W. Michael Hsu: 13:04
Oh my God, it was. It was 1,000% harder than I thought it would be. When we started out, we were just an outsource bookkeeping firm. Really? I didn’t want to start a real business, which to me at that time was import export or whatever that means. But then I didn’t have any money, so all I had was my skill and my time. So I did what I did best, which was accounting. So we did bookkeeping and consulting. I remember my first client, I quoted 100 bucks a month, and then my partner at the time was so afraid that they’re going to say no. As soon as I said 100, he goes, oh, but you know what? Because you’re smaller, we’ll give you a discount. It’s 50 bucks a month.
John Corcoran: 13:49
Jeez. Wow.
W. Michael Hsu: 13:51
I was at my firm. I was building $270 an hour.
John Corcoran: 13:56
Wow.
W. Michael Hsu: 13:57
And then overnight, I went from $270 an hour.
John Corcoran: 14:01
To.
W. Michael Hsu: 14:01
50 bucks a month.
John Corcoran: 14:05
Kind of hard to be profitable at that rate. Yeah.
W. Michael Hsu: 14:07
Yeah, it was super tough. But I was really lucky. I had a lot of I had a lot of. I had a lot of teachers and mentors along the way and big shout outs to EO. I actually very quickly met my first mentor, I think a year into my early career, and he taught me everything.
John Corcoran: 14:26
Was it through EO?
W. Michael Hsu: 14:28
No, I went to Inc. magazine’s conference. You know that when I just couldn’t afford to have no business to be at and again approach this guy, and I was like, what’s the secret to becoming a multi-millionaire? And most entrepreneurs in my career, I realized, are really generous. They’re willing to share. They’re willing to give. And he introduced me to EO. I signed up with an accelerator at that time.
John Corcoran: 14:53
Oh, great. Yeah, I did accelerator as well. Yeah.
W. Michael Hsu: 14:56
Oh, an accelerator is the best program. So it’s amazing. It’s amazing.
John Corcoran: 15:01
What did you like about it?
W. Michael Hsu: 15:03
I think it’s different. As they say, your environment shapes you, right? Like what is the 5 or 6 monkey rule. Like you’re the you’re you’re you’re your level is the same as the six people that you’re hanging out closest to. Right. And then at the same time, it’s a structure that’s got the four day strategy, money people, execution days. The programming is amazing. The people are amazing. And the network is just like it forces you because you’re always like, what is this guy doing? What is that guy doing? Oh, I can take this. And you’re just consistently being pushed forward.
And the monthly accountability and even today, even today, I thrive on accountability because we all know what we’re supposed to do: make more money, spend less. But accountability is just so hard. Yeah. You know, accountability to self is harder than accountability to others, which is really weird. Like if we tell ourselves we want to do something or it’s too cold, I’m too tired. If you tell someone else you’re going to do something, and if that someone else is someone you respect, you’re going to show up.
John Corcoran: 16:04
Yeah. And probably someone in that ego accelerator community. Told you, dude, 5050 bucks a month is too cheap.
W. Michael Hsu: 16:14
Oh, yeah. Well, well, I couldn’t join your accelerator at 50 bucks a month, but at that time, maybe, like 500 bucks a month.
John Corcoran: 16:21
You worked your way up by then. Okay.
W. Michael Hsu: 16:23
Oh, yeah.
John Corcoran: 16:24
Yeah. So. So you start Deep Sky, and then you’ve got these other initiatives as well. Tell us what measure, measure and hack is.
W. Michael Hsu: 16:33
Yeah. So measure measure and hack method is a methodology that I have gathered. I say this collection of practical ideas and functional tools around using numbers and systems to achieve our goals. So very much like iOS, very much like maps, very much like scaling up. But the framework just adds two more things. So its vision, strategy, execution, which everything that I mentioned talks about a lot and then measure and hack. So measuring you know, know your numbers, track your numbers, what to track, how to track it, how often to track it.
