Quantrix vs. Excel - Financial Modeling

Written By Ankita Ghosh

Show Notes

Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.

Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.

Lyndsey Weber, a seasoned expert in financial and supply chain modeling join us this week for a lively conversatio on both financial and supply chain modeling. She recounts her experience with some of the worst models she has encountered, the lessons learned, and the importance of organization and design in creating effective models. Lyndsey shares her journey from ExxonMobil to Quantrix, offering a deep dive into the art and science of financial modeling.

Key takeaways from this week's episode include:

  • Having a well-defined structure and approach is crucial for creating and maintaining effective financial models. Poorly organized models can lead to significant challenges and inefficiencies.

  • A horror story about inheriting a model filled with bad practices, including hidden reference cells and broken VBA code. The experience teaches her the value of starting over and building a model from scratch with best practices.

  • The importance of understanding stakeholder needs, both emotional and practical, and designing models that cater to these needs. This approach helps in building models that are not only functional but also user-friendly.

  • The benefits of using Quantrix over traditional Excel, highlighting features like always-on pivoting, natural language formulas, and role-based access, which enhance efficiency and collaboration.

  • One of Lyndsey's key pieces of advice is to prototype models on paper before building them. Mapping out inputs, outputs, and key calculations in plain English helps in creating a clear and effective model structure.

Quotes:

Here are a few relevant quotes from the episode on financial analysis and modeling:

"This model that I inherited had, I feel every bad practice in the book, I vividly recall a couple of formulas where they just pointed to what I would call a cell island.”-Lyndsey Weber



“Having a defined structure and approach that can be repeated, I think is essential.”-Lyndsey Weber

In this episode, Lyndsey provides valuable insights into the complexities of financial and supply chain modeling. She sheds light on the best practices and tools that can make a significant difference in model-building. This episode will help you enhance your modeling skills and create more effective and user-friendly models.

Sign up for the Advanced Financial Modeler Accreditation Today and receive 15% off by using the special show code ‘Podcast’. Visit www.fminstitute.com/podcast and use code “Podcast” to save 15% when you register.  

Follow Lyndsey:

 Follow Paul: 

Follow Financial Modeler's Corner  

In today’s episode:

[00:55] - Introduction

[03:57] - Worst spreadsheet model horror story

[04:43] - Key takeaway: Importance of organization in modeling

[06:57] - Guest Backgrounds

[12:10] - Evolution of modeling roles at ExxonMobil

[14:20] - Differences between supply chain and financial modeling

[20:30] - Overview of Quantrix as a modeling tool

[22:00] - Advantages of Quantrix over Excel

[28:40] - Areas for improvement in Quantrix

[35:27] - Considerations for scalability and collaboration in modeling

[38:50] - Excel Discusssion

[44:58] - Rapid Fire Section

[52:23] - Importance of prototyping models

[53:00] - Get to know our guests personally and Conclusion

Full Show Transcript

Host: Paul Barnhurst:: Welcome to Financial Modeler's Corner where we discuss the art and science of financial modeling with your host, Paul Barnhurst. Financial Modeler's Corner is sponsored by the Financial Modeling Institute. Welcome to Financial Modeler's Corner. I am your host, Paul Barnhorst. This is a podcast where we talk all about the art and science of financial modeling, with distinguished guests from around the globe. The Financial Modeler's 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, Lyndsey. Welcome to the show.

 

Guest: Lyndsey Weber:: Thanks, Paul. Glad to be here.

 

Host: Paul Barnhurst:: Yes, I'm excited to have you. So Lyndsey Weber is joining us today. We're going to talk quite a bit about Quantrix, which is a modeling tool. We'll get into that a little bit later. That's how we met. She used to work at the company, and I thought it'd be a great opportunity for people to get familiar with tools beyond Excel. So we'll talk quite a bit about that. But before we get there, we always like to start every interview before we get into the background and some other questions with the worst model you've ever seen, tell me about that horror story. I know you have one.

 

Guest: Lyndsey Weber:: Yes, I think everybody has more than one, of course. The one that stuck out in my mind was maybe one of the first terrible models that I inherited from someone else. Pretty early in my career, we were trying to build a cool workforce analytics model, which is not quite financial, but taking all of the data for our supply chain organization and the skill assessments that I think we all typically do in our corporations. And matching people in their skill sets to future roles in the company to see who is like the perfect fit for certain roles that we had planned three, 4, or 5 years out. This model that I inherited had, I feel every bad practice in the book, I vividly recall a couple of formulas where they just pointed to what I would call a cell island. There was a reference cell that was like row, GB 234. And it was like a single value. And they had gone so far as to even make the text of that cell white as if it was like super secretive and hidden. So trying to reverse-engineer this model and figure out where everything was located in the references was horrible. And then you think you've got it cleaned up, and then you try and run the model and you realize there's a whole set of random VBA code that is lying underneath. Half of the code works, half of it doesn't. You run certain things at certain points and it crashes. So Yes, crazy crazy model, but maybe a good start for the learning curve for reverse engineering. Some complicated models with maybe not be the best practices.

 

Host: Paul Barnhurst:: So did you end up starting over or did you salvage that existing model?

 

Guest: Lyndsey Weber:: 100% started over, Paul. Yes, there was nothing in there that I felt like I could rebuild from but certainly took a lot of lessons from that model to try and make it better the next time.

 

Host: Paul Barnhurst:: That's what I figured, as you were telling them. Like you had to start over. That's just not salvageable.

 

Guest: Lyndsey Weber:: No.

 

Host: Paul Barnhurst:: We had a guest one time, similar to what you said, like the GB, whatever. He goes, in one model, I found an assumption in row 7000.

 

Guest: Lyndsey Weber:: Yes, if you're trying to hide it in my opinion, you're already off on the wrong foot. We don't want any secrets in our models.

 

Host: Paul Barnhurst:: That's just where I use very hidden. In VBA?

 

Guest: Lyndsey Weber:: Yes, exactly. Top secret, please.

 

Host: Paul Barnhurst:: No, I agree with you. So what was your key takeaway from that being one of your first models? What did that teach you?

