In the first of this two-part feature, Dr Steve Priddy draws on his own experience to recount ‘divorced from reality’ financial forecasting from the dotcom-boom era.
A very good friend of mine is a serial entrepreneur. He has done well in a series of ventures in technology, data protection, low carbon technologies as well as more down to earth activities such as boat building. What drives him, he says, is novelty, the opportunities arising from new, innovative ideas put into the marketplace. In this sense, I am like him.
Students of mine researching at the cutting edge of business and finance in topics as diverse as Big Data and ethics, or future thinking in FTSE 100 corporations, gets me springing out of bed in the morning. The opposite, revisiting old prejudices and misconceptions, makes me yawn. But sometimes, dear readers, it is our duty to bear witness and to bore you with basic lessons learned.
In late 1999, early 2000, I was given the business plan for a dotcom start up to review with a view to funding. The idea was to develop a digital catalogue of construction elements and components – everything from windows through manholes to staircases. The target customer would be contractors, developers, architects and engineers.
The plan financials were what made me sit up and take notice. The plan forecast that within three years the product would be turning over £50 million while providing employment for 50 people. Good, simple numbers. The only problem was their complete divorce from reality. At that time I was finance director for a business with equally good and simple numbers – a mature business turning over £50 million, but providing jobs for 500 people. We threw the plan in the bin, and months later dot-communism cratered.
In 2014, we seem to be back to the same place. In the next part (part 2) of this piece, we will explore how not much has changed.
A version of this article has been published by NQ Magazine.
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