Financial Modeler's Corner
00:33:44 · Paul Barnhurst, Giles Male
[00:33:44] S0: Right? Copilot came out about a week after we started. We did our first episode. I think our second was testing Copilot online. Online. I remember. The agent. Not not Copilot in Excel, but the actual agent that would build for you, just so everybody understands. Copilot had been out for a while, but it could only give you... Answer your questions. It didn't have an agent that actually could build for you. So the first one was online. And do remember how awful it was the first time we tested that thing? [00:34:09] S1: Yeah. But I remember there's been a few points. There was definitely the moment when we tested the in Excel online agent where we were like, oh, hang on. That's better. And then I think the beginning of this year, I can't remember if it was just certain model releases It was [00:34:23] S0: open kind of four, five, and five late last year. We tested it at the beginning, I still remember Ian's comment, this changes everything. He was like Yes. Kind of his jaw almost dropped like, wow. This is actually good. Not, I could see where this could help, but man, you gotta be really paying attention. It was, yeah, this can really help. You still need to be paying attention, but it's not this can kinda help. [00:34:48] S1: Yeah. Hell of a journey. Alright. I'm I'm gonna I'm gonna move some questions you will be very familiar with. Not quite quick fire round, but we're definitely going to hit you with those. The first one, what's your worst modelling experience, whether it's yours or somebody else's?
00:35:06 · Paul Barnhurst
[00:35:06] S0: So I would say probably this is the greatest learning, but the worst one. I inherited a business that was the most complex business we had. So I'm gonna tell a story because I think everybody will appreciate this. I'm working in FP and A. We get a new CFO. He basically tells all of us, all your models suck. Everybody's coming to headquarters next week, and we're all building new models. That's litter... And if you know him, that's basically the way he said it. He may have even used a few f bombs in there as he said it. You know, very colorful. And so we had to go to Texas. And one of the first things he wants us to do is we're using this offset to build a ramp. And I had never done it, and I couldn't figure out the formula, and he could tell I was struggling a little bit. So this is only ten years ago. I'd never learned proper model training. I just kinda figured everything else out of my own. I'd call myself a spreadsheeter at that point. I'll be honest. This is ten, twelve years ago. So he called in an investment banker to work with me on this model. We spent six months and got to the point where we had something that was decent, but it could never really support the business because our data was so crappy. We didn't have an understanding. So I spent the next year basically remapping all our data, and then finally, I told myself, I have to rebuild this model. Crap. It's gonna take forever. I'm not even sure I know how all of it works. Still occasionally got circular references in it, which I never figured out in the prior model. I just turned it off and... Oh, and the numbers look good. I shouldn't admit that. So here's all the horror stories. Dim is just going right... Rolling over right now going, what, sir? You idiot. And so I rebuilt it, and and it was still a complex model. It was a really complex business, and this is just revenue. But then I can have real conversations with the business. Like, hey. For this key customer, we're estimating this for this product, and these are the campaigns, and this is the timing. And I could start to make important decisions and take my boss through what was really going on, and we make changes. Here's what happens to margin. And that was the best learning experience in modeling I've had in my career, but it was painful. That model at times was just awful. Yes. We broke many modeling rules.
00:37:15 · Paul Barnhurst
I freely admit it. There's real life, and there's... And as you get better, you follow more and more, but you also know where to break them and you're putting in proper checks so people can understand what's going on. And I still sometimes thought this model is real tough. And the new guy who took over one day were talking and I go... He he had managed another business, and I was kinda doing some support to help him with the transition. And he goes, this other business is really complex. I go, my models are really complex too. He goes, yes. But I can understand the logic of why you did what you did. It makes sense. Like, it helps the business. This other one is complex, but it doesn't help the business. We have to tear it apart and rebuild it. At least yours, I can see how it supported the business. So, like, that journey, it went from just a garbage model that we took over and six months to get to good enough garbage that we could be comfortable we could forecast, but not actually help the business to a year later before we really had something that could truly help the business. So probably a lot longer answer than you wanted, but there you go. Half the guests on this show have it. The advanced financial modeler is becoming the way modelers signal that the work is real. I took it, it made me better, and it opened doors. What are you waiting for? Go to fminstitute.com/podcast. That is fminstitute.com/podcast, and use code podcast for 15% off.
00:38:34 · Giles Male, Paul Barnhurst
[00:38:34] S1: No. It's great. And it's a nice real world answer because I think, like, my textbook answer every time on this, if you pick up a messy model is, oh, you should just rebuild it. Know? Oh, wait. Start from scratch. Don't try and just use what's there. But actually, the reality for a lot of teams and individuals is you don't have the capacity to just stop for three weeks or whatever. You might argue it's a day now with AI, but you don't have that time to just stop and start from scratch. Sometimes the reality is you've gotta make something work to the best of your ability with as much confidence as you can. [00:39:08] S0: Yeah. And so it's just a real... It was a really good learning journey, and it got better and better as we went. And I felt like I at least handed something over that could support the business even though there were some areas that definitely needed to be rebuilt. [00:39:22] S1: And you described something which has always been a bit of a litmus test for me, which is when somebody goes, just explain to me how you got to that cost of sales number. If you don't fall apart when you're asked that and you're on the model and you can go, yep, it's here. Like, there's the logic. This is how it flows through. That's kind of a litmus test for me for for good modeling or one of them at least.
00:39:22 · Giles Male, Paul Barnhurst
[00:39:22] S1: And you described something which has always been a bit of a litmus test for me, which is when somebody goes, just explain to me how you got to that cost of sales number. If you don't fall apart when you're asked that and you're on the model and you can go, yep, it's here. Like, there's the logic. This is how it flows through. That's kind of a litmus test for me for for good modeling or one of them at least. [00:39:42] S0: Yeah. No. I hear you. It's asking them to... When they can explain assumptions and you can tell they really understand the business, you get much more comfortable with the model. I think the second one is when you ask them a question and you could see the models in some kind of order where you can follow what they're doing, that's another one that you get. You automatically feel more comfortable. Doesn't mean it's perfect. You could be wrong, but it increases that comfort level that they know what they're doing. [00:40:09] S1: Alright. Similar question. What's the most unique thing that you've ever seen being built in terms of a model or Excel?
00:40:09 · Giles Male, Paul Barnhurst
[00:40:09] S1: Alright. Similar question. What's the most unique thing that you've ever seen being built in terms of a model or Excel? [00:40:16] S0: Oh, that's a good question. You know, so my not that I build, but one of the favorite things I've seen, if anyone's followed them, I always love. I used to share it in some of my chaining. Have you ever seen the Japanese artist? What's his name? He's an artist that he sold some of his paintings. He would do complete paintings in Excel. So we were sold for, like, 70,000. Landscapes and different things where he do the entire artwork in Excel. So not me. And I'll have to find his name. I wanna go look at Yoshi's son, but if you just type in Japanese Excel spreadsheet artist, you'll find it. And it's fascinating some of the pictures. So that's probably one of my favorite because I'm like, wow. Who would have thought that you could make a career? And he had made a career. If you sold something for 70,000, that's a career out of painting in Excel. Like, just bizarre. [00:41:09] S1: I've never heard that before. That's really, really cool. There's a guy called... I've forgotten his name. He was at the Global Excel Summit a few years ago. A guy called George who builds, like, the, like, the orbit of planets within the solar system in Excel. Not sure if it's VBA or something else. That's probably the craziest one I've seen, but I think I think yours is cooler, actually,