In this episode of Financial Modeler’s Corner, host Paul Barnhurst welcomes Andres Klaric, the co-founder and co-CEO of Fuse. In their conversation, Andres discusses common financial modeling mistakes, how startup models differ from corporate M&A models, and what investors truly look for when evaluating projections. He also shares firsthand experiences on navigating the fundraising process, balancing work ethic with personal life, and the strategic approach to scaling a company.

Andres Klaric is the co-founder and co-CEO of Fuse, a next-generation loan origination system designed to streamline lending for financial institutions through self-serve customization, a low-code API builder, and personalized agent portfolios. Andres shares his journey from investment banking and private equity to launching a fintech startup that’s reshaping loan origination. He provides insights into financial modeling for startups, securing venture capital, and the critical lessons he’s learned from Wall Street.

Expect to Learn:

• The biggest mistakes and horror stories in financial modeling.

• How startup financial models differ from corporate M&A models.

• The key factors venture capitalists look for in startup projections.

• Lessons from private equity and investment banking that shaped Andres as a CEO.

• The art of balancing complexity and simplicity in financial modeling.

Here are a few quotes from the episode:

• “The biggest mistake in startup modeling? Overcomplicating things when simple assumptions will do.”

• “Modeling for investors and modeling for internal operations are two completely different things.”

• “A bad financial model won’t kill your startup, but a bad go-to-market strategy will.”

This episode with Andres Klaric was packed with insights on financial modeling, fundraising, and the lessons learned from both Wall Street and the startup world. From the importance of keeping financial models simple to navigating investor expectations, Andres provided a masterclass on startup finance and strategic thinking. Hard work, strategy, and the ability to adapt will always outweigh an over-engineered spreadsheet.

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LinkedIn - https://www.linkedin.com/in/andresklaric/
Company: https://www.fusefinance.com/

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In today’s episode:
[02:59] - Worst Financial Model Horror Stories
[08:57] - The Journey to Founding Fuse
[11:53] - Lessons from Wall Street
[18:07] - Financial Modeling for Startups
[23:05] - How VCs Evaluate Startup Models
[25:06] - Fundraising Strategies & Finding the Right Investors
[32:07] - Rapid-Fire Financial Modeling Q&A
[42:34] - Final Advice & Closing Thoughts

Full Show Transcript

[00:01:27] Host: Paul Barnhurst: Welcome to Financial Modeler's Corner. I am your host, Paul Barnhurst, aka the FP&A Guy. 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. FMI offers the most respected accreditations in financial modeling, and that is why I completed the Advanced Financial Modeler. I'm thrilled this week to welcome our guest on the show, Andres Klaric. Welcome to Financial Modeler's Corner.

[00:02:07] Guest: Andres Klaric: Hi, Paul. Thank you for having me here. It's an honor.

[00:02:09] Host: Paul Barnhurst: Yeah. Really excited to have you. And just a little bit about Andreas. He's the co-founder and co-CEO of Fuse, a next gen loan origination system that simplifies lending for financial institutions through self-serve customization, a low code API builder, and a personalized agent portfolio. Over the last decade, he's worked on Wall Street, investing in tech and business services. This gave him an acute awareness of the issues slowing down lenders from achieving their highest potential, ultimately leading to him starting Fuse with his co-founder Marc Escapa. So Andreas again, welcome to the show. Thrilled to have you. Love the love the background? We like to start every interview with this question. Worst financial model you ever had to work with or that you've seen that horror story?

[00:03:08] Guest: Andres Klaric: I think any sell side in which you're perhaps you're like the investor and trying to buy a company and they you go into the data room and it's all hard coded, right. So like you're trying to effectively rebuild their model, but they're all hard codes. Right. So that is kind of day one of suffering. If you think no matter how complex the business is, right. Like you're just praying as an especially when you're very junior because you know, you're going to have to build that. You're just praying that it's linked and all of a sudden it is not. So I would say 90 to 80% of the time it will not be a link model. So you will have to spend that entire day or so trying to reverse engineer what you know. Another analyst's sweat and tears were spent kind of doing and you just need to put it together, right. So I really look forward I helping kind of rebuild those models that are already built and kind of infer all of that and saving that suffering from all of us. So I would say that every beginning of process was without a doubt the ones with the most anxiety.

[00:04:15] Host: Paul Barnhurst: Yeah, I can imagine you opened something. I got all the numbers. I got everything I need. Here's the model. Oh, it's all hard coded.

[00:04:24] Guest: Andres Klaric: Yeah, exactly.

[00:04:25] Host: Paul Barnhurst: Yeah, that would be painful. I'm curious, though. You know, reverse engineering I think is always a good way to learn something. Do you feel like that made you a better modeler, having to go through and figure out how to reverse engineer it? Or. I mean, what was kind of your takeaway and learnings from those experiences?

