I Can't Do Math In Prose

I wrote those words to a friend of mine yesterday. We are working on a project together.

He wrote me an email listing a whole bunch of investments to be made and where we are on them.

I read it and understood it, but it didn’t really register with me.

So we are going to make a spreadsheet with a few columns, total some stuff up, and look at it together.

The Gotham Gal calls that a “fredsheet” because I do better with numbers in a spreadsheet.

This is an example of presenting information in context.

I feel that how information is presented is often more powerful than the underlying data.

And when you want someone to understand what you are saying, it is best to put that information in the format that person is most comfortable in.

For me, that is often a sheet.

#life lessons

Comments (Archived):

  1. Pete Griffiths

    Never a truer word.Here’s the classic:“The Visual Display of Quantitative Information” by Edward R.Tufte

    1. Joe Marchese

      Tufte is the master

      1. Vasudev Ram

        Alan Cooper is good at this area too. (He is the “Father of Visual Basic” [1] – and more):https://en.wikipedia.org/wihttps://www.cooper.com/abou…He is the author of the books:About Face: The Essentials of Interaction DesignandThe Inmates Are Running the Asylum: Why High-Tech Products Drive Us Crazy and How to Restore the SanityI had read the first book above.It had a great example of better UI design, i.e. just putting the two arrowheads of a scrollbar at the same end of the bar, instead of at opposite ends. Saves a lot of mouse movement. Seems obvious in hindsight, as many inspired ideas do. But someone had to think of it.

    2. DJL

      Crap! Just posted the same thing without seeing yours. ;>)

      1. Matt A. Myers

        You linked to it for us lazy folk though, so, thank you!

  2. awaldstein

    Great truth.For me, I can’t much anymore do stories in decks but only in prose.Over and over recently, I’ve asked people to simply tell me their story, their pitch in a one pager, a few paras or a short audio recording.Numbers aside, that is the context for vision and its story as a wrapper.

  3. William Mougayar

    Good way of putting it. If it’s a good story, good numbers will make it stick.

  4. Vendita Auto

    So true a stain on a sheet is a powerful thing (not spam or crypto related)

  5. onowahoo

    Ha! Fredsheets

  6. Pointsandfigures

    Or in a deck, it might be a bar graph, or a pie chart or a….

  7. jason wright

    i like to sketch and draw my way when explaining something.why is it called ‘spread’? spreading the wealth, the goodness, as a form of redistribution? Badly needed.Still don’t get this American “math” thing.

    1. LE

      We also put the word ‘the’ before ‘university’.

      1. jason wright

        which one?

        1. LE

          Anyone. The good ones and the mediocre ones.So you say ‘I went to University’ and we say ‘I went to the University..’

    2. Susan Rubinsky

      I sketch too. I carry a sketch book to all meetings. Every project I do gets the overall concept, or flow, sketched first. I prefer sketching with pencil on blank paper because it is quicker to get the concept done in seconds and the person you are presenting it to either gets it or requests some other methodology (a “fredsheet” for example.)

  8. Tom Labus

    Give me a good story any day!!!

  9. Salt Shaker

    Solving crossword puzzles requires both numbers and clues. 7 across (four letters) is meaningless w/ out the clue “Astro’s MVP,” and vice-versa. Spreadsheets and conclusions are co-dependent and neither should be left open for interpretation or published w/ out the other.

  10. RameshJain

    Often: Content without context is meaningless.

  11. DJL

    The best text on this subject (by far) are the Edward Tufte books – The Visual Display of Quantitative Information. https://www.amazon.com/Visu

  12. creative group

    CONTRIBUTORS:Be prepared for pitches to Fred to be modified using the spreadsheet.Captain Obvious!#UnequivocallyUnapologeticallyIndependent

  13. Mac

    That’s why I still remember the lyrics to all of the Stone’s music from the 60’s.

  14. BillMcNeely

    Keep the end audience in mind. Younger folks do video. I do better with the written word. The Army with PowerPoint. Get good or find someone good get ideas across in that medium. Many including, Generals Mattis and McMaster have tried changing this, but to no avail. More here https://www.theatlantic.com

  15. Richard

    Is there anything more nauseating than common core math? Why was it adopted?

