Discover the Power of Simplicity in Financial Modeling With Giles Male

You should build models as complex as they need to be, but as simple as you can make.

So what skill level? What is really needed for somebody to become an advanced modeler?

Do you have to have a level of literacy or awareness about almost all of the potential tools, knowing when to choose which tool for the right job? I think when you first open up an actual model, you know within the first 10 seconds, but you just see the tabs, you know straight away whether it's been built to a standard or not. If you build the most sophisticated tool in the world, but you've built it in a way that your end client doesn't know how to use or doesn't feel comfortable with, then I do kind of feel like you've missed the point. There's another whole side of this where I think there's soft skills that you must have to be more than just a spreadsheet geek. I do think most people, if you use the term financial model, probably do assume you're talking about a three statement model. I'm sure there are hundreds of thousands, if not millions of people that do amazing modeling work in Excel and they may never have had to build a full three statement model in their life.

And what is the one lesson you've learned over your career that has helped you? Maybe saved you the most time or helped you the most?

The one that jumps to mind is just the importance of.

Welcome to Financial Modelers Corner where we discuss the art and science of financial modeling with your host, Paul Barnhurst. Financial Modelers Corner is sponsored by Financial Modeling Institute Foreign welcome to Financial Modelers Corner. I am your host, Paul Barnhurst. This is a podcast where we talk all about the art and science of financial modeling with distinguished financial modelers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FFI offers the most respected accreditations in financial modeling and that's why I completed the Advanced Financial Modeler. I'm thrilled to welcome our guest to the show this week, Giles. Mel, welcome to the show.

Thank you very much for having me, Paul.

Excited to have you. Giles is one of the few guests we've had on more than once. He was part of a roundtable discussion where we talked about AFM and some other things and we thought we'd bring him back for a solo appearance. He so wanted to talk to all of you. So here he is. Right? You know what, first question's coming. I don't think you got this question last time. Tell me that horror story. What's that worst financial model you've ever.

Seen or worked on so many I'd probably break them down into categories. There will be some of my own from my early career where I just had those crazy sort of 10, 15 line formulas that I was very proud of at the time. The worst one I've seen, Professor, that wasn't mine, which I've spoken about in a couple of places before, was I saw somebody running a month end model and it had a VBA macro dashboard with a bunch of buttons. And I watched this person get a piece of paper out which was a handover document, click all of these buttons in an order looking at this piece of paper. And I asked him what they were doing and he didn't know. And when I dug into the code, none of what he was doing with the VBA buttons had any impact on the things that the models, the, the model we was used for. It was crazy. And he'd been handed this model well over, I think six, seven months ago. So that, that's probably the weirdest one.

Yeah, I, I had a guy I interviewed yesterday, you know, episode that will be coming out and he mentioned when he dug into it, 50 different workbooks were externally linked to the model and some of them went as deep as seven. So they went back when you got back to the original one, they were linked through seven different workbooks. And some cases there were circular workbook links in the third one here, reference back to the first one in different areas. And I was just like, oh, bad, right?

That's back to like a pre. Pre power query world. Which actually when you think of it is what, more than 10 years ago where you had like those dedicated input and output external link sheets, if you were doing that well. But yeah, that's bad.

Yeah, I'm not a fan of workbook links. I've used them. But make sure you're doing it well. And I've done it not well. Yeah, but I've been pretty limited and it's usually only workbooks I'm working with. Never have somebody else own your external workbook link if you're going to do it. I'm with you. It should be power query. But there's those rare occasions and if people do it well, they're structured really well. You can, you can do it. I generally say no just because they're usually not structured well and they're more problem than there were.

That's one of the things that would make you most nervous, isn't it, when you open it up and if you saw 50 external workbook links, I would immediately be very nervous.

The one that makes me most nervous is when you open the Formula Name Manager and it has thousands of external link references, so not even workbook links. But I've had one where the code, there were so many and it's such an old file. There was a VBA code I'd use to kind of break all the links and take all that out. It wouldn't even run on the file.

I was like, you are exactly right. And I've seen ones where you open it up and you've got thousands of just ref errors in the Name Manager. And again, you just think, well, this has just not been looked at at all. So, yeah, go. You're bringing back some really traumatic memories for me within the first five minutes, Paul.

Well, you're welcome. I guess we can now have a therapy session. Some ptsd.

Yeah.

Some of these horrible models you've seen, the one you. You mentioned there, and some of the others. What was the learning experience has been kind of the key takeaway when you see these models.

I mean, the key takeaway from my own experience was not to get wrapped up in your own, not to be impressed by your own, you know, level of complexity in what you're creating. There's. I think there's a very common journey that good modelers go on where you probably do start to get good at Excel and, and some clever things and you think that clever, complex stuff is impressive. And then typically something goes wrong and you learn about the importance of finding the simplest way to do things. So that's been the biggest lesson, I think, in my whole career. Probably simplicity.