But most importantly is the hack. And the reason why I call it a hack is it’s never about these overhauls. Crazy big moves that we always think I hate. If I get on this podcast, my business is going to kill it. If I get this client, my business is going to kill it if I. It’s never that. It’s always the collection of tiny little changes over time. It’s the little things that you do every day over time. So that’s why I call it a hack. I always love talking about, like, the numbers help us understand what’s working and where the bottleneck is. And the hack is the one that’s going to, you know, unlock the flows.
John Corcoran: 17:48
And so what is the hack? That’s that.
W. Michael Hsu: 17:52
Depending on where. Well, well, you got to measure right. You got to measure. You gotta put. So the way I say it is people say what the county is. The way I say it is like we quantify everything. We put everything in. We put your entire business onto one single pane of truth, onto a number. Your PNL tells you the performance of the business. Your cash flow tells you. You know where it is, you know what has happened. Your balance sheet tells you where you stand. It’s all about the past in which we extract lessons. It’s about the present. Where do we stand? And it’s about our future. Where are we going to go? So once you lay everything down on a single pane of truth, it’s very easy for you to spot your bottleneck or spot what’s working and what’s not working.
And entrepreneurs are incredibly, Incredibly smart people that 99.99% of them know exactly what to do as soon as they know what the problem is. The issue is 99%. 99% of them don’t know what the issue is. So we ended up just throwing everything against the wall. We worked so hard. We keep driving. We keep driving sales. When our profit is a problem, we keep trying to fix our profit. When cash flow is our problem, it’s like we’re always working on the wrong thing, you know? So that’s really what it is. So the idea is to measure. So you know, and then hack on the things. It’s like the rudder right. The little tiny piece that’s going to help your ship move.
John Corcoran: 19:15
And do you find that a lot of the entrepreneurs you’re working with are not measuring the right things or they’re not, you know, maybe they’re measuring them, but they’re not. They don’t have a process in place for evaluating them, or they don’t have that outside perspective or the right, you know, team in place to help them to understand their data. Which one of these or is it all of them that they struggle with? Yes, yes. And all of it?
W. Michael Hsu: 19:40
Yes. And the reason why is I think, I think most entrepreneurs are, are, are, are again generalizing a little bit here. They’re either great salespeople or they’re great artists. They’re great at what they do. If they’re right or they’re great at selling what they do. I know very few entrepreneurs who are financially literate or financially intelligent. Very little. I’d say maybe ten out of every hundred. Probably even less than that. Even in, you know, Ypo, you have these incredible entrepreneurs that got great businesses that are doing amazing things. The problem is, nobody teaches us this thing, you know? And even for me, like I said, I have two degrees. I have two degrees in accounting and a CPA license. They did not teach me this. Right.
John Corcoran: 20:24
How did you figure it out yourself? Was it a book? Was it podcasts? Was it a YouTube video? Was it hacking away?
W. Michael Hsu: 20:32
It was. It was a lot of. It was a lot of books. But then it was also what I realized very quickly as an auditor, because I started my career as an auditor. And there’s two things that I realized. One, it’s nobody knows what is going on. I always remember I we had a new client. It was a $15 billion capitalization client that had to do an audit. We had no experts in-house. We’re doing internal controls, IT audits. And so what this firm did was they put me into a six hour lunch and learn, then put me on a plane and then introduce me as the expert of the IT audit. So what I did was what I but I had the firm, you know, as my background. So what I did was I sat across from the internal auditor, I asked all these questions, and the whole time the internal auditor was like, oh man, you came from a big firm.
You must know all these like, oh, we’re so embarrassed, but check this out. And that was and I was taking down all these notes back then we didn’t have ChatGPT. So now I can I can go back to my hotel, and I spent the entire night googling what the hell he was talking about. So then I can understand it. And then the next day I’ll come back. And that’s the second thing that I realized, which was, as an auditor, I have the backstage pass. Everybody assumes I have the answers. So I started going around and asking everybody. I talked to everyone, I talked to every CFO, I talked to everyone. Where does the number come from? Where does it go? How does it work? How does it flow? What is it that you care about? What is it that they care about? And I just put the whole thing together. That’s why I call it the measure and hack method, because it was the application of accounting and finance into business operations.