[00:04:44] Guest: Andres Klaric: Yeah, no, it's definitely like you learn how like someone else's brain kind of operates, right? I still think that as far as model building goes, that option and then reviewing a model are probably like some of the fast kind of shortcuts, but starting something from scratch and adding complexity to it. It's also pretty fun, right? Like just you have a good sense of the business, but then like, your investment team wants to add more and layer and layer more complexity, sale cycles, churn. And depending on what you're modeling like, the complexity can be very hard when you think about like insurance or modeling or like when you're modeling for banks and credit products and losses, all of that. I would say the models that you do in banking tend to be the most exaggerated ones, because bees in general kind of have a template that they follow. Whereas banks try to think like each one of those pieces that they're selling to. So that translates into them. Overengineering. Whereas the private equity fund in general is just thinking through the lenses of like their own investment strategy. Whereas the banks are kind of trying to understand each one of their clients.

[00:05:56] Guest: Andres Klaric: So that's why it lends to so much complexity. I would say, though, the most insufferable models I like, the ones that come from like management. Right? Sometimes like someone that actually understands the business, but it's probably really overengineering portions of it that are not necessary. So you're trying to understand what can be simplified so that you can actually forecast. Right. Because just to give you an example, I remember at some point we're looking at buying sugar assets in Brazil. So it was like the type of sugar that you can get out of a ton of sugar cane. And like all this extrapolation and the amount of fertilizer that needs to be put and how fast and how many months you have to actually cut the cane. And I think with like some of that with like a percentage would have done it. And you're like trying to understand all of that and just trying to simplify like make analysis into like, okay, you get ten tons or 20 tons or like just the rest is let it dry. What? The financial analysis?

[00:06:59] Host: Paul Barnhurst: Yeah. No, I mean, I think we've all been there is it's easy to overcomplicate things. And you're like, okay, I just need to get directionally correct answer. I don't need to get down to the 10th of a penny or, you know, the last ounce of something or whatever it might be. So it's easy to see happen a lot.

[00:07:20] Guest: Andres Klaric: I do remember someone mentioning once of the changes of post stamps that in the market for checks, I guess, like I guess that that would have an effect. But I do remember, like in my banking days, people talking about MVTs they would want to like that type of impact on the DCF and it was negligible. Right. But like just talks about overengineering and sometimes take place.

[00:07:45] Host: Paul Barnhurst: Yeah. And I think we've all probably been guilty of it. There's times when it's like, you know, the cost of capital. Yeah it's important, but sometimes you spend so much time arguing about, okay, is it 12.4 or is it 13? Is it, you know, ten? It's like, all right, at the end of the day, nobody should be making their final decision on a deal based on whether they use 12 or 12.5 as their whack estimate. If that's what's decision on whether you're doing a deal or not, you probably should review the economics and make sure it's a good deal. Not you hit a target just because you change the interest rate.

[00:08:25] Guest: Andres Klaric: Exactly. There needs to be like a sound operational thesis around it. Like not the I would say that during like I would say five years ago where rates were zero. It's probably a good decision to look a lot at that whack. But when the cost of capital are where they are today, I think that there's just plenty of other things, as you mentioned, that supersede that.

[00:08:48] Host: Paul Barnhurst: Yeah. I mean, and many other things. Right. It's just keeping it perspective and focusing on the assumptions and strategy and other things. I think you bring up a lot. You know, good points. So we'll dig into that a little bit more, but would love for you just to share a little bit more about how you started your company. You know, kind of what you're doing today. Just talk a little bit about that.

[00:09:09] Guest: Andres Klaric: Yeah. So my first job out of high school was in sales. So I paid for college selling cars at a dealership in Northern Virginia. And then I spent two years as an investor. Right. Like modeling and modeling and modeling. And along the way went to Harvard for my MBA. I stayed in touch with some of the folks that I met there, and that's one of which was my co-founder at the beginning of the pandemic. Like everyone else, I was asking myself, what is it that I want with the rest of my career, right? Or at least a good portion of it? And I decided that perhaps starting something was the best next step for myself. I spoke with this friend of mine, and I started bouncing ideas and realized that, like, perhaps we should start a business together. The first iteration of the business was a direct to consumer Schumer brand. Within months of launching that business, the only question we kept being asked by the lenders we were selling loans to was, who's in your tech stack? Right? Like, who are your vendors for this particular piece of software? And we had actually built that internally. So within like very quickly we came to the realization that we were not a B2C business. We were a B2B business that we had gotten very lucky and landed in a market that was private equity owned for the most part for competitors. And it was very old, very expensive piece of software, not very low NPS. So we thought to ourselves, like, let's build in this space, right? So we raised millions of dollars of capital, and we're working with like top notch lenders in the auto space and the consumer space and the commercial space. But it has not been a easy journey, right. Like it's been a long and hard work has been a sacrifice has been put into it. But I wouldn't change anything.