Yeah, I think we all learned that somewhere along the line that. Yeah, my favorite quote or one of my favorite quotes, people hear me say a lot is simple is actually hard. Complex is easy. It's usually a lot easier to write that complex formula than to really think about how do I design and structure and build this in such a way that it's really simple for people to understand?

Danielle Stein Fairhurst had a really nice quote. I can't remember when she said this, but she said, you should build models as complex as they need to be, but as simple as you can make them. I'm paraphrasing a little bit, but that really stuck with me in the last year or so.

Yeah. And it's a great way. I've heard someone else say, make it as simple as you can because the end user is going to make it more complex just as you go through the process. Yes, that's the other one I heard, I like that. I'm like, you do everything as simple as you can because don't worry, they'll complicate it for you.

Yes, I'm going to remember that.

Why don't you tell our audience a little bit about yourself and your background?

Sure. So I mean on paper I'm a SEMA qualified accountant and I got out of the kind of management accounting side of things as quickly as I could. I'm really what I would call a sort of career long financial modeler. My first job was really intense bid analysis. So building big complex three statement models for bids, doing lots of things like Monte Carlo analysis, dealing with auditors, working through lots of complex modeling scenarios. So I feel like I got really lucky in my early career. Got very early exposure to some, some things that, you know, some modelers don't get to for decades. And then I hit 30 and had, had, I keep saying, describing this as my first midlife crisis, but basically I just got frustrated. I wanted to do my own thing and I didn't know what to do. And I think like many people in that space, you kind of sit there and think, well God, how do I, how do I start my own thing here? And the only thing I wanted to do was Excel work. So I went on this path into contracting and freelancing, trying to build models for people on my evenings and my weekends. And then eventually met Miles, my business part there and we did some consultancy work together. And now I co found Fullstack, which is a training company for modelers at all levels.

Got it. Yeah. I think a lot of people get to the point where you kind of want to do your own thing, set your own schedule. You're tired of building a model at one in the morning, whatever it might be.

Yes, it's always the model. The model's always the last thing. That's what I found on, especially on bid projects. You know, everything else gets done, there's a timeline and the model's the last thing. So it's always you that's there on the evenings and the weekends just before the submission date, which was. Yeah.

And you're always holding them up like, why don't we have the bottles?

Yes.

Yeah, yeah. Makes a lot of sense. Before we get into the good old fun, hard code modeling stuff, we're going to talk hardcore running for a minute. I know you're a big running fan. You recently did an ultra marathon, so one that tells me you're crazy because I've done marathons and I thought I was crazy. But ultra, it's a whole new level. So tell us about the event you did. What was the distance? What was that experience like for you and where did you go? Was it Africa for that one?

Yeah, I was in South Africa. So this was the third part of a trilogy for me. I got into, I got into Iron man events, a big triathlons about six or seven years ago. And I really wanted to do an Iron Man, a full Iron man and marathon to Sabo, which is the multi day desert ultramarathon through the Sahara and then Comrades, which is the one I've just done in South Africa. It's an 86 kilometer road race, so you've got to do it in less than 12 hours. It was hot, it was very hilly, it was very, very tough. And again, one of the most rewarding things that I've done in my life. It's, it's, it's a hell of an experience getting to these points where you think you hit a limit and then, and finding something that you know you can drag yourself beyond where you think your limits are. It's, it's one of the most addictive things that I do in my life, to be honest.

You know, it, it's funny you say addictive because most people I knew who did ultras in my experience, running clubs, they had that addictive personality. It's really interesting because you almost have to have it to commit the time it takes to do it. And that was the biggest thing for me. I've done a few marathons, I've done a half Iron Man. I'm like, I could do a full, like I just value my time too much. So I admire anyone that's able to carve out that time because I know it's tremendous commitment to do an event like that.

Well, it is. And, and you know what, what I think I learned from Comrades because I went as part of an organization called Africa Marathons, who, they, they, this group makes sure everything around the race is done for you. So you can just turn up and worry about the running. But I was there as part of a group of about 25 people and I quickly learned that, that most other people doing this actually do manage to take their running very seriously. And, and it's, it was just me that was flagging pack that realized, you know, 11 hours in I was like, oh, I probably should take this, this training stuff more seriously. But it's, it is fun. It, the addiction I think is just what it gives you back is positive self talk, you know, when, when you, when you feel like you can really back yourself and you can push through what you assume are your limits, that, that for me has been a huge, you know, value add to lots of areas of my life.

So it sounds like the biggest thing is it's helped you realize what you're capable of kind of overcoming that negative self talk we all deal with.

