Serial entrepreneur Michael Ly, CEO of a number of businesses including Reconciled joins me on loud Stories podcast.
In this episode, we talk about . . .
- How Michael stays focused on working on his businesses, rather than in his businesses.
- The complexities of navigating different cultures in the work environment,
- And how starting a new businesses gets easier each time, as you learn from past experiences.
- Michael sharing how his upbringing in the hot desert of Arizona by Cambodian refugees, impacted his approach
- The structure of his online bookkeeping and advisory firm The Accounting and Business tools he uses
- Michael’s philosophy of Always be learning.
Heather Smith: Thank you so much, Michael for joining us on the Cloud Stories Podcast. Can I start by asking you,
What is your favourite movie, song or band from your teenage years and why?
Michael Ly: Oh wow, that is a great question. I really enjoyed the movie, Gladiator with Russell Crowe, and that movie was I think a classic for young men growing up and that was the post Braveheart movies where these epic movies came out and Braveheart set the standard.
Michael Ly: Gladiator was my… and mainly because it just showed the story of this soldier that had an injustice happened to him and he came out of that injustice victorious, and the realistic battle scenes and that age or that period of time is very fascinating to me, so I’ve read a lot about that period of time historically that is trying to portray.
Michael Ly: Yeah, really interesting story, that’s probably my favourite.
Heather Smith: Excellent. And I’m not sure whether you’re aware but Australians claim Russell Crowe as their own, but he’s actually from New Zealand.
Michael Ly: Oh, okay.
Heather Smith: I don’t know if you’re aware of this, but anyone who are from New Zealand who’s any good Australia claims is their own.
Michael Ly: That’s funny.
Heather Smith: So everywhere we’ll just write, “An Australian Russell Crowe.” Thank you for that. That was a really interesting insightful answer.
Can you share with our listeners a bit about your background, Michael?
Michael Ly: Yeah, sure. I was born and raised in Tempe, Arizona, the valley of the sun as we call it in U.S., to parents who are refugees from Cambodia, who we’re Chinese-Cambodian by descent, and that’s a big part of my family history and story.
Michael Ly: Went to Arizona State for college, studied business and accounting. When I got out, I worked less than a year at a public accounting firm, not in their audit and tax, but in their consulting division. I was told that my personality was too gregarious for audit and tax and that I wouldn’t survive. So I did consulting for a while and learned from a mentor there who taught me basically how to be a CFO and how to consult clients.
Michael Ly: I left there, did my own accounting consulting for a while, and then my old boss, mentor went and started his own firm and recruited me, so I went to work for him. And about a year into that he decided to take a full time job with a big real estate company here, and so he gave me all of his clients.
Heather Smith: Wow.
Michael Ly: So I learned quickly what it was like to grow and build a little firm. I also was getting married during that time. So got married, we spent a year in Arizona after we got married and then moved to Seattle. I spent five years there helping build a consulting company. I was their CFO and they specialised in oil and gas companies doing training, and change management consulting, and ERP implementation, and things like that. So I helped them grow from 50 employees to a little over 200 employees, from $10 million in the U.S. a year to $40 million U.S. a year.
Michael Ly: And then we moved to Burlington, Vermont, where my wife is from. She’s from the border of Vermont in Canada, she’s a dual citizen. So we have three kids now and I had the fortune of starting a four and a half years ago, a company called Reconciled, that’s fits into the Cloud accounting world, the Cloud accounting space.
Michael Ly: When I started it, I didn’t really know that the ecosystem was so large, and that I would run into people like you someday, who is on the other side of the world, also participating in this ecosystem.
Michael Ly: So I was new to it and it quickly grew, Reconciled, now we’re close to 30 employees, we have scattered throughout nine States in the U.S., and working with over 150 clients, and we’ve been able to basically double every year since we started. So it’s been really wonderful.
Heather Smith: It was really interesting how you at the start said, someone came and told you, you’re too gregarious for audit and tax because I remember I struggled so much with the audit exams, and I put it down to the fact that I didn’t have sneaky thoughts about what people could possibly do. I just always thought people were at their absolute best, and I could never come up with these scenarios that they would place in front of me. And again as I listen to this now, I failed tax multiple times. And it’s interesting now how… So I both led into the management consultancy reporting side of things rather than that rules orientated side of things as you did back then as well. And how now the world is our oyster, which is funny.