[00:10:51] Host: Paul Barnhurst: Cool. Well, you know. Thank you for sharing. And it's always great when you start to figure out okay, what's that right part. Product market fit. Like you said, you pretty quickly realized we're not B2C, we're B2B. Sometimes that takes a long time to realize. And you know, the earlier you realize it, the better off you are. So I think, you know, that's great that you're able to recognize that sounds like this is something, you know, you'd wanted to kind of always do in the pandemic hastened that and it all came together.

[00:11:18] Guest: Andres Klaric: Yes, absolutely. The pandemic was a cathartic moment. Right. Like this Carlos moment for so many of us. And, in a way, like, of course, it was a lot of human tragedy. But I think for myself, all the pain aside, that like the world had to go through, it was a very fertile ground for innovation.

[00:11:41] Host: Paul Barnhurst: Yeah. I mean, there are a ton of companies that came out of it, and I think there's a lot of personal thought. I mean, obviously, would any of us want to go through it again? Of course not. But definitely can be learning during those adversities. And so, you know, before you started your own companies, you mentioned you'd spent your career in private equity and investment banking. You know, I'd gone to Wharton. And I'm curious what interested you in that area. Why? Why did you, like kind of investment banking? Private equity. What was the reasoning?

[00:12:08] Guest: Andres Klaric: Yeah, I think we need to contextualize it. At what times? At that point in the late 2000, early 20 tens, the SEC's work was to work in finance. Right. Like tech was interesting, but more okay, maybe right. Not. It was not an obvious choice. It was still between bankers and consultants, like the most sought after type of jobs in college. Right. And I started my freshman year like knowing that I wanted to end in Wall Street and like the key selling points for me about Wall Street was just like the learning curve. The fact that you effectively are going to work so hard that like, you're going to get four years or five years of experience in two years that effectively, no one is going to ever question your work ethic because it's just grueling, really. At least in the era that I was there, it was not an easy environment, right? But I would not change anything out of it. It built character. It built resilience. It allowed me to speak the language of investing it in a way. It also refined me. Right. I guess I was a kid, I raised in Bolivia, but I did not have the Polish background of some of the roles up there. I don't know, New York City or some of the big kind of first world countries, right? So for me, it was a unique opportunity to kind of be on an equal playing field to some of the most sophisticated type of clients.

[00:13:40] Guest: Andres Klaric: It's playing in the NFL of finance, right? And I learned a ton. It opened doors. It opened the doors, certainly of Harvard. It opened the doors of having the type of investors that I have today. So if I have to go back in time. I remember getting my Goldman Sachs offer in February of 2010. And I do remember with a a ton of gratitude, realizing how much of a step change it was going to be in my life. Right. It was. I can remember exactly where it happened. I interviewed the old 85 Broad Street building. It was kind of empty then, because they were moving to like 200 West. 200 West has been their headquarters since 2010. Finished that interview. Got on the subway to see my sister at Columbia. And I got by the time I got out of the one train and 119 or 1 12th Street. I got on this one train and I already had a missed call, and it was the headhunter for Goldman saying, like, I got the offer and it was a cold day in February, and I remember my hands shaking, but not all the cold. It's just like excitement that I was just going to go through that. Perhaps I had earned a ticket to that career.

[00:14:58] Host: Paul Barnhurst: No. That's cool. And I know you mentioned you're growing up in Bolivia. What age did you move to the US?

[00:15:05] Guest: Andres Klaric: I double my age. I'm almost 37 now. I came here when I was 18, so. So you came? Yeah. And I cannot get rid of my accent. For the love of God, no matter how hard I try it. Just if you know something that makes you lose your accent at this point, I've given up.

[00:15:21] Host: Paul Barnhurst: You know, good luck. I don't. It's interesting because some people are able to lose it really easy and others pick up multiple different accents. Some never lose it. So good luck. Yeah.

[00:15:36] Guest: Andres Klaric: That's cool.

[00:15:38] Host: Paul Barnhurst: So makes sense. You've been here basically most of your life now.

[00:15:41] Guest: Andres Klaric: Yeah. Yeah.

[00:15:43] Host: Paul Barnhurst: Yeah. And I'm curious, you know, you came to the US, you did the private equity investment banking you talk about how it was kind of that ticket, all those learning experiences, just an opportunity to kind of be in, as you said, the NFL finance. I'm curious, what's the greatest lesson or lessons you learned that help you as a CEO today? You took away from that time working in the industry?

[00:16:06] Guest: Andres Klaric: No one's gonna outwork me, period. I'm willing to put that make those ultimate sacrifices that I think as a business leader, sometimes you need to make. And, I mean, it is hard, right? Like your family suffers, your relationships suffer, or at least take a toll. But you're going to work harder. Harder than, than anyone else, right? And, stamina tends to like working smart is important, like being tactical. But in most instances that I've seen is the sheer determination that gets you to the finish line in most instances. I am not discounting the importance of thoughtfulness, but that, of course, is an obvious part of that equation. But if you don't put in the hours, the thoughtfulness just goes to the trash.

