In this episode of Financial Modelers Corner, host Paul Barnhurst delves into the intricacies of financial modeling in the e-commerce industry with guest Drew Fallon, a seasoned e-commerce entrepreneur and co-founder of Iris, a cutting-edge FP&A tool for e-commerce businesses. The discussion offers valuable insights into the unique challenges of financial modeling in a rapidly evolving digital landscape, particularly in direct-to-consumer (DTC) businesses.

Drew Fallon is an experienced entrepreneur in the e-commerce and CPG sectors. He began his career in equity research, working on high-profile IPOs like Airbnb and Corsair. Drew later co-founded and served as CFO for Mad Rabbit, an e-commerce brand that achieved significant growth under his leadership. Currently, he is the co-founder and CEO of Iris, a financial modeling platform that integrates AI to help e-commerce businesses automate their financial forecasting and analysis.

Key takeaways from this week's episode include:

• The key components of effective financial modeling for e-commerce businesses.

• How cohort forecasting and customer retention play crucial roles in revenue prediction.

• The importance of understanding fulfillment costs and their impact on gross margins.

• Why many e-commerce brands fail due to poor financial modeling and how tools like Iris can help.

• Insights into Drew's journey from equity research to building successful startups in the e-commerce space.
  

Here are a few quotes from Drew Fallon:

• "The number one thing to focus on with these e-comm businesses is the returning revenue number. If you mess up the forecast for your returning customer, it's the easiest way to mess up the gross profit forecast." - Drew Fallon

• "E-commerce is a tough business on working capital. It can be really challenging if you don't model out your cash flow accurately." - Drew Fallon

• "If you get the gross profit wrong, then you get the CAC wrong. And then all of a sudden you're losing money, and you die." - Drew Fallon
  

In this insightful episode, Drew Fallon emphasizes the critical importance of precise financial modeling in the e-commerce sector, particularly in managing customer retention, fulfillment costs, and the dynamics of working capital. His experience in scaling e-commerce brands and developing Iris underscores the need for specialized tools and methodologies to navigate the complexities of this industry. Whether you're an entrepreneur, financial modeler, or simply interested in the intersection of finance and technology, this episode offers valuable lessons on how to build sustainable, profitable e-commerce businesses.

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In today’s episode:
[01:10] - Introduction to the episode and guest Drew Fallon.

[04:44] - Drew’s background and E-commerce journey
[11:52] - Discussion on Drew’s passion for startups and its challenges and rewards

[17:04] - Key elements of financial modeling specific to e-commerce

[28:16] - Operational metrics and cost assumptions and how they affect overall financial health.

[35:06] - The advantages of using Iris in e-commerce financial modeling.

[41:53] - Quick insights into Drew's financial modeling preferences

[47:08] - Drew’s advice for aspiring financial modelers

[49:30] - Final thoughts and how to connect with Drew

Full Show Transcript

[00:00:00] Guest: Drew Fallon: There was like a sensitivity table that was literally just like hard coded, like all the way down. And they would literally say, if we do this much revenue and we spend this much money, this is where our profit is. There was no balance sheet for it. E-com is is, you know, it can be a tough business on working capital. I liked the, you know, sort of marriage between like, hey, you take the sort of creative aspect and then you take like the sort of quantitative aspect of you marry the two together. And that's how you scale a successful DTC brand.

[00:00:24] Host: Paul Barnhurst: You either have to have your own store or be selling it in some way that you can connect with that end customer. Otherwise, how do you stand out?

[00:00:32] Guest: Drew Fallon: I'm drawn to startups specifically just for like literally like the creation aspect of it. Like I, I'm somewhat addicted going like 0 to 1.

[00:00:41] Host: Paul Barnhurst: Give us a quick overview of what Iris does.

[00:00:44] Guest: Drew Fallon: The fourth generation FP&A tool, in the sense that we integrate with all of your existing data sources that would originate any transaction.

[00:00:54] Host: Paul Barnhurst: 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. Welcome to Financial Modelers Corner. I am your host, Paul Barnhurst. This podcast is where we talk all about the art and science of financial modeling. With distinguished guests from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling. I'm thrilled to welcome this week's guest to the show, Drew Fallon. Welcome to the show, Drew.

[00:01:42] Guest: Drew Fallon: Thanks, Paul. Happy to be here.

[00:01:44] Host: Paul Barnhurst: Really excited to have you. We start every show with this question because if you've modeled, you have a horror story just the way it works. Well, tell me about that worst financial model you've ever seen or that you've worked with.

[00:02:01] Guest: Drew Fallon: So when I yeah, I know exactly it comes. It's it's very clear in my mind and then. Yeah. Yeah. Exactly. Ironically it's for, it was for one of the, most well run businesses I've ever seen, the most profitable businesses I've ever seen, which sort of called into question whether or not I thought financial models even matter at this point, because I was like, if these guys don't know how to do it, then, but of course they do. So it was literally I struggled to even call it a financial model. Honestly, for a lot of reasons. There there was there was no like driving schedules. There was no real inputs. It was, you know, the there was like a sensitivity table that was literally just like hard coded, like all the way down. And they would literally say, if we do this much revenue and we spend, you know, this much money, this is where our profit is. They there was no balance sheet for it. And I was I was astounded by that because I was like, this is, you know, a really well run company, you know, eight figure company. And to me, the financial model is the guiding light for all business decisions and roadmaps. Right? So, it was it was pretty incredible. , to see just like the lack of effort that was put into you know, the roadmap for the business, basically. But yeah, I it was, it was, very poorly, very poorly made.

[00:03:19] Host: Paul Barnhurst: It sounds that way. As I like to say, sometimes I think companies make money in spite of themselves, not because of themselves. You know, you just you have to wonder maybe. Yeah.

[00:03:29] Guest: Drew Fallon: I mean, sometimes you're making so much money that you don't really need it that badly.

[00:03:34] Host: Paul Barnhurst: I guess when we like to be in that situation. Sign me up.

[00:03:39] Guest: Drew Fallon: Yeah, right. I mean, if you're making that much, it's like, okay, well, until that stops, then who cares? Yeah.

[00:03:46] Host: Paul Barnhurst: Like, I was talking with the guy the other day. And just the difference between small and large company modeling. You rarely build a three statement model like Apple, right? They may do it for an M&A deal, but they're not doing it for the company. That's not how they build their plan. We're talking about. Yeah I don't think they have to worry about their cash flow. We have at least five year runway. And the one guy's like, yeah, five years if they don't sell a single product for five years, right? And so it's just so different versus the small company where every little dollar matters because you're like, I got a 12 month or 18 month runway.