Michael Ly: Yeah, it is really great. I don’t know when you entered the Cloud space, I entered in at the fall of ’15, end of summer ’15, and by that time QuickBooks Online, was a pretty good product, could do 80% of the things you needed it to do, on the desktop did and Xero was here in the market as well.
Michael Ly: And so I think I just got lucky, there’s a Greek word Kairos. Kairos means right place at the right time, and so I started at the right place at the right time and was able to ride the wave of growth that both QuickBooks Online and Xero have had in the Cloud accounting space and shaping in down in the U.S., and helping the small business owner, an entrepreneur ethos consider remote in outsourcing work.
Michael Ly: So yeah, I feel like I got lucky and very fortunate.
Through history we can examine being at the right place at the right time with that right skillset catapults one to success. Do you still think someone starting up today has that opportunity?
Michael Ly: Oh yes, I definitely do. With the global bookkeeping market, especially if you enter in to the market that reconciles in, which is primarily in bookkeeping advisory services, the estimates are that it’s a $10 billion market, and no one dominates that market. No one company in the world can claim even a billion dollar in that market or half a billion dollars. I don’t know if anybody can claim even $100 million.
Michael Ly: So it is a completely distributed field and there are so many companies, so many small businesses and entrepreneurs that are still doing there are books on traditional ledger, or in Excel, or in Google Sheets. They are not working with an accountant, or a ProAdvisor, or bookkeeper, whatever you want to call yourself. They’re not working with anybody.
Michael Ly: So the opportunity is right for a new entrant who can provide a very clear message to the market of who they want to serve, and I think it’s going to be a while before we see any real market leaders take up a large chunk of that $10 billion market size.
Heather Smith: That’s a really interesting and I do agree that there’s still opportunity out there, so hopefully people will recognise that. You’re based in Burlington, Vermont. Now, I’ll tell you a quick story about Vermont. I lived in Toronto and I did a 14-hour road trip over a few days, but as I physically cross the border into Vermont, the drivers were nicer. It absolutely, you can tell, oh my goodness, everyone has just got so much nicer. And then as we crossed out of Vermont, Vermont got tougher on us. So the Vermont is like, from my experience, because two days totally can define a State, is one of the nicest States in the USA. Can you share with us what the startup in the small business environment culture is like in Burlington?
Michael Ly: Yeah, great question. Vermont, those people are very nice and it’s because nobody is in a hurry here, and nobody moves here to be in a hurry, or to impress anybody. It really is a State you move to for lifestyle reasons. And the brand of Vermont in the U.S. is very strong, it represents high quality products, high quality inventors and makers, and a high quality experience in tourism and hospitality.
Michael Ly: There’s definitely a growing and burgeoning startup community, since I’ve been here in Burlington, I moved to Burlington a little over eight years ago. At the time when I landed, I met with one of the only people that was doing fractional CFO work at the time. CFO for hire work, and now there’s a dozen people doing that.
Michael Ly: There used to be only one major VC fund, venture capital fund in Vermont, and now there’s a handful of them. And there are coworking spaces popping up everywhere, I actually own one myself because I saw the demand and-
Heather Smith: You own a co-working space?
Michael Ly: Yeah. So-
Heather Smith: That was everything else.
Michael Ly: Yeah. I think that there are more and more people understanding the quality of life, and because of the remote nature of work and the demand from remote work is growing and growing, and the desire for people, and Millennials especially to work where they want to work from and live the way we want to live.
Michael Ly: Vermont’s becoming an attractive place for people in U.S. and the State of Vermont is making it very attractive and they’ve in the past year as well as this year have put out remote work grants for people who want to relocate to Vermont and work remotely from here-
Heather Smith: Wow.
