Derek Paulson is Director of Finance and Performing Marketing at Rad Power Bikes, a Seattle-based e-bike company changing transportation. In this episode he talks about his approach to navigating tariffs (“There no, no word in the English language more scary to a finance professional than the word uncertainty” says Paulson as he discusses required “efficiency” and “flexibility” in their supply chains). He also reveals his approach to the finance transformation required to shift Rad Power from a direct-to-consumer to an e-commerce and retail focused model, that is “starting with a blank Excel sheet to do the modeling for Rad Power Bikes”.
In this episode:
- How Honeywell and PepsiCo are top training grounds for finance leaders
- Efficiency vs flexibility in supply chains
- Is an MBA worth it in finance?
- Data privacy, AI, and finance
- Making the case for SUMIFs
Connect with Derek Paulson on LinkedIn: https://www.linkedin.com/in/derekpaulson/
Full blog post and transcript
Glenn Hopper:
If you would like to earn CPE credit for listening to the show, visit earmark cpe.com/fpe. Download the app, take a short quiz, and get your CPE certificate. Finally, if you enjoy listening to FPA today, please go to your podcast platform of choice. Click the subscribe button and leave a rating in review of the show. And now onto the show from Data Rails. This is fp NA today.
Glenn Hopper:
Welcome to FP&A Today, I’m your host, Glenn Hopper. Today on the show, I’m joined by Derek Paulson, director of FP&A and supply planning at Rad Power Bikes. Derek’s had a solid fp and 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. So let’s get into it. Derek, welcome to the show.
Derek Paulson:
Thanks, Glen. Happy to be here and, uh, honored to be selected for this. I’m a listener of the podcast, so, uh, nice to, to be invited.
Glenn Hopper:
That’s great. Really enjoyed talking on the, uh, when we were, uh, talking ahead of the show, so I just, I can’t wait to kind of dig into, uh, to your background and, and I think we share a lot of, uh, common approaches to finance, so I can’t, uh, I can’t wait to to get into some of those. So I guess for our audience, let’s go ahead and start at the beginning and just kind of walk us through your career journey and what led you, and I guess even before that, what led you to finance in the first place?
Derek Paulson:
Yeah, uh, I mean, certainly the, the why finance is, is an important question, but, um, I’ll go back to, uh, as a little kid, um, uh, as a young child, once I had an experience where I think it was my grandparents were telling me about, um, when they were little, they, they could go out and, uh, buy a loaf of bread for 10 cents. And the, then that’s what, that was kind of how I got, uh, first introduced to the concept of inflation. And, uh, for some reason, that stuck with me and it fascinated me so much that later, um, still in elementary school, one one point our teachers gave us a writing prompt that said, if I could go back in, in time using a time machine, I would do, um, the answer I ended up giving was I’d go back to great depression times, buy a bunch of loaves of bread and bring ’em back to current times, <laugh>, and sell ’em at like a 10 x profit.
Derek Paulson:
So even as a, as you know, a 9-year-old kid, I already had this idea of arbitrage in my mind. And, you know, there’s, there’s a great arbitrage opportunity there. So, you know, I had that interest in business even from, you know, from my young age. And as I, I got to college and I was deciding on a major, I, I knew I wanted to be something in business, business, um, and I, 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. You know, when you think about different industries, really, fp and a can can take on a lot of different flavors as, as you go throughout your career. And I, you know, feedback I’d heard from, from mentors and, you know, from the career development program at, at, at college, I got that feedback a lot.
Derek Paulson:
And 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, was a really good way to, to say, Hey, I, I’m gonna leave some options open and, and see where my career takes me. And it, it definitely, I would say, you know, you, you mentioned a little bit about my background going through Honeywell and PepsiCo earning an MBAI, I really do feel like I’ve been able to build a great career off of that foundation and, um, really excited to see where it continues to head from here.
Glenn Hopper:
Yeah. And your, your career, I mean, you worked at some, some heavyweights like Honeywell and, um, and PepsiCo and I, I think, you know, and, and I think we’ll talk a little bit more about the, the training program at Honeywell. Um, 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.
Derek Paulson:
Yeah, so I did join Honeywell right after college. And, um, I would say they, they definitely have a reputation for developing finance leaders and really focused on well-rounded financial professionals. Not only understanding the nuts and bolts of finance, but also understanding the business. Talked a lot about the CFO as COO and really wanted to emphasize within that company, CFO needs to be a business partner. Um, and that trickles all the way down throughout the organization. So, um, as an example of that, my very first role at, at Honeywell was in a manufacturing plant down in Mobile, Alabama, uh, where they, they, they made chemicals for all kinds of different end uses. And, you know, it meant a lot to first role be doing cost accounting and CapEx planning at an actual site where, where the business actually gets done, where the products actually get made.
