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And now, onto the show.
Welcome to FPNA Today, I'm your host Glenn Hopper.
Today on the show I'm joined by Derek Paulson, Director of FPNA and Supply Planning at RAD Power Bikes.
Derek's had solid FP &A career from Manufacturing Finance at Honeywell to Sales Finance at PepsiCo, and now leading Forecasting, Pricing, and Supply Chain Planning at one of the most well -known e -bike companies in the US.
He describes himself as a generalist in finance clothing, which I love, and you'll hear why that mindset has helped him thrive across finance, marketing, and operations.
We'll dig into how he models growth without historical data, balances strategy with day -to -day execution and leads his team through uncertainty, tariffs, and transformation.
Let's get into it. Derek, welcome to the show.
Thanks, Glenn. Happy to be here and honored to be selected for this.
I'm a listener of the podcast, so nice to be invited.
That's great. Really enjoyed talking ahead of the show so I just can't wait to dig into your background.
I think we share a lot of common approaches to finance, so I can't wait to get into some of those.
I guess for our audience, So let's go ahead and start at the beginning and just kind of walk us through your career journey and what led I guess even before that what led you to finance in the first place?
Yeah, I mean certainly the why finance is an important question but I'll go back to as a young child once I had an experience where I think it was my grandparents were telling me about when they were little they they could go out and Buy a loaf of bread for ten cents.
And then that's what that was kind of how I got first introduced to the concept of inflation and And for some reason that stuck with me.
And it fascinated me so much that later, still in elementary school, at one point our teachers gave us a writing prompt that said, if I could go back in time using a time machine, I would dot, dot, dot.
The answer I ended up giving was, I'd go back to Great Depression times, buy a bunch of loaves of bread and bring them back to current times and sell them at like a 10X profit.
So even as a nine year old kid, already had this idea of arbitrage in my mind and there's a great arbitrage opportunity there.
So I had that interest in business even from my young age.
And as I got to college, and I was deciding on a major, I knew I wanted to be something in business.
And I landed on finance for really two key reasons.
First was I think it's a really good hard skill that becomes a foundation you can build a career on.
And the second is really it kind of leaves a lot of options open.
When you think about different industries, really, FP &A can take on a lot of different flavors as you go throughout your career.
Feedback I'd heard from mentors and from the Career Development Program at college, I got that feedback a lot.
That's something that as someone who, at the time, didn't know what I wanted to be when I grew up and sometimes I still feel that way.
Finance was a really good way to say, hey, I'm going to leave some options open and, and see where my career takes me.
And it's definitely, I would say, you know, you, you mentioned a little bit about my background going through Honeywell and PepsiCo, earning an MBA.
I really do feel like I've been able to build a great career off of that foundation, and I'm really excited to see where it continues to head from here.
And you're, your career, I mean, you worked at some heavyweights like Honeywell and, and PepsiCo, and I, I think, you know, and I think we'll talk a little bit more about the, the training program at Honeywell, but I guess, you know, looking back at your time at those two companies, what were the biggest lessons from those roles?
I mean, especially in terms of how FP &A partners with like sales and operations.
Yeah, so I did join Honeywell right after college, and I would say they definitely have a reputation for developing finance leaders really focused on well -rounded financial professionals.
So not only understanding the nuts and bolts of accounting.
I had an accounting role, I had an FP &A role, but not only understanding the nuts and bolts of finance, but also understanding the business.
You talked a lot about the CFO as COO, and really wanted to emphasize within that company, CFO needs to be a business partner.
And that trickles all the way down throughout the organization.
So as an example that my very first role at Honeywell was in a manufacturing plant down in Mobile, Alabama, where they made chemicals for all kinds of different end uses.
and it meant a lot to first roll, be doing cost accounting and CapEx planning at an actual site where the products actually get made and it was a great learning experience to just learn the nuts and bolts of the business.
Later on I had other opportunities to be at a corporate FP &A role and get the more traditional annual plan, monthly forecasting, variance analysis, kind of FP &A cadence, but it was really kind of having that breadth of experience as well as a focus on being a functional partner.
That was what I took away from Honeywell.
After my stint there, I did go back to business school and I'm happy to talk more about that decision.
I assume it's probably of interest to a lot of listeners.
But after business school, I joined PepsiCo.
What's funny is that they have a similar reputation to Honeywell, so much so that I was sitting in a recruiting pitch and the PepsiCo recruiter was sharing an article that came from the Wall Street Journal about where future CFOs worked.
And they highlighted that PepsiCo was one of four companies that's known for training future CFOs.
And I was very familiar with that article, because I heard the same pitch from Honeywell coming out of undergrad, because they were also one of the four.
