In this episode of FinPod, co-founder Scott Powell and colleague Asim Khan speak with Danielle Stein Fairhurst, a renowned financial modeler, author, and Microsoft MVP. She shares her journey into financial modeling, driven by her love for finance and Excel, and shares her modeling core concepts..

Danielle discusses common mistakes modelers make, the importance of simplicity, and her contributions to the Excel community, including writing books and organizing meetups.

For young professionals, she emphasizes the importance of technical skills and staying current with new tools. Join the conversation to gain insights into financial modeling and the evolving landscape of Excel.

Transcript

Scott (00:13)
Hi, my name is Scott Powell. I’m a co-founder and the chief content officer here at Corporate Finance Institute.

I’m delighted to have my colleague Asim Khan with me. And I’m… We are both super excited to be talking to Danielle Stein Fairhurst Danielle is an expert financial modeler. She is an author of 2 books around Excel and financial modeling. She’s a Microsoft MVP and she also is a corporate trainer. And Danielle, we are delighted that you have joined us today.

Danielle Stein Fairhurst (00:45)
Thanks for having me.

Scott (00:46)
So what I thought we’d do is just start by what got you passionate at the start of your career around financial modeling.

Danielle Stein Fairhurst (00:55)
Yeah, well, way back when I first started, I think it wasn’t quite as well known as a particular pursuit. And I kind of found myself doing it because I really enjoy finance and the use of Excel was something that came very naturally to me. And I absolutely love the concept of using Excel to solve different problems and…

That’s pretty much all I’ve ever done is use Excel in a financial context for lots of different organizations and clients.

Scott (01:31)
And just for our listeners and learners, can you describe how you would describe the skill of financial modeling?

Danielle Stein Fairhurst (01:40)
Yeah, yeah. Well, typically a financial modeler is is good at Excel, but they also understand how a business and the financials hang together. And, you know, the skill of financial modeling is being able to take the business and and put it into a model or a construct, usually in Excel, so that you can kind of see all the moving

pieces and usually it contains a P &L or income statement, a cash flow and a balance sheet. But sometimes it doesn’t. Sometimes it might just be, let’s say if you usually you have a problem that you want to solve. So, for example, you might want be wanting to make a decision around a product. You know, should I expand into into a new region and the financial model will help you solve that?

problems. So you’d put in the inputs and then it will give you the outputs. And of course, the wonderful thing about financial modeling is that if you change the inputs, the outputs will change. And if you build the model in a well structured way, that works beautifully.

Scott (02:55)
Thanks, Danielle. And thinking about the financial modeling skills you’ve seen in others, or people, or maybe people you’ve trained, what are the biggest skills gaps, or what are the biggest mistakes a lot of financial modelers make?

Danielle Stein Fairhurst (03:08)
gosh, so many. So probably, I think when people get really good at Excel, they try and show off about all the, you know, I can build a formula that’s this long, which isn’t clever. And I think just keeping it simple and solving a problem logically using Excel rather than trying to…

Scott (03:09)
Ha ha ha ha.

Danielle Stein Fairhurst (03:34)
cram as much as possible into a single row. That’s one mistake I often see. And of course, it’s very easy to make mistakes. It’s probably, there’s some many quoted statistics around how many mistakes there are, the percentage of financial models that contain errors. And as a modeller, your job is, as you’re building it, is trying to reduce

the possibility for error as much as you can. And a lot of the things that I teach in best practice are about reducing the possibility for error and putting things like error checks in and sort of sense checking as you go to make sure that that doesn’t happen.

Scott (04:19)
So I’m interested in what drew you to writing. You’ve written two books on financial modeling in Excel. What drew you to that?

Danielle Stein Fairhurst (04:25)
Mmm, yeah.

Yeah, well, I guess it’s one of those things you have this, you know, writing a book just seems like a wonderful achievement. And I was first approached by Wiley Finance back in, gosh, it’s quite a while ago. And I had a lot of training materials already and I would write a lot of instructional text. So I had a lot there already. And just to put it together as a kind of instructional guide.

And I would use it as part of my training. The thing though about writing a book in Excel of course is that Excel changes and the screenshots, you know, are using, the first book was using I think Excel 2010, that was quite a while ago and then we had to update it with the new functionality of Excel. So we’ve actually written that one three times and I’ve also written,

Scott (05:10)
Mm-hmm.

Danielle Stein Fairhurst (05:22)
financial modelling in Excel for dummies and that has been released twice now and that one’s still relevant in terms of the version of Excel that people are using and what is applicable for financial modelling.