Derek Paulson:
And it was a great learning experience to just learn, learn the nuts and bolts of the business. Later on. I had other opportunities to, you know, be at a corporate fp and a role and, and get the more traditional annual plan, monthly forecasting, variance analysis, uh, kind of fp a cadence, but it was really kind of having that breadth of experience, um, as well as a focus on being a, a functional partner. That was kinda what I took away from, from Honeywell after, uh, my stint there. I did go back to business school and I’m happy to talk more about that decision. Um, I, I assume it’s probably of interest to, to a lot of listeners. Um, but after business school, I joined PepsiCo. Um, and what’s funny is they have a similar reputation to Honeywell, so much so that I was sitting in a recruiting pitch and the, the, the PepsiCo recruiter was sharing an article that came from the Wall Street Journal about, you know, where future CFOs, uh, worked.
Derek Paulson:
And, um, they highlighted that PepsiCo was one of four companies that’s known for training future CFOs. And I was very familiar with that article ’cause I heard the same, same pitch from Honeywell, uh, coming out of undergrad. ’cause they were also one of the four. So, uh, I joked for a while. I was trying to, I was like, fan of trying to collect Infinity stones, worked all four of these, uh, uh, I only got halfway there, but, um, really a good, awesome learning opportunity. I, I think the PepsiCo learning for me was really two things related to how companies win. First of all is brands. So the power of brand as a differentiator for businesses. I saw that when I was, you know, working on brands like Doritos, Pepsi, mountain Dew, these are some of the, the most famous consumer brands out there. And really got to see the power of brand.
Derek Paulson:
When you think about pricing and just, you know, market share, it, it all comes back to brand secondarily. And one that I think I’ve, I’ve carried into my, my future roles is also the power of distribution. If you think about any, any of the places you’ve been in the last week, there’s probably some Pepsi product that you’ve interacted with at multiple touchpoints, convenience stores, restaurants, grocery stores. There are, you know, Doritos on the shelves and Pepsi, um, on the shelves or, or, you know, at the, 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, um, can be a really big differentiator for businesses. And, uh, 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.
Glenn Hopper:
Yeah, I mean, that, that’s exactly, uh, where I was gonna go next is, so Rad Power Bikes, you’re kind of focus and you’ve helped transition the company from that direct to consumer e-commerce model to it. Now you are a true omnichannel business. So that is that distribution there that you’re speaking of. And so I guess, you know, with that in mind, can you talk us through what that transformation looked like? I mean, from a, you know, you know, from a financial planning and, and modeling perspective primarily? Yeah,
Derek Paulson:
Definitely. And first I’ll give a quick intro to Rad Power Bikes because it’s not as well known as some of those oth those other brands. But, you know, rad Power 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. So really focused on how do we change the future of transportation. And, and a lot of that is by, you know, designing, building e-bikes that can be car replacements. They’re also used for fun. I have four of them in my own garage, <laugh>. So I’m, I’m a consumer of our own products. But, um, it’s really kinda a, a bold vision. And that’s, that’s what originally attracted me to the company. And a little bit of the history on us is for, for the vast majority of Rads history, we were a D two c e-commerce platform.
Derek Paulson:
We, we, we sell a bike in a box to someone ship it to your house, you, you, 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 feel the bike before they made such a big purchase. Um, and so we really started to grow partnerships with local bike shops where we’d sell to the, the bike shop at wholesale and that bike shop. It would help you test ride and get the right fit and, and pick the right bike for you. So that was a big shift. Um, if you think about not only strategically, but operationally and financially, you mentioned, you know, the forecasting aspect, the shape of the p and l if you think about a wholesale retail model is very different from a D two C. Um, you know, at high level, you know, wholesale products, you’re gonna get lower gross margin ’cause you have a, a margin that you’re granting to, to your partner.