  16. iggyfanlo

    I think information is best presented where the consumer of that information has to do the least amount of work to consumer it. Personally, I am with you and numbers; for my daughter, it’s words… it’s like foreign languages, I speak Spanish and could translate on Google, but it’s easier for me in English

  17. JLM

    .It is all about how you, personally, process information. I bet you are the type who has to sleep on info to be able to process it even when you receive it in the exact format that you like it. This is typical of morning people who wake up with all the info they absorbed the prior day now dressed right and accessible.Knowing how one’s contacts process information, how they communicate is a critical element in understanding how to work with these type of people. It is one of the most important elements of excellence.Successful military leaders in combat are almost always verbal information processors which is not unsuspected given the nature of the enterprise. While, staff officers are almost always written information processors.This basic differences accounts for why a guy like Mattis is a Marine 4-star troop leader and a guy like McMaster is an Army 3-star staff type.Lots of people have a good balance of both, but if you can build a team which processes info the same, you can move at a quicker speed.If you look at all the changes Trump is making in his Cabinet, this is exactly what is going on — he is picking people who process info the same way he does which is verbally.If you look at all the people he has fired, they are all people who process info in writing and are a little more deliberate.One can argue that it requires a balance of such personality types, but I don’t think so if you can get the right ones around you.JLMwww.themusingsofthebigredca…

    1. LE

      Successful military leaders in combat are almost always verbal information processors which is not unsuspected given the nature of the enterprise. While, staff officers are almost always written information processors.With staff officers I am curious to what extent this relates to having to CYA with written data?

      1. JLM

        .At fighting unit level staffs – battalions, brigades, divisions — CYA is non-existent. At command levels — combatant commands, JCS, schools — it is prevalent.The further you get from troops the more burdensome the CYA and paperwork is.Eisenhower was a damn good staff officer having served under both MacArthur and Marshall, but he really went to school under Fox Conner in Panama. His secret sauce was the ability to forge an allied staff which took him to the Presidency ultimately.He was never a real combat leader, while guys like Patton were excellent combat commanders and never should have been allowed near a staff or paper.It takes both kinds. You run out of bullets and you are screwed.JLMwww.themusingsofthebigredca…

        1. karen_e

          Leaders and managers

    2. Vasudev Ram

      >If you look at all the changes Trump is making in his Cabinet, this is exactly what is going on — he is picking people who process info the same way he does which is verbally.Interesting. Do you think he is doing this intentionally?

      1. JLM

        .It is intentional though it may not be stated out loud.Look who Trump gets along with and likes — entrepreneurial business types like Mnuchin/Ross and military types like Mattis.Pompeo was with the President every day laying out the PDB (Presidential Daily Brief) and they got to know each other. Pompeo was always the guy in the room who knew more than anybody else because he was the Dir Central Intel.Didn’t hurt that Pompeo was #1 coming out of West Point and was a star at Harvard Law.You have to know that guys like McMaster — who was often considered one of the top brains of the Army like Petreaus — are hard as hell to work with. As 3-4 star generals they are impossible to discuss things with and they are used to getting their own way. They are also control freaks.He traded McMaster for Bolton — classic talker with a hard edge toward Russia, China, NK, Syria. It is funny when civilians are tougher on adversaries than military guys, but the military guys have actually seen what war looks like up close.Trump has an enormous inferiority complex over his Vietnam draft dodging. This manifests itself in his rabid support of the military. Typical jock sniffer behavior. Over compensating for his own perceived shortcomings.The thing is, Trump is a doer and if he gets the right people around him, he can get a lot of things done. I only like the guy for policy and results.So, yes, he has entered the phase where he now understands the game and he is a gamer. Every move is intentional and considered.JLMwww.themusingsofthebigredca…

    3. PhilipSugar

      Yea…….Mattis and Theranos……should be in jail. He really dug into that technology….not.

