks were and gave us tons of ideas around acquiring new users and generating revenue. None of these ideas were groundbreaking and I’m sure we would have gotten to them eventually but it was valuable getting to them earlier since we were able to take them into account when building the product.
I’m not sure why investors don’t require pitching startups to share these instead of a pitch deck, they seem much more useful.