John Corcoran: 22:14
Yeah. So tell me you started this online community called FMF Financial Mastery for founders. And the vision behind it was a good one. It was to democratize numbers and allow founders to understand their numbers. But I’m curious around the business model around it because, you know, you had outsourced CFO services, and sometimes it’s hard to kind of draw that line between, you know, what value does the community provide and where do I, you know, avoid getting sucked in and providing what I charge a lot for, for less expensive in that community. So how did you figure that out?
W. Michael Hsu: 22:55
Well, financial mastery, the reason why is as a consultant, as a CFO, advisor or even as a team of CFO advisors, we’re limited on the people that we can help. But in order for me to even before I can help you, I realized that all CEOs have the same questions. Like for example, question number one I said is always, are we building cash or burning cash? Question number two is if we’re burning cash, how long do we have. Right. And question number three is well, either we’re building cash or burning cash. We’re going to have to fix it, which is around profitability above and below the line. These are generic basic questions that every CEO needs to answer, but every CEO doesn’t understand. So that’s why something like financial mastery is for founders to help them with that.
Because I can create content one time and then they can watch it and learn it on their own time. For me, knowledge is one of the things that’s the best. Because for me, by giving that to you, I didn’t lose anything. We just doubled. We just doubled the knowledge in the world. And that to me is fantastic. And that even in that, what actually makes it easier for us to work together if you were to work with me? So I don’t see that problem at all, because there’s just so much we just ask as a society, as the world, as human beings, we just don’t have cultures today. We just don’t talk about money enough, early enough. And every time we do talk about money, it’s almost always bad. And I just.
John Corcoran: 24:22
I couldn’t agree, I couldn’t agree more. As someone who grew up, you know, not hearing about it that much from my parents, I don’t feel like I had that much financial literacy. And I’m and I’m trying to change that with my kids who are still young. You mentioned your dad was an entrepreneur. How were your conversations with your father as a kid around numbers and money?
W. Michael Hsu: 24:44
Terrible. My dad. So my dad was a he was not the number one man. He was the number two man. He was the integrator. He managed the factory and was very diligent at it. But we didn’t talk about it because it was, you know, if you think it’s taboo to talk about money in America, it’s even more so in Asia. It’s not un-not humble. I don’t even know. It’s like, yeah, it’s not humble. It’s not a humble thing to do.
John Corcoran: 25:09
In Asia or like a pretentious thing to do or something. Okay.
W. Michael Hsu: 25:12
Yeah. Yeah. But it’s really funny. Nowadays everybody talks about money. It’s like they talk about money, but then they think it’s a bad thing. It’s a, it’s a, it’s a very weird hypocrisy. But the idea is that.
John Corcoran: 25:22
Yeah. So there’s negativity to it. There’s a negativity to it. Right. Yeah. Yeah. So yeah. So you didn’t talk about it with him then?
W. Michael Hsu: 25:30
Yeah. No, no, I did not talk to my father about business at all. He didn’t let me know about it again. I guess it’s that humble. They really want me to grow up humble and not think, you know, I’m some rich kid or anything like that. I wasn’t, but, yeah, you just did not talk about money and I. And I’m frustrated now growing up and looking back. And my dad passed away ten years ago. And I’m looking at his finances. Had he taught me financial literacy, had he shared with me his business experience, I would have been a lot more successful a lot earlier on. But the issue is he didn’t know how. So the best way he can think about not letting me grow up spoiled is to not talk about it, which I think is the wrong thing to do.
John Corcoran: 26:15
How would you advise a parent today to approach that with their kid? At what age and how did they approach it?
W. Michael Hsu: 26:26
As soon as possible I, I say, I say learn financial. Most parents don’t have financial literacy either, but there’s so much content out there that’s available. So learn financial literacy and start talking about it. Understand that money is nothing more than a tool, and money is it helps the world go around. It’s actually a great thing. It’s not a bad thing to have money. It’s certainly a terrible thing to not have money. So I think every parent needs to learn and understand about, you know, how you make money, how you spend money, what is necessary, what is nice to have and what is, you know, kind of play money. And once you have that basic financial knowledge, let your kid have a credit card as early as possible, let them understand debt, let them understand, you know, responsibility. I remember as a kid I had a girlfriend overseas in Taiwan when I was in America, and I made these long distance landline phone calls. Oh, the phone bill, our phone bill was 700 bucks.