So I joked for a while I was trying to...
I was like Thanos trying to collect Infiniti's songs, working all four of these.
I only got halfway there, but really a good, awesome learning opportunity.
I think the PepsiCo learning for me was really two things related to how companies win.
First of all was brands, so the power of brand as a differentiator for businesses.
I saw that when I was working on brands like Doritos, Pepsi, Mountain Dew.
These are some of the most famous consumer brands out there, and really got to see the power of brand.
When you think about pricing and just market share, it all comes back to brand.
Secondarily, and one that I think I've carried into my future roles, is also the power of distribution.
If you think about any of the places you've been in the last week, there's probably some Pepsi product that you've interacted with at multiple touch points, convenience stores, restaurants, grocery stores, there are Doritos on the shelves and Pepsi on the shelves or at the beverage spots.
So really seeing that the power of meeting your customers where they are, and making it easy to see and discover your brand, can be a really big differentiator for businesses, and that kind of feeds into where I am now at Rad Power Bikes as I've gone through a little bit of a transformation as far as our distribution model.
Yeah, I mean, that's exactly where I was gonna go next is, so, Rad, Power Bikes, you're kinda focusing, you've helped transition the company from that direct -to -consumer ecommerce model to it, now you are a true omni -channel business, so that is that distribution there that you're speaking of.
I guess with that in mind, can you talk us through what that transformation looked like, I mean, from a financial planning and modeling perspective primarily?
Yeah, definitely. First I'll give a quick intro to RadPower Bikes because it's not as well known as some of those other brands, but RadPower Bikes is an e -bike company and we're really all about changing the way transportation happens, making it more energy -efficient, enjoyable, and accessible to all.
Really focused on how do we change the future of transportation?
A lot of that is by designing building e -bikes that can be car replacements.
They're also used for fun.
I have four of them in my own garage.
I'm a consumer of our own products, but it's really a bold vision.
That's what originally attracted me, the company.
And a little bit of the history on us is for the vast majority of Rad's history, we were a D2C e -commerce platform.
We sell a bike in a box to someone, ship it to your house, you grab it and you build it at home.
But as we found over time, more and more customers wanted to really test ride and see and steal the bike before they made such a big purchase.
And so we really started to grow partnerships with local bike shops, where we'd sell to the bike shop at wholesale, and that bike shop would help you test ride and get the right fit and pick the right bike for you.
So that was a big shift. If you think about, not only strategically, but operationally and financially, you mentioned the forecasting aspect, the shape of the P &L, if you think about a wholesale retail model is very different from a DTC.
At a high level, wholesale products, you're gonna get lower gross margin because you have a margin that you're granting to your partner.
But you also assume and hope to see leverage on the SG &A side may not cost as much from a marketing perspective to reach that customer.
The shape of that P &L is different.
When we were thinking about building this business on top of our existing business, we really thought about what do the P &Ls look like separately first?
You think about the business levers that you can pull in two different business models, really necessitates two separate P &Ls.
But then at the end, you got to bring those P &Ls together and make sure that the whole picture makes sense.
You know, you can assume that one plus one equals three.
But if you don't think about the impact that, you know, selling at wholesale at a lower margin, maybe that cannibalizes a sale that you could have gotten at full price.
So you have to really think about the blended P &L.
And that's something that we've obviously learn more about over time, but the key is, I think, to understand the business levers and then also think about strategically how those two pieces work together and make sure that it truly is one plus one equals three and not one plus one equals one and a half or less.
Yeah, that was always my favorite modeling to do.
And it's funny, I had a finance professor years ago accuse me of confusing the map for the terrain, which is, that saying has stuck with me forever because I just loved modeling so much And just, you know, you can think about all the assumptions and drivers and just build it layers and layers deep and have your, you know, all your internal factors and your exogenous factors and your scenario analysis and all that.
And it's, you know, as, as doing FPNA, that's like the most fun I had is, and especially when you don't have a lot of historical data, where you're just continuing a trend line, you know, throwing in some seasonality and all that.
But with you, the whole shift in the approach to the way that the bikes are distributed, I imagine you had to build similarly forecast and pricing and you didn't have the historical data to back it up.
So how do you approach modeling when you're flying, you know, really without a reliable baseline?
It's all brand new.
Yeah, it was especially challenging for me coming from big established companies that have a lot of history.
Forecasting something entirely new starting with a blank Excel sheet is daunting.
But I actually also think that in some respects it takes the pressure off a little bit because you know your forecast model is going to be wrong.
You just know you can't get all these assumptions right when you have no history to base it on.
In some respects it takes the pressure off.
I think what's key is identifying, as you mentioned, what are the key drivers that really impact the end result of this model?