[00:17:01] Host: Paul Barnhurst: Got it. Did you say, kind of. As I hear you, that biggest takeaway was really the work ethic?

[00:17:07] Guest: Andres Klaric: Yes. The work ethic that you develop, there is just no, you're never no one is going to outwork you.

[00:17:14] Host: Paul Barnhurst: Yeah. No, I know investment banking can be some very long hours. We had a guy that I think he said he worked the summer at one of the banks and most days the average, you know, 19 hours a day. And it was just for his internship. And I'm like, ah, I don't know that I could do that.

[00:17:31] Guest: Andres Klaric: So yeah. No, but you know that you sign up for that, right? It's not that you pay like you get paid a bad wage. You make a very nice they pay very, very well. Right. So but you also work very hard.

[00:17:46] Host: Paul Barnhurst: Yeah. I mean, there are certain fields, investment banking, one of them, you know, consulting right out of school audit. There are others where, you know, going in. They're going to be long hours. You'll learn a lot. They'll pay you well. But you know, it's going to be very, very time demanding. So. Understood. All right. So I'm curious what things I want to dig into a little bit and spend some time on when it comes to modeling. You know, we've had a lot of guests that have talked about building financial models, but something we haven't focused on a lot is building those financial models. When you start a company, you know how it's different when you're a startup. Like when you start your company and you're like, okay, we got to put together some financial projections. How would you think about that? How did you kind of get started?

[00:18:35] Guest: Andres Klaric: The most you realize that like a three statement model is not like the expectation. The most important thing is to be able to, the revenue waterfall. That's kind of like the detail that matters. And you're kind of your cost structure, right? Like people want to see what products you're building, how much it costs you to sell them. And like times sell cycle for that. Right. Like that is the most important kind of view. Also there's the saying that like whatever you show folks, they're going to discount it. And that happens in private equity and hedge funds and all the places. But I think in ventures, just the extent to which they will discount your projections is like significantly higher. Right? We're talking about like more than 50% discounts on what we consider like a management base case. Right. So I think the more thoughtfulness and also evidence based things you can show. And that, it's very important. Right. Like so there's like a lot of macro components that come into it. But I would say that the modern age is a very small piece. Like there is just so much more, right? The demos of the software, that kind of stuff. I would say compared to the models that they had to rebuild in be like, this is you can rebuild in an hour or so, but it's not the same complexity.

[00:20:08] Host: Paul Barnhurst: Sure. So simple models, not a lot of complexity. You mentioned a lot around product demo. I mean, kind of where do you start? Let's say, you know, it's a new industry or new thing you're creating, or is it trying to figure out what the Tam could be, you know, how do you penetrate? What are some of the areas that you start with kind of those basic assumptions? Because obviously there's going to be more macro. It's not like you have a bunch of internal data you can just plug into your model. You have nothing.

[00:20:35] Guest: Andres Klaric: Yeah. I mean, if you're like it depends on the motion that you're running, right. If you're if you're a rip and replace strategy, let's say you're, you're let's say you were modeling Facebook and you're trying to and in let's say Myspace was a public company, right? So what you would show is like, hey, the total market in Myspace has 10%. You're growing at this stage or like I am taking market share from them at this pace or something like that, right? So that is one strategy. But if you're completely novel, like creating an industry, I think those are significantly harder. So you need to kind of mirror and be able to show the analog of, hey, in this industry, these guys were trailblazers and they grew at this stick and the market was like a fraction of it with this kind of nuances. So you will show in our industry, we think it will grow at this stage. So you can only show them. You either use the power of analogy or you use the power of a comp that's pretty similar to yours. That is public to kind of show why you're going to grow faster and justify it from a product standpoint, sales cycles, implementations, things like that that will allow you to build a succinct narrative on why you are growing faster, and why you will continue growing faster and outpace them and things like that.

[00:21:53] Host: Paul Barnhurst: FP&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 love 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, 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.

[00:22:58] Host: Paul Barnhurst: And what do you see as the goal for that financial model for startup? I mean, obviously you're generally trying to raise capital, but beyond that, what are you trying to get the VC firm comfortable with when it comes around model and projections? I'm sure product and technology and people are huge for the VCs and you have to have all that, but what are they really trying to get comfortable with when they look at your model?