 

Guest: Lyndsey Weber:: Organization. And I think you probably talked to a lot of financial modelers who speak to this, but having a defined structure and approach that can be repeated, I think is essential. So this model did not have a table of contents. There was no guide for end users to know where to start in the model or what to do. And there was no dedicated space for things like assumptions and raw data and things like that. And so to me, that was for sure. One of the biggest lessons from that model was I can try and build a better mousetrap, but if I just follow my own personal style and opinion how this should be organized, this is going to be repeated. The next person who comes in now opens my model and tries to figure out what is it doing, how is it written, and why is it organized this way. I think the analogy I've given people before is a poorly organized financial model, whether it's in Excel or something else. It's like going into some stranger's house and trying to unload the dishes from their dishwasher and put them into the cabinets and drawers and cupboards. You have no idea where anything goes. It's a complete guess. So we have to open all the drawers and all the cabinets. And show people where things belong to help them learn the model and how it works.

 

Host: Paul Barnhurst:: Yes, I like that analogy. I hadn't heard that one before. I've heard others, but that's a good one. And at the end of the day, it comes down to design. So important in models, if you follow a structured design, it's going to be a lot easier for people to understand the model. And it sounds like you learned that early on. I wish I had learned more design principles early on. For years, just figuring it out on my own, never seen, hey, Hard Code? Do this. Taking a modeling course to get those good design principles. So I built plenty of what I like to call Franken models over the years.

 

Guest: Lyndsey Weber:: Yes, we know those. Yes, I think it just comes with time. I feel like you pick up something new, a new best practice. You get the experience and hopefully see some other good examples of models that other people have built.

 

Host: Paul Barnhurst:: Yes, it comes with time. And I think there's some real value sometimes to just take a course. And just get those best practices from the beginning. So you have at least that framework to help guide you even though you need the experience to go with it.

 

Guest: Lyndsey Weber:: Yes, absolutely.

 

Host: Paul Barnhurst:: So why don't you tell our audience about yourself, your background, and what you're doing today?

 

Guest: Lyndsey Weber:: Yes, sure. So as far as an undergrad degree, I typically just call it industrial engineering, but it was a blend of supply chain management, business, and engineering which I loved and picked specifically because I didn't know exactly what I wanted to go and do. But I've always loved Supply Chain. I love math and even took a class in ERP in college, which I think is a little bit unique. So was exposed to SAP even in my college studies, took that degree, and went and started at ExxonMobil the chemical company down in Houston. And that's where I would say I started to get the experience, not only in complex models and planning but also in seeing truly how supply chains are run at the largest companies in the globe. And I think that's a fascinating world, and I'm sure we'll talk about that. But there is so much interesting overlap and significance, I think, in the relationships between finance and supply chain that can help you understand what decisions need to be made in a business. One of the things that I did at Exxon was run global projects that had a technology piece to them, so sometimes it was looking at new palletizing equipment to run at our manufacturing plants, or bringing in a new mobile application to help track and trace our inventory across the globe. And that showed me that I love tech and the overlap between supply chain and technology. So that's what ultimately brought me to Quantrix a scrappy startup feel, a small company compared to the conglomerate that is Exxon.

 

Host: Paul Barnhurst:: 15 employees Versus 50,000 or whatever.

 

Guest: Lyndsey Weber:: Yes. Something like that. Insanely different and refreshing and fun to be honest. But they were looking for somebody to help start up the pre-sales organization at Quantrix. Of course, hadn't done pre-sales, but certainly had done internal selling to stakeholders with these projects at Exxon, and with a lot of the Excel background that I had built up at Exxon, it seemed like a good fit. Had never used the Quantrix product before being hired, but was very fortunate to have jumped into the company and realized, I would say quickly, that this is a powerful and very cool tool, and I regret not knowing about it when I was at Exxon for sure.

 

Host: Paul Barnhurst:: Thank you for sharing and appreciate getting a little more of the background. I don't even think I knew what an ERP was in college, let alone take a class about one. It's impressive.

 

Guest: Lyndsey Weber:: Yes, it was it was unique. And I think it was helpful to get that exposure early because certainly going into your first couple of internships and then obviously at a Fortune 100 Fortune three writer which is Exxon, you see that away. There are not too many roles that I don't think you end up in at some point in an SAP or an Oracle or something like that.

 

Host: Paul Barnhurst:: If you're working for big, large global companies, odds are you're going to use one of them. I used SAP for the Navy. I used Oracle at American Express. I get it, I did procurement. That's where I started my career. Not which is very close to the supply chain. I was a contractor absolutely writing a lot of contracts and things. Although Yes, very unique for the Navy as you're ordering a bomb or researching about a passive surveillance radar. It was all, that's so cool. It was a weapon center, so it was a service contract. Awesome. So it was interesting. Some of the things you do like. Okay. Yes. We can't tell you about that. You have to have a top-secret clearance, we can tell you what we want to buy, but we won't tell you how we're using it. We have that. Because they couldn't. So that was interesting. But it was fun. It was different. Much better than buying pens and pencils, as.

 

Guest: Lyndsey Weber:: 100%, yes.

 

Host: Paul Barnhurst:: When you hear about. So at ExxonMobil, I know you had a lot of opportunities to build models. And were those mostly supply chain models or what what models were you building there? What was the goal with the models you worked on at ExxonMobil?

 

Guest: Lyndsey Weber:: Yes, it evolved, I would say, with the different roles that I ended up having a lot of the early ones were, I would say, significantly more project-based financial models. So thinking about things like return on investment or I would say large capital equipment type models where the consideration is we're going to open a new plant in this country and we think we're going to need 3 or 4 new packaging lines or production lines. Can we justify that cost and how much do we need to charge for the film wrapping the pallets, and all of this? As far as the raw material costs, how do we back then calculate and figure out what are our margins? How much could we go sell this product for things like that? So I would say more project-based finance, where some of the models that I built originally, of course, as I mentioned, with the force model, some of that later bled a little bit into, I would say like workforce analytics people personnel planning, which is another interesting tangent off of financial modeling. And then I would say towards the end it was a lot more true, what I would call supply chain planning models. So okay, integrated business planning, sales and operations planning, saying we've got this, this amount of demand right, coming in for all of our product lines for this month through the next 6 to 9 months. How do we balance that with what our current supply is and what our production plans are, and ensure that we're maximizing the fulfillment of products to customers? And that, of course, includes not only sales units, but also, like we said, margins, pricing, and runtimes at the plants. My role was to use the models that we had built to make those decisions and make sure that we were hopefully maximizing the revenue for the business unit.