The simple example is forecasting revenue for this brand new business, the wholesale channel.
There's really identified, just keep it simple.
What are the three key levers or inputs that will impact your model most?
First of all is number of wholesale partners.
If it's 100, if it's 1 ,000, obviously, that's going to have a big play in your model.
Then second, we'll leave, is how much volume is each of these partners doing, and on a monthly basis, in particular, if you sign up a partner and they do 100 ,000 in sales a month, versus a partner that does 500 ,000 in sales, obviously, has a big difference to the end result of the model as well.
We didn't really have a lot of data to make an estimation on, but you got to start somewhere put a line in the sand and say on an average basis this is what we expect.
Then the third piece is the actual margin rate.
What margin are we granting to our partners.
Say it's a 30 percent margin for ex -modeling purposes and so we keep 70 percent of that.
You put that as an input and know that you'll have to tweak it over time as you learn more.
I think keeping it simple focusing on the drivers is really what makes that model work because you know, you're going to have to adjust those drivers over time.
Start it knowing that you're going to have to make those adjustments.
And then once the actuals flow in, then you can tweak it and find out where you were wrong and make the adjustment.
Yeah, it's funny. I just was, we had a guest on a couple of weeks ago, Annette DeYoung, and she moved from accounting to finance.
And one of the things we were talking about is the difference from accounting in finance is finance.
You can be okay with being directionally right.
Whereas accounting, it's like, no, that it is that the trial balance has to balance, period, that's all it is.
So that's, that's a shift. And I also, it's funny because I've, I come from a private equity backed business background where, you know, nobody wanted to see a model that was, uh, not as perfect as maps exactly to the, uh, to the terrain.
But, uh, I do, you know, going back to another professor's quote, I did the George Box quote that all models are wrong, some are useful.
And that's something to keep in mind, too.
You know it's again the map is not the terrain, so that's a big part of finance.
And if you can as you get more data like you said you can tune him in.
But if you're directionally right and your strategically thinking about what those drivers are, what the levers you can pull and everything, then you're you know that's your job as a finance person.
I think that's a perfect example, and at the end of the day you as the Forecaster are responsible for that forecast. And so when it inevitably is wrong, you have to be able to explain why it was wrong.
And I think if you have the right levers identified there, that becomes easy.
You can say, Hey, it was, you know, we expected a hundred new partners.
We only got 50, so that's why we fell 50 % short of our forecast. You're forecasting revenue, you're doing the supply planning, and even, even the marketing support and talk about having to be strategic.
You're looking at everything.
And you're the cool thing is it goes back to your, what you said initially about being, you know, a generalist in finance clothing.
You're going across, but you see how each lever impacts the other.
So I'm wondering, how do you balance the responsibilities across all three and maintain that clarity across such interconnected roles.
Yeah, one of the beauties about this career transition I've made going from those big kind of well -oiled machines to a true startup is I get to wear a lot of different hats and I actually really like that.
That's been rewarding and inspiring for me in my career.
And I will also say that doesn't work without a good team of specialists that are supporting me and supporting in that decision -making.
But yeah, it is a lot, a lot of responsibility, a lot of roles that aren't usually combined into one.
But that's, as I mentioned, kind of driven by my personality that persona I've taken on of being a generalist in finance clothing, that's really what keeps me excited about work.
And I would say, a lot of times within companies, what causes friction or inefficiency is when different functions don't talk to each other well, I'm kind of straddling the finance and marketing world right now.
And you can see it when marketing says, hey, this is our ROAS, and finance says, but how does that actually tie to the P &L and just different languages almost that are tricky to bridge.
And so I think working to come to common definitions and understandings of what we mean when we talk about certain things really helps bring those processes and the way we think about our businesses into harmony makes it more efficient.
So it definitely is a balancing act, but I think it's work well spent, because it makes our organization better because we're all operating and working towards the same goal.
Thinking about what you're, you're doing it.
Rad power bikes. This is all the CFOs that I've talked to really, and anyone in finance, anyone who's having to forecast right now, and this goes back to COVID days too, but now we have uncertainty around tariffs, we have global supply constraints, or, you know, what's going to go on with supply chain.
If there's a trade war going on, or just the supply chain problems that I feel like we still haven't recovered from since COVID.
And then, you know, so all the pricing shifts associated with that, that's all part of your world every day.
And now you're looking at it, not just from the finance perspective, but you've got to source parts for manufacturing.
You've got to handle the marketing around that.
So how do you build financial flexibility into your forecasting models?
And I know probably when you were doing the 25 forecast, you weren't planning on this much sort of uncertainty.
No, who was right? No one had that crystal ball.