[00:23:22] Guest: Andres Klaric: I think they're trying to first and foremost return the fund, right. Like get enough conviction that like if you put, they put a multiple of revenue or EBITDA down the road on your business, then whatever that amount ends up being, and after dilution, it's worth your entire fund. Right. Like that's essentially and based on that, if you're asking for them for 20 million and their fund is like 2 billion, they're trying to what they're trying to think is like, is this going to be 100 X, right. Like or more of that. Right. So that's kind of the math that they're trying to get to. And you need to show that thoughtfulness. Right. That it's hey, like in ten years this is going to be worth this. And your portion of the investment is going to be worth. Why? Because, this is kind of the capital requirements of this business. And what they need to be able to do is get comfortable putting a discount or whatever discount. They don't tell you what discount they bought. Right. But I'm sure in their investment committees they will say like, well, you got to believe that these two things go well and, and all of these things go well. Even if you put a discount to what these guys have told us, we still will win. Right? Like and perhaps they've showed us a 50 reasons to invest, but 48 of them don't really read the work. We're really excited about this too. And like the proof points. They're already getting this through very well, like x, y, z reasons. So they don't necessarily always tell you why they invest in you. Right? Like sometimes they just tell you afterwards they once they invested. Right. But your job is to help them, distill like key reasons to invest and why they invest some. You will probably find out down the road.

[00:25:04] Host: Paul Barnhurst: Yeah, that's really helpful. What was it like when you got your kind of first investment, first person, like, kind of institutional investor? What was that moment like for you?

[00:25:15] Guest: Andres Klaric: It's a very organized process, right? It's not that you just wing it. Right.

[00:25:20] Host: Paul Barnhurst: I hope not.

[00:25:21] Guest: Andres Klaric: Yeah. Yeah. The amount of preparation that goes into that, it's like you put together a deck. The deck is the easiest part. You need to be super strategic around who you actually speak to. So one of the most common mistakes as a first time investor, as a first time founder, you make and like I was lucky that I had a co-founder that was a repeat founder was a really were very quickly separate funds that like lead and funds that they don't. Right like immediately like you're right in the new category of like, okay, I know I need to check who leads the type of round that I am trying to raise. If your series A seed Pre-seed B so who has who writes the type of checks that I'm going to need, then you need to distill who invests in companies like mine. Right. Like that's. And who is an investor in something that looks like a competitor. So you need to do all these levels of distilling then like who am I connected to? What is my angle. Right. What is the criteria to invest? Right? Is I too early? Am I too late? And then of course afterwards is who can introduce me to these people, right? Or do I know them already? Right. Like. And then, once you kind of narrow down, you probably want to have, like, a list of at least 50 to 100 people. After you've distilled all of this universe of people that you probably want to talk to, right.

[00:26:52] Guest: Andres Klaric: And you need to be strategic around how do you gradually get your name out there and kind of communicate to the world that you're fundraising without necessarily like taking like footballs, right? Like you want to make sure you're not that your narrative and like, pitch and everything you're back up for everything is already pretty buttoned up by the time you have your first set of meetings. Of course, like your first set of meetings could be scratches, right? In the sense that, like, you don't know necessarily how they're going to go. Right? They could go very well, okay. They can go very poorly. Right. It depends. Right. And the founder needs to minimize and leave the least to chance by virtue of practicing. But maybe you already went through the delusional phase in which you thought your baby is the most beautiful one. And like you, no one has told you up until you actually face someone that you're actually millions of dollars out of. So not until you actually finally have the real meeting you will not know, but you can prepare for it. And like what you're trying to do is minimize that downside, right? So that the element surprises you have had enough to mitigate the potential downfalls. Right. But of course, as Mike Tyson says, everyone has a plan until they get beaten in the face.

[00:28:04] Host: Paul Barnhurst: So yeah, when you get punched in the mouth, everything changes. Now, I appreciate you sharing that. And I'm curious, what advice would you offer? Let's say we have somebody listening. You know, they're building a financial model for the first time for a startup. If there's some advice you could offer them, what would it be?

[00:28:22] Guest: Andres Klaric: It's a dark startup or someone else's startup.

[00:28:25] Host: Paul Barnhurst: Let's say someone else's. Let's start with somebody else's. So they're modeling for somebody. Somebody come to them and said, hey, I need this model built for my startup.

[00:28:33] Guest: Andres Klaric: Yeah, in general, it's probably because it's most founders don't know how to model, right?

[00:28:37] Host: Paul Barnhurst: So yeah.

[00:28:39] Guest: Andres Klaric: I think that they need to spend a lot of time understanding the business. So for me, like the model part is the easiest part of my day to day job, right. I would say for some founders it's probably the thing they dread the most. Right. Because effectively they've never done it right. It's like asking me to do like SQL, right? It's just not something I'm used to. Right. That's something. My co-founder would be far more technical than I am, right? So if you're building for someone, you need to really understand their business. Right? Like spend time for them explaining you how their kind of business model operates. Right. Because you're obviously going to have a model that they want to show investors and they want to. You also want to help this management team to run a business, right? So the first clear question is like, are you building this model to kind of like project the business into the future, or you actually want to use it as a source of KPIs to drive the day to day business. Those are very different models, right? One is an operational model and the other one is a financial model. I would say, understanding that out of the gate for that person will be important because the operating model is something that they will not be there to update every month when the new numbers come in. So they need to kind of guide that founder in terms of how do they actually get a sense of where the company is going by virtue of updating that every month of the financial model that they use for investors? It probably doesn't get used that often.