 

Host: Paul Barnhurst:: Were those mostly in Excel or were they using other tools? I imagine there are times when there's some optimization and different things you need to do that could be a challenge with just Excel. So I'm curious, was it all Excel-based or were there other tools you use at all?

 

Guest: Lyndsey Weber:: Yes, primarily I would say, Paul, I was pretty familiar with the day-to-day in SAP and Excel is the two primary tools of choice for obvious reasons. There's not as much nitty gritty decision-making, I think, that you can make in SAP, particularly when you have disruptions to your supply chain. If there's a stockout or there's a plant strike a tsunami or a typhoon, We don't typically have the luxury of running to an ERP system to make those decisions quickly. So we ended up in Excel, of course, other departments within the company and some of my close friends worked in, I would say, more of a true optimization department, and they had some very sophisticated, to your point optimization type tools that they use to do I would say complex linear programming, running algorithms, things like that. But for the most part, we were we were putting our heads together and working through the details in Excel.

 

Host: Paul Barnhurst:: And that's why I was wondering, is there some optimization or things like that? And that makes sense for the bigger optimization, running it through a specialized tool or an algorithm or whatever the basics in Excel, I think that's pretty common for most companies. And then you may have something else depending on the complexity. What do you see? I'm curious. You've built financial models, the project finance, and you've done supply chains in a number of different areas. What do you see as maybe the biggest difference between supply chain modeling and more traditional financial modeling?

 

Guest: Lyndsey Weber:: Yes, this is a hard question, I think, because I see a lot more in common than not in common between them. One of the things I would say to Paul, and maybe this is just from my experience, is I tend to see supply chain models being much more granular and detailed, at least in the assumptions that we're making. Because oftentimes it is boiling down to not only a particular, let's say, skew or item that we're selling, but even peeling back 2 or 3 more layers of that to say, well, what are the raw materials that go into those who are the suppliers that are feeding us, those who are the suppliers of those suppliers? So typically I feel like in a supply chain model, we have maybe 2 or 3 tiers even deeper of assumptions that we're making. Then at least in like a traditional three-statement financial model or something like that so I think that's one of the primary differences. I have seen financial models that go on a detailed daily basis, especially if we're dealing with stocks or futures, something like the trading markets. but I think that's another maybe differentiator of supply chain models is oftentimes we are looking at daily data, daily decisions, or at least weekly if we're looking at, let's say, production plans, in a market where there's a lot of volatility and we have to make adjustments to those plans pretty frequently.

 

Host: Paul Barnhurst:: Yes. So it sounds like I mean I'm going to guess there are a couple of things. I guess you mentioned granularity. Often it's more granular because you need to know how much to order. There are a lot of things that you have to get or you end up with a working capital problem, a cash, all those types of challenges, a bunch of inventory that goes bad, whatever it might be, or customers who can't get what they want and they're all upset and go elsewhere. One of those types of things. And then I would imagine the other is with a lot of those models, you're probably not building with supply chain like three-statements.

 

Guest: Lyndsey Weber:: Not easily.

 

Host: Paul Barnhurst:: You're not modeling the balance sheet for say. You're modeling the inventory. You're modeling cash. You're not thinking of it in a three-statement type of way.

 

Guest: Lyndsey Weber:: Yes, for sure. And I think to me, that's one of the things that I have found so fun and interesting about seeing both the supply chain side and the finance side because I actually feel like there are two different sides of the same coin. When we look at supply chain models and financial models together, I think you get 98% of the picture of what's going on in the business. Because Yes, to your point exactly. We have very specific KPIs in the supply chain planning world that we want to track. The unit cost to serve on time in full margins on a per product or even a very specific per SKU basis. All of that information ultimately does feed into the three-statement. And so I think it's very interesting where you could start in either direction. But I think it's fun to start at the three-statements in view of a business drill down into some areas where you have some questions and see the links through all the way to the supply chain because through the supply chain lens is where you're going to get access to the Intel around what are our customer's buying behaviors? Do we have an efficiency problem? Is that coming from manufacturing? To your point, even on procurement, like do we have an opportunity to renegotiate a raw materials contract that could significantly reduce some of our expenses? It's fascinating to me, the clues that you can pull together from both of those types of models.

 

Host: Paul Barnhurst:: Yes. Well, and you see a lot of companies that will have supply chain finance roles. Sometimes you see the supply chain sitting in finance. I was at a large Fortune 100 company last week. And we trained both finance and sourcing people. They were both in the same group. And so there's people doing sourcing. There are people doing more traditional finance roles. Because you're right, in many ways they are just opposite sides of the same coin. whether you're building a three-statement model or you're building a supply chain model, you need to understand the operations of the business. And seeing both of those together helps you understand them at different levels, which makes you better. Whether you're doing supply chain or you're building the traditional three-statement model, you'll be better at the job understanding the other side. And so you've had a good opportunity to see both sides of that. And I would imagine, though coming to Quantrix probably opened your eyes and helped you see a lot more at a bigger level than probably some of the detail you were doing at ExxonMobil.