So how are you now trying to stay ahead of these challenges and trying to, you know, kind of pivot and move with them?
Yeah, the, I mean, the common joke is version, you know, xls .final, final, final?
We're into like 65 or 70 finals now at this point, a lot of, a lot of rework, a lot of reassessing.
It's obviously a very timely question.
The entire economy is grappling with this.
And there's, I always say that there's no, no word in the English language more scary to a finance professional than the word uncertainty because that just makes it hard to forecast, hard to plan, hard to allocate resources.
So with Terrace in particular, I go back to kind of a mental model I've developed over time, which is, you know, within supply chain, this trade off between efficiency and flexibility.
And if you think about the most efficient model of supply chain, you could possibly imagine, think of like a single source supplier.
They produce all your products.
You only have a couple skews and they produce a big, huge They run night and day, no changeovers on the production line.
That's maximizing efficiency, but we know that the real world needs more flexibility than that.
You know, your demand doesn't come in those big, huge chunks where all your product is coming in at once.
You got to space it out.
We have cash constraints.
So we trade off that efficiency for flexibility so that we can use just -in -time sourcing and things like that.
I would say in times of uncertainty, this is even more important to understand that trade -off and just know that flexibility is what we have to lean into in times like this.
If I think about that from a operations perspective, it's how quickly can you source new suppliers and ramp up production?
If you have to shift to a new country, for example, how robust are your quality control processes to where you can pivot on a dime.
How nimble can you be in regards to your pricing and your pricing adjustments?
And then, specific to your question on FP and 80 liters, how flexible are your forecast models?
You know, we go back to those different drivers.
We're not necessarily used to having to say tariff could be anywhere from 10 % to a 150 -plus, but you really got to think about that piece as, you know, you got to be able to be flexible.
If you can't you won't survive I also think about you know obviously scenario planning and sensitivity analysis that's going to become also extremely important is what if tariffs are 10 % what if tariffs are 40 % what if tariffs are 100 % being able to answer those questions because that's the other thing to think about is FP &A folks where we're obviously tasked with forecasting we're also tasked with communicating the forecast and aligning an organization and all the different stakeholders around that forecast and making sure that people are aware of and bought into the approach. And so that's also key
is, you gotta manage expectations and questions from the board, your employee base, your customers, so it's not only what are we forecasting and what is the model throwing out at these different sensitivities, but then how do we actually talk about what that means and what the risks are, what the opportunities are, it's not for the faint of heart right now, for sure.
Uh, and if you're in the trenches with me, I salute you.
You know, I was just thinking about, uh, one of my favorite tricks to do when doing forecast in a time of uncertainty.
Like for me, uh, the biggest in my career, the biggest time of uncertainty was the global financial crisis.
I was in a pretty leveraged a brick and mortar retail business that, um, it was wild and I, so I started on all my forecasts and we'd, you know, go back and redo the forecast every, every quarter.
And, um, I started adding the confidence interval bands.
And I would look at like early before at the beginnings of it, I would have, you know, they'd be a fairly tight band, but by the end, it was basically just covering the whole graph.
It's like, I don't know, it's going to be somewhere.
I think it's going to be here, but it's going to be somewhere in this range.
And then it feels like that's, that's where we are now.
Again, going back to seeing it from all perspectives, this is what the best finance partners are able to do is they're not just seeing the numbers, they're, they understand what the numbers mean, and this is something for our listeners who were early in your career, I can remember the first time I was putting together models or even doing basic reporting, the numbers didn't mean it was a big telecom company and that the numbers were just big numbers that really that scale didn't resonate with me.
It just, it looked like seeing the individual trees and not the forest. And so you don't have that insight, but the longer you're around business, the more you can be exposed and I love the way people are doing business partnering now to really get, like you said, to be if you're at the facility where the work is happening and you're not just in this kind of finance ivory tower, that's helping you learn the business more.
And I was talking to, as I do, talk to FP &A people all day, talking to someone the other day and they had mentioned a mistake they made early in their career where they were just sending out the daily sales numbers and didn't really mean anything to them, they just pulled the report, slapped them together and sent them out and ran into the CEO who told him, Those are some pretty interesting sales numbers you sent out this morning.
And he didn't know what to say about it and had to go back and look at them.
And he saw that one area that's a fraction of the size of the other he'd reported 10x the sales in one day of the other, and just, it didn't mean anything to him.
So I think that example is kind of why understanding the business and the nature of it is sort of, the relativity of it is all so important.
And going back to you as that generalist and thinking about that broader knowledge and how it applies to FP &A, but being that generalist in finance clothing, what does that mean to you?
And how's that mindset shaped your approach to FP &A?