[00:04:16] Guest: Drew Fallon: Yeah. And a lot of times in , in our industry, it'll be paired with a 13 week cash flow model as kind of like a bottoms up feedback into the balance sheet model. Because E-com is is, you know, it can be a tough business on working capital.

[00:04:29] Host: Paul Barnhurst: Yeah. No, I know it's definitely a heavy one on working capital. I did do, retail e-commerce model for a company a couple of years ago and saw that challenge on their working capital.

[00:04:41] Guest: Drew Fallon: Yeah, it's it's not fun.

[00:04:43] Host: Paul Barnhurst: Oh, I can imagine. So tell us a little bit about yourself, your background, what you're doing today. So give us the rundown on drew.

[00:04:52] Guest: Drew Fallon: Yeah. So, I've been mostly within, like, the e-commerce and CPG industry, for the better part of the last ten years. Now, coming up on, I started, , getting into e-comm sort of in what I call the glory days of Facebook and dropshipping. Right? So, you know, ten years ago, you know, pretty much anybody could stick a dollar into Facebook and get a couple bucks out. That has since changed, but so when I was 18, I started my first brand and I went to college with the two founders of a brand that was called Mad Rabbit. And so Mad Rabbit was started while we were in college. , and it was, it was it took off pretty quickly. And so we graduated in 2019, the three of us, we went on to our full time jobs. So I went on to do, equity research on an e-commerce desk, where we were doing a lot of the IPOs during like the 2020, 2021 boom.

[00:05:41] Host: Paul Barnhurst: So was that a lot of SPACs, IPOs?

[00:05:45] Guest: Drew Fallon: We were I was on like a time. It was a huge Spac time. But I was on more of like a mega cap desk. So like we did like the Airbnb IPO, for instance. Like, so like, yeah, those weren't those weren't going out in SPACs. But so like we did the IPO for like Corsair, which sells like, , hardware, like, monitors and computers. We did Airbnb, we did vroom, which sells cars online. And so I familiarized myself sort of with the equity capital markets specifically, during that two years or whatever it was. And in the meantime, Mad Rabbit had grown to about 3 million in sales. So it was still a very, very small business. But at that point we decided to go full time on it. And so, I was the founding CFO of that brand for about five years. We were a series A backed company. You know, when we started, it was a one product Shopify store. And by the time I left last summer, it was a, you know, 24 product omnichannel, you know, eight figure business. We launched Walmart last year. We launched, , Amazon, you know, a couple of years prior. And so saw a lot, you know, through the evolution of a brand from really, you know, zero past ten kind of a deal.

[00:06:53] Guest: Drew Fallon: And one of the things that I realized and I learned was that the financial talent within this industry, specifically within this e-commerce and CPG industry specifically, doesn't really exist, honestly. And so, like, you know, when I, when I quit my job on Wall Street, you know, I took a, a significant pay cut and I did it because I wanted to be part of a startup. Right. And I and, you know, I was kind of part of the beginning of it. , but that's not a realistic expectation. And so when e-commerce in 2022 was the 2022 was the first year that e-commerce did not grow as a percentage of retail, , year over year. , and when that happens, you know, all the margin starts to get sucked out when the growth is gone. And so people in our industry all of a sudden turn their attention very voraciously towards, financials, operations, unit economics, etc. and so I say all this because I'm leading up to what I'm doing now, which is where I'm the co-founder and CEO of an e-commerce specific FP&A tool called Iris. Where, you know, we're using AI to automate financial modeling and analysis effectively.

[00:07:56] Host: Paul Barnhurst: Great. Yeah. I knew you were where you were going on that you and I have talked about Iris, and we'll get to that a little later and give our audience an opportunity to learn a little bit more about that. But before we jump into that, what interests you in e-commerce? Obviously, you did it right out of high school. I think you mentioned your first one. You joined, Mad Rabbit. You've done a lot of e-commerce. Why that industry? Like what attracts you to e-commerce?

[00:08:20] Guest: Drew Fallon: So I always thought e-commerce specifically, there's two things like, number one, the barrier to entry was extremely low. Right. So like for, you know, an 18 year old kid who wants to start a business, it's kind of like the natural choice. You know, I was I wasn't like an engineer, so I couldn't go and code my own software startup or whatever. But more importantly, I fell in love, honestly, with, like, the marriage of, like, art and science between like, branding and like, e-com specific like paid media. So like, you have, you know, like the Warby Parker's and the Allbirds and like all these, like, beautifully done brands, right, that really are just selling shoes on the internet or whatever. , but it's all about like, design, right? And like, they're able to capture market share because they can, you know, take advantage of this new distribution channel. , but more importantly, because, like, it's a brand that people actually resonate with and you own your audience and, and you are marketing to an audience that you owned. Like you were selling direct to the consumer. , and I thought, I thought that, like red antler, which is like this really famous branding agency did such a great job with so many of these brands. And I wanted to make one because I thought they looked cool. And then on the flip side of the, you know, the more sciencey part was that like running Facebook ads and doing paid media, is a lot like day trading. It's it's not like brand marketing, you know, there's no mood boards and stuff. It's very like head in the computer, you know, optimizing campaigns, you know, multiple hours per day, like it's very, very high intensity, very, engaging type stuff. And so I like the, you know, sort of marriage between like, hey, you take the sort of creative aspect and then you take like the sort of quantitative aspect and you marry the two together. And that's how you scale a successful DTC brand.

[00:09:57] Host: Paul Barnhurst: Okay. That makes a lot of sense. I appreciate that answer. And I was going to say definitely a little bit are a little bit science. When you say brands like one that comes to mind that I love is I'm not sure, familiar with Cotopaxi.

[00:10:08] Guest: Drew Fallon: Of course. Yeah.

[00:10:09] Host: Paul Barnhurst: Yeah, right. I know the CEO, I know the CEO, I've interviewed the CFO, I know the company well, and I love the message. He chose the company because he thought he could do the most good with an outdoor brand. And then he built the business around his idea of how capitalism should work. And so it's totally there's so much art in that they built a loyal following on the brand. It doesn't matter that it's poor gear that works really well for their message. And it was the right product. But it wasn't about outdoor gear. That's what I find fascinating with some of these businesses on that art side of e-commerce.

[00:10:42] Guest: Drew Fallon: Yeah, because like, you know, before, before sort of DTC or ecom, you know, you couldn't market a brand identity to your customer list. You know, like, you you kind of just hope that you stood out on the shelf at target. And like, if you turned over, then like you got velocity. But, if not, then, you know, there wasn't much brand before the internet really kind of took over, you know?