 

Guest: Lyndsey Weber:: Yes, absolutely. One of my favorite parts of my time at Quantrix was seeing industries outside of oil and gas and chemicals. Of course, that's where I started my career at Exxon. It's so fun and interesting, I think, to see how financial models vary based on the industries that you're working with. So Quantrix has customers across tons of different industry verticals. So one day we might be talking to a company that's doing a big M&A model, We may be talking to another company that is in electronics. And they're trying to make decisions on these multiyear contracts with communications providers. And they may also have a retail arm. And then they also have a semiconductor planning arm. It's just so cool to see the variety of industries there. But I think to your point, Paul, for sure, it felt like coming from the supply chain, very tactical planning at Exxon to this role at Quantrix. We certainly went up 20,000ft, if you will. A lot of the models are much more strategic and high level in the sense of, like you said, rolling up to the financial statements, looking at things from a PNL level, even if you have a large company where it's multiple panels. That just the level of detail is certainly, I think, rolled up and consolidated a lot more with what we were often seeing at Quantrix.

 

Host: Paul Barnhurst:: Sure makes a lot of sense. So why don't you tell our audience a little bit about a little bit more about what Quantrix is, maybe an overview of what the tool is, and then have a few specific questions I'd like to get into just introduce our audience because I'm guessing 99% of the listeners may be more like Quantrix. What's that?

 

Guest: Lyndsey Weber:: Yes, Yes, this this was always the greatest challenge, and the greatest passion, I think, of my time at Quantrix was spreading the word on the product and what it could do. So in short, Quantrix is a multi-dimensional modeling and planning platform or tool. So certainly it's, I think usually easiest for people to think of it as like an Excel alternative. Certainly, it plays in that space. I would say more often than not it has an in-memory calculation engine. And I would say the best way I've described it to people is if you are an expert financial modeler and all of the best practices and tricks in Excel to make a beautiful, consistent, airtight financial model. I think you would love Quantrix because most of those best practices are built-in inherently to the way that the tool operates. From a structural perspective, how you build a model from scratch, how you can prototype in a model and then ultimately share that with other users, I think is incredibly flexible. And to me, the biggest differentiator especially if we're comparing it to Excel as the reference point, is just the level of built-in efficiency that I think modelers could gain while still retaining a little bit of that cell-based user interface that everybody loves from Excel.

 

Host: Paul Barnhurst:: Yes. So talk about what are a few of those things when you mean if you're doing best design a lot of it's built-in. Maybe give us a few examples of that with Quantrix where it may not be in Excel. Can you throw out a few examples?

 

Guest: Lyndsey Weber:: So maybe my favorite is there's a concept in Quantrix of categories or dimensions. So oftentimes I think, expert financial modelers will define named ranges. Maybe if you're ultra fancy a dynamic array to help you as your model is usually expanding sometimes contracting, but usually it's expanding and growing. We want to try and make those references to cells as dynamic and bulletproof as possible. In Quantrix, that concept of a dynamic array or a range is all automatically built-in. It's not something that the user, the modeler, has to define. You can just press enter on the keyboard and create those subsets of items within your model, and then drag and drop them actually to different places in the model to use them in multiple places. So I think that's one example. The other example, of course, I think that is most common that people see when they first start looking at Quantrix is not super unique among a lot of other modeling tools, but natural language formulas. So again the benefits that we use for named ranges, tables, and all of those kinds of best practices in Excel or in Google Sheets. That is out of the box. How you refer to objects within a context model is simply by the plain English name that you've given to every single thing within your model. There are no, as we used to call them, battleship formulas. There is no concept of a C7 in Quantrix. It's going to be the name of that month that product, or that line item in your PNL that you're going to specifically refer to in your formula. So they end up being a lot more human-readable.

 

Host: Paul Barnhurst:: Yes. I teach a lot about Excel tables and try to help people understand the difference, okay, it's structured references and that's what most, most pretty much all multidimensional modeling tools, whether it's Quantrix or pigment anaplan, whatever. There are quite a few out there. That's what they're doing. They give you that natural language, which is nice because we all understand the C7 and B7 it's ingrained if you've used a spreadsheet for any part of your life, but it doesn't make sense in a lot of ways. It's not intuitive to go, hey, C7 times B7, that's revenue times quantity. Wouldn't it be a lot easier to just say 'revenue times quantity' and have it applied to the entire column, which is a type of benefit you see with a tool like Quantrix? Well, those are a couple of great examples. What were maybe your favorite things about Quantrix? You mentioned the multidimensional modeling, but any other things that you enjoyed that you're like, oh, I'd love to see Excel adopt that or this makes it so much easier, so to speak, from your perspective?

 

Guest: Lyndsey Weber:: Yes. So a couple of the things I loved about Quantrix were, number one, how easy and native pivoting is in Quantrix. So we always talked about this, as always on pivoting in Quantrix. So given that flexible structure and the ability to easily define dimensions or categories in your model, we also had the ability, or the modeler has the ability to drag and drop those categories to the X or the Y axis in your model, on-demand on the fly, and it doesn't impact formulas whatsoever. So Quantrix doesn't require formulas to be oriented. You can pivot at any time that logic holds together. So of course, that's one thing I know. There are things like Power Pivot in Excel. But to me, this is one of the game-changing features that Quantrix had even if it's just the personal preference of different modelers in the same model of one person wanting to see time along the x-axis, the other person wants to see time broken down across all of the different rows. I would love to see an easier way to just quickly pivot all of the data you might have in a single sheet in Excel.

 

Guest: Lyndsey Weber:: I think that would be awesome. And then maybe number two, I know Excel is making a lot of headway, especially with the ability to integrate with teams and things like that, but collaboration layered with role-based access to different parts of a model, I think is a major need in spreadsheets and oftentimes not super easy to set up without being a little bit restrictive, frankly, or even just not intuitive. One of the things that Quantrix has is the ability to define different role-based permissions, and that can do everything from hide certain aspects of your model to remove certain even interfaces or navigation components to the model, or dynamically filter a large data set to only show that user the aspects of the data that you've configured for them. So that was great because it's a little bit richer than just permissions-based or protection in a spreadsheet. That would be something I'd love to see in spreadsheets or in Excel.