Yes, we're all, we're finance professionals.
We're all happy in Excel.
You know, I always say, I think in terms of rows and columns, you know, I think as if I'm looking at an Excel spreadsheet.
To your point, I think that we're at our best, when we have the business understanding that then puts that those numbers in context for us and we have much much better insights because we know what's understanding in the business.
You know I always talk about knowing the business cold.
That's that's a phrase that I learned in PepsiCo as well is it's not enough to just know the numbers.
You have to know the business as well and the key thing that has worked for me is closing the laptop and going to visit one of our retail stores or going out and seeing our 3PL in action and talking to people that are picking, packing, and shipping the product.
Seeing it gives me so much more context than when I go back and look at the numbers because I do sit in Excel a lot.
I have that context and I interpret the data differently as I'm close to the business operations.
So I'm a big believer in that.
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And another thing that I know you're a big believer in is training and mentoring.
And I think when we had our pre -call before the show, that was the first thing I caught on to because when I looked at LinkedIn, And I think it's in the first sentence in your bio, talks about developing your team.
So I'm wondering, and I think that's hard, that doesn't come naturally to a lot of us, especially people in finance and accounting, because we're sort of drawn to it the way an engineer is.
We like being heads down in our models and doing that work so the soft skills of management and mentoring can be hard. So I'm wondering, as someone who is passionate about that, how do you personally approach developing and mentoring your FPNA team, especially given your background Honeywell's leadership development program.
And I don't know if that was a significant contributor to the way you approach mentoring now or not.
Yeah, it absolutely was.
And I think back to early on in my career, I mentioned both Honeywell and PepsiCo known as gold standard as far as developing finance leaders.
And I definitely gained a ton from those early career opportunities.
I would say there was a lot that was programmatic about that the company itself and the and the structure and the processes that that made that happen naturally.
but I also think I was uniquely blessed and benefited from individual mentors who truly cared about me and my development.
And it is a conscious investment.
And that's what I, when I think about it, it doesn't come naturally.
It takes time, it takes energy, but it's time well spent, and it's a good investment.
We talk all the time about what's your ROI in finance, the ROI on people development is really, really good.
And I think at times that the hesitancy is, Sometimes it's easier to just do it ourselves than coaching someone and training them to do it.
But one, when they do it and they learn that new skill, one, that becomes more leverage for you and your team, that now you can rely on them, and that opens up your own capacity a little bit more in the future, and that compounds over time.
But secondly, I think the process itself and seeing others accomplish new things and grow in their careers and confidence is rewarding in and of itself.
That's what has kept me focused on that as I've grown my career.
It's a little bit of giving back to those early experiences and early mentors that have helped shape me in passing it forward. But it's rewarding to see others grow and gain that confidence.
For listeners who haven't been through one of those structured leadership programs, what advice would you have for becoming a more effective manager and mentor?
Yeah, it's a good question.
I think there are plenty of examples.
outside the professional sphere.
You know, think about great mentors you've had in your life outside of your boss, even parents, athletic coaches, teachers, anyone who has prioritized your success.
I think that's really the key of what makes an effective manager, mentor is someone who prioritizes another individual's success.
Sometimes it really is just as simple as caring about someone and choosing to see what they can become.
And you don't need a HR -driven development plan to do that.
You just start to become an advocate for them and look for opportunities for them to stretch themselves and grow and offer those up and help coach them through those opportunities.
I would say if that doesn't come naturally to you, just practice it.
It's just like any other skill, mentorship and helping others grow and develop is something that you get better at as you do it.
Dedicate the time, set up those one -on -ones, and set up those coaching opportunities, and over time that discomfort or maybe the apathy gives way to, hey this is really exciting to see them develop and grow their skills.
The other part or the other side of that coin, I guess I could say is how you're putting into yourself and expanding your career and knowledge.
It's really both of those are very hard to think about sometimes.
It's how am I gonna build my team, how am I going to build my own skill set?
Because it's especially sometimes you get to a certain point in your career and it's you think.
Well, I can do my job.
I'm very efficient at it.
This is kind of my sweet spot.
Why do I need to do anything else?
But I think the best leaders are the ones who are continuously learning continuously expanding and finding those points of discomfort and going past it.
So for you, beyond the training and development of your team, what's top of mind for your career development right now?
Or is there something you're trying to learn, and explore or get better at.
Yeah, it's interesting, I just read this morning's, someone made a comment about, why do so many successful people continue working when they could retire?
And somebody commented, it's because of the type of person that they are that leads them to the success in that first place, causes them to wanna have that drive to continually be improving and learning and growing.
So I think that may or may not come naturally to everyone.