I think that's exactly. I think it's the self talk. I remember in my 20s, you know, if, if you'd seen me in a, in a meeting with, I don't know, a CFO or an fd because I was young and I was quite inexperienced and I don't think I'd done anything professionally that I was that proud of. I had that kind of slightly negative inner talk where you're just like, oh, this person probably doesn't want to be sat with me or I bet I look stupid. I'm probably doing something wrong. And I found that even after the first half, Ironman, I did. And you might empathize with this a bit. Like it's still six, seven hours of running and swimming and cycling and I genuinely didn't know if I was going to finish. And to get over that finish line just gave me something, you know, that I felt really, really proud about.

Yeah, for me, I didn't know if I was going to get out of the water. It was raining, cold, extremely windy, and I wasn't a good swimmer. And I jumped in the water and it was just pounding over my head, people kicking me left and right. And I'm just like. And I'm miserable. I can't finish this swim. I almost went right to the boat and I know I can get through this. And we only had to do half the swim because they were afraid lightning was coming.

Oh, wow.

Because there was a window we had and they're like, if we go beyond this window, there's too big a risk. You can't have someone in the water with lightning and thunder. Right. And I drag. I cracked my body. One of the last people out of the swim. Get on the bike. And we got 50 mile hour wind gusts that day and hail. I got two flat tires on the bike. Finished the bike ride. The run was the piece of cake because I'd run marathons. I'm like, all I got to do is keep moving. I can do the run. This is the problem.

Where was this? Where were you in the world?

It was in Utah. It was Utah Lake.

Okay.

They used to do an Ironman out of there till shouldn't say this, but somebody drowned in the open water swim and they stopped doing the Iron man there.

Okay, fair enough.

So probably we were doing it in a protected area because they moved the location when they did the half so they wouldn't be out in the open water after the person drowned. I'm like, yeah, probably a smart move. So anyway, but that was my half Ironman experience. And of course it cleared up. It was nice weather, cool for the run, so it was perfect. Rest of it was just miserable.

It's tough, you know, and I, I remember getting to the end of it and my first thought when I, when I started speaking to people after the first half was, I'm never doing that again. And why would anybody do a full Ironman? And then a week later, I'd signed up to Ironman uk, which. Which is a very classic story for people that get into the this.

Yeah, it's funny, you're like, you finish. You're like, I'm never gonna do that. It's like a friend of mine told me, you know, his wife was having a baby, was like their third kid, and she goes, remind me, we're never having a kid again during the pregnancy. Like six months later, she's like, I think I want to have a kid. And he reminded her of that. And she goes, you know, you cannot use anything I said during childbirth against me. It's kind of like that first hour after the run. You just ignore everything you said. Yep.

Totally agree.

One last thing there, and then we'll move on to the real meat of our interview here. Any interest in doing the Badwater Ultra here in the U.S. where you go from lowest point in the continental U.S. to the highest through the. Through Death Valley, 140 miles.

Yes. So I'm. I'm really easily persuaded to do stupid things like this. I'm. I have to admit, you know, comrades was just over a month ago. Mentally, I'm still in a post ultra phase where the last thing I want to do is run, but it will end. And the, the short answer to that is, yeah, definitely, I'd be very easily persuaded. I need something.

I used to live outside there, so I remember always hearing about it and the runners and you run to the base of Mount Whitney. And then a few super crazy people will then decide to hike Whitney so they can say they went from the lowest to the highest point in the continent of the US and add an extra, you know, 18 miles to the trip and over 20,000ft of elevation gain altogether.

I mean, sounds so crazy that I'M instantly interested. So, yeah, we'll keep that one in mind.

That tells me a lot about you. All right, let's move on to modeling here. So you were recently awarded the Master Financial Modeler from the FMI Institute. What was that like? Talk a little bit about that.

A huge honor, to be honest. I mean, I like you, you know, from afm. I've put a lot of work into the FMI certification program. And cfm, when you step up, is no joke. It's a good hundred hours plus of study. So I put my application in for MFM and I think I'm the seventh to be awarded it in the world. And I'm very honored. You know, MFM and I say this just to manage my own imposter syndrome mean that I'm like one of the seven best modelers in the world. It's reflective of what you're doing in the broader industry and, and how you're trying to help people. So, yeah, huge honor. I do feel like I've. I've put a lot of work into to trying to be active and support people publicly in the last 12 months. I'm looking forward to. To what it means I can do to support them.

Cool. Well, congratulations on that. Thanks for sharing a little bit about that. Now, modeling, I'm curious, what's the most interesting or funnest project you've ever worked on for a model?