Derek Paulson:
But you, you also assume and, and hope to see leverage on the, the sg and a side, you know, may, may not cost as much from a marketing perspective to reach that customer. So the shape of that p and l is different. So when we were thinking about building this business on top of our existing business, we really thought about what are the, what are the p and ls? What, like separately, first you ha you think about the business levers that you, that you can pull in these two different, different business models really necessitates two separate p and Ls, but then at the end, you gotta bring those p and ls together and make sure that the whole picture makes sense. Um, 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, a sale that you could have gotten at, at full price. So you have to really think about the blended p and l. And that’s something that we’ve obviously learned more about over time. But, um, you know, the, 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.
Glenn Hopper:
Yeah. And when you do stuff like that, that was always my favorite kind of modeling to do. And it’s, uh, it’s funny, I had a finance professor years ago accuse me of, uh, of confusing the, uh, the map for the terrain, which is that, 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 fp a 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 I, you know, with you, the whole shift in, in the approach to the way that the, uh, bikes are distributed, I imagine you had to build similarly forecast and pricing models and you didn’t have the historical data to, to back it up. So how do you approach modeling when you’re flying, you know, really without a, a reliable baseline, it’s all brand new.
Derek Paulson:
Yeah, it was, it was especially, uh, challenging for me coming from big established companies that have a lot of history, um, forecasting something entirely new, starting with a blank Excel sheet is daunting. But I actually also think that in some, in some respects, it takes the pressure off a little bit. Um, because you, you know, your forecast model is going to be wrong. You just, you just know you, you can’t get all these assumptions right when you have no history to base it on. And so in, in some, in some respects, it takes the pressure off. Uh, I think what’s key is identifying, as you mentioned, what are the key drivers that really impact the end result of this model? And the simple example is forecasting revenue for this brand new business. Um, you know, the, the wholesale channel, there’s really, I identified just, just keep it simple, what are the three key levers that, um, or, or kind of inputs that will impact your model most?
Derek Paulson:
First of all is number of wholesale partners. You know, if it’s, if it’s one, if it’s a hundred, if it’s a thousand, obviously that’s gonna have a, a big play in your model. Then second will leave is how much volume is each of these partners doing? And, and on a monthly basis basis in particular, you know, if you, if you sign up a partner and they do a hundred thousand in sales, uh, a month versus a partner that does 500,000 in sales, um, obviously has a big difference to the end result of the model as well. And we didn’t really have a lot of data to, to make an estimation on, but you gotta start somewhere, put a line in the sand and say, on an average basis, this is what we expect. And then the third piece is the actual margin rate. You know, what margin are we granting to our partners?
Derek Paulson:
Um, you know, say it’s a, you know, 30% margin for, for x, you know, modeling purposes. And, and so we keep 70% of that. You put that as an input and know that you’ll have to tweak it over time as you learn more. And I think keeping it simple, focusing on the drivers is really what makes that model work. Because you know, you’re gonna have to adjust those drivers over time, start it knowing that you’re gonna have to make those adjustments. And then once the actuals flow in, then you can tweak it and, and find out where you were wrong and make the adjustment.
Glenn Hopper:
Yeah, it’s funny, I just was, uh, we had a guest on, um, a couple weeks ago, Annette de Young, and she was, she moved from accounting to finance. And one of the things we were talking about is the difference, you know, in from accounting in finance is finance, you can be okay with being directionally, right. Whereas accounting, it’s like no <laugh> that, you know, it is that the trial balance has to balance period. That’s, uh, you know, that’s all it is. So that’s, that’s a shift. And I also, it’s, it’s funny because I, I come from a private equity backed business background where, um, you know, nobody wanted to see a model that was, uh, not as as perfect as, as in maps exactly to the, uh, to the terrain. But, uh, I do, you know, going back to another professor’s quote, I the George Box quote, that all models are wrong, some are useful. And that’s something to keep in mind too. Um, you know, it’s, again, the, the map is not the terrain. So that’s a, a big part of finance. And if you can, as you get more data, like you said, you can tune ’em in. But if you’re directionally right and you’re strategically thinking about what those drivers are, what levers you can pull and everything, then you’re, you know, then that’s, that’s your job as a finance person.
Derek Paulson:
Yeah, I think that’s a, 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. Right?
Glenn Hopper:
Yeah. And in, and in your forecast, so you’re now, I mean, you’re re you’re, uh, forecasting revenue, you’re doing the supply planning and even even the marketing support. And I think about, you know, that’s more the, that, that str talk about having to be strategic. You’re looking at everything and you’re, the cool thing is, and, and it goes back to your, what you said initially about being a, you know, a generalist in 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 kind of maintain that clarity across such interconnected roles?