But I think for those of us who, probably if you're listening to this podcast, you tend to be wanting to be on the cutting edge and learning more.
I would say, so right now I've recently stepped into an expanded role at the company where I'm now taking on responsibility for marketing, and I would say, top of mind for me is learning the world of performance marketing.
I definitely have had some exposure to it throughout my career.
I majored in marketing during my MBA program, and I've worked pretty closely with marketing leaders for quite some time.
But it's kind of the first time in the driver's seat, if you will, and having to actually make the decisions rather than advising on decisions.
And so definitely I'm trying to learn more about the, both the art and the science of marketing.
I think sometimes as finance people, if there's a function that we have historically looked down upon, it may be marketing just because it's, maybe it's more fluff, or maybe it's too creative for us spreadsheet livers.
But I really have come to appreciate over time how marketing and finance actually aren't that different.
If you think about what a marketing role is, It's making a series of investments in the form of ads or social media posts that are intended to generate a future return in the form of revenue.
If I think about it from my finance mindset, in that way, it makes a lot more sense to me, and it gives me an appreciation for the value of the function of marketing in and of itself, as well as how I can plug into it and have some expertise to bring to the table.
But it's a lot of learning.
I mean, you think about multi -touch attribution models.
How do all these different activities that we're doing as a marketing function actually result in revenue?
I talked earlier about how does this tie back to the P &L is always the age old question.
I think coming to an appreciation of how that's done and how that's measured is really top of mind for me.
And that's where I'm leading a lot of my team and just extra opportunities to learn along the way.
Well, you mentioned your MBA, and I think that coming out of a good MBA program, that really helps if you're going to be that more of a generalist because you're getting the broad picture.
And I think a lot of our listeners, maybe undergrad in finance or accounting, are a lot of our listeners are probably considering going back for their MBA and a lot of our listeners already have their MBA.
But I'm wondering for you, what went into your decision to attend Kellogg and what did you get out of the experience and what advice would you give to our listeners about that?
Yeah. I'd start off by saying I'm a huge believer in the power of education.
I think a lot of people approach the MBA decision in particular as a strictly financial decision.
It costs this much. There's some sticker shock when you look at tuition rates especially for top MBA programs. The question becomes, hey, am I going to make that up in my career because oftentimes I'm giving up wages for those two years while I'm at school.
Obviously, I have the cost itself of attendance, but then the assumption is that over time, the compounding effect of that increased salary post MBA pays off.
I definitely wouldn't discourage people from thinking about it that way.
I definitely pulled out my own spreadsheet and did that analysis for myself.
That is an important part of the decision, but I would also emphasize there are benefits to education that are not quantifiable, that don't show up on a spreadsheet that I think are really important to consider as well.
My time at Kellogg was extremely, personally enriching.
I would say and I often say, My time at Kellogg made me a better me.
I just think that the leadership learnings, the personal growth, I've always said as well that the process of learning makes you a better learner.
You're not just getting those facts put in your head because those facts eventually will fade away, but it makes you a better learner.
So I came to appreciate most for my MBA program was the idea of learning from peers.
I feel like I learned as much from my peers, if not more than I did from my professors.
So you think about an MBA environment, especially a full -time MBA program like the one I attended, it's people from diverse backgrounds all over the world in many cases that have done consulting or M &A or even non -business things pre -business school.
So just that environment of learning is really, really valuable.
I would say that I carry with me as I've maintained many of those relationships, we support each other on career transitions, life transitions, and I think just those relationships and that ability to kind of think of my life as a process of lifelong learning is as valuable as anything I learned in the classroom and so I'm a huge proponent of it.
Everyone obviously makes their own decision on it, but nothing but good things to say about that experience and who it has helped me become as a leader and as a person.
Yeah, I think another part of it is what I was alluding to earlier where people can get sedentary and complacent where they are in their career.
And I think a lot about brain plasticity and I think about we do something over and over and we just have these ruts sort of dug into our neural pathways of just this is the way it's always done.
And it's very hard to be able to shift when you're facing something like the uncertainty that's going on around the economy, and really the kind of thought that you need to be able to bring to the table, if you're going to be in a senior leadership, a more of a strategic role.
So very important to continue learning.
And like you said, the facts kind of go away, but the learning to learn in the, I think opening up to new, new knowledge, especially if you have to push yourself forward, if you're not the strongest, whatever and you've taken another statistics class.
It's really making you think outside the box and and think through that.
So I think continuing education beyond the NBA to even is always helpful, especially as we prepare for future where I think we're going to all get replaced by bots so I don't if we're just agents were going to be managing teams of agents or I say tongue in cheek I don't you know if you're a regular listener to the show.