It's probably the biggest one that I ever worked on. So I worked on a smart metering bid. So years and years ago. Well, not that many years ago, but, you know, we had a rollout for smart meters in the uk. I don't know if you're familiar with this, you know, essentially like intelligent gas and electric meters where, you know, you don't have to get a meter reading all the time. So this was a huge project and I ended up having this network of models. You had different regions in the UK that you were modeling for and pricing for, and just the largest team imaginable. So many subject matter experts, so many assumptions to manage, but it was the most valuable project I've ever worked on. And there's one story from that I wanted to share with you, which is nothing to do with the modeling and, but it was a real learning point for me. We had a really strong program manager and he went through this process with all of the subject matter experts bearing in mind these are people that are probably going to be managing, you know, if you win the bid. Areas of this project that are operating in the millions of pounds Each year and he set them a task and I had to set up a spreadsheet with three columns and three numbers and it was right for your area. Just give me three numbers. What do you think the kind of essentially the bet, the best case, the worst case and the most likely cost is for your area. And underneath I just want three things that would take us from the most likely to the best and three things that would have to happen to take us from the most likely to the worst number. And that was it. That was. There was no modeling. It was just three numbers. And then he brought every one of these SMEs in one by one with a team of us there watching and. And he got them to justify this thing. You know what, why, why have you put this thing that would get us from the most likely cost to the best and what you got out the back of that was 25 versions of things that you could then go and work on as a risks and opportunities management tool. You know, if you go and do make sure these things happen, you will drop the cost base by X. If you make sure these things don't happen, we're probably going to protect about the cost base rising. And it was just such a big learning curve for me of like the modeling is important, like comple modeling is. Is needed. But there's a whole other area of. Of like interaction and, and just communication that. That's just as valuable on projects like this.

Yeah. I mean it's like when you build a budget, the biggest part is the planning and the assumptions. It's that conversation and thinking about the risk and really the business understanding. And sometimes we think, oh, it's all about the model. But at the end of the day, the model is just a representation of what the work we really do.

Absolutely. And you might recognize this kind of thing where you sit in a room with a CFO and they kind of already know the answer that they think the model is going to give you. You're there just to prove that the number in their head is right, but they kind of know it. So yeah, I found those moments in my career really interesting. When you meet people that are just their level of awareness is like three steps ahead of where you are and you're just excited about the modeling part.

I agree with you. They're always great to work with. They can really think through all those situations. And the worst is when you have the CFO that already has the answer in his mind and the model doesn't.

Support it at all 100% and they can see it. You present the numbers and they instantly see, they go, look, line 25, that, that cost line there, that's not right in year three. And you're like, oh, how, how do you know that? Just looking at this for the first time. And they're right. They're always right.

Yeah, they could spot any number on anything. And they're just like, well, this and that and that. And you're just like, oh my goodness.

I don't know that exactly.

I know what you're talking about. I've dealt with some of those. So you mentioned starting, you know, Full Stack Modeler and you've been running that now for what, about five years? Four years?

Yeah, five years. Incredibly, that's gone fast.

So talk a little bit about how you started it and then even more importantly, what do you hope others get from the program? So like kind of what is the program and what does somebody get by going through Full Stack modeling?

Yeah, I think it's probably changed over time. You know, originally there it was a group of four co founders all coming together with different skill sets. The team's changed now, so. So me and my business partner Miles run it. We've got a growing team that we actually kind of lean on a lot of our members now part time to help us run the business. But it's a community, it's a training program that covers a lot of the fundamentals. It's called Full Stack because we try and think of it as the full stack of skills that we think you need. So certainly Excel fundamentals, financial modeling fundamentals, but also things like data viz, understanding how you manage data at different levels, whether it's just a bit of power query or more complex things and getting really sort of hands on practical experience in the community. So yeah, we work with individuals who pay to join US on a 12 month membership. They pay out of their own pocket. But we also work with some of the biggest companies in the world in all sorts of sectors who put cohorts in and we kind of help manage those cohorts, you know, pretty intensely throughout their time with us.

So it's a 12 month immersive program where you're covering kind of the Full stack, the data viz, the modeling, all of it, not just, hey, here's how you build a three statement model.

Exactly that. And actually, you know, for companies it's not always 12 months. I think sometimes 12 months can feel a bit daunting. So sometimes with companies we say, look, come in for six months with us, we'll give you a Month by month, kind of structured package to work through. We'll check in with you, we'll assess your team at the start, we'll kind of test you at the end. But yeah, yeah, it's. It's pretty comprehensive. And we actually lean in really closely with the fmi. So I try and get as many of our members, whilst they're doing our accreditation internally, to then go for as much of FMI's accreditation program as well, because I just think it complements it so nicely.