[00:11:03] Host: Paul Barnhurst: Yeah. Shelf space in retail is really hard to stand out with. Just shelf space, you either have to have your own store or be selling it in some way that you can connect with that end customer. Otherwise, how do you stand out?

[00:11:16] Guest: Drew Fallon: Correct. And a lot of these retail buyers will be looking for brands that can drive foot traffic like we want you to. We'll put you on our shelf if you can bring customers in, you know. So like, I think Matt Rabbit, when we got into Walmart, you know, we already had like a million followers on social or whatever. And so that was a big part of the pitch, right? Because they were like, we were like, we can drive traffic to your stores.

[00:11:34] Host: Paul Barnhurst: Yeah, I could imagine. I actually I was just in Canada a couple weeks ago and we did training with Walmart. Oh, cool. Yeah, I was speaking of them and a little bit of the, you know, kind of their reputation and different things of the challenge of getting in with them being such a big retailer. Yeah. So I'm sure that had to be a huge moment for you guys.

[00:11:51] Guest: Drew Fallon: It was. Yeah. So next.

[00:11:52] Host: Paul Barnhurst: Next question. This is your third startup. Why why startups. What does you love about them? Obviously you like e-commerce, but what is your, , thing about startups? You just like pain or.

[00:12:06] Guest: Drew Fallon: You know that that may be the answer, Paul. Because when I left Mad Rabbit, the brand was doing really well. We had just launched Walmart. We raised $10 million in series A, and I think I just like pain because like, you know, I went through all the pain part of Mad Rabbit and then the brand finally is like, you know, it's on. It's like real legs. You know, we kind of like, made it in some ways, you know? Not that, you know, not that like it was a, you know, massive billion dollar company or anything like that. But, you know, it was we we did, you know, what we were, you know, mostly setting out to do. , I think I'm drawn to startups specifically just for like, literally like the creation aspect of it. Like, I, I'm somewhat addicted, going like 0 to 1, like it's there's nothing that motivates me personally more than, like being able to wake up on any given day. And like that day you can actually make a difference within the business, Like Iris, you know, extremely early stage business. If I go out there and I hustle today, I can literally, you know, add 5% to the business or whatever, you know what I mean? Or if I go and I hire, make a great hire or I go and I try to find somebody, you know, that's going to be a real needle mover. , and eventually, , you kind of, you know, you run out of out of that and your role changes. Right? But I do think, , it is kind of like an addictive motion and it's a little bit of like a calling, which sounds like kind of cliche, but I loved my my banking job, I really did, but I didn't love being in like the corporate environment.

[00:13:31] Host: Paul Barnhurst: You love that startup and making the difference and building something. It's those early days to get you excited, and there are a lot of people like that. Serial entrepreneurs. Yeah, they always want to be starting that next company because they love the building, and that is as soon as it gets to a certain size, they're like, I'm out, no longer interest me. I'll go find my next project, so to speak. Yeah.

[00:13:51] Guest: Drew Fallon: This one, this one might be a little bit different for me, because Iris really does sit at sort of the I could do this stuff for the rest of my life. You know, I really do love, as you know. So this is probably the right place to say it, but I really do love, like, building out models and, like, performing analysis and all that stuff, like, I could, I could do all this stuff all day. And the technologies that we're using, to do some of this stuff are really it's really incredible. I think. I think, you know, AI is going to be a massive impact on, on this industry.

[00:14:17] Host: Paul Barnhurst: Yeah. If you say you love modeling, you're on the right show.

[00:14:20] Guest: Drew Fallon: I was going to say like I would normally that would make me normally sound like a nerd, but I think this is good for it.

[00:14:24] Host: Paul Barnhurst: This is a nerd podcast. I have three podcasts and they're all nerd podcasts. I only invite nerds to the show. So you're all good. You're in good company. But why don't you give us maybe just the one two minute overview? What is Iris? For those who are listening, we'll get into it a little bit more, but give us a quick overview of what Iris does.

[00:14:44] Guest: Drew Fallon: Yeah. So Iris, like I said, sort of like a fourth generation FP&A tool in the sense that we integrate with all of your existing data sources that would originate any transaction. Right. So let's let's think about a brand like Mad Rabbit. Right. Because that's a good example of an e-commerce brand. , you know, selling on Shopify, selling on Amazon, selling into Walmart via e-commerce, which is a cloud based, , EDI system, advertising on Facebook, advertising on Google Payroll is on gusto or whatever. That's all internet based. , and so these digitally native brands, theoretically, you can understand the financial performance in real time of these businesses. If you can orchestrate and centralize all of that data. Right, because it does exist on the internet. Yeah. So we can we connect into all of your revenue and expense lines. Right. Anything that would fall into like a ledger, like a, like a QuickBooks or an NetSuite ledger, , we create a data warehouse for you where you have financial, a PNL, effectively financial data in real time, right. So you can understand, like, you know, on Tuesdays, you know, my contribution margin or my sales are 10% higher than they are on Wednesdays because in e-commerce that matters. Like we literally have like daily marketing calendars, right? Because like I said, it's very high velocity.

[00:15:54] Guest: Drew Fallon: Like you're in the you're in the ads manager today could be 50 grand, tomorrow could be 100. And so we centralize and structure all that data, and then we train the ML and the AI on like a structured data set. You know we have a couple billion in GMV at this point. And so we use that to basically help them, , create better financial forecasts. So if you're a winter apparel brand, you sell winter coats. , and you think that your Cacc is going to go down in the summertime, Iris can be like, hey, like, that's not likely, right? Like, based on, like our category data, right? Because we, we we've structured everything sort of apples to apples. , so we basically run the ML to help people with the inputs of their model. Right. So if you have like a cab driver in your model, we can help you sort of define the parameters around, hey, you know, really based on your historical data and category, you know, tailwinds, headwinds. , we think that this, this driver should really sit here. , and so we automate the construction and facilitate the forecasting of the actual financial models themselves. , based off of all of that structured data that we're also performing analysis on.

[00:17:02] Host: Paul Barnhurst: Makes sense. So let's get into the meat of this. Financial models for e-commerce. In your view, what's the key to building a good e-commerce model. Like what are some of those things that are most important to get right?