 

Host: Paul Barnhurst:: In today's business world, financial modeling skills are more important than ever with financial modeling institutes. Advanced Financial Modeler accreditation program, you can become recognized as an expert in the field by validating your financial modeling skills. Join the Financial Modeling Institute's community of top financial modelers, gain access to extensive learning resources, and attain the prestigious Advanced Financial Modeler accreditation. Visit www.fminstitute.com/podcast and use Code 'Podcast' to save 15% when you register. Yes, it'd be great to lock certain things down, share them, and show only parts. So it's that object-oriented compartmentalizing things versus hey, here's your whole sheet. And I've seen a few tools that have created some stuff like that for Excel. It's a tool that sits on top that allows you to do some of those things. And Yes, it would be nice to see more of that. We're making progress. But yes, collaboration, and enterprise scalability. There are a number of things like that that are challenges. So on the flip side, what's something you disliked about modeling in Quantrix? What were some of those things that maybe I'd like to see this a little differently, or that you found maybe not as intuitive as you would like?

 

Guest: Lyndsey Weber:: Yes. I think some of these things, even while I was at the company, we were already making a ton of headway in this. One of the things that I loved doing and built a passion for and a little bit of a reputation for it Exxon with the models I was building, was the user interface. So we talk a lot about this, I think in the financial modeling space. But different preferences for formatting, layout, color coding and actually building a user interface or an application layer, if you will, on top of your financial model to make it easier for people to interact with it. That is something I loved doing. And when I first joined Quantrix, I felt like we had some good baseline. I'd call it like design or application functionalities where you could take your model and then you could start laying over what we called canvases to give people a nice, friendly entry point into maybe a complicated model. At least at the beginning, it felt like we needed a little bit more rich functionality to make the types of interfaces that I think are needed for models, especially if you are sharing your financial model with non-financial modelers, To use either they're inputting data or they're reviewing a sales forecast, for example. we made a ton of progress in that. I would say on the second half of the time I spent at Quantrix, which was exciting to see, but that was one piece where at first I was like, oh, like, there's so much potential here, but we don't quite yet have the functionality that I think we need to build beautiful, financially driven, model-driven applications.

 

Guest: Lyndsey Weber:: That's probably one I would say. Number two, I don't know if anybody's fully cracked this code yet, but auditing financial models is so important and is always required. And I think it's very challenging to build an auditable component of a modeling application. We, of course, had an audit trail in Quantrix and it was super detailed. You could see everything that was changed or modified within the model. But I think tracing through the evolution of the model over time is something that can be challenging to get and to answer all of the different questions that different personas want to get answers to. an investor or an auditor maybe wants to see different information from just you or me, who's maybe been building this model for the past six months, and we want to revert back or see why we built something a certain way, or why did a user go in and change a certain value? So I think There's always an opportunity to enrich the capabilities on the auditing or the audit trail functionality.

 

Host: Paul Barnhurst:: Makes sense. Yes. Auditing is always a challenge when you're trying to figure out, okay, who changed the number? Why? What's the logic and what's the story?

 

Guest: Lyndsey Weber:: Yes.

 

Host: Paul Barnhurst:: And that's usually the challenge. Yes, I can see all the words here that tell me what happened. But that doesn't give me.

 

Guest: Lyndsey Weber:: Yes, but why text exactly? Yes. The qualitative information I think is so hard to document and make it easy for users to access when they're they're trying to do that work.

 

Host: Paul Barnhurst:: But that's the fun when you inherit somebody's model.

 

Guest: Lyndsey Weber:: Absolutely. The treasure hunt is always fun. Yes, I do love that part, even though sometimes it makes you want to pull your hair out.

 

Host: Paul Barnhurst:: There are aspects that can be fun and trying to figure out the other times, but you're just like, cursing somebody's name. It's a little both the love-hate relationship for sure.

 

Guest: Lyndsey Weber:: Definitely.

 

Host: Paul Barnhurst:: So I'm curious if somebody's listening to this and they're thinking, ah I might like to go beyond Excel for building models whether it's Quantrix or another tool. When do you think it's to consider using something other than a traditional spreadsheet, whether that be Excel or Google Sheets for your modeling? What advice do you give others?

 

Guest: Lyndsey Weber:: Yes, I think a couple of things come to mind. One is scalability, which I think is a probably way overused term, but I think it has become clear even during the time I was at Quantrix on the presales team. At some point, people oftentimes reach, I would say, a threshold where it just becomes difficult to maintain and extend even the most sophisticated, elegant spreadsheet model. Whether that's because the business is scaling and becoming just so complex that we can't we can't manage it with a hub and spoke Excel environment anymore. Oftentimes I would also see the team, the financial modeling organization at the company growing such that it's not sustainable for everyone to be even in the online collaborative Excel environment. There are limitations. Sometimes we need something that allows us to move quickly prototype faster and create a series or a network of models that are connected outside of externally linked workbooks.

 

Host: Paul Barnhurst:: Oh, come on, who doesn't love external workbook links?

 

Guest: Lyndsey Weber:: So I think I would say two things in summary on that, Paul. One is scalability. The company is growing at a rate at which we can no longer successfully, reliably, and confidently maintain the spreadsheets that we have. And also, I think number two is likely the pace at which the business is changing. We can't continue to rely on a single-threaded Excel expert in the organization to spin up new models or change complicated models fast enough to where we might be having changes to scenarios and to assumptions daily or even hourly. And we can't put the business success rate on 1 or 2 core subject matter experts. One of the things that I think Quantrix unlocks is the ability for people to all jump into a model and quite quickly understand how it works, what the formulas are doing, read, and validate. But even number two, one of the things that I think is, is pretty unique to Quantrix is the prototyping phase, how quickly you can start from a completely blank Quantrix model and begin building out and extending that model so much quicker than even a very, very adept Excel modeler can do. And part of that is just the way that the structure is built and the fact that in Quantrix you don't need data, you don't need numbers and cells to write formulas and completely build out the frame of your model. The data can be the very last piece that you pull into a Quantrix model. And I think people oftentimes underestimate the amount of time and risk that that removes when comparing Quantrix to something like Excel.