      1. JLM

        .Sort of proves my point — he wasn’t an info guy. He was a troop leader.The second I saw the Theranos board, I was convinced it was a sham. At one time it had the following “names” on it:Former Secretary of State Henry Kissinger;Former Secretary of Defense Bill Perry;Former Secretary of State George Shultz;Former Senator Sam Nunn;Former Senator Bill Frist, MDFormer Navy Admiral Gary Roughead;Former Marine Corps General James Mattis,Former CEOs Dick Kovacevich of Wells Fargo; and,Riley Bechtel of Bechtel.Looks like a defense contractor board of directors more than a medical startup. What message does that board send? It is going to be doing business with the government.None of those guys were knowledgeable about medical startups (unfair to Frist who has a good VC group in medical admin).This board is probably exactly why the blonde founder with the Steve Jobs black turtle regalia did NOT end up in jail. She got a comparative slap on the wrist.JLMwww.themusingsofthebigredca…

    4. cavepainting

      Numbers can lie. Narratives are often spun.To know the truth,Seek a narrative weaved with numbersAnd ask yourself what is real, what is imagined,And what is still in the realm of the unknown.

      1. JLM

        .I have absolutely no fucking idea what that means given my comment.Let me take a stab — Trump bad?Well played, I think.JLMwww.themusingsofthebigredca…

        1. cavepainting

          You got it right, my friend. I don’t know how you got Trump into your comment, but I imply what you inferred as my default dial tone.

    5. Lawrence Brass

      With that churn rate it is very probable that he will get his perfectly tuned yes men cabinet done, before he leaves.

      1. JLM

        .Not to worry, he’s got almost 7 years to finish it. Then, 8 for Pence?I like his instincts on people. I like his people.Pompeo, Sec State nominee — #1 at West Point, top of is class Harvard Law experience in business, politics, Dir Central Intel (has done a great job).He pitches on any good team. If only the Dems would confirm him.JLMwww.themusingsofthebigredca…

  18. LE

    And when you want someone to understand what you are saying, it is best to put that information in the format that person is most comfortable in.I have a name for this concept it’s called ‘make it easy for the insurance adjuster’. It relates to making it simple for someone to do their job that is either time pressed, lazy or both.It dates back to when I was a kid and before the widespread use of computers for estimating. My dad, when he had to file an insurance claim, would get someone (or he would) come up with all the numbers prior to the adjuster arriving. The adjuster, confronting a great deal of manual labor, would go with the numbers presented to him and typically not even question things because it appeared that my dad had his act together. And the adjusters were typically at the core lazy.I applied this concept later in business more times than I could remember details of.In one case I created a spreadsheet and submitted to the state evidence that I had (on purpose) overpaid state sales tax for several years. I was to busy with sales and management to calculate the real number so I just overpaid it to be sure. At the end the spreadsheet showed evidence that I overpaid (in 80’s dollars) about $17,000 in sales tax. No questions asked 6 months later (iirc) I got a check from the state for the exact amount on the spreadsheet. Of course the numbers were honest but it could have said anything so it was quite surprising (considering the State does audits to make sure you are not cheating them).In another example (of making it easier for who you are ‘selling’) was when I sold my first business and the people purchasing came one day to take inventory. I gave them a 3 inch thick computer printout (greenbar anyone remember that?) with everything layed out and totaled. (Employees had taken weeks to count everything and input the numbers.) By lunch time they were exhausted and threw in the towel. They went with the totaled number at the end of the report. That wasn’t what they were expecting. They were thinking they would give me a number and we’d go from there. They ended up paying for things that you typically wouldn’t even consider inventory because they were so overwhelmed and had miscalculated both the time involved and who they were dealing with. They could have easily asked for the data (which is what I do) in advance and then strategized or decided to spot review the higher value items and even question certain items that honestly probably shouldn’t have been considered ‘inventory’.

    1. JLM

      .Haha, “make it easy for the insurance adjuster”? Haha.Whenever I took over a company, I used to cut the audit costs in half. It was easy.I would have the auditer make a list of information he was going to require from the company. In public companies this is the PBC list – provided by client.I would then pick 2-3 subjects that I wanted carefully audited such as “non-cash compensation” or the “impairment of goodwill.”Then, I would have every one of the PBC items put into an individual folder and have them inspected by another accountant (stopped doing this after a couple of years).I would require the auditer to come over and inspect the PBC files — 70-100 files — and opine they were all complete.Only then did they come do the audit.I could reduce a $100,000 audit to $25,000 with this method. I recently helped somebody do exactly this.I guess I was making it easy for the insurance adjuster.JLMwww.themusingsofthebigredca…