[00:17:18] Guest: Drew Fallon: So I think the number one thing that you can basically mess up, and the number one thing to focus on, with, with like these e-comm businesses is the returning revenue number. , so there's there's a couple things here. But number one, , Amazon has always been a traditionally, , you know, opaque API or they don't share much data, right. , until recently. And so now you can understand, like new and returning customer analytics from Amazon, you have to have like a certain, you know, tool like Iris to actually do that to see cohort analytics. , but like basically if you mess up the forecast for your returning customer, it's the easiest way to mess up the gross profit forecast, right? , and if you mess up the gross profit forecast, the gross profit forecast is what dictates how much money you should be willing to spend on a kayak. Right? Because like, if I, you know, because there is no kayak this I can purchase, right? And so if I think I'm going to get $2 out of my returning customers and gross profit, I only get $1, but my kayak is $1. Now I'm burning into the red, right? And I'm I'm losing money because not because my kayak, you know, is too high, but because my returning customers is too low. , and so, you know, one of the things that people oftentimes get wrong is sort of like the the retention decay curve in modeling for returning customer revenue. Founders are are generally pretty optimistic. And they like to look at their, you know, subscriber retention as opposed to their overall customer base. And it's like, well, you're only 20% of your customers are subscribers, right? Like, not everybody's buying your coffee every single week. , and so I see the biggest mistake that I see a lot of the times, is basically inflating a returning customer forecast, which then inflates the gross profit forecast, which then sort of throws off your unit economic targets.

[00:18:58] Host: Paul Barnhurst: That makes a lot of sense. What you're saying there about, , customer retention, right? You get that wrong, you get that curve wrong, and it just throws off all your unit economics, your gross profit. It changes everything. Especially like you said. Hey, well, we got really good subscribers returning. Well, yeah, but subscribers are generally a small part of your overall business, unless you're some kind of only subscription in your e-commerce, which most are. There are some, but that's generally not how you see e-commerce. It makes a lot of sense. So speaking of that, yeah. How do you typically model revenue? How do you think about it? Is it mostly by those different cohorts you talk about? Or if you're building a financial model for e-commerce, walk through the revenue piece a little bit for us.

[00:19:43] Guest: Drew Fallon: Yeah. So it's it's actually a pretty hot topic right now in the industry. , I've seen a lot of people sort of turn to this like idea of like cohort forecasting, which I didn't know wasn't, wasn't popular, honestly. But, so basically there's there's three different components to what I'll call like a consumer brand with regards to revenue. You have like your Shopify revenue, right? And under that you have new customers that go to Shopify and returning customers that go to Shopify. You have Amazon revenue, which is new and returning as well. As long as you have a tool to help you understand that. And then you have the wholesale component, right. And so with the new customer revenue, we we model it off of off of a cake, right, and off of a new customer, AOV. So if I'm going to spend, you know, $50 in marketing next month and my cake is going to be $25, I'm going to get two customers. If they each spend 50 bucks, that means that my revenue is going to be $100, right? And so those two customers that make up my $100 in new customer revenue, those are now my you know, that's my cohort for July. Call it. Yeah. And then so and then you do like a retention curve, you know based off of historical and seasonal data and whatever sort of adjustments you think are appropriate. , and then that's how you come up with like the returning customer number.

[00:20:55] Guest: Drew Fallon: And then there's a returning customer AOV as well, because in our industry, in general, people spend more the first time. So I might go to Cotopaxi. Com and buy 4 or 5 items and then decide that I really like the shorts more than I like the hoodies or, you know, whatever it is. And I want another pair of shorts. And then I come back and I buy one pair of shorts. And so you have to account for sort of that, that down tick in a, in a returning customer AOV. And then, you know, all of that gets rolled up into the actual LTV itself. And so, effectively what you're doing is modeling LTV, right? Because you're modeling the first purchase and then you're modeling the subsequent purchases. And so you're modeling all in a lifetime value. , and then you do that for Shopify, you do that for Amazon. , and then, you know, we don't have to get into the weeds on the wholesale or retail component, but it's usually a consumption based model around like units per store, per week. , where, you know, you say I have five SKUs in target and they want me to sell two units per store per week, and in 2000, 2000 stores or whatever. And so that's, that's that's generally how we're doing revenue forecasting.

[00:22:00] Host: Paul Barnhurst: So it sounds like that cohort being able to break it out group, it is really critical to getting your revenue forecast right, because it has a huge impact on how you model your expenses.

[00:22:12] Guest: Drew Fallon: Yeah. So I think, you know, we're worth noting. There's this idea and it's a little bit less popular now, than it used to be kind of in when, you know, we were all trying to grow a little bit more than we used to, or maybe than we are now. , people were, were, were very oftentimes trying to break even on customer acquisition. Right. So if my, you know, AOV for new customers is $50 and my cost of goods sold is half of that, so 25 bucks, I'm willing to spend $25 on kayak, have a 0% contribution margin ratio, because I know that those returning customers are going to lift my contribution margin into the green. So that was a good way to that was actually a fine way to scale a business. Right. Because you're not losing too much money. You're, you know, acquiring customers about as aggressively as you can. Yeah. Without, you know, without without literally losing money every time you spend a dollar on Facebook or whatever. And so if you if you lose hold of that returning customer cohort that's supposed to push you into the green and cover some of the opex, you will start slowly dying, right? Like you'll just start to, you know, your burn or your income will be negative and you'll, you know, you'll have to get onto some sort of like equity or debt, you know, treadmill that like, by the way, those are pretty much dry these days for, for e-commerce. , and so yeah, that's that's pretty much the, the, it's the, it's the number one thing that people mess up that I see.

[00:23:33] Host: Paul Barnhurst: Yeah. I mean it's it sounds in a lot of ways obviously it's it's different like SaaS subscription. Right. You that churn rate has such a huge impact on that lifetime value of that customer helps you determine how much can I spend to acquire the customer. And if I get that churn rate wrong, or I get the average order value wrong, it makes a huge difference on how much I can spend. If you over spend on acquisition, you're going to die at some point, right?

[00:24:01] Guest: Drew Fallon: Yeah. Because you're saying like you're you're saying like, okay, like my model, right? Is going to spit out LTV to KAC of three Oh, but if it's only one five on the first, you know, purchase, then it's two. Oh, like, you know, that's where like, you know, the three LTV is where the hockey stick kind of, you know, happens. So if you can't achieve that escape velocity with those unit economics, you should probably stop scaling. Honestly. You know. Yeah.

[00:24:26] Host: Paul Barnhurst: You're gonna you're you're gonna die at some point if you can't make the economics make sense. So stop scaling and wasting money till you figure that part out. Either find a way to lower your cap, increase the order value, whatever it might be, but there's ratios that have to make sense for long term growth and long term sustainability.