 

Host: Paul Barnhurst:: Okay, now that's helpful. So as I'm hearing it, it sounds like if people are dealing with small models or relatively simple use cases, you would recommend a spreadsheet. That's probably the easiest way to do it. Cost-effective people know, all those types of things. But when you hit those scalability issues, or as I often like to call it when you find yourself in Excel hell. It's probably time to look at something like Quantrix or others. When you need to scale, you need that higher collaboration. You need to be able to quickly make all those changes. Because we all know if you have a complex model, we've all been there where they want a bunch of changes made and you're like, okay, that's going to take some time, even if you designed it well. Depending on how extensive the changes are, it can be material. If they're simple changes and you've built a model, well, you can do it on the fly, like changing an assumption or whatever. But the more complex it is, it can be challenging. We're having multi-dimensional modeling. Sometimes it can be as simple as just moving the pivot around.

 

Guest: Lyndsey Weber:: Yes. Absolutely.

 

Host: Paul Barnhurst:: I mean and that all makes sense. So I'm curious have you used any other tools for modeling beyond Quantrix in a spreadsheet? Are there any other tools you use or that you've had experience with?

 

Guest: Lyndsey Weber:: Not many, of course. I've probably tried and keep tabs on a lot of the seemingly daily new entrants into the market on this. I've seen some pretty interesting, some honestly just beautiful-looking tools out there. But I haven't had the same amount of experience using them. Truly I love Excel. We used to talk about this even at Quantrix. I think there is there are many times and places where we should just use Excel because it is amazing how much you can do. And there are thousands of successful global companies that use Excel as their primary tool of choice. I haven't used as many outsides of Excel or Quantrix to probably give a fair shake on what those are like, but I am constantly impressed, I would say, by the especially user interfaces of some of the ones I feel have come out recently. They're just they're beautiful-looking products where I think somebody who was not in finance could look at this and say like, wow, that's a beautiful-looking application. I'd be interested in looking at some data or looking at a scenario within this application.

 

Host: Paul Barnhurst:: Yes, I know one of you and I have talked about it before, and I just released an episode this week, that is from somebody who uses causal for all their modeling. I know that one has a clean interface that you and I have talked about, and there are a number of others out there. Some of them are more purpose-built just for planning and may not be more general-purpose modeling, which I think Quantrix is a little more of that general-purpose modeling. I think of it as a little more enterprise tool than causal, which if anyone goes to my website, I've done reviews of causal, and I've done a review of Quantrix. They are a couple of years old, so I'm sure things have changed in the software, but it'll give you a general idea about them. So people want to learn more. They can do that, you know? And I'll find the website. But it's amazing to watch how many are out there and I've seen a few I like that have tried unique things. And then you see some that they're very similar to the other 50 multidimensional modeling tools. So I get it. So we're going to move on here to a couple of Excel questions. And then we're going to go to what we call rapid fire. And I'll walk through how that's going to work. So what's your favorite Excel shortcut?

 

Guest: Lyndsey Weber:: Yes, I am probably super lame compared to some of your guests on the podcast here. I love ctrl+T. I probably have used ctrl+T to build tables more than any other shortcut. Of course, some of the easy ones to navigate up and down. Lots of rows and columns, but I would say probably the one that I consistently felt was helpful was making tables for sure. And that was just setting you up for success. I think a good habit to use Ctrl+T to remind yourself to make tables when you're building complex models.

 

Host: Paul Barnhurst:: Well, if it makes you feel better, you're in good company. I interviewed Ken Polce, if who that is. He is an expert on Power Query and an expert in Excel.

 

Guest: Lyndsey Weber:: Power Query, yes.

 

Host: Paul Barnhurst:: He's been an Excel MVP for almost 20 years now. One of the global expert's first training, one of the very first trainings ever was his on Power Query that was out there. And his favorite he mentioned was ctrl+T. But what he said, he goes, my ctrl+T is an Excel ctrl+T because he has his own tool. He's built an add-in.

 

Guest: Lyndsey Weber:: Fancy.

 

Host: Paul Barnhurst:: It's like mine also allows you to requires you to rename the table and appropriate name when you press ctrl+T and I'm like, ah, I love it. That's brilliant.

 

Guest: Lyndsey Weber:: Yes. Excel takes notes.

 

Host: Paul Barnhurst:: Because that's the first thing you have to do. And if you forget you're like, oh, which one's table 16?

 

Guest: Lyndsey Weber:: That's awesome.

 

Host: Paul Barnhurst:: When you look at your formula, and go, table 16. That doesn't tell me anything, I misnamed.

 

Guest: Lyndsey Weber:: I love it.

 

Host: Paul Barnhurst:: So I'm a big ctrl+T too. That's high on my list. I love ctrl+T because I think tables are critical. If you're going to use Excel for any real data work, you have to know the tables. so next question is do you have a favorite formula?

 

Speaker4: This is a tough one. I would say prior to knowing Quantrix, I always loved INDEX MATCH. I think INDEX MATCH is cool for what you can do with it. Of course, now I think with Xlookup that may slightly edge it out just for ease of use, but I always thought INDEX MATCH was super cool, just with the way that you could navigate, I would say pretty quickly to the subset of the data that you were looking to return. So probably INDEX MATCH.

 

Host: Paul Barnhurst:: That's a good one. We get a lot of people to say that. And then as you look back at your career so far, what's the number one lesson you've learned that saved you the most time over your career?

 

Guest: Lyndsey Weber:: Especially when it comes to financial modeling, we covered this earlier, I don't think you can ever be too organized. whether that's in building a model or even one of the biggest things I feel like I learned pretty early on, even at Exxon, that I feel like has helped to carry me through my career so far, is understanding, taking the time to learn and to document what the stakeholders on your project or for your model, what they are looking for, what they need and what is important to them. Even if it's something that is just emotionally important to them and less so critical to the business. designing a financial model. Coming into a meeting prepared, knowing who your stakeholders are and what they want to get out of the meeting or the model or the project, I think serves you incredibly well. The sooner that we can train ourselves to be on the lookout for that in every conversation. I think it's amazing how much more effective you can be in your role.