      1. LE

        That’s great. So you had your own ‘taint team’ or ‘privilege team’ prior to the auditors getting involved.One question though if done ‘correctly’ isn’t this a way to subvert part of the process of an audit? That is the element of surprise and not being prepared and having some dubious practice uncovered?At the very least (and would like to stress ‘hats off to you’ again) another important concept here is that although what you said ‘opine’ prior to the audit didn’t prevent them from poking further human nature wise they were almost certainly less likely to do so because they’ve already committed that what you are giving them is what they need and approved. Most people will not want to go back on their word at least typically. [1][1] The concept here is the difference between something that is legally binding and the principle that people at the core what to remain consistent with what they have said or agreed to even if not legally binding (small example is giving $100 deposit to a car dealer to ‘hold the car’ with a check that will not even be cashed)

        1. JLM

          .Every audit I was ever involved with was with a draft US SEC Form 10Q (quarterly report) or 10K (annual report) in hand. These reports had a bevy of footnotes which are mandated by the SEC.Each file corresponded to some subject which was part of the mandated footnotes — as an example “executive compensation” which would have the CEO’s employment agreement and a printout of the 10% most highly compensated persons in the company.The field auditers would look at the general ledger, the checkbook, the cash disbursements journal, the income statement, the payroll system to ensure the number reported in the footnote was correct.The file would have all that info in a single manila folder thereby saving a huge amount of time.The auditers would also sample some percentage — 5-10% — of other accounts, but the ones they typically sampled were “non-cash competition” which is options and the “impairment of goodwill” which requires a bit of financial analysis to ascertain whether goodwill has been impaired. Goodwill is the difference between hard assets and the purchase price in an asset based acquisition. Used to be amortized, but now is tested for impairment.I would not allow anyone to talk to the auditers and only the CFO — not even me — could talk to them. The actual field auditers were typically 2-3 years out of school and came with their laptops with the last audit.When the numbers all balance, it is difficult to believe you have problems.Thing like what you describe have to be reduced to writing in what are called “revenue recognition policies” which is something any seasoned CFO deals with a couple of times per year.Every business has some quirk which the CFO has to be expert on.It, like most things in business, is easy if you know what you’re doing and where the costs are.JLMwww.themusingsofthebigredca…

        2. PhilipSugar

          I think both of your comments are correct.If you have everything covered that is a huge help.You also can leave a “bone” for the auditors to pick, it is the same with lawyers they both believe:”If I don’t find something, then people will think I did nothing”

          1. LE

            Exactly. Similar but unrelated concept. I keep hard disks in fireproof safes. (There are several and of course off site as well). It is not high security and never will be. So I also put some cash in each safe. I leave the safe unlocked (because some are small enough to be carted away and the larger one can easily get broken into.)The concept is if someone breaks in they will easily open the safe and take the money and not take or think about the disks. Be less likely to. Hiding in plain site.This is something that I did back in the day with cash registers. Leave a bit of money in them. Leave the drawer open. If someone broke in they would take the money and in theory be less likely to trash your place.The concept you are talking about also works with building inspectors and in a host of other situations.With lawyers this is one of the reasons deals are killed. In many cases they waste time on minutia to show they are doing something and time passes and a deal dies potentially.

          2. PhilipSugar

            Lawyers kill deals in several ways.I say time kills all deals. Something changes or one party gets remorse. Dead Deal.They are used to the I win by you losing mentality, it is what they are trained to do (btw: that is the current state of politics because most politicians are lawyers) that sets up an adversarial relationship.They also try and win by renegotiating terms. That really pisses people off.They also focus on the really bad. They have to cover certain bases, but they love to put in terms that if you do the other party is going to come after you regardless of what the agreement says. For instance you probably have a prenup on your second marriage. A lawyer would put in the terms apply under any circumstance. Her lawyer would say this means he can sleep with a prostitute and give you AIDS, then divorce you and the terms apply. Your lawyer would say if we allow any outs, this agreement won’t apply, she’ll say you weren’t nice to her and want an out, this agreement means nothing.Last case is the worst. Killing it on both sides. You both say they are going to do WHAT???

