Main takeaways: - The use, and misuse, of modeling - Creating a financial model for your product - Testing out various scenarios - costs, prices, distribution channels etc

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10. Shyam Venugopal
TONIGHT’S SPEAKER

11. Who is this guy?
Senior Product Portfolio Manager , DS SOLIDWORKS
Presales Engineering : 7 years
Alliance Management : 2 years
Product Management : 5 years
MSME : Robotics , Microsystems , MBA : BU
2019 Goal : Learning to Juggle

12. SOLIDWORKS Corporate Overview
Leader in 3D Computer Aided Design (CAD) software
Founded in 1993
Purchased by Dassault Systemes in 1997
www.solidworks.com

13. Everything in these slides is common sense...but

14. Modeling

16. Let’s define the term
Model
Noun
mod·​el | ˈmä-dᵊl
: a description or analogy used to help visualize something that cannot be directly observed
: a system of postulates, data, and inferences presented as a mathematical description of an entity or state of affairs
A model is an abstract representation of reality,
useful for its explanatory and predictive power.

17. We inhabit a world of models..

18. What is common among these examples?
Representations of the world (real or imagined)
Communicate a view of the world
Descriptive
Prescriptive
Decision making frameworks
Inaccurate / Incomplete / Biased

19. What is a Financial Model
An abstract representation of a real
world financial situation.

20. I’m a Product Manager. Why should I care about this?
This sounds “financy”.

21. It does not matter how great your product is if it is not
financially viable.
Shale Oil.

22. How does a financial model help product managers?
● Can it make money?
● How can it make money?
● How much money can it make?
● When can it make money?
● How much money do I need to make more money?
● How does the money get distributed?
● Are there better uses for the money I am about to invest in this product?

23. Making money should not be the primary focus of the
product manager. But the product manager should be
aware of the financial implications of their product.

24. Types of financial models
1. Three Statement Model
2. Discounted Cash Flow (DCF) Model
3. Merger Model (M&A)
4. Initial Public Offering (IPO) Model
5. Leveraged Buyout (LBO) Model
6. Sum of the Parts Model
7. Consolidation Model
8. Budget Model
9. Forecasting Model
10. Option Pricing Model
A simple spreadsheet relating the sources of costs
and revenues with the appropriate assumptions.

25. Rules...
Clearly outline assumptions
Start with a single unit (of time , of product etc)
Do not add too many variables
The model is what matters, not the exact numbers

26. Example

27. Communicate clearly
Senior execs do not have the time or patience for your mathematical masterpiece.
Frame findings as If...then
IF we increase price by 10% , THEN we will make an additional $1M dollars or more this year.
Use probabilities whenever possible.
What is the best case and worst case scenario.
Offer a recommendation on how to proceed.

28. Summary
Keep It Simple Stupid (KISS)
Know and state your assumptions clearly
Do not use fancy mathematics and complex models
Clearly communicate impact with decision makers
Get input from multiple stakeholders
The universe is not obliged to conform to your spreadsheet

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