Derek Paulson:
Yeah, one of the beauties about this career transition I’ve made going from those big kind of well-oiled machines to a, a true startup is I, I, I get to wear a lot of different hats, and I actually really like that. Um, that’s been rewarding and, um, inspiring for me in my career. Um, and I will also say that doesn’t work without a good team of specialists, uh, you know, that, that are supporting me and, and supporting me in that decision making. Um, but yeah, it, it is a lot, um, a lot of responsibility, a lot of roles that aren’t usually combined into one. Um, but that’s, you know, as I mentioned, kind of driven by my personality that the persona I’ve taken on of being a generalist in finance clothing, that that’s really what, what keeps me excited about work. A lot of times within companies, what causes friction or inefficiency is when different functions don’t talk to each other.
Derek Paulson:
Well, um, you know, we see it, I, I’m, 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 and l? Um, and, and just different languages almost, um, that are, that are tricky to bridge. And so I think, you know, working to come to common definitions and understandings of what we mean when we talk about certain things really helps bringing those processes. Um, 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. ’cause it makes our organization better. ’cause we’re all operating and working towards the same goal.
Glenn Hopper:
Fp and a today is brought to you by Data Rails. The world’s number one fp and a solution Data rails is the artificial intelligence powered financial planning and analysis platform built for Excel users. That’s right, you can stay in Excel, but instead of facing hell for every budget month end close or forecast, you can enjoy a paradise of data consolidation, advanced visualization reporting and AI capabilities, plus game changing insights, giving you instant answers and your story created in seconds. Find out why more than a thousand finance teams use data Rails to uncover their company’s real story. Don’t replace Excel, embrace Excel, learn more@datarails.com.
Glenn Hopper:
Thinking about what you’re, you’re doing at Rad Power Bikes. And I <laugh> this is, I all the CFOs that I’ve talked to really, and anyone in finance, anyone who’s, who’s having to forecast right now and going, this, this goes back to the covid days too. But now we have uncertainty around tariffs. We have global supply constraints, or, you know, what’s gonna 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, 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 per perspective, but you’ve gotta, uh, source parts for, for manufacturing. You’ve gotta handle the marketing around that. So how do you build the 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 around no who was right. No one had that, 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?
Derek Paulson:
Yeah, the, I mean, the common joke is version, you know, xls dot, final, final, final <laugh> we’re, we’re into like 65 or 70 finals now at this point. Uh, a lot of, a lot of rework, a lot of reassessing. It, it’s obviously a very timely question. The entire economy is grappling with this. Um, 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. Um, and so in, you know, with tarrifs 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, the, the most efficient model of, of supply chain you could possibly imagine, think of like a single source supplier.
Derek Paulson:
They produce all your products, you only have a couple SKUs, and they produce a big huge batches. They, they run night and day no changeovers on the, on the, on the production line. Um, that’s maximizing efficiency. But, um, we know that the real world needs more flexibility than that. You know, your demand doesn’t come in those big huge chunks where, where all your product is coming in at once, um, you gotta space it out. We have cash constraints. Um, so we trade off that efficiency for flexibility so that we can use just in time sourcing and things like that. Um, I would say in times of uncertainty, this is even more important, um, to understand that trade off and just know that flexibility is gonna, is what we have to lean into in, in times like this. And so if I think about that from a operations perspective, it’s, you know, how, how quickly can you source new suppliers and ramp up production?
Derek Paulson:
Um, if you have to, if you have to shift to a new country, for example, how robust are your quality control product, uh, processes to where you can pivot on a dime? Um, how, how nimble can you be in regards to your pricing and your, um, your, your pricing adjustments. And then specific to your question on, on fp and a leaders, 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 150 plus. Um, but you, you really gotta think about that piece as, as, you know, you, you gotta be able to be flexible. I if you can’t, you won’t survive. And I also think about, you know, obviously scenario plannings and sensitivity analysis, oh, that’s gonna become also extremely important is what if tariffs are 10%?
Derek Paulson:
What if tariffs are 40%? What if tariffs are a hundred percent being able to answer those questions? Because that’s the other thing to think about is fp and a folks, we’re, we’re obviously tasked with forecasting, but 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, 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, uh, you know, I salute you
Glenn Hopper:
<laugh>, you know, I was just thinking about, uh, one of my favorite tricks to do when doing, uh, forecasts in a time of uncertainty. Like for me, uh, the, the biggest in my career, the biggest time of uncertainty was the global financial crisis. I was in a pretty leveraged, uh, brick and mortar retail business that, um, you know, uh, it, 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 gonna be somewhere <laugh>, I think it’s gonna be here, but it’s gonna be somewhere in this range.