All right, so another kind of question I want to get your thoughts on is right. Financial modeling is a skill that many people profess to have. Almost everybody that works in finance is like, yeah, I can build a financial model, but most models are poorly designed. I built many. I didn't start my career with any kind of course. It was just, oh, hey, start building stuff. No idea. You know, not using color coding. Probably use some hard codes from time to time. Ashamed to admit, you know, all those things we shouldn't do. So what skill level? What is really needed for somebody to become an advanced modeler? When I say advanced, I always use that word loosely. It's like advanced Excel, but more of a competent modeler that can really design a model well and make sure it's usable. To me, that's more an advanced modeler than somebody that can build a really complex model is they're able to make it simple and usable for the end user. What does that really take in your mind to kind of get to that level?

Yeah, it's such a big topic area, and it's something that I've had a conversation with a few people about recently because I think it's really hard to define what advanced or, you know, you could swap advanced out with expert. What does it mean to be an expert? And I know some of the things that I definitely don't think it is. And I see people kind of projecting themselves as experts because they have these skills. So, for example, I see lots of VBA experts who in one silo would consider themselves to be experts in vba, but they don't have the awareness to know when VBA is appropriate versus Power Query or the data model or maybe not even Excel at all. So I think it's probably a few things. Now I'm convinced you have to have a level of literacy or awareness about almost all of the potential tools, for example, within our Microsoft environment that you could lean on. So I think part of the answer is knowing when to choose which tool for the right job. I think part of it you've just hit on which is keeping things simple. And then part of it actually is the technical side of, you know, how do you build good models? And I think you a little bit like have you heard this thing when you meet somebody, you decide whether you like them or not within seven seconds or something. I think you have the same thing with models. I think when you first open up a model financial model, you know, within the first 10 seconds when you, you just see the tabs, you glance over a few tabs, you see the way it's structured, you know straight away whether it's been built to a standard or not. It doesn't matter whether you follow fast or smart, you know, but you just know when there's been principles that have been followed versus not. My time as a consultant definitely drilled home the message that it is about being useful for the user. If you build the most sophisticated tool in the world, but you've built it in a way that your end client doesn't know how to use or doesn't feel comfortable with, then I do kind of feel like you've missed the point slightly there.

FP and a guy here. And as you know, I am very passionate about financial modeling in the Financial Modeling Institute's mission. I have been a huge fan of the FMI for years years and I was super excited when they decided to sponsor the Financial Modelers Corner. I recently completed the Advanced Financial Modeler certification and loved the entire experience. It was top notch from start to finish. I am a better modeler today for having completed the certification. I strongly believe every modeler needs to demonstrate they are a quality qualified financial modeler. And one of the best ways to do that is through the FMI's program. Earning the accreditation will demonstrate to your current and future employers that you are serious about financial modeling. What are you waiting for? Visit www.fminstitute.com podcast and use code PODCAST to save 15% when you enroll in an accreditation today. Agree there's, there's the balance of how do you make it usable for the end user. And I've definitely been one of those. That's a lot of my career been on the too complex side and okay, how do you simplify this? You know, of course. So I'm really been focusing on simplified and then I got a client that wanted to use every single line of accounting in the account system to forecast.

At oh wow.

You know, there went the being simple. It was, it was quite complex.

And that, that's a really interesting one because then you know in that situation, you've got a real challenge on your hands because you know that's probably not the most appropriate way to do that. So part of your skill set is now nothing to do with the technical side. It's like communication skills, like can you actually persuade this person not to do what they think is the right thing to do? So there's another whole side of this where I think there's soft skills that you must have to be more than just a spreadsheet geek. And then it probably makes a difference. If you're on a team of modelers in a company like Operis or whoever or one of the big accounting firms, being good at what you do is probably very different to if you are a consultant or like you run your own business as a consultant modeler. The skill sets are really different in those two sort of categories as well.

Well, and then there's so many different types of models. Like I remember on LinkedIn a friend of mine saying the number one skill every FP and a professional has to have is how to build a three statement model. And I responded with, I never built one for my career till two years ago when I went out as a consultant. He's like what he had done all startups, right? I worked at American Express. American Express isn't building a bunch of three statement cash flows and three statement models and trying to roll those up. And so like for me the AFM was a real challenge because I just hadn't done a lot of three statement modeling and it was a really good learning for me because I think it's this, everybody has to understand the three statements. If you work in finance, I think understanding basic accounting and three statements should be table statement stakes. I don't think you have to build a three statement model. Depending on the work you're doing in FPA big companies, it's not needed. But you better understand how the three statements interact at a minimum. In my mind.

