Dear Analyst #122: Designing an online version of Excel to help Uber China compete with DiDi on driver incentives with Matt Basta

There are only so many ways to make Excel “fun.” If you’ve been following this blog/podcast, stories about the financial modeling competition and spreadsheet errors that lead to catastrophic financial loss are stories that make a 1980s tool somewhat interesting to read and listen to. There are numerous tutorials and TikTok influencers who teach Excel for those who are actually in the tool day in and day out. Meet Matt Basta, a software engineer by trade. He published a story on his own blog called No sacred masterpieces which is worth reading in its entirety as its all about Excel. In this episode, we discuss highlights from Matt’s time at Uber, how he built a version of Excel online to help Uber China compete with DiDi, and how Uber completely scrapped the project weeks later after DiDi acquired Uber China.

Business intelligence at Uber through the eyes of a software engineer

I don’t normally speak with software engineers on the podcast, but Matt’s story during Uber will resonate with anyone who works at a high-growth startup and lives in Excel. Matt’s story has everything. Tech, cutthroat competition, drama, and of course, Excel.

Matt has worked at a variety of high-growth startups like Box, Uber, Stripe, and now Runway. He joined Uber in 2016 and worked on a team called “Crystal Ball.” The team was part of the business intelligence team. The goal of this team was to create and develop a platform that analysts and business folks could use to figure out how much to charge for rides, how much incentives to provide to drivers, etc. All the core number crunching that makes Uber run.

As per Matt’s blog post, employees were working on one of two major initiatives at Uber in 2016:

Redesigning the core Uber app
Uber China

As Matt told his story, it reminded me of all the news articles that came out in 2016 about Uber’s rapid expansion in markets like China. The issue is that a large incumbent existed in China: DiDi. This comes up later in Matt’s story.

Getting data to the city teams to calculate driver incentives

From the perspective of the Crystal Ball team, all they wanted to do was set up a data pipeline so that data about the app could be shared with analysts. Analysts would then download these files and crunch numbers in R and this process would take hours. In 2016, Uber was competing directly with DiDi to get drivers on the platform. The city team would use the data provided by the Crystal Ball team to figure out how much of an incentive to offer a driver so that the driver would choose to drive with Uber instead of DiDi for that ride.

The problem was that the city team in China was using these giant Excel files that would take a long time to calculate. In order to compete with DiDi, Uber China would need a much faster way to calculate the incentives to offer drivers. This is where Matt’s team came in.

The only other “tool” the city team had at their disposal was the browser. The city team still wanted the flexibility of the spreadsheet, so Matt’s team strategy was to put the spreadsheet in the browser. Now at this point, you might be wondering how in the world did this become the solution to the problem? Matt’s blog post goes into much more detail as to the stakeholders, constraints, and variables that led his team to go in this direction.

Luckily, Matt had worked on a similar tool while at Box, so he re-used code from that previous project. During this time at Box, Box had Box Notes and Dropbox had Dropbox Paper. Both of these products were based on the open source tool Etherpad for real-time collaborative document editing. Matt thought, why not build something similar for spreadsheets?

Discovering nuances about Excel

In the blog post, Matt talks about discovering Excel’s circular references. We all know that circular references can break your models, but Excel’s calculation engine also allows for continually calculating if the computed value of the cell converges. I think this is how the Goal Seek function works in Excel to a certain extent.

When Matt’s online version of Excel was released internally, the head of finance was upset since you could see how the formulas were calculated in the tool. To Matt’s team, they did what they were supposed to do. They put Excel in the browser and figured you should be able to see the formulas in the cells.

According to the head of finance, there were spies from DiDi who would apply for internships at Uber China just to get competitive data. Needless to say, Matt removed the ability to see formulas in his tool.

DiDi buys Uber China

Matt and the Crystal Ball team spent 6 months helping the Uber China team with their data needs. Internally, Matt’s team didn’t get an all-hands invite or anything regarding the acquisition of Uber China by DiDi. People just found out through the news. Eventually, then CEO of Uber Travis Kalanick sent out a message regarding the acquisition. Matt’s tool would get scrapped immediately.