Michael Ly: … and will pay for your move as well as your internet and your office set up and make it very easy for you. So the State of Vermont also has jumped into seeing the opportunity to attract a certain kind of person with certain values. And so yeah, Burlington’s very, very entrepreneurial and Vermont as well, and Burlington is the largest city here, so it’s the centre of most of the economic activity happening across the state.
Heather Smith: That’s really fascinating, all the different initiatives you described this, so when I go offline I’ll go and have a look at that, but where I live, Brisbane is very much a lifestyle community and you possibly being from overseas you don’t necessarily hear about Brisbane, but we call ourselves old country town and we all know one another.
Heather Smith: You’ve actually started a number of businesses and now you tell me you own a coworking space, so who knows what else you’re doing.
What is the driving force behind starting a business? I normally ask people, “What led you to start that business?” But you’ve started so many, what drives you to start these businesses?
Michael Ly: That’s a good question. I think I’m at heart and I’ve been this way probably since I was born, or at least growing up, it was brought into my upbringing. My parents were both entrepreneurs and they modelled for my siblings and I what it looks like to come to the U.S. with nothing, literally coming out of the Khmer Rouge Holocaust and coming here with nothing, and to make a life for themselves and their kids.
Michael Ly: That took a lot of entrepreneurial grit, and learning skills, and a language that they didn’t know, and learning to communicate in a culture that they were leery of or really were unfamiliar with, and I’m making mistakes, which I saw them make firsthand in many different ways, but also learning from. Me and my siblings are all entrepreneurs. We just have that now from our parents.
Michael Ly: So I think it’s just there and I can’t tell you that I know what DNA strand you can point to that makes it there, but it’s there and we model for it. I was able to see my parents in one generation become upper middle class and give their kids, all of us a college education. We all fortunately were able to get our college degrees funded as well because of our grades.
Michael Ly: And then we’ve been able to surpass our parents’ wealth by a dramatic number because of our entrepreneurial lessons that we’ve taken and applied. So I’d say one is, it’s in me and then two, and just having a lot of fun. I would say me and my siblings, none of us really do it for money when we set out to go about our ventures. Of course, money is a result and profits is a result, but we never set out because we believed that it was the best way to make money.
Michael Ly: It’s just it was the best thing for us to enjoy and it’s what we enjoyed the most. And from that, because we’re doing it with passion and we’re willing to spend all of our free time doing it because it’s so much fun, then comes money, and then comes lessons that we learn. We’ve all made mistakes including myself and had failures as well, but I think it’s learning from those failures and being willing to go at it again and again and not let that drag you down. That helps us succeed. And then obviously God’s grace and luck have something to do with it as well.
Heather Smith: I think someone mentioned to me that if you’re a migrant and you’re actually able to deal with actually moving to another country, you can pretty much deal with anything.
Michael Ly: Yeah.
Heather Smith: For example, taking on a new software programme or taking on a new business is just small chips compared to actually moving countries.
What does a typical day look like for you, Michael?
Michael Ly: Oh, yeah. Typically, if I was in Vermont, I’m actually vacationing or working from Arizona right now for the next four weeks. So back in my hometown, I would get up and I’d have breakfast with the kids, usually have some meditation or time in prayer. And then I set my day and my mind up right for the day, and then I go to the office, go to the coworking space that I work from and check in with my assistant there that runs the space.
Michael Ly: And then I usually have on my calendar a series of meetings. They can be anywhere from high level sales meeting for Reconciled, I check in with my director of operations or any of the other direct reports I have. Or it’s working with the co-founder with my two other startups, so checking in with them. Doing a podcast interview, doing a recording for our own podcast, Friday Night Live.
Michael Ly: So there’s a variety of things that happen, interacting on Slack and the different communities, you and me are part of one and checking in on that. So I have my day fairly structured, it’s all on my calendar. And then I have different tasks that I have to accomplish and I accomplish those.
Michael Ly: I try to leave by 5:00 every day, get home so that I can have dinner with the family, spend time with them, help my kids with bedtime. And then usually evenings I am reading, or enjoying time with my wife, or taking the kids out to the gym to do some basketball shooting.