[00:30:11] Host: Paul Barnhurst: Got it.

[00:30:12] Host: Paul Barnhurst: And I agree with you with what you said there about, you know, understanding whether it's financial, operational, you know, really understanding the business. As you said earlier, you know, the complexity of a startup model is nowhere near some of the, I'm sure, big M&A or LBO or, you know, large deals you do in investment banking. And that's and it doesn't need to be it's not about that.

[00:30:34] Guest: Andres Klaric: I mean, you can make it. You're not gonna get any extra points for that. It's going to be on the margin. Like no one's going to be like, wow, look at this model.

[00:30:42] Host: Paul Barnhurst: You mean you've never had an investor go, wow, your model is so slick. I now want to invest. Right. It's not how it works.

[00:30:51] Guest: Andres Klaric: Yeah, but I think to some extent that applies elsewhere. It just more. It is just that the percentage ascribed to the model relative to other later stage investment rounds is just significantly lower. Right.

[00:31:07] Host: Paul Barnhurst: Sure. Yeah. I mean, if you're doing the big, huge deal that has the large LBO and, you know, you're looking at a bunch of different discounts, cash flows or whatever, all those numbers and percentages, they can make a big difference in the final deal where you know, you're brand new.

[00:31:22] Guest: Andres Klaric: Yeah. For us is binary, right? The outcome is either going to work or not. Right. Like I think later stage deals, it's more like the size of the return and then hurdles and all of that. And that means that your model needs to be more sophisticated. For us, it's like, is it going to be or not? Whether this company is going to fail. That's that's kind of it.

[00:31:43] Host: Paul Barnhurst: Yeah. Can they be a unicorn or are they going to fail? Okay, well, they have a chance of being a unicorn. All right. We'll put them in the portfolio. Hopefully 1 or 2 of these hundred pay off and we get our return.

[00:31:55] Guest: Andres Klaric: Exactly.

[00:31:56] Host: Paul Barnhurst: Yeah. Very different from if I buy this company. I need x, Y, and Z to make this amount of money.

[00:32:04] Guest: Andres Klaric: Exactly.

[00:32:06] Host: Paul Barnhurst: Makes sense to me. So these are a couple kind of standard questions we ask. And then we'll move into what we call a rapid fire section. So first: what's your favorite Excel shortcut. Do you have a favorite.

[00:32:17] Guest: Andres Klaric: Well I like there's like some defunct ones. And I have to admit that I made the biggest cardinal sin and I switched to a mac in the last five years.

[00:32:25] Host: Paul Barnhurst: Sorry. We got to hang up on you. Now you're out.

[00:32:28] Guest: Andres Klaric: So I miss so much of my PC. Like my PC keyboard. It is. It is a shame that the Macs have not been able to figure out a keyboard that is as good as the PC's. If there's anything that PCs have is an amazing keyboard, right? So there's just so many shortcuts in Excel, right? Like I just miss like not having to like merge cells or things like that to do like just to put like an underline and accounting underline over like three boxes below and like not have to merge or do it in a way that I could just do it with shortcuts. Those were great. Like edit links. It was like, I don't remember that. That's still the, the, the one in the new Excel, but all that, whatever. Fax it back. Had it back in the day, were coloring everything in blue, green. Everything in the model just made it look like such a pro. I remember that being just really loving that.

[00:33:25] Host: Paul Barnhurst: Yeah, that's the biggest thing that's kept me from considering a mac is I'm like, I just can't do excel in a mac, so I get it. I mean, Macs are great computers? But that's one area shortcuts. And some of those things that are just they're just not as good.

[00:33:38] Guest: Andres Klaric: Yeah. Removing grid lines fundamental like removing grid lines has to be one of the things that like it annoys me so much when someone says I need something with grid lines. I'm not sure how you feel about grid lines.

[00:33:51] Host: Paul Barnhurst: I'm not. A grid doesn't annoy me if somebody sends them, but usually when I'm working in cell, one of the very first things I do is I'll turn off the grid lines that I haven't listed that as my favorite shortcut. But now that you mention it, that has to be pretty high on my list.

[00:34:07] Guest: Andres Klaric: And of course, freezing the column. Sometimes it does out.

[00:34:12] Host: Paul Barnhurst: Yes. Yep.

[00:34:14] Guest: Andres Klaric: Yeah. I still remember that. It's just not the same on a mac.

[00:34:17] Host: Paul Barnhurst: Yeah. If you've done it long enough, they're just kind of muscle memory. Just unfortunately, you can't do it on a mac.

[00:34:23] Guest: Andres Klaric: And of course, paste. Unformatted. That's good. Pasting formats, the good of us.

[00:34:30] Host: Paul Barnhurst: And selecting all the different types of paste options.

[00:34:33] Guest: Andres Klaric: Yeah. And of course the elevator. Right. Like it's not a real shortcut but control down. Control up just to go through the elevator. That's good.