John Corcoran: 27:28
Oh, wow.
W. Michael Hsu: 27:29
And my mother very quickly, you know, let me know what it feels like to have a $700 debt that I had to pay back over the next three years.
John Corcoran: 27:38
Yeah. Yeah.
W. Michael Hsu: 27:39
Yeah. I think that conversation is important.
John Corcoran: 27:42
It’s funny, I have tried a bunch of things with my kids. I’ve tried different systems that didn’t work. The latest thing I tried is I bought a used electric car, which was not a fancy top of the line Tesla. And so my kids, I think they thought we were going to get like a really nice Tesla. So they didn’t like it at first. But what I did is I tied it in with something they were passionate about. You can tell me if you think this is a good idea or not. Well, my eight year old is crazy about football, NFL football right now. And so he wanted to go to a game. So I said, all right, here’s what we do. All right. You will be the advocate for driving the new EV, which will save us on gas money.
And I put them on the wall. I wrote the amount that we paid in gas for like the last six months in a row. And then I put new columns for gas after we got the EV, and it turns out we cut it more than by half. And I said, I, I will get you tickets to an NFL game if you become the advocate. So I gave him ownership basically over that line item in our family and l basically. And then I’m expanding it out. I’m going to do it with eating out and dining out costs. Our line item. And I’m going to give ownership over that P and L to a different kid. Yeah.
W. Michael Hsu: 28:50
Measure and hack.
John Corcoran: 28:51
Measure and hack. That’s great.
W. Michael Hsu: 28:53
That’s exactly what is that’s that’s incredible. Because once you put it up there, they see it.
John Corcoran: 29:00
Yeah.
W. Michael Hsu: 29:00
Because they don’t feel it. They don’t they don’t know what gas cost is like. Oh yeah. Gas is just gas. But once you put it on there and then they can see the difference. And then if you have that NFL ticket it’s like, you know, whatever how much it is. And then they can see that gap and then they and then and then I love what you said. You say they own that line item in the PnL.
John Corcoran: 29:19
Yeah.
W. Michael Hsu: 29:19
That’s like the CEO right there. Right. Like I always say I always tell my clients, I’m like, I don’t own your PnL. I provide you your PnL, but your PnL is a blueprint of your business. The people in your business, the operations people, own that thing. You know, that’s why we have lessons. Like, how does a CMO job affect the financial, the business? How does a CEO’s jobs affect the financial of the business? It is only when it’s relevant to them then they can make changes. So I absolutely love that. Like you’re like, hey, you’re now the owner of the EV driving, right? Yeah. You say the other one was.
John Corcoran: 29:55
The dining out is the other one. That’s it. I figured it was something that they could own and control. I mean, they like dining out, but I wanted to, like, kind of create a balance so that they’re not always pushing to go to McDonald’s or in and out.
W. Michael Hsu: 30:07
Love it. Especially dining out. Dining out is the biggest. It’s the biggest leak, right? Because even for me, I pull out my credit card statements and you’re like, why is my credit card bill $15,000 this month? And then you look at it, you’re like, there’s no you’re expecting to see like a $3,000 something. No, you see, it’s $70 here, $100 dining now, $150 here, $50 there. And those things are the smallest leaks, what we call leaks that they have. And you have that in business and you have that in your family. So I think it’s incredible that you have an eight year old that is managing that. That’s amazing.
John Corcoran: 30:42
Yeah. I want to ask you also about the CFO club. So this is really interesting. It’s kind of like you realize that there weren’t enough, I guess, young CFOs coming up, and they needed more training to serve this demand going forward. So you decided to create it. So tell me a little bit about that.