Michael Ly: And then relaxing at night. I am somewhat of a little bit of a night owl, I don’t like to go to bed before midnight. I have this thing for some reason that I’m going to miss out in the world before midnight, so my wife goes to bed and then I’m usually up for another hour to reading, or watching the news, or following politics, or something like that.
Heather Smith: So what time do you get up in the morning?
Michael Ly: I’m usually up around 6:00.
Heather Smith: So you’re burning the candle at both ends.
Michael Ly: Yeah. I don’t need a whole lot… as long as I get six hours, sometimes seven, then I’m fine. I’m pretty energised. Yeah, so I think it’s because I’m having so much fun, that I’m enjoying life.
Heather Smith: Absolutely. So if we talk about your accounting practice, Reconciled and I love the simplicity of the name Reconciled,
Can you describe the structure of your accounting practice?
Michael Ly: Yeah, sure.
Heather Smith: Do you call it an accounting practice, I’m using my Australian terminology there.
Michael Ly: Yeah, we actually don’t here because we don’t want people confused with… Here when we say accounting practice, that means tax or audit work in the U.S., so I usually call it an online bookkeeping firm or bookkeeping and business advisory firm and I stress the Cloud nature of it.
Michael Ly: I serve as CEO. I have a handful of direct reports, a director of operations who manages the whole delivery team or bookkeeping team. I have a director of revenue operations who handles all of sales, and then I have an HR recruiting leader. She is basically our HR generalists and she leads all the HR recruiting efforts for the company.
Michael Ly: And then I have my assistant who helps run the co-working space and manages my schedule as well as just helps with the admin and scheduling of the rest of the leadership team. And then the rest of the staff is made up of… we have an onboarding leader who reports to the director Ops. And then we have a small business leader who handles all the small business team, and then a mid market leader who handles the mid market team. And the all the Cloud accounting practitioners, bookkeepers on our team report up to them.
Michael Ly: We do have a CFO practice as well and those CFOs are all contractors, so they’re not employees of the firm, and they’re usually specialist in a certain industry that we’re bringing in. So we have about a half a dozen of those working for us on a contract basis.
Heather Smith: So as well as providing bookkeeping services, it seems like you’re probably providing other services through your business as well?
Michael Ly: Yes, yes. We run the full gamut of services that you would have an internal accounting department handle for you at a company. So anything from payroll, accounts receivable, accounts payable, financial reporting, all the way up to business advisory. We’ll help you with bank debt consolidation, renegotiation with your bank or commercial lenders, help you put a pitch deck together to raise money, report to your board.
Michael Ly: We’ve had a lot of success helping our clients raise money in the millions of dollars for their own firms, for their own ventures. And then specialisation of tech stack apps, implementing tech stacks and apps that are best in class for the industry of our customers.
Heather Smith: Excellent.
Can you share with our listeners some of the accounting apps you use in the practice of your business? So within the actual practice of the business, some of the accounting apps you use and perhaps how you went about choosing them?
Michael Ly: Yeah. The practice itself, we do primarily use G Suite for internal communication. We use Slack… Oh sorry, G Suite for external communication, Slack for internal communication. We currently are transitioning off of Trello, which we were using for workflow purposes and we’re moving to a system called Financial Sense that is built for CAS practices or Cloud practices.
Michael Ly: We also use a system called Beyond for onboarding, it’s called Beyond Software for onboarding. And then for our customers, we’re primarily on QuickBooks Online. We do have a handful of Xero customers. And then we pair that with Receipt Bank and Bill.com. And then if there’s an industry specialisation like for inventory or manufacturing, we’ll use a system like TradeGecko or SOS Inventory or LOCATE. We have several of them that we will implement based on the customer need. So we have a variety there, and-
Heather Smith: So internally you have some practice management tools, but you also offer accounting app advisory and that’s including solutions such as the inventory solutions, the TradeGeckos that you were mentioning?
Michael Ly: Correct, correct. Yes. And then if there’s an ecosystem or an industry that we’re unfamiliar with, we’ll often reach out to a separate partner that’s already specialising it. If for example, construction companies, we don’t have many of those and we try not to guard them because there’s a special focus for construction companies that you need to have.