[00:34:42] Host: Paul Barnhurst: Yeah. Yeah, yeah. No, I hear you. They're basically. Yeah. They're shortcut over doing it with your mouse, but they're not a shortcut in the traditional sense. So I'm curious, coming back to Excel, what's the most unique thing you have created in Excel? Most unique model that you've done could be for your personal life. Doesn't need to be for work.

[00:35:02] Guest: Andres Klaric: No, I've done like the net worth calculation that you mentioned earlier. I would say most unique one that I've done. I think I did a lot of like commodities, one like calculating the value of like sugar mills, but like, but like going down to, like the fields that they own and like, kind of the conglomerate. How much would that be worth? That was fairly interesting, right? Because some sugar mills only produce sugar, but some of them also produce ethanol. So what will be the CapEx to turn into ethanol? And like the specific price subsidy for ethanol in each jurisdiction that sugar mill was at? That was and of course, this was in Brazil. So on top of that, you had effects. You have the price per pound of sugar. There were a lot of like, forward curves on the contracts that we had to take. And of course, we were borrowing dollars to borrow in local currency. Those were like super complex models. The weirdest one probably that I did, though, was for pension fund in Mexico and just the like working with our actuaries and kind of seeing what kind of some of these pensions and some of these like life insurance assets will be worth. That was painful, right? It's not like the type of model that you built just in a week. There's just a lot of back and forth, and its actor is trying to explain this to bankers and bankers trying to explain our theories. And that I don't wish it to any. My worst enemy. Those are tough.

[00:36:40] Host: Paul Barnhurst: Yeah. I won't comment on actuaries.

[00:36:43] Guest: Andres Klaric: Yeah. No. Yeah. I mean, both parties have good points. It's just that you needed to compromise on something.

[00:36:50] Host: Paul Barnhurst: It's just. Yeah. Anytime you involve a lot of different groups, you're going to have different opinions. And coming together just complicates things. Doesn't matter how smart or who's right or who's wrong. It's just anytime you have a different groups, it's more work.

[00:37:04] Guest: Andres Klaric: Yeah, indeed.

[00:37:06] Host: Paul Barnhurst: All right. So we're going to move to rapid fire next. So how this works is I have about 12-15 questions. And you can't use the typical consultant answer. It depends. So you have to pick a side like yes or no in the majority of situations. Like I'll give you the first one. If I was to say circular references yes or no. And you just have to provide one or the other. Then after we go through all of them at the end, you can elaborate on 1 or 2, because I realize it depends on many of these, right? There is nuance to them, but more seeing if you had to pick one side or the other quickly, where would you go? Make sense? Ready?

[00:37:48] Guest: Andres Klaric: Yeah.

[00:37:49] Host: Paul Barnhurst: All right. Circular references. Yes or no?

[00:37:52] Guest: Andres Klaric: Yeah, absolutely. Yes.

[00:37:53] Host: Paul Barnhurst: VBA yes or no?

[00:37:56] Guest: Andres Klaric: I'm gonna say no. I don't think I've ever used a VBA.

[00:37:58] Host: Paul Barnhurst: Do you prefer a horizontal model? Lots of sheets or vertical? Kind of. All your schedules on one sheet.

[00:38:05] Guest: Andres Klaric: I like the months and years horizontally when it gets too big. Probably like the different schedules on.

[00:38:14] Host: Paul Barnhurst: Dynamic arrays in models. Yes or no. Dynamic like, where they spill. If you've worked with the spilled formulas now in Excel.

[00:38:24] Guest: Andres Klaric: No. What is that?

[00:38:25] Host: Paul Barnhurst: So the formulas now, you know how they used to always operate in one oneself today, they will spill into multiple cells. So if you put an input into them, instead of having to adjust the formula, like let's say you have 12 months, you change it to 13. If it's a dynamic formula, the formula will move out to column 13. So the formula lives in one cell, but it can adjust. And let's say you reduce it to six months it will reduce to six. You haven't had a chance to work with those then I'm.

[00:38:54] Guest: Andres Klaric: Yeah.

[00:38:55] Host: Paul Barnhurst: You run in your own business I think since that come out versus modeling.

[00:38:58] Guest: Andres Klaric: But that's when did it come out.

[00:39:00] Host: Paul Barnhurst: It was released I want to say 2020. It's in 365 and.

[00:39:04] Guest: Andres Klaric: 2021.

[00:39:05] Host: Paul Barnhurst: Excel.

[00:39:05] Guest: Andres Klaric: I left the five years ago. So exactly like when I left at the wrong time.

[00:39:11] Host: Paul Barnhurst: 19 was beta. I think 2020 was when it got released or so. And so it was the it was a big, huge overhaul. So you've missed that one. So you don't have we'll go with no then.

[00:39:23] Guest: Andres Klaric: Yeah. No no I never it was never an option.

