Mastering SaaS Models: Derek Baker's insights on building robust SaaS models
Financial Modeler's Corner
Insights on Tools and Key Differences in SaaS Financial Modeling
Learn about the benefits of Excel and Power BI for financial modeling in SaaS analytics, emphasizing the asset-light nature, minimal CAPEX, deferred revenue, and the importance of starting with a subscriptions table.
In this episode, Paul Barnhurst is joined by Derek Baker, who is drawn to really hard problems. Derek discovered early in his career that he loves startups and building companies.
He began his career working for SaaS startups, building out their core FP&A processes. For many of the companies he worked with, he was building their very first financial model to help them operate the business and make capital allocation decisions. He found that every business - regardless of stage - can improve performance with excellent FP&A.
Today, he works at Neighbor.com, a Series B startup, building the “Airbnb” of personal storage. Building the FP&A function for a marketplace has been the biggest challenge of his career, and he is loving every minute of it.
Listen to this episode as Derek shares:
How he got into financial modeling for SaaS companies
His advice for building robust SaaS Models.
The importance of understanding a business to build better Models.
Everything about SaaS and SaaS Companies.
His position on controversial modeling issues, including circular references, dynamic arrays, modeling standards, AI in modeling, and more.
Quotes:
“ The only way you're really going to learn how to build a model is by building it. You can do all the study you want, but at the end of the day, it's like anything, without practice, it's just theory. ”
“ The better you know an industry, the better you know the operations of the business, the easier it is to build a model.”
“ [ What separates good FP &A from great FP & A] I think it's 1- business acumen and 2- business partnering. Anyone can build a model in Excel and can learn those technical skills. But using those technical skills to help the business and partner with the business to help them understand the business better and grow the business is exactly what FP&A should be doing....”
Sign up for the Advanced Financial Modeler Accreditation or FMI Fundamentals Today and receive 15% off by using the special show code ‘Podcast’.
Follow Derek:
- LinkedIn - https://www.linkedin.com/in/derek-d-baker/
- Website - https://community.plan-buddies.com/home
Follow Paul:
- Website - https://www.thefpandaguy.com/
- LinkedIn - https://www.linkedin.com/in/thefpandaguy/
- TikTok - https://www.tiktok.com/@thefpandaguy
- YouTube - https://www.youtube.com/@thefpaguy8376
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In today’s episode:
(00:22) Intro;
(00:45) Welcoming Derek;
(01:00) The worst Financial Model Derek has ever seen ;
(02:00) Key takeaways from the worst Financial Model;
(02:41) Derek’ s background;
(04:41) Experience and Challenges while building the first Financial Model;
(07:20) What Derek thinks was missing from Finance Education in school?;
(10:13) What is it that Derek likes about SaaS and SaaS companies?;
(12:31) Key inputs in SaaS Revenue Models;
(15:08) What is the first tool that SaaS Startups must invest in?;
(16:40 - 17:25) Validate your Financial Modeling Skills with FMI’s Accreditation Program (ad ) ;
(17:26) Building a Three Statement Model - SaaS vs other Industries;
(19:00) Building Deferred Revenue;
(21:56) How to get started with building SaaS Models?;
(24:05) How often does Derek use Dynamic Arrays?;
(27:20) One thing that helped Derek in building Financial Models;
(29:20) Technical advice that can help people become better Modelers;
(32:26) Derek’s favorite Excel Shortcut;
(32:58) Rapid Fire;
(36:09) Nugget;
(36:55) Connect with Derek;
(37:21) Outro;
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