Michael Ly: So we have a firm that we know that specialises that in the U.S., and so we will usually forward work to them or have them come in and actually be a partner under us and do the work just because we don’t want to mislead our customers that we can do everything, but we really want to try to stay focused in a kind of a handful or less niches for ourselves.
Michael Ly: So yeah, construction is one of those areas. We usually don’t have a lot of restaurants, we don’t have a huge specialty in hotels, hospitality. We don’t have a huge specialty, and so we usually try to refer them elsewhere.
Heather Smith: What are the areas that you do niche? You say differently to me. American say differently, niche in.
Michael Ly: Yeah, niche in. We do try to focus on professional services, SaaS and E-commerce or multichannel sellers. Those are the top three in that we tend to have a handful of focus in. In professional services, digital marketing agencies definitely stands out because we have out of the professional sources about 50% of them are digital marketing agencies.
Heather Smith: For the digital marketing agencies, what’s the main app you’re recommending to them?
Michael Ly: We’re primarily using QuickBooks Online.
Heather Smith: As the GL but as the workflow management tool?
Michael Ly: Oh yeah. We’re actually not advising them on their internal workflow management because they do use separate systems. Like they’re usually implementing like Asana or something like that for their tools. And we’re not usually advising on those kind of generic workflow tools for internal use.
Heather Smith: I’ve seen Streamtime used a lot, so I was just interested to see whether that was what you were going to say. Thank you so much for sharing that information. I’m sure that people will find it very useful to hear what you’re using and how you’re using it.
Heather Smith: Michael, you’re also the co-founder of Humnly, an online HR service firm for entrepreneurs who issue… Sorry. It’s an online HR service firm for entrepreneurs.
What issues are you trying to solve through Humnly an online HR service firm for entrepreneurs?
Michael Ly: Well, as we were building Reconciled, the number two question that we get after accounting questions is HR questions. Because we do process payroll for our clients, we do handle payroll using QuickBooks Online or Gusto or other online products, so HR questions come up. And because most entrepreneurs honestly cannot differentiate between payroll questions and HR questions, they’re the same to them. They’re all in the one bucket.
Michael Ly: And in the U.S., most small businesses, they have to grow to a fairly significant size, let’s say 30 to 50 employees before they even consider hiring a full time HR person, so the bucket it falls into is the accounting professional at the company. Our clients are in that same boat, so they come to us, so I said, “Well, I didn’t want Reconciled trying to build in HR expertise. We don’t have it. Bookkeepers aren’t HR experts and they shouldn’t be. They really should be focusing on accounting.”
Michael Ly: So I was approached by an HR expert that’s in the next State over, New Hampshire and she heard about Reconciled and she wanted to build a similar service but in the HR world. So we partnered together and started Humanly. And so I basically took Reconciled same service model and copied it over into Humanly. So it’s literally the same kind of model, remote distributed team serving startups and entrepreneurs that need HR as a service but can’t afford a full time HR person.
Michael Ly: And so Humanly can basically do everything an internal HR department can do for an entrepreneur. So that’s been going well and I basically… My role is co-founder and I coach her as a green CEO. It’s her first time being a CEO, so I coach her on how to grow and scale Humanly.
Heather Smith: You’ve started a number of businesses and I normally ask the question, if you had your time over, what did you learn from the experience? But what you keep doing is actually starting new businesses, so it does it get easier each time.
You keep starting new businesses, does it get easier each time?
Michael Ly: It does. I think it does because you learn quickly what matters and what doesn’t to growth if your focus is growth. If your focus is profit maximisation or balance of your time, you will also learn that and you’ll know what matters to actually impact those things. For me, what I’ve learned with my experience with the Reconciled and now Humanly as well as the other startups is I know what impacts actual growth, top line growth and what impacts value.
Michael Ly: And so I focus on those and then I let the other things either be handled by a team member, or by my assistant, or I don’t deal with them, I don’t make them my priority because they don’t impact growth. So that’s really the focus that I’m having and I’m learning by doing this multiple times.
Heather Smith: Wow. That’s really interesting. So you are actually a Cloud accounting professional, you understand manual journals, you understand debits and credits.