[00:39:26] Host: Paul Barnhurst: Yeah exactly. External workbook links in models. Yes or no in general?

[00:39:31] Guest: Andres Klaric: No, it's not a good practice.

[00:39:33] Host: Paul Barnhurst: Named ranges. Yes or no?

[00:39:35] Guest: Andres Klaric: Rookie. I seldom used it.

[00:39:38] Host: Paul Barnhurst: Alrighty. What about. Did you use a a formal standard like smart or fast or one of those when you were modeling or just kind of follow some general principles.

[00:39:49] Guest: Andres Klaric: General principles.

[00:39:50] Host: Paul Barnhurst: All right. Perfect. Do you think financial modelers should learn Python in Excel? Do you think it's needed.

[00:39:56] Guest: Andres Klaric: Based on what you said about, like, the prefill things? I think it's just becoming technology. At least my line of business is like low code. No code. Right? Like, so it's kind of like asking someone if they should learn the abacus. I do think that probably like the type of modeling people are going to do in the future, it's going to allow them to do like far more complex modeling without necessarily the nitty gritty of our good old days. Right? Like, for example, thinking about the mean function and all those things like that. And when you're trying to do like the cash sweeps and for like, LBO models, I'm sure that they're gonna have to think about the stuff that is complex now, but with formulas that are far more powerful and completely not care about things like, finding your model crashing because of circularity, I think hopefully Excel fixes that and like all that riffing.

[00:40:49] Host: Paul Barnhurst: Yeah. No, I got it. Makes sense. What's your thoughts about Excel? Will it ever die? Do you think it'll ever go away?

[00:40:57] Guest: Andres Klaric: Not in my lifetime.

[00:40:59] Host: Paul Barnhurst: That's a common answer I have. My favorite one was people say yes, but I hope not in my lifetime.

[00:41:05] Guest: Andres Klaric: Yeah.

[00:41:06] Host: Paul Barnhurst: Do you think I will build the models for us in the future?

[00:41:09] Guest: Andres Klaric: The first draft, for sure. It already does.

[00:41:12] Host: Paul Barnhurst: All right. So do you believe financial models are the number one corporate decision making tool?

[00:41:19] Guest: Andres Klaric: Corporate finance for sure.

[00:41:20] Host: Paul Barnhurst: Okay. That works. And then what's your favorite lookup function like? Your lookup function choice. You like index match Vlookup, Xlookup.

[00:41:31] Guest: Andres Klaric: I've. I've seen some like sun brought up where you look up at some point. Those look pretty fancy. What was the one that I. The one that you use for kind of changing scenarios. I'm forgetting and I'd say it's not true. I've seen another one.

[00:41:50] Host: Paul Barnhurst: Switch.

[00:41:52] Guest: Andres Klaric: No, it's I think it's you kind of move it so that it's kind of move horizontal move to the right. Oh, is that you're talking about offset, right.

[00:42:02] Host: Paul Barnhurst: There you go. Yeah. That's definitely one you can use. There's a lot of them.

[00:42:06] Guest: Andres Klaric: Yeah. Offset is the one that I used to like a lot. I always forget how to use it. Then you use it and it's like oh, this is awesome.

[00:42:12] Host: Paul Barnhurst: Yeah. You know, I've had formulas like that. It's like, if I ever have to use indirect, I can never remember the syntax if I'm referencing another worksheet. It has been fabulous for that because I just say write the formula to do this, and it gets all the syntax right. And then I could just check it and make sure. You know, it works in my spreadsheet. But I hear you sometimes. All right. So we're going to go ahead and wrap up here in a minute. But anything else you want to say on rapid fire, any of those you want to elaborate on or any anything you want to add?

[00:42:43] Guest: Andres Klaric: No, I think I learned a lot. So especially about that one to release in 2020, I would have been nice to have.

[00:42:50] Host: Paul Barnhurst: Yeah. It's fabulous. If you go to my YouTube, there's some videos of different things where I did an entire webinar about dynamic arrays. Big fan of if you could offer one piece of advice to our audience to be a better modeler, what advice would you give them?

[00:43:05] Guest: Andres Klaric: Version up. I like, although I know that now like you can actually check versions without but version up.

[00:43:12] Host: Paul Barnhurst: Always got it. Appreciate it. If our audience wants to learn more about you or get in touch, what's the best way for them to do that?

[00:43:21] Guest: Andres Klaric: LinkedIn. Get in touch with me through LinkedIn. I've had great mentors through my life. I owe them a debt of gratitude. So if I can pay it back. Helping others would love to do that.

[00:43:30] Host: Paul Barnhurst: Thank you. I appreciate that a lot. Enjoyed having you on the show, Andreas and good luck building Fuse. Like I said, it's a lot of work for a startup. I know you work a lot of hours so you know, wish you the best of luck with that. And thanks for joining us on the show today.

[00:43:44] Guest: Andres Klaric: Thanks, Paul.

[00:43:45] 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 modeling. 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.