 

Host: Paul Barnhurst:: I fully agree. That makes sense to me. And design organization is so important in models. And I like how you said not just design from hey, here's a process I'm going to follow, but also understanding the needs of your business partners. As you said, even if it's just an emotional need, as long as it doesn't cause issues with the model trying to address those particularly. And you said the input layer, That executive summary, not input. But I mean the more the user layer, whether it's an executive summary or whatever it may be, where most people are just going to be looking at that part of the model if you can make sure it meets their needs, they're going to be thrilled, because the last thing they want to do is dig through the entire model. Yes, the example I've used a lot of times that I love is when we get in a car, nobody wants to pop the hood and make sure the engine's working. You just turn the button and expect it to work. And that's like a financial model. You just want to turn it on and be able to see the dashboards and everything so you can do what you need to do. You can drive. You don't care about what happened under the hood. You want to see enough to know that it's directionally correct or it meets your needs for your decision.

 

Guest: Lyndsey Weber:: Yes, absolutely. And I think we used to talk about this even in my role at Quantrix, being in pre-sales, trying to set the first impression of the product. When you're talking to an expert financial modeler, that's maybe considering something outside of Excel, the emotional tie to what the product looks like, I think can't be overstated. Whether you agree with it or not, I think the reality is people tend to trust products, and people that they think come well presented. So I think a financial model, frankly, should be no different. A presentation, a PowerPoint should be the same way. It should be something that looks clean and is eye-catching. Maybe even sure, color has its time and place in a financial model, but something that upon first impression, somebody feels like it looks like it has been cared for. There's been attention to detail. It has a good appearance too. It makes people want to use it and I think want to trust it.

 

Host: Paul Barnhurst:: Sure, there's something to say to have a professional, clean look that makes them feel comfortable. Totally agree. I think when you're selecting software if the user interface looks more appealing, you're automatically going to be more interested. You should get under the hood when you're selecting software and make sure it meets all your needs. But what's the sales guy? The salespeople typically show they want to show the bells and whistles and what highlights the tool. And that's usually like the model of what you're showing the end user. I think there are some comparisons between the two. All So this next section is our rapid fire section. And so what I'm going to do is I'm going to ask all the questions for Excel. And then we'll go through and ask for Quantrix. And with a Quantrix they'll be the answer. You can either pick it or you can say doesn't apply. Some of them I know won't apply to Quantrix here. And a few of them I may not even ask because I know they won't apply. A few of them will only need to ask once, but we'll start with Excel. And here's how the rules work. You get no more than 10 to 15 seconds to answer. It's a yes or no. You can't say it depends because all of them could be that. And then at the end, you can elaborate on 1 or 2 that you have a passion about. It's like, I want to explain more, this is too nuanced to go with just yes or no because I recognize some of them are. So you ready?

 

Guest: Lyndsey Weber:: Yes. Let's do it.

 

Host: Paul Barnhurst:: Alright. Circular or no circular references?

 

Guest: Lyndsey Weber:: No. Let's avoid it at all cost.

 

Host: Paul Barnhurst:: Yes, that's one that's pretty universal for the most part. Vba or no VBA?

 

Guest: Lyndsey Weber:: I lean towards 'no', there's there should be a better way. Question your motives, I would say.

 

Host: Paul Barnhurst:: Okay. And then do you prefer a horizontal or vertical model? When I say horizontal, like more tabs or a vertical model where like all your schedules, everything's mostly compact in one sheet.

 

Guest: Lyndsey Weber:: So I think horizontal for most users of the model, vertical for the architect of the model depends on maybe the audience, but generally, that's how I feel.

 

Host: Paul Barnhurst:: Makes sense. Dynamic arrays. Should you use them in your models? Yes or no?

 

Guest: Lyndsey Weber:: Absolutely yes. All day, every day, as much as possible. I think.

 

Host: Paul Barnhurst:: You would love it. I had a guest on where they've done 100% of their financial models, including the corkscrews with dynamic arrays because they've had lambdas built. There's a guy who's built a bunch of lambdas.

 

Guest: Lyndsey Weber:: Oh, wow.

 

Host: Paul Barnhurst:: You go on my website, you can download it. If you go to the Excel files, there's a link to the model they built and you'll look at half the formulas. I'm like, okay, those are custom formulas. I don't recognize them, but they're doing it for 100% of their modeling firm.

 

Guest: Lyndsey Weber:: Impressive.

 

Host: Paul Barnhurst:: So it's interesting because there are all those little limitations that people have to overcome. External workbook links. Yes or no?

 

Guest: Lyndsey Weber:: No, no.

 

Host: Paul Barnhurst:: Just don't don't put yourself through that pain.

 

Guest: Lyndsey Weber:: Just don't.

 

Host: Paul Barnhurst:: Named ranges, yes or no?

 

Guest: Lyndsey Weber:: Yes, definitely.

 

Host: Paul Barnhurst:: And when you build models, have you ever used a formal standards board that you follow like there's fast and some others out there for Excel?

 

Guest: Lyndsey Weber:: Yes. We had that come up a handful of times when I was at Quantrix. Personally, for me, there's a time and a place for it. For me, I have not had a need for them, so I'll say no.

 

Host: Paul Barnhurst:: Okay. Yes, we definitely get a lot of both on that. Will Excel ever die yes or no?

 

Guest: Lyndsey Weber:: No. I think it will continue to evolve. However, I don't think we will ever eliminate it.

 

Host: Paul Barnhurst:: Okay. Fair enough. Will AI build financial models for us in the future?

 

Guest: Lyndsey Weber:: I think maybe. I would say for the sake of brevity, no, I think it is more likely to help guide our model building than actually build one.

 

Host: Paul Barnhurst:: Sure makes a lot of sense. Sheet cell protection in your models? Yes or no?

 

Guest: Lyndsey Weber:: No. Use a better tool.

 

Host: Paul Barnhurst:: I can see the Quantrix stuff coming through on a few of these. So here's the next one. Do you believe financial models are the number one corporate decision-making tool?