How did you move from being hands on and technical to actually to work on your firm rather than in your firm? What was that process for you?
Michael Ly: I think the first thing if I were to put it for most people to understand is the first thing is when I started Reconciled and as it was growing, I made a decision that my identity not as an accounting professional, but my identity was as an entrepreneur. So that made me think through what do entrepreneurs do, not what does an accountant do.
Michael Ly: Entrepreneurs, their goal is to grow their company, most entrepreneurs who are in that scale or that area where they’re trying to grow something that can sell or have a big event for liquidity for themselves, they’re thinking through then how do I replace myself in every single task or every single role so that I’m only focused on the only roles that I can’t replace myself in.
Michael Ly: So I began that process in the very beginning going, “Okay, I’m going to start a bookkeeping firm, but I don’t want to be doing bookkeeping a year from now. And I want to start doing advisory in the practice, I don’t want to be doing advisory a year from when I started doing advisory.” So all the things that were in play I’ve made sure to document what I was doing, make it a repeatable process and not unique to Michael Ly, and also that I was selling Reconciled as a brand and not what Michael could do.
Michael Ly: So that means as an entrepreneur, you have to get really good at selling what you envision you want to provide and what you envision your ideal clients are going to be and your services are going to be, and not what you think you as the accountant or the founder can do. And I think that’s where most people are trapped that are in the accounting profession.
Michael Ly: Most firms in U.S. don’t grow past a quarter million dollars a year because they’re just dependent on the founder, the accountant on what he can do and what he can possibly train one other person to do, but he or she never thinks past that because they believe they’re the only ones that can do that work. And that’s a lie, that’s just frankly a lie.
Michael Ly: If you learned how to do that work, well, other people can learn how to do that work. And frankly, if you did it in the right way, you can train and teach and scale at a faster rate than I think most accounting professionals are comfortable with. So that’s the mindset that I had going into it.
Heather Smith: Absolutely. No, that was really interesting to hear you say, “How can I replace myself? How can I deal with this?” I’m sure a lot of people gained a lot from hearing that from you, Michael. Thank you.You have an MBA.
Has a formal education helped you on your business journey?
Michael Ly: The MBA is unique in that the MBA I got was at the number one entrepreneurship school in the country. It’s called Babson College.
Heather Smith: Okay.
Michael Ly: They’ve been rated number one for the past, I think 25, 30 years in the U.S. And so their MBA is not a typical MBA, it’s not finance-focused, it’s not investment banking-focused or general management-focus, is very much entrepreneurship-focused. Since my college days I had always dreamed of going to Babson College, and at the time you couldn’t transfer in if you were already going through college, so you had to start out there as a freshman right out of high school.
Michael Ly: I knew after college that if I ever got a chance one day to be in or around the Babson area, that I would go to school there and get my MBA. And so Burlington, Vermont is about three and a half hour, four hour drive to Babson and they fortunately had a fast track programme where you get your MBA in 21 months doing long weekends and one week trips and things like that, so that’s what I did.
Michael Ly: And I did that shortly after we moved to Vermont and I learned a tonne about entrepreneurship and the way they practice their entrepreneurship methodology. That was really, really eye opening and helped me with how I approach every startup that I build.
Heather Smith: That’s really interesting and I’m really glad that you did actually get something from it because many times you speak to people are like, “Yeah, I just had to do it, but I got nothing from it.” And you’re like, “Oh no, this wasted time.” But that’s really interesting and I’ll go and take a look at that university that you attended. How long did it physically take?
Michael Ly: 21 months. So faster than a normal MBA, which normally two years, and definitely much faster than a part-time MBA, which usually takes three to five years. So yeah, it was a great experience and very expensive. I had to pay for it myself, I didn’t have a corporation paying it for me, and it wasn’t required to do it, but I could tell you that it gave me the insight I felt like I needed and the structured methodology around identifying problems in the marketplace that you could solve and I apply that every single time when I’m looking at a new opportunity.
Heather Smith: That’s fascinating. Thank you for sharing that. Now, correct me if I’m wrong, but I believe that I have publicly heard you have a discussion around this topic.