You know I'm always rambling on about the, how cool AI is, and all that.
But we talked about that actually before the show a little bit, and you mentioned that you're not, you're not trying to go beyond the bleeding edge of AI, you haven't fully adopted it yet.
And I'm wondering what's driving that hesitation, have there been any obstacles, and what would make it more compelling for you to say, okay, well let's give this a shot?
Yeah, I definitely have listened to the show enough to know that the AI question was coming from you, Glenn.
I would say I do feel like I'm a little bit on the slow track to an option right now, relative to what I know is out there.
I definitely am dabbling in the idea of it.
I would say I'm not putting my forecast into AI and having it generated for me.
I certainly don't know that that's the best option anyway.
But I would say I have started to use tools here and there.
The Gemini meeting transcription tool, I've become a big fan of that.
I'm not a complete Neanderthal, but I would say there are real obstacles that I myself have faced, and I've heard from others as well.
I think two that have jumped out to me recently are the concept of data privacy.
I'm at a startup where we don't have a huge enterprise data security team that tells us these are tools you can use and this is how you use it.
And so there is kind of that trepidation of, hey, are these tools I'm using safe?
Like what can I plug in?
What shouldn't I plug in?
And or which models or which versions of those models are truly safe when you think about data security?
That's been an obstacle.
I think the second is just that idea of what I can do is good enough.
There's also a learning curve.
It's upfront cost of, I'm not really sure how I can get this to work for me.
It takes more time to learn how to use it in AI as it does to just do it on my own.
Going back to that comment earlier about people development, I think applying my own logic against myself, It's it's probably, you know, make that investment up front to figure out how it's going to benefit you, and then the benefits really start trickling in.
And again, those compound overtime, but really here is to hear your take on some of those because I know you're kind of a an advocate for this.
Yeah, and I don't. I don't want to be to the point where I'm proselytizing about it.
It's you know. So I guess a couple of things I would say one.
You mentioned Gemini, so within the last couple of weeks, And it's still nascent and it reminds me, I'm old, so I'm going to do an old reference here.
It reminds me of the early days of AOL and Prodigy, when they would send you a disc in the mail and you'd put in your computer and you'd install the software and you would try to log onto the internet.
And sometimes you would get on and you'd be off fighting with people in chat rooms in 30 seconds and having the time of your life.
Sometimes you would be, it would just, the modem would screech at you.
I won't make the sounds into the microphone, but the modem would screech at you for three to five minutes and you'd never connect.
And that's we're sort of there with AI right now.
And as finance people, there are some things that there's gray area.
And if you are off beat a little bit, you're not losing much. But in accounting and in finance, the risk of having a tool or an employee that hallucinates can be can be a bit of a problem.
So I'm not saying we should hand over everything to the bots right now, but with the pace of change, how quickly this is coming, I think that it's time we need to start experimenting with it and understanding it.
So even if that means I'm not ready to put my own company data in, but let me play around with some public company data or some synthetic data or whatever and see what these models can do.
I've seen how they work with words, but what happens when they write code and they can do So complex forecasting techniques using auto autoregressive integrated moving average and putting seasonality in and letting you do scenario analysis on the fly with the model.
Because it not because the model's using its knowledge base that it was trained on, but because it's actually going and writing Python code and building a really cool model under the hood and giving you instant feedback on something that would take you a couple hours to model.
So I think that when people start seeing, oh wow, you can use this for numbers and it does have these, but there's also the part where generative means it's generating new novel content every time, so reproducibility.
When you talk to the chatbot one time and it tells you one thing and then you talk to it later and it tells you something different, that's a problem, that's like having a schizophrenic employee, I think.
So um definitely still some ways to go there before we take it for granted that it's right and we're definitely in the trust but verify.
And I guess I do want to say one thing about data privacy.
Now, that said, in my day job, I have clients and we handle their data and we have data policies around what we can do with it.
We have a closed OpenAI enterprise account where all of our data stays within our environment.
So there's a couple of things on that.
So even if you're not in this enterprise account, all the models now, it's not like when they first rolled out.
Cloud default, not going to train on your data.
I think Gemini maybe default, but they all have settings, everyone from Perplexity, ChatGPT, Gemini, they all have settings where you can say, don't train on my data.
The trust issue is I'm uploading data to the Cloud.
But if you're using AWS, if you're using Google, if you're using Microsoft and emailing things, it's already in the Cloud.
Unless you're in a Faraday cage, There is some level of exposure to your data.
The question is, do I trust Amazon security or Microsoft security or whatever?
If the answer there is no, then you need to look at your whole text stack.
It reassess everything at that point.
Yeah. Then the last thing I'll say on it, and this is something to keep in mind.