Matt open-sourced the code for this WebSheets tool and the calculation engine lives on GitHub here. We chatted about the feedback Matt’s received about his blog post and you can see the comments on HackerNews. As usual, there are people chiming in saying Matt could’ve done this or that better. Whenever there is a mention of Excel on HackerNews, you’ll inevitably see people talking about how $XX billions of their company is still run off of someone’s Excel file. Interestingly, one of the resources Matt used to learn about Excel is Martin Shkreli’s YouTube channel where Shkreli walks through building out a financial model. Putting aside misgivings about Shkreli’s character, the videos are actually super educational:

Excel’s fast feedback loop

This is where the Matt’s story turns into takeaways and learnings that make this story more than a story about Uber China and Excel. Matt built something from scratch and had to come to terms with that it wouldn’t have a business purpose anymore. The tool is just a way to achieve the business objective. If the business objective changes, then the tool may become obsolete.

Hearing Matt’s perspective about Excel was quite refreshing since prior to this Crystal Ball project, he wasn’t an analyst and in the weeds of Excel every day. However, he worked with said analysts every day to understand their requirements and more importantly, whey they were so tied to Excel. Excel allows you to create a fast feedback loop to test an idea or an assumption. The reason the city team stuck with Excel and put up with the hours of calculation time is because building similar functionality with code would’ve been too difficult.

Founders will use Excel before writing code.

To the analysts and data scientists Matt worked with, writing formulas was their version of programming. Unlike traditional programming, Excel users don’t have to develop unit tests, build integrations, and deal with piping data in/out. Another interesting tidbit Matt brought up about the internal workings of the city team at the time is that there was no expectation that a given Excel file would live for more than a week. Each file would solve a specific problem at that point in time, and then get discarded as it too became obsolete.

Planning and forecasting on IBM software

Following this Crystal Ball project, Matt started working on the financial engineering team within Uber. His next project as trying to figure out how much revenue Uber would make in 2017. The tool they used was a self-hosted version of Anaplan called IBM TM1. I’ve never heard of this tool from a FP&A perspective, but my guess is that it’s similar to Oracle Hyperion (the tool I used back in the day).

There were analysts working with this tool who would turn Excel spreadsheet data into TM1 code for planning purposes. The problem is TM1 code is not strongly typed, so analysts would constantly break the tool when trying to write code for it. It was just one guy who created TM1 and the platform was acquired by IBM. Uber even invited one of TM1’s chief architects to talk to Uber’s analysts about the tool. According to the creator of TM1, Manny Perez, TM1 was the first “functional database” in the 1980s which exploited in-memory computing. Apparently there’s a cult following around Manny and the creation of TM1. So much so that a documentary was released a few years ago aptly named Beyond the Spreadsheet: The Story of TM1:

Not gonna lie, this seems like a super interesting documentary given the foundation of the story discusses spreadsheets at length. How about this description from the film’s website to incite some excitement around corporate planning software:

But as long ago as 1983, a light-bulb idea went off in the head of an employee at oil distributor Exxon. Manny Perez realized he could give business users the freedom to create at scale but also the control and collaboration prevalent in other technologies today. He thought his solution to the problem was so elegant and obvious, it would become instantly ubiquitous. It didn’t. To achieve his ultimate aims, he would need to pioneer and master many facets of technology, staying true to the spirit of user freedom whilst battling waves of competitors selling solutions that enriched themselves but not their customers. Eventually, with thousands of companies globally using his solution, and with a passionate community of followers, his inspiration and perspiration was validated when IBM acquired his technology in 2008.
Source: tm1.film

Back to Matt’s work with TM1. His goal was to make it easier for analysts to work with the software. He built a programming language on top of what the analysts were coding. The new language had type inference and checking to prevent errors from occurring in TM1.

Tips for Excel users

Given Matt’s extensive experience building on top of Excel and working with analysts all day at Uber, I thought it would be interesting to get tips he has for us Excel users. A key question that is worth pondering is when the business evolves to a point where Excel doesn’t make sense to be the tool of record anymore. I’m sure many of you have worked with files that handle business critical processes at your company and have wondered: this data should probably be in a secure database or something more secure than Excel.

Realistically, moving the data and process off of Excel involves a team of engineers writing code where everything is hosted on a server. The resourcing for this speaks to to the speed and immediacy of Excel’s value when your team needs to work fast. Should your team go down this route and create code instead of spreadsheets, Matt encourages all analysts to do one thing: provide good documentation.

This helps with the migration process when you have to work with a team of engineers. Tactically, this can mean something as simple as adding a comment to a cell in your file, leaving notes in the cell itself, or even creating a text box with the notes in the box. How many times have you inherited a file and spend hours spelunking around trying to figure out how it was constructed? Good documentation helps everyone.