 

Guest: Lyndsey Weber:: Not on their own, no. I think we need a combination of supply chain and financial models to make good decisions in the business.

 

Host: Paul Barnhurst:: I like it, I had one person who responded 'no'. Politics are the number one corporate decision-maker.

 

Guest: Lyndsey Weber:: Now that may be true. Yes, exactly.

 

Host: Paul Barnhurst:: I'm like, that's a hard one to argue with.

 

Guest: Lyndsey Weber:: Yes.

 

Host: Paul Barnhurst:: All When you're working in Excel. And I think I know the answer to this one because you mentioned it as your favorite function. What's your lookup function of choice? Do you like CHOOSE, Vlookup, INDEX MATCH, or Xlookup?

 

Guest: Lyndsey Weber:: Yes, probably varies based on what I'm doing. Probably my classic favorite is INDEX MATCH.

 

Host: Paul Barnhurst:: And is it INDEX XMATCH now or are you still using mostly INDEX MATCH?

 

Guest: Lyndsey Weber:: Yes, of course, it's definitely INDEX XMATCH now. Yes.

 

Host: Paul Barnhurst:: Just want to make sure because there are some that still go with the old match.

 

Guest: Lyndsey Weber:: Yes.

 

Host: Paul Barnhurst:: I finally started adopting the X match only in the last few months.

 

Guest: Lyndsey Weber:: It's a little weird.

 

Host: Paul Barnhurst:: I'm like, why didn't I do this earlier? It's just so much better.

 

Guest: Lyndsey Weber:: It is better.

 

Host: Paul Barnhurst:: So now we're going to run through those questions for Quantrix. And obviously, some of them will not apply. Some may be the same. And there are a few of them I won't run through. But do you deal with circular or circular references? How's that for Quantrix?

 

Guest: Lyndsey Weber:: Usually, don't have them very, rare. So, no.

 

Host: Paul Barnhurst:: You don't have VBA in Quantrix, so we'll skip that one. Do you prefer modeling horizontally or vertically in Quantrix or does that not apply?

 

Guest: Lyndsey Weber:: You can do both. Just pivot the dimensions.

 

Host: Paul Barnhurst:: That's true. So it doesn't matter because you can just flip it.

 

Guest: Lyndsey Weber:: Yes.

 

Host: Paul Barnhurst:: Obviously, everything's dynamic. So dynamic arrays don't apply external workbook links. Is that an issue? Do you link out to other stuff or what's it with Quantrix?

 

Guest: Lyndsey Weber:: You can link to other models on the cloud, which is cool. So there are models that can actually talk back and forth to each other without having to hard code a link within the model itself, which is cool.

 

Host: Paul Barnhurst:: Got it. Nice. And name ranges aren't going to apply because everything's named. Formal Standards board, again, that one doesn't apply. Excel, AI, I'm guessing you can lock down permissions at any level. So sheet cell protection again doesn't apply.

 

Guest: Lyndsey Weber:: To completely unlock from a mindset perspective. In Quantrix, role-based access can be data-driven, model location-driven, highly highly flexible. It's incredible.

 

Host: Paul Barnhurst:: So that concludes our rapid fire. So now we're going to go into the last section here. If you could offer advice to our audience to be a better financial modeler from your experience or just a better modeler in general, whether it's supply chain or finance, but just a better modeler, what is the number one advice you'd give them?

 

Guest: Lyndsey Weber:: I think what has helped me the most, other than the things we've already mentioned about getting to know your stakeholders and being organized. I have always started any model I've built out by drawing out on a piece of paper or a whiteboard the inputs, the outputs, the key calculations, and the key. I think with the calculations is to write them out in English, not in formula syntax. Get serious about what it is you are actually trying to solve. Once you have those things written out, I think it becomes quite easy to start drawing lines and mapping things together. And what I have always ended up with, even for prototypes where I was building custom demos for some of our prospects at Quantrix and pre-sales, you end up with a beautiful page that guides you on exactly how you should build the model and even a complex model. It's the eat the elephant concept. One bite at a time. Once you have this working page it doesn't have to be super clean or pretty. It can be the back of the napkin. But I think there's something to be said about writing it down, drawing the connections, using it in plain English, and then going to your modeling tool of choice and building that according to what you've drawn out. It helps, I think crisp your your thoughts around how this should be done. And it makes it easy to make sure that you're tracking along and building it with the best practices.

 

Host: Paul Barnhurst:: Basically, businesses prototype it ahead of time. Your recommendation is to pull out a good piece of paper, pencil, and pen and map it out in business terms. Before you go to the tool and start writing it and whatever the tool language. Got it. Makes a lot of sense. There's definitely something to be said for prototyping it is usually what I hear once, 20 minutes of planning saves you an hour of work later down the road.

 

Guest: Lyndsey Weber:: I totally agree.

 

Host: Paul Barnhurst:: You get a big return if you invest the time upfront.

 

Guest: Lyndsey Weber:: Yes. Agreed.

 

Host: Paul Barnhurst:: Alrighty. So last question. If our audience wants to learn more about you or get in touch with you, what would be the best way for them to do that?

 

Guest: Lyndsey Weber:: Yes, I would say connect with me on LinkedIn. I'm pretty often on the platform. I'm always happy to chat about either financial modeling or if you have questions about contracts. Of course, I think I'll always be a lifelong fan of the product there, but we'd be happy to connect with anybody on LinkedIn.

 

Host: Paul Barnhurst:: Alright. Great. Well, thank you, Lyndsey, I appreciate it and enjoyed having you on the show today. So thank you for carving out a few minutes of your time.

 

Guest: Lyndsey Weber:: Thanks, Paul. This was fun.

 

Host: Paul Barnhurst:: Good. Glad you enjoyed it. Thank you. Financial Modeler's Corner was brought to you by the Financial Modeling Institute. Visit FMI at www.fminstitute.com/podcast and use Code Podcast to save 15% when you enroll in one of their accreditations today.

Ankita Ghosh
Previous

Managing Complex Models with Structure with Christopher Reilly
Next

The Importance of Predicting and Influencing in FP&A