I think that's absolutely right. Yes, I, I wrote about this a couple of years ago actually saying, I can't remember what the the article was, but it was making the point that you don't have to be, you don't have to work in an investment bank and you don't have to be doing three statement models every day to be, in my eyes, a financial modeler. I do think most people, if you use the term financial model, probably do assume you're talking about a three statement model. I think that's fair. But I like the idea that we try and include as many talented people in the community as possible. And I'm sure there are hundreds of thousands if not millions of people that do amazing modeling work in Excel and they may never have had to build a full three statement model in their life.

I agree. There's the business, there's supply chain modeling. People are using good modeling principles and that understand modeling that aren't necessarily building a 3 statement. But I think I agree with you when you say financial model, that tends to make people think of the three statements. So it tends to be a skill you expect everybody to have.

But then to me that's just the first layer because then there are all sorts of three statement models. And even if you just broke it down into a one off transaction model versus an opera, a financial operational model, you know, there's so many variations.

Yeah, it's like anything when you start digging into it, there's so many variations. Like when you learn a sport, right? The different formations in soccer or football or basketball or whatever it may be you're really passionate about, you start learning your eyes. Oh, there's a ton here. Or even running, people don't realize, but I mean, you know this. There's a lot of different strategies and tactics and ways you could run and things you can do. Are you running uphill, downhill? Are you long distance, short distance, on.

And on and on, Even periodicity, right. For me, this is what I was thinking about the other day. You imagine if you spent most of your career as a financial modeler building annual models, working off the last three years of historic numbers, so you could have an entire career building really amazing value adding models like that. And you may never have built a rolling actuals plus forecast monthly model, which is a totally different build approach. You have to think about different levels of dynamic rolling nature for your model. Even that it's a completely different skill set and a different model type.

Yeah. And 99% of my models have been the rolling monthly FP and A models. And sometimes you have 40 different departments and three legal entities. So you got a 120 cost centers you got to manage. And it's just huge. And so I used to always be like, well models should just be horizontal because you're dealing with so many sheets. Then I built a basic three statement. I'm like oh, vertical really does make sense. And so I've kind of come, it's like, okay, it depends on what I'm building, what makes sense here. But I was always never understanding why so many people love vertical because I was doing so many I'm not stacking 200 cost centers in one sheet. I want them on individual pages because there's already 100 accounts. And so it was really interesting to learn as you start seeing different types of modeling going, okay, now I get why somebody does it that way.

Yeah. And, and again, that's really important. Horizontal versus vertical. I've typically modeled horizontally, but there's another mindset thing, I think, for modelers where you've got to be aware that the way you do things doesn't mean everybody else is wrong. Like if you open, if you're a horizontal modeler and you open up a vertical model, you can't chastise the person for going vertical. It might be totally appropriate for what they do.

Totally agree. Really great point. Next question I want to ask you. Obviously, you know, the number one tool that people use globally for modeling is Excel. There's a lot of other tools out there and there are some great tools, and I think people can build great models with different tools. But in your mind, you see it changing anytime soon, any other tool, you know, maybe becoming dominant, or do you see, at least for the foreseeable future, it's, it's going to be Excel and then everybody else.

Yeah, I mean, the only thing I would say is I think Google Sheets is making some huge strides. And I, I know there are lots of other players on the market. I think you've done some awesome work on, on this side of things. You know, the Quantrix equals there. There are loads of others that, that I, I probably forgetting off the top of my head. I think it's great that they're putting Excel under pressure. I just think Excel has evolved so much. It is a different beast now to what it was two years ago. And genuinely, I think that the only real competition is Google. And I had a stat recently that I think something like 60 to 70% of startups use Google Sheets over Excel, probably because it's free and the kind of collaboration side of things is better. I thought that was very interesting. So, no, I think Excel, Excel will certainly in my career lifetime be the dominant tool. But I think Google Sheets is, is doing some really cool stuff at the moment.

Agree with you. We just had someone on who compared Google Sheets to Excel and talked about when he uses each and where Google's better. And it was a great conversation and learned a lot of things like Google's just added tables.

They have, and they're good.

Google has more functions that people like that are not in Excel than Excel has that are not in Google. As much as people use Google, there are some really unique, like count unique. Why is that not in Excel? Why do I gotta wrap it in account A? Just create the formula. But that's a separate story. I digress. So you talked about how much Excel has changed. The term I use and I know I've heard you use it is modern Excel. So talk a little bit about what's changed and maybe what do you think's next for Excel.

To me, modern Excel. When I talk about modern Excel, I'm predominantly thinking of array modeling and linked to that. Certainly as a financial modeler, dynamic array modeling means you're leaning on lambda. As well. For me, as a financial modeler, they really come as a package. I know there are other things, so I know we've got things like Python coming as well and that definitely is a part of the modern version of Excel. But I think there will be a huge shift over to the use of modern Excel and in particular the use of dynamic arrays for financial modeling. And I think it's going to happen fast. I'm really convinced of this now and I base that on what I'm seeing with lots of the companies we train where interestingly, the youngest people in the teams, the least experienced, the fresh graduates are coming into the workforce. They're seeing and they're being trained on modern Excel and they just get it instantly and they love it. But I'm also seeing that from kind of more experienced people as well. Once you see dynamic array modeling in practice, I just think, I genuinely think we will look back in five years like cell referencing and we'll be saying why, why the hell did we always do that? That's, that's ancient.