[00:24:44] Guest: Drew Fallon: Yeah. And you know, there's, there's one thing that people the defense to that would be I'm going to scale these poor unit economics as much as I can until I can get into a retail, partner. So like, because, you know, back in the day and I've written, pretty extensively about this, the idea that, like, you know, , DDC used to be, , margin accretive compared to retail, right? Because we were cutting out the middleman, and we can pass out our costs, and we don't have to pay Target or Walmart for, , for this stuff. Now, on like a contribution margin basis, retail is actually accretive. Right. And so you could a lot of I've I've had conversations I'm not advocating for this necessarily. But if you build a model and you say, hey, like I am willing to to scale this, you know, 2.0 LTV to, to 20 million, because that's when I know that target's going to pick me up. Then I can basically model out revenue and target that has like a better contribution margin. And then at some at some point those lines will cross. , yeah. And it was all worth it in the end. Kind of a thing.

[00:25:42] Host: Paul Barnhurst: For a guy here. And as you know, I am very passionate about financial modeling and the Financial Modeling Institute's mission. I have been a huge fan of the FMI for 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 qualified financial modeler. In. One of the best ways to do that is through the FMI 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.fmiinstitute.com/podcast and use Code podcast to save 15% when you enroll in an accreditation today. Now I get it. If you if you have a plan to where you could change those economics at some point, whether it's the volume or whatever, I get it. You're willing to spend it. It's like when money was free. Just get growth at any cost. And that his money became more expensive. Now it's like, oh yeah, we probably should balance the cost side of this versus growth. It's interesting how we go through those cycles, and we keep learning the fundamental lessons that at some point growth is not the priority, doesn't matter when just at some point it has to make sense.

[00:27:18] Guest: Drew Fallon: This is the first time that's ever happened to e-commerce. E-commerce wasn't a thing. 20. You know, it wasn't a thing. Yeah, yeah.

[00:27:24] Host: Paul Barnhurst: Good point. Yeah.

[00:27:25] Guest: Drew Fallon: So so this is like people they the participants in this industry don't they can't fathom that idea. Like they don't know what's going on. They just know that their friends are dying left and right. , because as far as long as e-commerce has been in existence, it's always grown until 2022.

[00:27:42] Host: Paul Barnhurst: Yeah, it's it's been a fast growing industry. It's mostly had low capital during those 20 years. Very cheap money. Yeah. And it's like, yeah, why not just keep spending? We'll figure it out. We just need to get into this retailer or do this or turn this corner. And it becomes very easy to always think I will take care of itself later. Just get the revenue.

[00:28:03] Guest: Drew Fallon: Exactly, exactly.

[00:28:04] Host: Paul Barnhurst: Yeah. No, that makes a lot of sense. And it can be a dangerous game. Sooner or later, somebody's going to get burned. You just hope not to be one of those companies that you got your, your your hockey stick before the change. All right. So I have a question for you. Just what are the kind of the key assumptions, operational metrics beyond the revenue stuff? We've talked about wanting to look at CCaC and LTV and all those things that you should be looking at when building an e-commerce model. What are some of those other key assumptions and operational metrics?

[00:28:33] Guest: Drew Fallon: So one of the biggest ones I think, and in terms of like driving costs and also driving insight is, whatever sort of like drivers you're using for the fulfillment costs. Right? So when we think about shipping these, I'm going to I'm going to sell you, you know, this water bottle. , this is a it's you know, it's not that light. It probably weighs a pound and a half. , and if I sell it to you for for $20, it may cost me $15 to ship it to you. , and so having a good data model around how am I actually going to forecast these fulfillment costs, right. Whether it's postage, pick and pack, you know, other fees, you need to have a pretty sound data model in terms of like predicting, okay. Like if I send out this many products that weigh this much to this, to these zones, right. Because if I ship to California, it's going to be a lot different price. And if I ship to New York, if I'm in California. And so it becomes this, like pretty multifaceted, multivariable equation where you have to understand your product mix. Right. So that's another one. Right? So now you have to understand product mix. Because if I, if I am a, you know, a men's grooming brand and I sell, , a beard shaver and then I also sell fragrances, the beard shaver weighs three times as much as the fragrance does, and it's way more popular with people in New York.

[00:29:48] Guest: Drew Fallon: And so I spend way more money shipping, you know, the the shavers than I do the fragrances. And so if my expected product mix is going to change, you know, let's say in Q4, Black Friday, Cyber Monday, I sell way more face shavers than I do in any other season. Well, that might my, you know, cost per shipment is going to go up as well. And so I'm taking gross margin hits on shipping and on product costs. You know, you got to be ready for that stuff because that because again, the gross that's the gross profit that dictates the KAC. And so if you get the gross profit wrong then you get the KAC wrong. And then all of a sudden you're losing money and you die. , and so I think on the, on the, on the sort of expenses side, because these, these, these businesses have very low opex, right? I mean, you're spending maybe 10% of revenue on like personnel, 1520 if you're, you know, overstaffed, probably, just because, you know, the operating leverage is so low. And so I would say a lot of that attention on sort of the cost side is concentrated in the cost of goods. And there are a few moving pieces, including product costs and, , shipping costs basically.

[00:30:48] Host: Paul Barnhurst: Makes a lot of sense. So it sounds like the big thing I'm hearing there on the expense side is really understanding your product fulfillment, how your mix, how your different assumptions impacts that and being prepared for that.

[00:31:00] Guest: Drew Fallon: Yeah, like for Mad Rabbit, it actually costs us more to ship our products than to make them.

[00:31:05] Host: Paul Barnhurst: Yeah, I could believe it. Yeah. I mean and so the that shipping cost obviously your Cogs are important, but that's usually pretty stable shipping obviously depending on your product mix could change pretty materially depending on what type of products you offer. Think of Amazon. I'm sure someone who's ordering a couch versus somebody who's ordering some groceries, right? There's a very big difference in shipping there and that mix, and they're covering all that under Prime. So they're sure there's a lot there's a whole team running all those numbers and scenarios to understand how they'll impact gross profit.

[00:31:40] Guest: Drew Fallon: Yeah, exactly. And I think, you know, , on the on that note, like with Shopify and Amazon, so, you know, Shopify gross margins including shipping, right, are generally going to be anywhere from 20 to 40% higher than what's on Amazon because like you have you know, Amazon's going to take $0.35 off the dollar every time. And so you can hit a revenue goal. Right. Like let's say my revenue goal is $2 million. And I want to do a million in Shopify and a million in Amazon. And my marketing budget for that is 500 K. And so I want I want to make, , you know, 200 grand or whatever the contribution is. You hit that $2 million, spending 500 K on ads, but Amazon is 1.5 million versus 1 million. All of a sudden you're going to see gross margin compression from the channel mix, which is going to cause you to miss your gross or your contribution margin target, despite the fact that you hit your sales goal and your advertising budget. Right. So that that's that's the sort of devil's in the details type, , you know, part of the PNL, that I certainly have missed in the past as well.