W. Michael Hsu: 31:04
I was just so frustrated because I was very involved in the accounting world, and I was like, you know, in the Thought Leader Symposium and, you know, 100 most influential accounting personnels and all that. But it’s just like the entire accounting industry works in this vacuum. And while there are people being celebrated there. In the real world, what I’m hearing from the CEO is that my accountants don’t get this. My bookkeepers don’t get this. I just spent $150,000 to hire a director of finance. And I’m so frustrated because I’m asking them what to cut. And they’re telling me. They’re telling me the answers that I don’t understand.
And it’s hard for a CEO to ask a question 2 or 3 times, especially when accounting. What accountants do best is we make these very generic, very hard to understand, convoluted accounting talk. Answers to CEOs. And the CEOs are just like, okay, I don’t get it. So I’m just going to give up. And that’s frustrating because businesses go out of business. Companies go out of business because of that. Because they don’t understand. I got so angry one time when I had a CFO, when I had a CFO say, hey, you know what? I’m going to quit because I think the company is not doing well. And yeah. And I go, you’re the CFO. Bowl.
John Corcoran: 32:21
Now that’s what their job is, right?
W. Michael Hsu: 32:23
That’s literally your job.
John Corcoran: 32:25
Yeah.
W. Michael Hsu: 32:26
And so and so what I did was and I realized again, it was because nobody taught us this in accounting school. They have the skills. They have 95% of what they need. So this is what I tell the accounting world to these accountants and financial professionals. Look, you’re 95% of the way there. Everything they taught you in school is great. This is the last 5%. And once you do that, once you do that, I can tell you now more than ever, CEOs absolutely need this thing. You know, you’re in a unique position to create tremendous value for CEOs. So go out there and do it because otherwise all they’re doing is complaining about, oh my, my CEOs don’t appreciate me. They don’t. I can’t hire enough people. And it’s just all the complaining. But I have one CEO who told me he writes 100. He writes a $170,000 check to his accountants every year. And he tells me this, he says. Worst check I have to write each year. Zero value. That’s heartbreaking for me.
John Corcoran: 33:30
Me. Yeah.
W. Michael Hsu: 33:32
So? So I just wanted to close the gap. So I started a CFO club, which is, you know, a lot like this online community. We have lessons, tools, templates, basically taking everything we did at Deep Sky for 15 years. Everything that I’m teaching my own CFO advisors, we just created these lessons, you know, courses, accountability. You know, very, very, very accelerated, like just for these accountants and financial professionals who, whose interest is not just taxes, not just audit, but they want to become advisors and they actually want to provide more value. So that’s what the CFO is.
John Corcoran: 34:09
Yeah that’s great. Michael, you have so many interesting different projects before I get to finding out where people can go learn about all these different things. I want to wrap up with a final question. So I’m a big fan of practicing gratitude, and I’m also a big fan of giving my guests a little bit of space at the end here to shout out and acknowledge particularly any peers or contemporaries or mentors who’ve helped you in your journey in your career so far. Anyone in particular you’d want to thank or shout out first?
W. Michael Hsu: 34:40
First comes to mind EO as a whole, I think I always say this EO, EO gave me everything I know really starting from EO and then provided me the network. Even today I’m super involved in it. EO great programming and from EO I actually have three mentors. Michael Cadle number one.
John Corcoran: 35:04
He’s actually what I’ve learned from him before. He’s great. Yeah. Michael’s great. Yeah.
W. Michael Hsu: 35:08
So Michael Cadle, he runs math right now and he’s actually a client. He’s really funny. My mentor became my client. But you know, we work so much together. The other piece is incredible. Teach me about life. Actually helped me through depression. I think it was eight years ago. And then. And. Yeah, just just incredible. Incredible people.
John Corcoran: 35:28
Yeah. That’s great. Michael, thank you so much for your time. Where can people go to learn more about you and connect with you?
W. Michael Hsu: 35:35
Yeah. I put everybody I point everybody to. So our online community, which is built on Skool. So if you go to Skool.com/numbers, that’s where that’s where you can go for the financial mastery for founders. Or if you search on social media. Michael Hsu I’m on most social media sites.
John Corcoran: 35:59
Awesome. Michael, thanks so much.
W. Michael Hsu: 36:02
Thank you.
Outro: 36:05
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.