Scott (05:39)
But what an impact you’re having, creating those books, allowing others to really understand best practices as it relates to financial modeling. So I’m really curious, congratulations by the way on being a Microsoft MVP. Can you tell us a bit of the story behind that? And what does that entail?

Danielle Stein Fairhurst (05:53)
Thank you. Yeah. it’s just an award or recognition by Microsoft that, you know, that we are out there and sharing the love of Excel. It’s for people who are passionate about using Excel as am I, and people who are sharing the new tools and features and how to apply them in your work.

And so as an MVP, there’s a lot of responsibilities that you have to share. Things that we get to go to, to actually talk to the Microsoft team, to go to their annual summit in Seattle and lots of other opportunities. So it’s a great, we do a lot of community work. I run a lot of meetups. I…

One of the things that I find a little disturbing about the world of financial modeling is the lack of female participation. And I run a women in financial modeling meetup group to try to encourage women to get involved, to compete in the championships. So there’s financial modeling world cup, Excel, eSports, all of that stuff. I commentate

sometimes for the Excel eSports online battles which are streamed on ESPN and on YouTube. I’m attending their finals in Las Vegas at the end of this year. So I get really excited about any opportunity to share Excel and financial modeling with the community and especially if it can help more women get involved in the profession.

Asim (07:35)
How does, if I may ask a question, how does Microsoft find somebody, identify potential MVPs?

Danielle Stein Fairhurst (07:42)
It is a nomination process. So yeah, you just get nominated by another MVP, I suppose. Yeah.

Scott (07:50)
So Danielle, I don’t know if you can answer this but I’m just curious given that you’re commentating and you’re seeing really amazing people compete as financial modelers, is there anything, any story you remember of just someone doing something exceptionally well at one of these competitions?

Danielle Stein Fairhurst (08:06)
Sometimes I’m amazed at some of them. Dear Mood Early, I don’t know if you, he actually recently became a Microsoft MVP just because of his, he shares a lot of his, so he’ll often live stream his competition and watching what he does, you know, just the speed with which he can create or to solve a problem. You know, you have two in the financial modeling world cup, you have two hours

and just being able to very, very quickly solve a problem and get right through to the end is absolutely amazing. And when commentating, the role of a commentator is to try to explain what’s going on on the screen. And it’s like, wow, there’s a shortcut I haven’t seen before. Or some of the way and the layout and the way that they go about solving these problems is absolutely mind blowing.

Yeah, it’s really interesting.

Scott (09:04)
Wow, that sounds exciting. Speaking of being wowed by shortcuts, I think all of us know there’s way too many shortcuts and even I recently was shown a shortcut that blew me away. Most of our learners and listeners will be lovers of Excel. I’m going to put you on the spot. Do you have a few Excel shortcuts that either you use all the time or that people don’t really know that they could be using?

Danielle Stein Fairhurst (09:26)
Yeah, I guess when I train, I do a lot of training online, I tend to sort of vocalize the shortcuts that I use, you know, the ones that, you know, and everybody’s got their favorites, probably, you know, alt equals is probably, I’m sure everybody knows that one. But, you know, just being able to quickly put in a sum, you know, that’s one that I just use absolutely constantly, you know, just being able to navigate really quickly, I think they…

you know, control shift right, control shift down, you know, control A, you know, those sorts of things where you’re able to very quickly, it’s just going to be a lot quicker than using the mouse.

Scott (10:03)
So talk us through what’s a day in the life of Danielle Stein Fairhurst now? Like what does that entail?

Danielle Stein Fairhurst (10:11)
Yeah, I mean, I’m probably not a typical financial modeler. There’s, you know, I think financial modeling is a skill that people have as part of their career and they might have it as their sort of job and it’ll be one part of their job. I’m a pure financial modeler. So financial modeling is all I do. And I sort of split it into two parts. I have consulting where I actually go into organizations and build financial models for them. Or I…

talk about financial modeling and I have just hit stop record on a brand new LinkedIn learning course. And so that’s what’s been keeping me busy over the last couple of weeks. Yeah, I’ve got a finance functions in depth one already that is has been out for over a year now and I’m just just finished recording one which is a new.

Scott (10:49)
Wow.

Danielle Stein Fairhurst (11:04)
a new finance presentation. Yeah, I was thinking, I haven’t actually announced it yet, but it’s finance presentations. Yeah, it’s about taking the best way of visualizing the output of your finance, your financial models, your ratios, whatever you want to present, and then how to get it from Excel into PowerPoint. So more of a presentation. It’s a little bit different to what I’ve done in the past. So that’s been keeping me busy the last couple of weeks.

