

Don't found a company unless you love Excel - co_pl_te
http://ekoester.com/dont-found-a-company-unless-you-love-excel

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crntaylor
_Valid point_ \- you eventually want your revenue to be larger than your
expenses (unless you plan to get acqui-hired...)

 _Invalid point_ \- you need Excel to figure that out. I think a good hacker
is more likely to use some combination of R, Python + Pandas, databases and
CSV files to do most of their financial modelling. Then those all-important
month-end reports can just be automated away...

~~~
kfk
I work in finance, I toyed with Python and Pandas and CSV files for a while,
it won't do. When you get at it, you soon realize that any kind of decision
will have to come from high level numbers, no the billions of rows you hear on
HN and, in that area, it makes simply no sense using anything other than
Excel.

~~~
arjie
If it won't take you too long, would you mind sharing a couple of examples?

~~~
kfk
High level? Think about cash flow _forecast_. How you do this? You need to
model your income statement and balance sheet. Start building up assumptions
for: sales (duh), accounts receivables, overdues, your cogs, inventory,
possible capex investments, opex, etc.

This is very structured data, you can build up hierarchy trees in python, but
it will take you too long. Plus, your models will change, people will want to
see things from many different changing angles.

Unfortunately, every time I start writing about controlling people desert the
thread around here, but it is a fascinating topic.

~~~
malandrew
Go on. I'd like to hear more.

~~~
kfk
I answer all on this topic, just shoot me an email

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linker3000
Don't found a company unless you understand basic business concepts and
maintain an accurate audit trail of your financial operations (or use/employ
someone who does) - sure. Using Excel? Maybe, but it's not the only option so
the original article is way off the mark being so specific. It's akin to
saying "if you want to make a telephone call, use an iPhone".

Anyway, based on my current employer, spreadsheets are for:

Holiday rotas

Support call logs / case management

Weekly status reporting (because the format I was using in Word was so tabular
'it might as well be done in a spreadsheet' \- go figure!)

Project Management (Make a GANTT chart by colouring in various width/Joined
cells) and then spend ages manually adjusting things when dependencies slip.

Manually copying/pasting data from an on-screen query so it can be sorted and
deduped before being put into an email. I have now automated the whole
process.

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cokernel
If I'm starting a company, don't I want R and E to satisfy an inequality (and
one in a particular direction) instead of an equation?

More seriously, Excel has many problems that make it unsuitable for anything
that might require statistical analysis. See for example B.D. McCullough and
Berry Wilson, "On the accuracy of statistical procedures in Microsoft Excel
2003," Comput. Statist. Data Anal. 49 (2005), no. 4, 1244--1252, available
online at
[http://dx.doi.org/10.1016/j.csda.2004.06.016](http://dx.doi.org/10.1016/j.csda.2004.06.016)
but paywalled. I thought that this article, or a similar one, was recently
discussed on HN, but I could not find an appropriate link.

On the other hand, I don't know anything about business. I can see an argument
for using a widely-deployed piece of software for verifying R > E even if it
is inappropriate for data analysis.

~~~
Bsharp
You definitely don't want to be using Excel for heavy data analysis or
statistical analysis, and unfortunately some companies refuse to acknowledge
that. Performance is very often sacrificed for familiarity and ease-of-use in
business.

~~~
einhverfr
Even as spreadsheets go, I wouldn't use Excel for statistical analysis (I
wouldn't use any spreadsheet unless it was a function coded as a macro). It's
not just a performance thing, but also a confidence in results thing.
Spreadsheets admit to oversimplifying the processing and then having issues as
the assumptions in the data change.

This does not mean that a spreadsheet couldn't be an important piece of the
pipeline though. Database to Spreadsheet is actually a very powerful
combination, particularly with views.

~~~
Bsharp
Absolutely agree with you. Database-to-spreadsheet is the best way to analyze
data then summarize the results in a business setting. Unfortunately, the
people seeing the results occasionally want to see how you got to your
numbers, and since they frequently have non-technical backgrounds the database
step is often where they can no longer follow.

I worked at a company where our data was in SQL Server but we basically had to
import the entire data set into Excel because none of the higher-ups knew SQL
and wouldn't be able to peer review. Those spreadsheets were slooooooow.

~~~
einhverfr
Wow, that sucks.

It's funny, the other co-founder of Efficito is a financial analyst who writes
tools to do his analysis for him in Lisp. He also maintains a Common Lisp
implementation. Fortunately I bet your former employer would not be interested
in his services.

~~~
malandrew
I'd love to see the source for what he's doing. Sounds neat.

~~~
einhverfr
I am not aware of any ones he has released source for sadly. For a general
idea though see
[http://weitz.de/eclm2013/abcl.pdf](http://weitz.de/eclm2013/abcl.pdf)

It includes some code snippets and screen shots of hybrid Java/Lisp programs.
He is also a maintainer of Armed Bear Common Lisp.

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swombat
I've built GrantTree's financial modelling (real time, to the penny) using a
Ruby/Rails back end and FreeAgent for the transaction management.

No Excel in sight. The only thing we use Excel for is client calculations and
holiday tracking.

~~~
daemon13
Well, it is probably possible to do financial modelling in Erlang (fault
tolerance, etc) or Go (good concurrency support).

But why would you need this? You can do financial model in 1 hour using
Excel...

~~~
swombat
Because it is far more clever than anything I could do in Excel. And it
doesn't require me to duplicate information all over the place. I'd rather
have just one master source of data that I do all the calculations on.