[00:32:39] Host: Paul Barnhurst: Sure. Right. You could have been 20% better on your revenue and still been worse on the bottom, depending on that mix shift 100%.

[00:32:47] Guest: Drew Fallon: Yeah. It's like it's it's nuts. Like. No.

[00:32:50] Host: Paul Barnhurst: And I've seen some of that in different businesses as well where, you know, we had a mix of subscription and transactional, and it was a business where we sent out a ton of mail, you know, 50, 60 million pieces of mail a month if we had a lot higher mail. But I had some big miss on subscription, we could beat on revenue but get hammered on the bottom line. Yeah, because the cost of goods sold, you know, postage, paper printing, all that is huge for mail. Right.

[00:33:19] Guest: Drew Fallon: And that's why it's not enough. You know, there's a lot of people who only model the revenue and it's not enough.

[00:33:27] Host: Paul Barnhurst: I would 100% agree with that. I learned a ton about all our different programs, and how much Mel went out to try to really start to understand our business. And so not e-commerce, but similar type principles of, yeah, understand mix and your cost and all those type of things. So that's what I think of when you mention that.

[00:33:47] Guest: Drew Fallon: I was gonna say, like, I spent the last couple days building a model for my new company and it's software and it's it's a lot easier.

[00:33:55] Host: Paul Barnhurst: You're like this, I can handle. Yeah, yeah. I don't have this returning customer thing. It's. How long does the customer stay? And I know what the monthly revenue is. Yeah, exactly.

[00:34:05] Guest: Drew Fallon: It's really it's. Yeah. The the costs are almost all fixed. Like, it's it's pretty. It's pretty simple.

[00:34:11] Host: Paul Barnhurst: It was pretty nice to model that way versus when you had to do it before in the sense of easier maybe not as challenging intellectually.

[00:34:21] Guest: Drew Fallon: Yeah, I would say, you know, because you build I actually built it in almost the same way with a revenue model. The only difference with software is that there's going to be like an expansion type schedule in a lot of cases. Right. , and you probably honestly know more about modeling software than I do. This is the first time I've ever done it. , but the sort of cost schedules are like, you know, it's just like staff. And then it's like, you know, until your revenue is larger than that number. Like, the difference is the burn, and you know, that it actually, you know, modeling software has made it very clear to me why venture capital is actually a very fitting tool for this business model. It's actually been a pretty, , eye opening experience, I could imagine.

[00:34:57] Host: Paul Barnhurst: Well, good. I'm glad to hear it. I'm glad you got that opportunity to do something a little different and just see that insight to that window, because yeah, it's definitely different. So let's get back a little bit to Iris finance. We've talked about those e-commerce models. Why why would a tool need a platform in e-commerce versus just using a spreadsheet, like why Iris or any of the others out there? I know there are others in the industry as well, but why would they want to have a modeling tool?

[00:35:25] Guest: Drew Fallon: Yeah, so it kind of goes back to my, my earlier point, which is like there isn't much financial talent in these businesses. , and I see a lot of it getting done in like, Google Sheets. , the problem with that is that, like, if any like anybody who, like, knows how to use Excel, like, doesn't use Google Sheets. Do you agree with that?

[00:35:46] Host: Paul Barnhurst: Not 100%. Most of the time. I'll agree with that. I know a few, like.

[00:35:50] Guest: Drew Fallon: I would never use Google Sheets just cause I know how to use Excel. , and so like these, these, these people, they end up using these Google Sheets, in just like the worst ways. Like they need to be told what to do. They really do, like, you know, even like I, there's several $100 million brands on Iris that don't have CFOs. They don't even have, like, finance teams, like, they literally, you know, just have their Google sheet and they try to forecast it. And there's no like method to the madness. And so, again, Iris takes this vertical approach because our model is templated in the exact way that you and I have just spent the last 15 minutes discussing. , and so you basically plug and play Iris, you just connect into all of your integration sources. , and you have a financial model a day later with, like, you know, all the schedules that we've spent all this time talking about. , and so number one, they don't they don't know how to do it, generally speaking. , number two, they aren't necessarily familiar with all the moving components. Right. So like that channel mix that we talked about. Like part of what Iris does on the analytics side is a lot on the cost stuff. Right. And so you you cannot miss, you know, that Amazon fees forecast if you have the Amazon revenue forecast in Iris like it's it's unbreakable in some ways.

[00:37:07] Guest: Drew Fallon: , and so you know and then third is just sort of what I talked about a little bit earlier, which is like just the sort of, , the guidance of the inputs. Right. So because we're we have access to significant amount of categorical data, , we're able to help people understand like what's a reasonable expectation, right? , 99% of brands on Shopify are below $10 million in sales. , and so like it's very high volatility. , it's hard to know good inputs for a two year old brand that's done $9 million in its life, you know. And so if they can get any sort of direction based off of like what we've seen, it actually is pretty valuable. The other thing is like we have, the financial model within Iris, we have a cash flow model and a strategic three statement model. , it's it's those are two of like seven features that we have. So we have like a metrics library. We have like a real time plan to actual, we have a host of other, , sort of what I'll call like BI tools. , and so it kind of marries the 2 in 1 place, which I think is advantageous as well.

[00:38:10] Host: Paul Barnhurst: Make makes a lot of sense. Appreciate, , giving a little more detail there and kind of when you mentioned nobody, you know, chooses Google over Excel, I would have almost agreed with you. But just last week, I interviewed someone who's an Excel MVP, and he gave all the times he uses Google Sheets over Excel and why Google Sheets is better data entry. He says for data entry, it's a better tool. He goes, if I need Power Query, I'm going to use Excel. It works better for importing ranges, using queries in his mind in some areas. And there's other things he really likes about as a number of functions that Excel does not have. He's done an analysis of every single function between the two.

[00:38:50] Guest: Drew Fallon: Okay, well, he probably knows better than I do then.

[00:38:52] Host: Paul Barnhurst: So yeah, he's probably the foremost expert of the two tools. So it was a really interesting discussion because most people say, hey, collaboration is the only situation you should use Google Sheets. And he's like, I 100% disagree with that. And here's why. So it was an interesting discussion before this interview. It was just last week. I probably would have agreed with you. That's why I was like, okay, yeah, really good. We'll come out in a few weeks. I recommend listening to it. It's I would love to. Yeah. It's between definitely, But as for me, I use Excel 99% of the time. So I'm with you.