          3. LE

            Funny though when I sold my first business I came up with a persona and way of operating that gave the buyer the thought that I was wasting time on things and therefore they would have much more potential with the business than I did. This was not done with words though. It was done with excess processes and what appeared to be an obsession with minutia that could easily be eliminated. So I never talked about what a new buyer could do (common mistake). I just appeared to not have my act together and to be kind of a nut (which is easy for me to do as anyone who knows me would know). So they think ‘oh boy if we get in here we will be able to streamline things and do much better’.

          4. JLM

            .Can’t agree with you.First, the actual people showing up to do the audits are 2-3 years in with laptops. They check, double check, re-check all the numbers and footnotes.That is something you can win.Most companies have only 1-3 real accounting issues. Mine always were non-cash compensation, goodwill impairment, and reserves.With accounting, you can get to perfect.I used to have a CFO and a Controller who were both CPAs, so I never gave an inch on the accounting principles and I was always conservative, so I used to get pressed on writing off goodwill. I hate goodwill. Nobody really understands it.Auditors don’t present the same problems that others do because they are dealing with fixed fees.My experience anyway.JLMwww.themusingsofthebigredca…

          5. PhilipSugar

            I think we violently agree, and your example proves my point.No, you can never be wrong on the fixed numbers. And you better have them ready. You better drive that bus.But the accountants are going to push on writing off Goodwill and Expensing versus Capitalizing.I have always been aggressive in Expensing. In the technology field people love capitalizing because they then report EBITDA so it is somewhat “free”. But it is not free because I have never ended up shrinking development staff, and you certainly see it in the free cash flow numbers.I have never been able to understand or someone explain to me Goodwill. Let us say I have a business that generates $10mm in profit and free cash flow. I have no assets on the books (I take all cash at closing), I sell to you for $50mm. But you are trading for 20x Earnings. You issue $50mm of stock to buy me. The business grows under you and you cut admin expenses via synergy. Your P/E stays at 20. You have to put $50mm of Goodwill on the books?, but your value went up by $200mm, it is why people back out Goodwill.

          6. JLM

            .Expensing v capitalizing is the classic “builder’s” issue. This is what got MCI/Worldcom in trouble and for which people went to jail.Back in the day, telecom and cable were worth 4X PPE until there were some bankruptcies which peddled PPE for 15% of cost.This put a new more rarified focus on the issue of expensing v capitalizing.In your example, you either have to declare the sale is an “asset” sale or a stock sale. If the sale is a stock sale, you can stop right there.If the sale is an “asset” sale, then you have to enumerate the assets being sold/bought. The buyer and the seller have to submit a form to the IRS showing the assets, their original basis, the depreciated book value, and the starting entries in the asset listing for the acquiring entity.Stop and think for a second — a $1MM gizmo can only be depreciated a total of $1MM whether owned by the former or latter company. This is why the asset listing is essential.Once the acquiring company makes (agrees to) its initial booking entries, then goodwill is calculated.Goodwill is purchase price minus depreciated book value of assets acquired (based on the agreement between buyer and seller and as filed with the IRS).In the old days, goodwill was amortized over 20 years. A decade ago, the rules were changed to evaluate goodwill for impairment.This caused a seemingly huge problem, but it is very simple math.First, the acquirer has to designate the “unit” for impairment evaluation. Put all server farms in with each other. Or, all apartment buildings. Or all operating units in Florida.You get to pick your goodwill impairment analysis unit, but it can never change.Then, using the current cash flow each year and the original acquisition multiple, you value the unit (the entire unit). It gets tricky because you may decide that the multiple has gone down. It doesn’t make any difference if the multiple goes up.Then, you compare the current calculated goodwill versus the original booked goodwill asset by asset within the unit.Then, you aggregate the unit.This aggregation of assets within the unit is where a lot of problems disappear in multi-unit operating businesses. One operating unit (different than “unit” for goodwill impairment calculation) may go down, but another may go up.If the current goodwill equals or exceeds the acquisition goodwill, you have no impairment.If the current goodwill is less than the acquisition goodwill, goodwill is declared “impaired” and you write off the impairment.Goodwill can never be written up, only maintained or impaired. It is a GAAP accounting issue, not a valuation issue.In your exact example, there is no connection between the accounting for the transaction and the acquiring company’s value. That has nothing to do with accounting.If a company issues stock, it is booked at its value. So, yes, a company which pays $50MM and receives no assets (which is not likely because today even customer lists are considered assets) would have to book $50MM of goodwill.Other than the booking entries, goodwill has virtually nothing to do with acquisitions. It is a result of acquisition arithmetic and nothing more.What you do highlight is why companies with high P/Es (like Amazon) should be doing acquisitions with their stock unless they have a gob of cash.If they have cash yielding 1% and can put it to work at their P/E ratio, that is a great coup.JLMwww.themusingsofthebigredca…