Scott (11:04)
Are you able to tell us what the title is?

Danielle Stein Fairhurst (11:31)
Today, it’s very early in the morning here in Sydney and I’m just about to spend the day with a client in Sydney who I’m doing a lot of data analysis for them dealing with large quantities of data, which is not unusual for me to work with that kind of client. Today will be lots, I’m pretty sure today is going to be lots and lots of Power Query. Just.

Scott (11:57)
Yeah, which is very useful. Yeah.

Danielle Stein Fairhurst (11:59)
Sort of the data model. Yes, yes. And not pure sort of financial modeling as such, lots of data analysis today, I think. But yeah, I have a lot of different clients. I go into different organizations and help them build models. And then the rest of my time is training. I am actually going to Fiji on Monday to run a budgeting, I think it’s the budgeting and forecasting

course next week for some locals there. So lots of different things. No week is the same and I absolutely love it. It’s really, really varied, but always around those core skills of Excel and financial modeling, which I think are absolutely fantastic skills to have for anyone.

Scott (12:27)
Wow.

That’s fantastic.

It’s lovely to hear your passion for Excel and financial modeling and that you’ve built a career around it. Given what a leader you are in financial modeling, what do you think is going to happen going forward? Do you see any changes as we go forward with things like possibly AI and financial modeling? Where do you think we’re headed?

Asim (12:47)
Wonderful.

Danielle Stein Fairhurst (12:54)
Absolutely, yeah.

Yeah, yeah, it’s really interesting. You know, Microsoft is working really hard at keeping relevant, making sure that that that Excel is is staying relevant, particularly for financial modelers. You know, things like dynamic arrays are, you know, makes things easier for users. There are I can see there’s a few.

Gaps, you know, they can, there are a few things when you try to build a full financial model using only dynamic arrays, it can be quite difficult to do some of the things that would be quite basic in ordinary Excel. So I think there’s a little way to go, you know, getting lambdas, so using lambdas solutions, getting them to become more mainstream because they are quite scary

still for most people. I mean, heck, they’re scary for me. So, yeah, I don’t know if you guys ever use lambdas, you know, getting them to solve. Amazing, amazing what you can do. And in the competitions, a lot of people use lambdas. They have them to solve particular problems that are quite difficult to, or quite long-winded to build in Excel. And you can build a lambda like a little reusable formula.

Scott (14:07)
Mm-hmm.

Danielle Stein Fairhurst (14:28)
in Excel, so I think Microsoft is really behind that in terms of AI. I am waiting for the day that AI can build a financial model for you, but I think that’s just a little way off still. So I think our jobs are safe for now. For now, yeah.

Scott (14:41)
Mmm.

So, Asim, I have one more big question and it’s getting you to think about someone maybe in their early 20s, they’re just on the start of their Excel & financial modeling journey. What advice would you give those folks?

Danielle Stein Fairhurst (15:02)
Yeah, yeah, I think the technical skills are really important and I think we expect, the employees expect that from young people and just staying on top of your game in terms of making sure you know what’s out there, you know what’s available, you know, staying on the cutting edge of…

you know, making sure that you can use all of the tools from Microsoft as well as, you know, whatever else is out there. You don’t necessarily have to, I know it can be quite daunting because, you know, like there’s Python and Excel now, there’s just so, and that’s just a huge topic. You know, Power Platform, you know, all of that stuff is absolutely huge. And I don’t think you need to be an expert, but you do need to know what it does.

You need to be able to assess, hey, this is a situation that needs Power BI or we should be using formulas instead, and just knowing what is the best solution for different problems. And if you’re on the job market, to be able to have that conversation during an interview, to be able to talk intelligently about these different technologies.

And I think from a technical perspective, but also to sort of understand overall the business and how a financial model kind of looks at the entire business. I think having that sort of appreciation of financial modeling can be helpful as well.

Scott (16:41)
What a great piece of advice. It is interesting how many tools there are out there and there’s many ways now to solve the same problem. So I thank you, Danielle. Yeah, thank you so much. Well, I think our time is almost up. So I think on behalf of us and myself, Danielle, thank you so much for spending a bit of time with us and sharing your advice and your journey in financial modeling with us and our listeners. So thank you again.

Danielle Stein Fairhurst (16:49)
Absolutely.

Thank you. Thanks for having me.

Asim (17:10)
Thank you.