Glenn Hopper:
Um, yeah. And then it feels like that’s, that’s where we are, are now too. And I, again, going back to seeing it from all perspectives, this is what the best finance partners are, 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, for our listeners who are early in in your career, I can remember the first time I was, I was putting together models or even, you know, doing basic reporting. The numbers didn’t mean it was a big telecom company, and the, the numbers were just big numbers that really, that scale didn’t resonate with me. It just, it, 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, 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.
Glenn Hopper:
And, um, I was talking to, uh, as I do talk to fp and a people all day, <laugh> 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 ’em. They just pulled the report, slapped ’em together, and sent ’em out and, um, ran into the CCEO and, uh, the who told him, those are some pretty interesting sales numbers he sent out this morning. And he, you know, didn’t know what to say about it and had to go back and look at ’em. And he saw that one area that’s a fraction of the size of the other had he’d reported 10, 10 x the sales in, in one day of, of the other, and just, it didn’t mean anything to him. So I, I think that that example is kind of why understanding the business and the nature of it and sort of the relativity of it is, is all so important. And going back to you as that generalist and, um, thinking about that broader knowledge and how it applies to fp and a, but being that generalist in finance clothing, what does that mean to you and how has that mindset shaped your approach to fp and a?
Derek Paulson:
Yes, we’re all, we’re finance professionals. We’re all happy in Excel. You know, I, I always say, I think in terms of rows and columns, you know, <laugh>, I, I, 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 of the business. You know, I always talk about, um, you know, knowing the business cold. That’s, that’s a phrase that I learned at PepsiCo as well, is, you know, it’s not enough to just know the numbers. You have to know the business as well. And, you know, a key thing that has worked for me is closing the laptop and going to visit one of our retail stores, or, um, going out and seeing our three PL in action and talking to people that are, um, picking, packing, and shipping the product. Um, 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. Um, I have that context. Um, and I, I interpret the data differently, um, as I’m close to the business operations. So I’m a big believer in that.
Glenn Hopper:
Yeah. And another thing that I know you’re a big believer in is, uh, training and mentoring. And I think when we had our, our pre-call before the show, that was the first thing I caught onto. ’cause when I looked at your LinkedIn, I think it’s in, in the first sentence in your bio talks about developing your team. And I think that’s hard. It’s, 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, and doing that work. So the soft skills of, 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 fp and a team, especially given your background in 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.
Derek Paulson:
Yeah, it absolutely was. And, and I, 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, I think I was uniquely blessed and benefited from individual mentors who truly cared about me and my development. And it is a conscious investment. Uh, and that’s what I, when I think about it, it doesn’t come naturally. It takes time, it takes energy, but it’s, it’s time well spent and it’s a, it’s a good investment. Uh, we talk all the time about, you know, what’s your ROI in in finance, the ROI on people development is really, really good.
Derek Paulson:
And I think, you know, at times that the hesitancy is sometimes it’s easier to just do it ourselves than, than coaching someone, uh, and, and training ’em to, to do it. Um, but one, when they, when they do it, and they, 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, uh, a little bit more in the future. And that compounds over time. But secondly, the, I think the, the process itself and seeing others accomplish new things and grow in their careers and confidence is rewarding in and of itself. So that’s kind of 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, and early mentors that have helped shape me and passing it, passing it forward. But it’s also, it, it’s rewarding to see others grow and, and gain that confidence.
Glenn Hopper:
For listeners who didn’t, haven’t been through kind of one of those structured leadership programs, what advice would you have for becoming a more effective manager and mentor?
Derek Paulson:
Yeah, 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, um, 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 it an effective manager or 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. Um, and you don’t need a HR driven development plan to, 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, those opportunities. And, and I would say if that doesn’t come naturally to you, just practice it. It’s just like any other skill, um, mentorship and, and, and helping others grow and develop, um, is something that you get better at as you do it. And so dedicate the time, set up those one-on-ones, set up those coaching opportunities, and over time that discomfort or, or, um, maybe the apathy yeah, gives way to, Hey, this is really exciting to see them develop and, and grow their skills.