  19. Susan Rubinsky

    I once dated a guy who only cared about numbers. He thought all prose was useless. (He was absolutely brilliant but almost failed English Lit, LOL.) Here is the poem I wrote for him.BTW, I love the “Fredsheet.” Perfect. Kudos to Gotham Gal.https://medium.com/50-in-50https://uploads.disquscdn.c

    1. Vasudev Ram

      The Fredsheet is classic, indeed.Wow. I thought your poem sounded like a haiku, and then just a bit later looked again at the image you posted, and lo and behold, it *was* a haiku!Here are some computer haiku:A file that big?It might be very useful.But now it is gone.Yesterday it workedToday it is not workingWindows is like thatStay the patient courseOf little worth is your ireThe network is downThree things are certain:Death, taxes, and lost data.Guess which has occurred.You step in the stream,but the water has moved on.This page is not here.Out of memory.We wish to hold the whole sky,But we never will.Having been erased,The document you’re seekingMust now be retyped.Rather than a beepOr a rude error message,These words: “File not found.”Serious error.All shortcuts have disappeared.Screen. Mind. Both are blank.The Web site you seekcannot be located butendless others existChaos reigns within.Reflect, repent, and reboot.Order shall return.ABORTED effort:Close all that you have.You ask way too much.First snow, then silence.This thousand dollar screen diesso beautifully.With searching comes lossand the presence of absence:“My Novel” not found.The Tao that is seenIs not the true Tao, untilYou bring fresh toner.Windows NT crashed.I am the Blue Screen of Death.No one hears your screams.A crash reducesyour expensive computerto a simple stone.Error messagescannot completely convey.We now know shared loss.From: https://www.gnu.org/fun/jok

      1. JLM

        .Haiku overdose. Well played.JLMwww.themusingsofthebigredca…

      2. Susan Rubinsky

        Love error page haiku. I used to write them in the 90’s for my clients as little easter eggs.

      3. Vasudev Ram

        Forgot to add one of my own that I used to use in my email sig. Maybe I will revive it (pun intended):”On a clear day you can see the blue screen of death.”https://en.wikipedia.org/wi…https://en.wikipedia.org/wi

  20. SubstrateUndertow

    CTD = consider the destinationBest to ride in on narratives-metaphors-language-formats already well established in the mind of the receiver!Which begs the question why so little effort is being spent by educators and the media to develop and popularize core narratives-metaphors-language-formats that are optimally accessible and reusable for accelerating mass-culture collaborative big picture framing for the rest of us ?

  21. sigmaalgebra

    Clearly for simple work, simple descriptions will do.But not all work is simple, and then how to describe the work well can become challenging. We can’t expect just one technique to be the most effective always.

  22. Chris Phenner

    Agree some topics are best ‘Fredsheeted’ (shared as a sheet); encountered this today and said (in exasperation) ‘This isn’t worth talking about unless we Sheet It.’Yes. Thank you.

  23. Jan Schultink

    AI can help humanity go the other way: from spreadsheet to prose at the press of a button https://automatedinsights.com/, often used by journalists to report on earnings. I find it very hard to get a financial picture in my head from paragraphs of blurb.

  24. bfeld

    This would be an example of how we are different. I can do math in my head. I can hold a lot of numbers in my head. I can remember all kinds of strange numbers linked to dates. So – I prefer NOT to see things in spreadsheets. Dave Jilk once referred to my approach as “gestalt math.”

  25. Doug Lee

    Most statements of “I can’t do …” can be more accurately amended to, “I won’t do”