~~~
PeterisP
If you're doing deep analysis on large historical data, then it's in essence a
MIS system, and most businesses do (and should do) that outside of Excel.

But what the article is about, in a growing startup or a changing company
(say, completely new product line) the 'one master source of data' is not in a
database but the assumptions in your head; and any clever model based on your
historical data will be either impossible or far more wrong than a simple
order-of-magnitude calculation done on a paper napkin. And, well, Excel is
more convenient than the napkin.

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walshemj
DO NOT use Excel to do your accounts on use a real accounting package!

I say that as one of the factors in a VC company I worked for going bust was
that they used some dodgy spreadsheet as part of it accounting system.

~~~
einhverfr
It's not the end of the world to do accounts in a spreadsheet. In fact for
certain sorts of things, they are really ideal.

However, it is a huge mistake to keep your general ledger or book of original
entry in Excel. The reason has nothing to do with making mistakes or errors
and every thing to do about fraud. Paper is the gold standard in anti-fraud
accounting systems, particularly if you follow the standard rules like
ensuring books are kept in pen. Paper to Excel is fine. Replacing the paper
with Excel is not.

~~~
daemon13
I would be curious to know for which sort of accounting things Excel is ideal?

Sorry, I could not comprehend the second paragraph.

Fraud has nothing to do with paper or computer based system. To minimize risk
of fraud you need to implement proper sets of controls, like segregation of
duties, etc.

As for Excel - Excel is a poor instrument for doing the accounting, therefore
it shall not be used ... unless you have some kind of micro/nano business.

~~~
einhverfr
> I would be curious to know for which sort of accounting things Excel is
> ideal?

Well, let's see.

1\. Preprocessing data for entry. This might be used, for example, if you want
to depreciate fixed assets using a method your accounting software does not
support.

2\. Post-processing data. You might do this if you have a report from an
accounting system but your final report needs to take into account additional
factors. Some of my customers use Excel to turn trial balance data from their
accounting systems into financial statements.

Another example of post-processing might be if you take aggregated sales
reports from an accounting system and further process it by business folk who
don't know the programming environment.

As for paper: Yes, separation of duties is a part of it but paper has an
advantage that no computer system can match, namely that if you keep your
books in indelible ink, then alteration of numbers is obvious on audit. This
is a weak point of electronic media. You can lock it down, but it is always
possible for someone to unlock it. So with comparable policies, paper wins out
anti-fraud-wise.

~~~
daemon13
Interesting, actually what you mention is not an accounting per se, but I
agree with you, specifically

>> 1\. Pre-processing data for the entry.

For this specific example if the accounting package does not support certain
depreciation method (which rather rare), you can easily do this in Excel, both
for financial modelling purposes and as a supporting document for the
accounting entry.

>> 2\. Post-processing data.

What you describe is not accounting. This is financial and management
reporting. Yes, Excel is what is used by most everyone.

Good points.

~~~
einhverfr
Perhaps I have a more expansive definition of "accounting" than you ;-) I do
agree that Excel is not and never should be a primary tool for _bookkeeping._

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markyc
svbtle and medium: link-baiting so you don't have to

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passwert
I started a company and I hate excel.

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ukandy
It's doomed to fail in that case.

~~~
collyw
I want to start a company or go freelance because I hate excel so much. My non
technical co-workers insist on using it (for almost everything).

I estimate around 80% of the problems with our system come from using Excel to
upload data.

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daemon13
I do not want to sound negative, but this post is complete water...

What you need is:

\- understand your numbers, which requires knowledge, brain and a bit of
experience;

\- accurate numbers, which shall be output by accounting.

You can prepare P&L forecast for $50-100M business on one piece of paper, if
needed. Excel just makes things more efficient.

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AgLiAn
I am using Google Spreadsheet.

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kyllo
Excel spreadsheets are fantastic for one-time, throwaway calculations.

If you want to save, share, or reuse anything, though, it's a one-way ticket
to versioning hell, and you need to run scheduled reports off a database.

Excel gets really dangerous when people who don't know anything about
databases try to use it as a database.

~~~
malandrew
Obligatory link:

[http://wyorock.com/excelasadatabase.htm](http://wyorock.com/excelasadatabase.htm)

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noahmarc
Sounds like a market opportunity. Aside from simple accounting (tracking
revenue and expenses), what's the range of startup needs that are covered by
Excel?

If these needs aren't met by current accounting / finance packages, it
definitely opens the door for a new competitor.

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serichsen
I would never use a spreadsheet for basing decisions on. It is just too error
prone. I do not know how many trillions of euros (and dollars) have been
wasted due to some excel sheets having off-by-one errors in marking rows or
similar issues.

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malandrew
Has anyone here ever done their startup's financial modeling in code instead?
And if so, can you share your code sans your real data and assumptions.

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drill_sarge
Don't be a marketeer unless you love PowerPoint.

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pacofvf
There is a thing called openoffice, or even better LibreOffice, there's almost
nothing that you can do in Excel that you can't in LibreOffice

~~~
mwexler
... for various definitions of "almost". Depending on your needs, Open/Libre
may run circles around Excel, or fail laughably. Just like Emacs vs. Vi,
Language1 vs. Language2, it all depends on your needs and available time.

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simonbarker87
Same can be said for a PhD

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eaigner
cli script anyone? you obviously dont have to love excel...

~~~
PeterisP
How would you write and explore, say, a cash flow forecast of a not-yet-
existing product line with a cli script? I could imagine doing that in emacs,
maybe, because you can probably do everything there; or on plain paper if
you're quick+accurate with doing math in your head.. but in a cli script ?