[00:39:26] Guest: Drew Fallon: Yeah, yeah, yeah, I just.

[00:39:28] Host: Paul Barnhurst: I get it.

[00:39:29] Guest: Drew Fallon: Yeah. It's like a stuck in my ways thing or something I don't know. But like I also just don't know the Google Sheets shortcuts admittedly. So like I can't leverage it in the same way. Yeah, that's another challenge.

[00:39:40] Host: Paul Barnhurst: A friend of mine, because his company only uses Google Sheets is there's, , add in called Sheet Whizz, where you get all the major Excel shortcuts in Google Sheets, like $50 a year for it or something. And he's like, since I can't use Excel at this company, I'm going to do that. And he's starting to become a big fan of Google Sheets. He's still I think he still prefers Excel, but with that, with their import range and some other things, he's like, I'm actually starting to like it. It has some real advantages. It's kind of funny, like, okay.

[00:40:09] Guest: Drew Fallon: Yeah, yeah, it's it's 50 bucks a year. That's a pretty good deal.

[00:40:12] Host: Paul Barnhurst: Yeah. I mean, right, especially for a company. You're working for a big company. They're gonna not bat an eye at $50.

[00:40:18] Guest: Drew Fallon: Yeah, trace, if it.

[00:40:19] Host: Paul Barnhurst: Makes you more productive, you can.

[00:40:21] Guest: Drew Fallon: Trace precedents and dependance. That's a big one.

[00:40:24] Host: Paul Barnhurst: Yeah, I can see you probably pulled it up there and looked at it for a second.

[00:40:28] Guest: Drew Fallon: I did pull it up. Yeah. There's like there's only like ten though. There's not like that many.

[00:40:32] Host: Paul Barnhurst: Yeah I, I haven't looked at it at all. I just know that helps.

[00:40:35] Guest: Drew Fallon: Yeah it's a great idea.

[00:40:37] Host: Paul Barnhurst: Speaking of shortcuts, what's your favorite Excel shortcut.

[00:40:40] Guest: Drew Fallon: So one of the like I'm a I'm a formatting geek. So I like I think honestly like half of a good spreadsheet is the formatting and presentation of it. , and so I love all of the formatting shortcuts like the borders, you know, alt, HBP, HBO, Hhn, or whatever. You know, the HF, HFC, like all basically all the colors I, I love and I love everything on the home menu. Yeah yeah yeah. Oh yeah. That's your friend all day like I that's where I live. Like I think it's it can you can really change credibility wise. You can really, you know, make people think that this is a better model just because it's formatted more beautifully. So I, I live I live in there. Honestly, I think Alsace is probably the funniest one. , but it's also pretty useful in a lot of contexts as well for just like sorting things.

[00:41:31] Host: Paul Barnhurst: Oh yeah. So it took me a second. I'm like alt that's data. Oh assessor. And then yeah, yeah.

[00:41:37] Guest: Drew Fallon: Yeah. So if you wanted to like sort a range alphabetically or whatever you type in ass into your computer and.

[00:41:44] Host: Paul Barnhurst: Yep. There you go. I'll never think of it the same now. I hadn't quite put it together that way. Thanks a lot. Just kidding. All right. We're going to move on to our rapid fire section. So I'm going to lay the ground rules of how this works. You get no more than 10s to answer. So the goal is to just pick a side. Then at the end, if there's 1 or 2 you're really passionate about, you're like, there's a lot of nuance. I want to add some context to why I chose the side I did. We'll let you do that because I recognize on many of these you could say it depends. So I'm kind of having a little fun here and just trying to put you on the spot. So you ready?

[00:42:23] Guest: Drew Fallon: So are we going for just yes or nos.

[00:42:26] Host: Paul Barnhurst: You're just picking a side. And then at the end you can elaborate on 1 or 2.

[00:42:29] Guest: Drew Fallon: Okay okay.

[00:42:30] Host: Paul Barnhurst: Circular or no circular references.

[00:42:33] Guest: Drew Fallon: No. Circular references.

[00:42:34] Host: Paul Barnhurst: Vba or no VBA.

[00:42:36] Guest: Drew Fallon: I can't do it.

[00:42:37] Host: Paul Barnhurst: So no horizontal or vertical model. Horizontal dynamic arrays. Yes or no?

[00:42:47] Guest: Drew Fallon: I'm not good with them. But yeah, I mean I should be.

[00:42:51] Host: Paul Barnhurst: External workbook links.

[00:42:54] Guest: Drew Fallon: I would never do that.

[00:42:56] Host: Paul Barnhurst: Yeah, that's a pretty common one. , named ranges in your model.

[00:43:01] Guest: Drew Fallon: , yeah. If you. Yeah, if you if you feel like it.

[00:43:05] Host: Paul Barnhurst: When you build models, do you follow a formal standards board like fast or smart or some of those that are out there?

[00:43:12] Guest: Drew Fallon: You know, I know I don't, but I would if I knew of one.

[00:43:16] Host: Paul Barnhurst: Okay. Makes sense. Do you think Excel will ever die?

[00:43:21] Guest: Drew Fallon: Ever? Yes.

[00:43:23] Host: Paul Barnhurst: In your lifetime?

[00:43:25] Guest: Drew Fallon: Yes.

[00:43:26] Host: Paul Barnhurst: All right. Well, I had to put you on the spot there. Put you on the record? Yeah. Will I build the models for us in the future?

[00:43:33] Guest: Drew Fallon: 100%, yes.

[00:43:34] Host: Paul Barnhurst: Okay. Should you use cell protection in your models?

[00:43:39] Guest: Drew Fallon: Yeah.

[00:43:41] Host: Paul Barnhurst: Alrighty. And do you believe financial models are the number one corporate decision making tool?

[00:43:48] Guest: Drew Fallon: Without a doubt.

[00:43:49] Host: Paul Barnhurst: You know, somebody told me, no, it's politics. And I was like, it's hard to argue with.

[00:43:55] Guest: Drew Fallon: Okay. It's financial model is the second most important.

[00:43:58] Host: Paul Barnhurst: Yeah, exactly. I was like, I can't really argue with that one. I've seen too much of that. So it's really made me laugh. I was like, that's a good answer. Yeah. All right. So look up function of choice. And I realize there's more than four, but I'm not going to list all the different ways a lookup can be done in Excel. So I'm going to list some of the most popular. And you can tell me which one you like. Choose Vlookup index match or ex match.