Glenn Hopper:
The other part or the other side of that coin, I guess I could say is how you are putting into yourself and expanding your career and knowledge. And it’s really, both of those are very hard to think about. Sometimes it’s, you know, how am I gonna build my team? How am I gonna build my own skillset? Because it’s, especially sometimes you get to a certain point in your career and it’s, uh, you think, well, I, 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, for you, beyond the, the training and development of, of your team, what’s top of mind for your career development right now? Or is there something you’re trying to learn, explore, or, or get better at?
Derek Paulson:
Yeah. Um, it’s interesting, I just read this morning’s, uh, someone made a comment about why do so many successful people continue working when they could retire? And somebody commented, it’s, it’s because of the type of person that they are that leads them to the success in that first place causes them to want to have that drive to continually be improving and learning and growing. Um, 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, you tend to be wanting to be on the cutting edge and learning more. 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.
Derek Paulson:
I majored in marketing at, during my MBA program, and I’ve worked with pretty closely with marketing leaders for, for quite some time. Um, but it’s kinda the first time in the driver’s seat, if you will, and, um, having to, to actually make the decisions rather than advising on decisions. And so definitely in 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 delivers, you know, <laugh>. Um, but I, 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, 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.
Derek Paulson:
And if I think about it from my finance finance mindset in that way, it makes a lot more sense to me. And it gives me an appreciation for the, 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, it’s a lot of learning. I mean, you, you think about multi-touch attribution models, what, how do all these different activities that we’re, that we’re doing as a marketing function actually result in, in, in revenue? I talked earlier about how does this tie back to the p and l is always the, the, the 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. Um, and that’s where I’m leaning a lot on my team and just extra opportunities to learn along the way.
Glenn Hopper:
You, you mentioned your MBA and I think that coming out of a good MBA program that really helps if you’re gonna be that more of a generalist because you’re getting the broad picture. And I think a lot of our listeners, um, maybe undergrad in in in finance or or accounting are a lot of our listeners are probably considering going, 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?
Derek Paulson:
Yeah, uh, I’d start off by saying I’m a, I’m a huge believer in the power of education. I think a lot of people approach the MBA decision in particular has a strictly a financial decision, right? Like it costs this much, there’s some sticker shock when you look at tuition rates, especially for top MBA programs. Um, and, and so the question becomes, Hey, am I gonna make that up in my career? ’cause oftentimes I’m give I’m giving up wages for those two years while I’m at school. Um, obviously have the, the cost itself of, 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, and, and did that analysis for myself. And it, that is an important part of the, the decision.
Derek Paulson:
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. Um, I would say, and I often say my time at Kellogg made me a better me. Um, I just think that the leadership learnings, the personal growth, I’ve always said as well that, you know, the process of learning makes you a better learner. Not just it, it’s not just you’re, you’re not just getting those facts put in your head. ’cause those facts eventually will fade away, but it makes you a better learner. What I came to appreciate most from 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, because you think about an MBA environment, especially a full-time MBA program like, like the one I attended.
Derek Paulson:
It’s people from diverse backgrounds all over the world, in many cases that have done consulting or m and a or, um, even non-business, uh, things pre-business school. So just that, that environment of learning, um, is really, really valuable. And I would say that, that I’ve carried with me as I’ve maintained many of those relationships. We support each other, um, on career transitions, life transitions, and, and I think just those relationships and that, um, 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. Um, everyone obviously makes their own decision on it, but, um, nothing but good things to say about bad experience and who it has helped me become as a leader and as person.
Glenn Hopper:
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 the way we get, 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, to be able to shift when you’re facing something like the uncertainty that’s going on, uh, around the economy and, and just really the kind of thought that you need to be able to bring to the table if you’re gonna be in a, 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 and the, I think opening up to new, new knowledge, especially if you have to push yourself for it, if you’re not, um, the strongest, uh, whatever statistics person, and you’ve taken another statistics class, it’s really making you think outside the box and, um, and think through that.
Glenn Hopper:
So I think continuing education beyond the, the MBA to even is always helpful, especially, um, as we, uh, prepare for a future where I think we’re gonna all get replaced by bots. I don’t <laugh> if we’re, it’s just agents. We’re gonna be managing teams of agents or I 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 I, we, 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. Um, 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, give this a shot?
Derek Paulson:
Yeah, I, I definitely have listened to the show enough to know that the AI question was coming from you, Glenn <laugh>. Um, but uh, yeah, I think I would say I, I do feel like I’m a little bit on the slow track to adoption right now relative to what I know is out there. You know, I I, I definitely am, am dabbling in the idea of it. Um, I would say, you know, I’m, I’m not plugging I’m, I’m not putting my forecast into AI and having it generate it for me. Um, and I certainly don’t know that that’s, that’s the best option anyway. Um, but I would say I, I have started to use tools here and there, um, you know, the, the Gemini meeting transcription tool is, I’m, I’ve become a big fan of that, so I’m not a complete Neanderthal. But I would say, you know, there, there are real obstacles that I myself have faced and I’ve heard from others as well.