I don't quite share your optimism for the five year window, just knowing how long Power Query and anything's taken to adopt in Excel and the different versions that are out there. But I do think we're moving that way. I don't know how long it will be, but if I had to guess, I'm gonna go 10 to 15, but we'll see.

Well, you'll, you'll hate my actual number because I actually predicted two years. So you'll have to, you'll have to hold me to account on that, Paul, if in two years we're nowhere near.

You know, Chris Argent and Lance Rubin have had their battle about Excel and, and they had a bet going of when it would die. And I think Chris O's Lance a bourbon and I, I think I told him I would be the delivery boy or something. On that it was like 15 years and this was, I don't know, probably three, four years ago around there would be another tool other than Excel. So we'll see where that ends. But I get it right. We're. If any of us could forecast highly accurately, I like to say we'd be sitting on a beach somewhere enjoying a drink because we would have made a fortune in the market. It's about good assumptions.

It is. Do you know, the only difference for me this time, I think, and I could be completely wrong, is that I think this is, this transition is going to be led by the professionals. I think you are going to genuinely see the, the financial modeling teams at the big four beyond at the big, the big like modeling companies. I think they're going to be the first to really transfer over to full dynamic array modeling and everything else. And I just think that's going to filter down. I mean we. You've had people on your podcast who have, who are running consultancies. You had Cameron and Nick on, I remember, who are now running a business where all of their client modeling is dynamic array and lambda based. And I think that's fascinating to see that in place. Adding real value already.

Yeah, no, it's exciting. There's definitely some doing it so it'll be fun to watch and we'll just kind of have to see how it all unfolds. But it's, it's amazing a time to see these dynamic arrays. Lambdas lets this whole idea of everything expands and contracts and I totally agree with the younger generation. I'm teaching two 18 year old girls excel. I know their dad and he, he asked me to train them and I was explaining lookups and I showed them Vlookup. They're like, well why would we ever. And xlookup. Why would we ever use that? I'm like, only reason I'm explaining it to you is you're going to run across it in your career and I want you to understand when you open that file what's going on. And they're like, okay, I go, in general you're probably going to use another function and that's totally fine. But just trust me, you're going to run into those situations where people are using them. So it's really interesting as I was explaining different things, I'm like, I'm only telling you this one here because you're going to run into it or this you're never gonna. I would recommend you never use it. Like sumif versus some ifs. If you know some Ifs why would you use some. If you're just forcing yourself to use two different formulas, like just build the one and then it's. You can add the second criteria every time. So it's really interesting getting that fresh perspective of somebody who had used Excel that was younger, as you're training them well.

And it might be a generational thing that the next generation coming through is just more familiar with coding. We do see more people now kind of coming out of college or uni, and they've actually seemingly had some quite good training in things like Python or whatever it might be, SQL. So where Excel's shifted over to this, what I would call a more kind of coding comfortable area for modelers. I just think at the bottom end of the industry, if you think of it that way, you've got the younger generation that are coming in and just they get up to speed so quickly. I think you'll have the top end of the industry with the professional teams pivoting over to this dynamic array modeling. So, so that's for me, that's why I keep banging on about, you know, for, for everyone in the middle, the average modeler group, you've got to get up to speed with modern Excel. You really do have to now.

Yeah, it's going to be fun to watch. It's an exciting time for sure. It's, yeah. Amazing to watch it change. So we're coming close to our rapid fire section and wrapping up the interview, but I have a. A couple questions we want to ask before we jump into that first one. What's your favorite Excel shortcut?

I've got a pair. So the one I use all the time is Control Left square bracket F5 enter just to jump, you know, back to a link and then back to where you started from.

That is the same combination Chris Riley just gave me the other day on the same page. Only two in, I don't know, 40 interviews now that have given that combo. But yeah, I know it's. It's one many modelers love, especially when you're trying to flip back and forth. And then what is the one lesson you've learned over a career that has helped you, maybe saved you the most time or helped you the most?

The one that jumps to mind. I was going to say something that I've kind of already said in this conversation. So the one that jumps to mind is just the importance of reviewing work, having your models reviewed, ideally not by yourself, but if you do have to review your own work, you have to take a break because there's this visibility fog that I'm sure you're aware of when you, you just see what you think you've built and you. It's amazing what happens when you step away from your own modeling work and maybe get a good night's sleep and come back and you look at it again with a fresh pair of eyes. With a tool, for example, like oak. I use oak from Operis all the time. So. So yeah, there are a number of answers I could have given you there, but I think the importance of reviewing your own work in a very tactical way is a big one.