[00:44:21] Guest: Drew Fallon: Xlookup index match.

[00:44:24] Host: Paul Barnhurst: All right, that's what I figured. You've been modeling for a while. That's usually the favorite if anyone's been doing it for a while.

[00:44:30] Guest: Drew Fallon: Is there a different one for new for newer people?

[00:44:34] Host: Paul Barnhurst: Xlookup with 365 is very common. You can also do nested xlookup. So two way similar to index match match.

[00:44:42] Guest: Drew Fallon: See I could I could probably take one of your courses.

[00:44:44] Host: Paul Barnhurst: And you could take my Excel one. We could talk after. It's not very expensive. I have dynamic arrays, Power Query and  tables in there.

[00:44:52] Guest: Drew Fallon: Dynamic arrays would be a cool one. I would I would love to learn more about that.

[00:44:55] Host: Paul Barnhurst: Yeah. So we could talk after we're done here. All righty. Let's see. Which one would you like to elaborate on? There are 1 or 2 of those. You hesitated for a minute.

[00:45:04] Guest: Drew Fallon: I think the will excel ever die question. It's like, will excel ever die? Like ever? Maybe. Probably like in the next like 40 years? Like probably not. , I think like the use case for Excel will diminish. It's hard for me to imagine a world where AI doesn't basically just do all this stuff pretty automatically for you. And of course, like, I basically just bet my career on that fact or that idea. I just don't think that the operations that are performed in Excel are more generally more complicated than what can be done in a web app, you know, and once the sort of, you know, natural language catches up to a point where you're just going to talk to it, you're just going to talk to the internet, and you're just going to build the models for you, kind of a thing. , that's, you know, the direction that we're going with Iris. So I think it's going to take decades to actually obliterate Excel. That's why, you know, I don't I don't even necessarily understand some of these, like, more enterprise tooling in terms of their target market. Like, I would never want to try to unseat Excel out of a, you know, a real big company that that would that seems like a crazy task to me. , not that there aren't plenty of tools that have done it, but it seems really, really hard. And Excel is the most bulletproof piece of software ever, so it's not going to die anytime soon.

[00:46:21] Host: Paul Barnhurst: Yeah, I would not bet my business on having to unseat Excel. It's one thing to say, hey, for this use case, use my tool. It's better for this use case, but continue to use a spreadsheet for other stuff for edge cases.

[00:46:36] Guest: Drew Fallon: And that's what ends up happening with Iris is like, Iris is a data warehouse more than anything. And so people will generally will generally export data into Excel if they want to manipulate it in a way that they haven't found, you know, doable. Yeah. I mean.

[00:46:47] Host: Paul Barnhurst: The three most common buttons in all software. Okay. Cancel export to Excel. I didn't know it might be export to Excel first. I'm not sure about that.

[00:46:58] Guest: Drew Fallon: But yeah, it probably is. Yeah, it probably is, right.

[00:47:01] Host: Paul Barnhurst: Alrighty. So I appreciate that. So we're going to wrap up here. Just have two more questions for you. Just another minute or so. First one is if you could offer one piece of advice to our audience that would make them a better financial modeler, what would that advice be?

[00:47:17] Guest: Drew Fallon: This is going to sound drastic, but like start a business, or at least like start like a fake business that you have to think about. , because once you have to like, think about actual actions within a business, it makes it a little bit, , more intuitive to actually build the model. Right? So if you're building a model and you're saying it can be an imaginary business and let's say, you know, we're going to launch a product in Q3. And so therefore I need to adjust my marketing spend in Q3. Oh crap. When I adjust my marketing spend in Q3, you know, my cat goes up or whatever the output is. And so it forces you to think about, you know, the actual roadmap of the business. And so I think if you can put yourself into an operator's shoes, you know, whereas before when I was doing it, , on Wall Street, it was way harder for me to sort of like conceptualize the actual drivers of these models. , and so I think when I started my first business and I was sort of building out models, you know, for, not for exactly like the most practical purposes, but it does really make you kind of think through it. And so if you can try to put your shoes into, you know, sort of like the CEO role. , and because, like you said, like, you know, financial model is the roadmap for the business, or maybe I set that, but whatever, in terms of like understanding, you know, different levers of the business, when are we going to make hires? When are we launching products, like how do we think seasonality is going to look? It's all these qualitative aspects that I think, really help inform the quantitative, deliverable. That is the model.

[00:48:41] Host: Paul Barnhurst: I would agree with that. And I've had others say like one person's like, start by modeling your life. Build a three statement with a budget. So it's something you can relate to similar like a dummy business. Understand how cash flow and the things interact in a real world scenario. So you can start relating that to different businesses and how they operate. It makes a lot of sense.

[00:49:03] Guest: Drew Fallon: I think modeling your personal finances would be a great because you are a business, right? You have income and expenses. You have a.

[00:49:09] Host: Paul Barnhurst: Balance sheet, right? You have equity, you have debt, you have all those. You have cash flow. Are you using a credit card? Are you putting things on credit? Whatever.

[00:49:17] Guest: Drew Fallon: Yeah, exactly. That's a great example I like.

[00:49:19] Host: Paul Barnhurst: That, yeah, I really like that one too. When he shared it I'm like that makes a good point. He's like, that's how I learned to model is I started to build my own budget, my own life and modeled it all and practice new things in Excel to get better. That's a good way to do it. All right. So if our audience wants to learn more about you, what's the best way for them to do that? To maybe get in touch with you.

[00:49:37] Guest: Drew Fallon: I am most active on Twitter, at Drew Fallon 12.  I'm tweeting, you know, mostly about the things that we talked about today. So, definitely, if you find it relevant, then give me a follow. I also started doing more on LinkedIn, I think, Paul, we talked about this last time a little bit. I'm trying to get more into the LinkedIn game. So Drew Fallon there, I guess is is just your name and. Yeah, that's those are those are my socials. And then www.irisfinance.co is our website. For anybody who wants to check us out there too.

[00:50:05] Host: Paul Barnhurst: All right. Great. Well, thank you so much for joining me today. Drew. You're the, , first guest. We've had to really dive deep into e-commerce. So I appreciate you taking time and sharing your knowledge there with our audience. Thanks for joining.

[00:50:16] Guest: Drew Fallon: Of course. Thank you for having me.

[00:50:19] Host: Paul Barnhurst: Financial Modelers 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/podcast and use Code podcast to save 15% when you enroll in one of the accreditations today.