Derek Paulson:
I think two that have jumped out to me recently are, you know, that the concept of data privacy, um, I’m, I’m at a startup where we don’t have, you know, a huge enterprise data security team that tells us these are the 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? Um, and or which, which models or which versions of those models are truly safe when you think about data security, that that’s been an obstacle. I think the second is just kind of that idea of what I can do is good enough. Um, and there’s also a, a learning curve. And so it’s kind upfront cost of, I’m not really sure how I can get this to work for me.
Derek Paulson:
It takes more time to learn how to use it in, in AI and as it does to just do it on my own. Kind of going back to that, that comment earlier about people development, um, I think applying my own logic against myself, it’s, it, it’s probably, you know, make that investment upfront to figure out how it’s gonna benefit you. And then the benefits really start trickling, and again, those compound over time. But really here is to hear your take on some of those. Um, ’cause I know you’re kind of a, an advocate for this.
Glenn Hopper:
Yeah, and I don’t, I don’t wanna be to the, to the point where I’m proselytizing, uh, about it. It’s, you know, I, uh, so I, I guess a couple of things I would say. One, you mentioned Gemini, so within the last couple of weeks, and it’s still, it, it’s, it’s, uh, nascent and, uh, not, uh, it, it reminds me, I’m old, so I’m gonna do an old reference here. It reminds me of the early days of like a OL and Prodigy when they would send you a disc in the mail and you’d put it 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. And <laugh>, sometimes you would be, it would just, the, the modem would screech at you.
Glenn Hopper:
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, and if you are offbeat a little bit, you’re not, you’re not losing much. But in, in accounting, <laugh> and in finance, the risk of having a tool or an employee that hallucinates, um, can be <laugh> can be a bit, a bit of a, a problem. So I’m not saying we should hand over everything to the bots right now, but the, 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, you know, uh, uh, synthetic data or whatever, and see what these models can do.
Glenn Hopper:
See how, I’ve seen how they work with words. But what happens when they write code and they can do complex forecasting techniques using auto, auto regressive, 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, um, but there’s also the part where generative means it’s generating new novel content every time. So reproducibility, when you’re <laugh>, you talk to the chat bot one time and it tells you one thing, and then you talk to it later and it tells you something different.
Glenn Hopper:
That’s a problem. That’s like having a schizophrenic employee. I <laugh> I think. So, um, definitely still some ways to go there before we take it for granted that it, that it’s right. And we’re definitely in the trust, but verify. And I guess I do wanna say one thing about data privacy. Now that said, I, in my day job, I have clients and, and we handle their data and we have, uh, data policies around what we can do with it. We have a closed, uh, 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, um, Claude default not gonna train on your data. Um, I think Gemini may be default, but they all have settings where you could, everyone from perplexity chat, GPT, Gemini, um, they, they all have settings where you can say, don’t train on my data. So the, 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. So unless you’re in a Faraday cage, there is some level of exposure to your, to your data. The question is, well, do I trust, uh, Amazon security or Microsoft security or whatever? And if, if the answer there is no, then you need to look at your whole kind of tech stack and where reassess
Derek Paulson:
Everything at that point.
Glenn Hopper:
Yeah. Yeah. So, and then the, the last thing I’ll say on it, 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 where it does the auto complete 999 times out of a thousand, it’s gonna say basketball player, one time out of a thousand might say baseball player. You know, just because there’s, there is, it’s, it’s learning the probability. And most likely if you’re talking about Michael Jordan, you’re gonna 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’s gonna, 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 it were, even if I had all my privacy stuff turned off and it went up into the model.
Glenn Hopper:
Now it’s not non-zero, but the idea that with something that has read the entire internet and doesn’t know who I am for, and, 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. He’s, I haven’t met him, but he’s, there’s also a race car driver named Glen Hopper <laugh>, but you know what I mean, there’s, uh, and for all of us, there’s, uh, 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 getting, putting the exact series of things in to get that to come out is, is, it’s not non-zero, but it is infinitesimal. So anyway, that’s my soap box 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, um, it, it, it’s going and everybody’s talking about agents, I have not yet found an agent that I would trust really to do anything for me yet. Um, and I, I give, I give, I teach classes where I show people how to use ’em and what they can do, but it’s, we’re just talking about the potential and the help. So I think time probably to, uh, to study it, experiment, play around with it. Time to let it close your books. No, <laugh>. Yeah, we’re not there yet. So
Derek Paulson:
Eventually we will get there though, IRA, right?
