Math:Physics::Metrics:Vision

Physics without math isn’t physics. A company vision without metrics isn’t actually a company vision.

What follows might seem absurdly obvious to many readers. But it wasn’t obvious to me earlier in my career, and I suspect it isn’t obvious to all technical entrepreneurs. So, here goes.

When I first started Sifteo, my first (and only, so far) startup, I was told that I needed to make a financial model (by Alex Gurevich, a friend and advisor who now is a venture investor at Javelin). Being a technical/idea person by training, I resisted this. Not because I thought the “money part” of a company wasn’t important. I just thought that, being so early in our company’s life, looking at the company through a financial lens would be so imprecise and so inaccurate as to be pointless: surely whatever model we came up with would bear no resemblance to the business we’d eventually build.

Alex said: doesn’t matter. You need to understand your business this way, even if it’s inaccurate and imprecise.

I relented. But only by half.

I said: OK, fine, Alex. You’re an advisor to the company. You get this finance stuff. You build the model, and then I’ll look at it, and call it done.

And Alex replied: Actually, no. YOU are the CEO. YOU have to do it. I will help you. But you have to do it.

I thought about all the code to write, customer discovery to do, trash cans to be emptied… but finally I relented completely.

Very wise decision.

We built a model, and, man. It made a LOT of things very clear about what we should and shouldn’t do with the company.

Marvin Minsky, who I barely knew during my time at MIT, did dispense this wisdom to me at some lab event: you don’t understand a thing until you understand it in more than one way.

What I realized is that if I could only understand the company in terms of its vision statement, or its technology, but not in terms of its numbers — product metrics, P&Ls (pro forma and historical), balance sheets, and so on — I didn’t really understand the company, and I couldn’t therefore run it.

The thing is: it’s not the case that the vision statement is the company, and the financial picture is just a view into that vision. Both are equally privileged and important lenses onto the same essential thing. One isn’t better than the other. They are just different. And it is super, super important to have a few lenses at your disposal so you can understand — and run — that thing that is your company.

(Pro tip: another essential lens is people and culture.)

Being a curious person, it became fun for me to dive into the finance lens, and I certainly got a lot of help along the way, from Alex Gurevich, from our investors, from Alan Henricks, a mentor and one of Sifteo’s board members.

I’m no finance expert. An actual finance person could discover the boundaries of my ignorance in 10 minutes. But that’s better than 1 minute. And I’d like to believe I get it “enough” and I’m curious enough that I can use these numbers to make business decisions.

One more metaphor, that may make sense to the more engineering minded reader. To say one can have physics without math is almost incoherent. What is physics if there is not mathematics? I guess it could be some “common sense” statements about the principles of the natural world, something akin to a natural philosophy. But I don’t think anyone could really call that sort of discourse physics.

The same is true for a company vision and its metrics. The vision without metrics isn’t a company. It’s a blog post, an over-beers conversation — but it’s not a company.

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For the interested reader Want to learn more about finance & metrics for startups? Fred Wilson of Union Square Ventures wrote some awesome posts on the subject. Check them out -

• An intro to P&Ls
• An intro to Balance Sheets
• An intro to Cash Flow Statements
• The posts above are all part of Fred’s “MBA Monday” posts.