Large language models when they're trained, they learn probabilities, not facts.
So if I type Michael Jordan is a and then it enter, you know, let it do its job work.
It does the auto complete.
999 times out of 1000, it's going to say basketball player one time out of 1000 might say baseball player, you know.
Just because there's there is.
It's learning the probability, and most likely if you're talking about Michael Jordan, you're going to be talking about him as a basketball player.
But if you type Glenn Hopper is a blank, it doesn't know who I am.
So it may hallucinate something right there.
So if I went in to chat GPT and typed, I'm Glenn Hopper, this is my address, this is my social security number, hit enter, and that goes up, even if I had all my privacy stuff turned off and it went up into the model.
Now, it's not nonzero, but the idea that with something that has read the entire internet and doesn't know who I am, and also the fact that there's hundreds of other Glenn Hoppers There's a musician in Australia named Glenn Hopper, by the way, pretty good.
I haven't met him, but he's, there's also a race car driver named Glenn Hopper, but you know what I mean.
And for all of us, there's all these different pieces of information.
So that to get out there and because it's not learning facts, it's learning probabilities, the chances of anyone putting the exact series of things in to get that to come out is, it's not non -zero, but it is infinitesimal.
So anyway, that's my soapbox on that.
And I'm not saying, go put all your company data in chat GPT now, But I am saying it's it's coming fast. And if everybody is talking about agents, I have not yet found an agent that I would trust really to do anything for me.
Yet I teach classes where I show people how to use them and what they can do, but it's we're just talking about the potential now.
So I think time probably to, uh, to study it, experiment, play around with it.
Time to let it close your books.
No, we're not there yet.
Eventually we will get there though.
Yep, Yep. And it's even since I started teaching courses on this.
I'm having to go update all my old courses because it can do so much more than it could a year ago when I made these courses.
So it's pretty cool.
We're seeing the potential.
Alright, and now that I've rambled on what were we talking about here?
No, I I definitely appreciate that I learned something from you just barely.
So hopefully the rest of the listeners appreciate that as well.
I appreciate that, yeah, um, OK.
Well we are because I've taken up half the show with my own inane rambling.
We are at the part of the show where we need to wrap it up with a couple of personal questions that we asked everyone.
So the first one, if you're a regular listener, what's something that most people don't know about you that we can't see on your LinkedIn or just by Googling you or whatever?
I would say for me, it's a love of outdoors.
I grew up in Utah. I grew up hiking, camping.
If given the opportunity, I will always opt to do something outside.
I love sports I you know I'm coaching my kids soccer teams Anytime, I'm not crushing it in Excel.
I'm trying to get outside and do something active I'm not really a runner, but I am training right now for my first Ragnar so I do that to stay active place multiple Frisbee on the weekends, that's kind of both a competitive and social activity that I get involved in so really again just anytime I can get up in the mountains or get outside and throw frisbee around.
I'm I'm always happy to do that and you mentioned before the show that you grew up in Utah, which is the most beautiful state.
I mean the the outdoor that the parks there and everything we've taken the kids out there all grown and gone now but when when they were in in the house we went out there multiple times.
Just so many great places, so I'm sure hiking and everything you can do in Utah's still looking for it.
I was privileged to grow up there.
It's a. It's a wonderful place.
OK, now everybody's favorite question.
What is your favorite excel function?
and why? Yeah, this is a great question.
I love this question.
I always love to hear everyone else's answers.
I don't know that I've heard this one a ton.
I really love some ifs.
So a lot of what I'm doing is taking big data sets and generating a forecast, thinking about how many of this type of eBiker we're going to sell in this geography and this channel.
So taking tabular data and aggregating it in custom aggregations.
I love the sum ifs for that because you can really define the set of kind of criteria that I want to sort into this specific table.
It makes that really easy.
You know that one of the alternatives to that is pivot tables, and I find those to be clunky and hard to format.
So I really like that the kind of how clean sum ifs is to do that.
I tend to use that one quite a bit.
Agreed, I still do love a pivot table, but I know exactly what you mean.
So well, Derek, I really appreciate you coming on the show.
I guess just last question.
how can people get in touch with you to connect and learn more about you and what your doing and rad bikes and all that?
Yeah, and definitely best way to connect is LinkedIn.
I'm, you know, Derek Paulson, feel free to add me, follow me.
I also do offer career coaching.
So I'm on a platform called Leland, if you look me up at joinleland .com, kind of really focused on early career, you know, finance undergrads who are looking to navigate their career, happy to do that as well.
So feel free to look me up on LinkedIn or on lean.
All right, Derek, well, thank you again for coming on.
Thanks G happen I really appreciate it