Glenn Hopper:
Yep. Yep. I, and I think sooner than a lot of people, sooner than a lot of people think, and it’s, even since I started teaching courses on this, the, 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, it’s, it’s pretty cool. We’re, we’re seeing the potential.
Derek Paulson:
Yeah.
Glenn Hopper:
Alright. And now that I’ve rambled on, what, what, what were we talking about here? <laugh>, <laugh>.
Derek Paulson:
No, I, I definitely appreciate that. I, I I, I learned something from you, just barely. So, uh, hopefully the, the rest of the listeners appreciate that as well. I appreciate that. Yeah.
Glenn Hopper:
Okay. Well, we are, because I’ve taken up half the show with my own and aint rambling. Let’s <laugh>. We do, we are at the part of the show where we need to wrap it up with our, uh, our couple of personal questions we ask everyone. So the first one, uh, if you’re a regular listener, you know, is what’s something that, uh, most people don’t know about you that we maybe, that we can’t see on your LinkedIn or just by Googling you or whatever?
Derek Paulson:
Yeah. Uh, 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. Um, I love sports. Um, I, you know, I’m coaching my kids’ soccer teams anytime. I’m not crushing it in Excel, I’m, I’m trying to get outside and, uh, do something active. Uh, I’m right. I’m not really a runner, but I am training right now for my first Ragnar. Um, so I do that to stay active. Um, I place ultimate Frisbee on the weekends. That’s kind of both, uh, um, competitive and social, um, activity that I get involved in. So really, again, just anytime I can get up in the mountains or, uh, get outside and throw Frisbee around, I’m, I’m always happy to do that.
Glenn Hopper:
And, um, and you mentioned before the show that you grew up in Utah, which is, uh, the most beautiful state. I mean the, the outdoor, the, the parks there and everything. We’ve taken the kids out when they’re all grown and gone now, but when, when they were in, um, 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
Derek Paulson:
Of Yeah, I was, I was privileged to grow up there. It’s a, it’s a wonderful place.
Glenn Hopper:
Yeah. Okay, now everybody’s favorite question. And you, you know, this is coming and I hope you have a a, a good answer. I, I heard a pretty good one the other day. Well, I’m, I’m, I don’t know why I’m rambling so much today. Maybe I always do. I don’t. <laugh> let’s get to you, our guest. And, um, what is your favorite Excel function and why? Yeah.
Derek Paulson:
This is, this is a great question. I love this question. I always love to hear everyone else’s answers. Um, I don’t know that I’ve heard this one a ton. I, I really love some ifs. So I, you know, a lot of what I’m doing is taking, you know, big data sets and generating a forecast, thinking about like how many, how many of this type of e-bike are we gonna sell in this geography and this channel. Um, so taking kind of tabular data, um, and aggregating it in kind of custom aggregations, I love the sum ifs for that. Uh, ’cause you can really define the set of, um, kinda criteria that I wanna sort into this specific table, uh, makes that really easy. You know, the, one of the alternatives to that is pivot tables, and I find those to be clunky and hard to format. So I, I really like that the kind of how clean some ifs is to do that. Um, I, I, I tend to use that one quite a bit.
Glenn Hopper:
Agreed. I still do love a pivot table, but I know exactly what you mean. <laugh>. Yep. Well, Derek, I really appreciate you coming on the show. I guess just last question, um, how, how can people get in touch with you to connect and learn more about you and what you’re doing and ride bikes and, and all that?
Derek Paulson:
Yeah, uh, definitely best way to connect is LinkedIn. Um, I am, you know, Derek Paulson, feel free to, to add me, follow me. Um, I also do offer career coaching. Um, so I’m on a platform called Leland. So if you look me up@joinleland.com, I’m kind of really focused on, um, early career, you know, finance undergrads who are looking to navigate their career. Um, uh, happy to do that as well. So feel free to look me up on LinkedIn or on Lehman.
Glenn Hopper:
Alright, Derek, well thank you again for coming on. Thanks,
Derek Paulson:
Glen. I really appreciate it.