Yeah, I think it was. It was Nicholas or Cameron. I can't remember which one. One of the Hay brothers. One of them's like always sleep on it and look at your work the next morning. Yeah, kind of that step away because you get so involved. You don't see things that a break will allow you to see. I think that's a great lesson. All right, Rapid fire. We're going to run through these quick. I know you've done it before and so if anyone's listening, they can go back and listen I don't know, episode 15 and see if you answer anything differently. But you can't say. It depends. You just got to pick one or the other. We'll run through them all really quick and then you can elaborate on one or two because I know there is nuance in all of these.

Yeah.

Circular or no. Circular references?

No circular reference.

VBA or no VBA?

No VBA.

Horizontal or vertical?

Horizontal.

Dynamic arrays. Yes or no?

100% yes.

I knew where that one was going. External work links. Yes or no? No named ranges. Yes or no?

Yes.

Follow a formal standards for your modeling like FAST or Smart or some of the others that are out there. There.

Yes.

All right. Will Excel ever die?

I I so I remember my answer to this last time. I'll say it more seriously this time. I don't think so. In my lifetime.

Fair enough. Will A AI build the models for us in the future?

Yes.

All righty. Should we use sheet cell protection in the models? Yes or no?

Yes.

I had somebody other day tell me they preferred very hidden vba. Okay. Do you believe financial models are the number one corporate decision making tool?

I remember my answer to this last time as well. So I'll try and again give a slightly different answer. Yeah, I do. As the technical tool. Yes.

And then what's your favorite lookup function? You would choose VLOOKUP index, XMatch, Xlookup or something else.

I am Now a full convert to xlookup. I was index match.

I'm a big xlookup fan as well. All right, Is there any of those you want to elaborate on? Add a little more nuance to your answer?

Yeah, maybe standard. So I've had the benefit of talking to lots of people in the industry, globally in the last couple of years, who I kind of, you know, I listen to them, I get to have these conversations and I hopefully absorb as much as I can. And the general sense that I. I've got from this is like, this is a really revolutionary time, I think, for us as modelers. And there are some fundamentals, like following a standard for me is a given, but there's also just a bit of reality to that. Like, yeah, look, I generally follow fast, but if somebody's not following every principle in fast to the letter, am I going to lose sleep over it? Probably not, because I think there's more important things for us to be talking about at the moment. So this came from a conversation I had with Ricard Warnerlid in Australia, who's just like, yeah, look, we're all trying to build good models. I don't think anybody's setting out to deliberately build confusing and complex models. So standards are great. I think lots of companies have their own sort of slightly tweaked in house standards. Definitely follow one rather than not. And then don't lose too much sleep over the finer details. Let's focus on the bigger topic, like what's happening with modern Excel in the future.

I like it. And where I kind of sit on that is follow general good principles, have structure and design some of those general industry standards. Beyond that, it comes down to opinion, and if it works within your company, you're keeping things similar. You're using good practices. To me, that's enough. I'm not one. Like you said, I'm not one of those, like, okay, you got to follow that T. You didn't follow page seven of this guide. As long as your model works, it makes sense and it's well structured, I'm okay.

I completely agree. There's a materiality thing. You got to be ready to make judgment calls, assess your situation. As we said earlier, if you work on a team of modelers, you probably do have to be a little bit more restricted and in line. But there are bigger conversations to be had, I think, at the moment.

Agree with you. I think that's a good spot to wrap up on. Enjoyed you joining me here. I had a great conversation. Last question I want to ask if someone wants to learn more about you or get in touch, what's the best way for them to do that?

To get in touch? Just find me on LinkedIn. I'd really appreciate any support for my little YouTube project, Excel on the Road. It is me at the moment, really, just going around talking to experts around the world and I'm very passionate about it. But yeah, if you want to get in touch, just connect with me on LinkedIn. Very, very happy to talk to people about modeling.

And we'll close with There will be an Excel on the Road from Vegas. We'll call it our Vegas Road Trip with Giles and I. So we're going to be planning that here for December with the Financial Modeling World Cup. I figure that's a good place to leave it on. Thank you for joining me today. I've really enjoyed chatting with you.

Thanks a lot, Paul. Appreciate it.

Financial Modeler's Corner was brought to you by the Financial Modeling Institute. This year I completed the Advanced Financial Modeler certification and it made me a better financial modeler. What are you waiting for? Visit FMI at www.fminstitute.com Model Podcast and use code PODCAST to save 15% when you enroll in one of the accreditations today.