In talking about your cultural upbringing you’ve said that when you’re with an elder is say a round table discussion, part of your culture is that you cannot correct an elder or you cannot talk over person older than you. Is that correct?
Michael Ly: Yeah. If you were brought up in a traditional I guess, East Asian upbringing, I don’t want to clump all Asian communities like this, but typically this translate to many East Asian and Southeast Asian communities that elders are revered so much so that I’m not allowed or it’d be very disrespectful for me to call an elder of Asian descent by their name. There’s terms in Chinese, in Mandarin, there’s terms in Southeast Asian culture where you basically call anybody older than you uncle, or aunt, or grandma, or grandpa.
Michael Ly: It’s a term of endearment, it’s a term of respect and honour and it shows the position that they’ve earned for still being alive and still being a part of the society. So it helps keep kind of the fabric of familial and societal structure and order as well as honour and removes the opportunity for shame.
Michael Ly: So it’s hard to think through when you live in a Western culture that’s built on a judicial system of right and wrong. Whether something’s right or wrong, illegal or legal, that structure doesn’t exist in the mindset of an East Asian person. They’re built around honour and fear or honour and shame. And so that’s the structure I grew up in in America, in the Cambodian-Chinese home, but then at the same time had to learn how the American customs work.
Michael Ly: And so I always find myself having to go back and forth in those and reminding myself that I’m in an American audience versus I’m in an Asian audience. But habits are hard to break, especially when you grew up that way, and so I often find myself applying the Asian practice of honour when I’m in an audience of a room full of white men and women who are older than me.
Michael Ly: And then I find myself when I’m in Asian an audience applying the directness of American culture sometimes and catching myself and reminding myself, wait, I need to be honourable here. So those are kind of things that you learn when… you’re kind of like a chameleon.
Heather Smith: Yeah, absolutely.
If you’re in a room with an elder, with an uncle, with an auntie and you’re in a business environment, how do you navigate the conversation if you need to give them directions or you need to disagree with them? How do you navigate that?
Michael Ly: The environments like here in the U.S. I’m definitely normally around elders that are not of Asian descent, so there is an expectation to voice my opinion, to be direct. I’m the leader, CEO of a company, so there’s expectation to be gregarious, be animated, ambitious. When I’m in an environment with Asian elders and I am in a position where I do just agree or I think that the views being presented or the thoughts being presented are wrong, or incorrect, or maybe outdated, you to decide when is it appropriate to address that and what approach.
Michael Ly: And being direct is one approach, it’s not an approach that would be heard. It would immediately be seen as disrespectful and you would lose your opportunity to have a voice in that kind of position. So you usually earn the right to say that through one, earning respect through hard work and honourable culture, and then putting yourself in a position of influence where you have the ear of that in a private setting and you’re able to say what you want to say honestly in a very respectful way.
Michael Ly: To say it in a public setting or in a room with others in there would be causing a term called losing face and Asian culture is all about saving face, which is another word for honour, saving honour. Once you destroy that honour, it’s almost impossible to rebuild because you’ve done something that is almost unforgivable. And there’s many ways to lose honour or to destroy face in an Asian culture, and one of those is interrupting and trying to correct an elder in front of other people.
Michael Ly: And where that might be respected in a board room when you’re having a really, really animated conversation about strategy or about what direction a company should go, that’s not expected or it’s not welcomed in most East Asian cultures to do it that way.
Heather Smith: Thank you very much for sharing and unpacking that for us. And I think diversity in the workplace and in the environment is really important., and sometimes just through our cultural upbringings, we’re not aware of all those different nuances that are happening there. And I know the first time you raised that, I was like, “Gosh, why didn’t I realise that? Because I should have realised that, but I didn’t realise that.”
Heather Smith: I lived in Singapore for several years, so I understood the uncle and the aunt, and I remember people would come up to me and say… because I was living there with my husband, but obviously with no family around, “What about your filial duty? Why are you living here? You’re not living up to your filial duty?” And I had to go home and look it up in a dictionary what that meant, which meant I wasn’t spending time or honouring my parents by being there.
Heather Smith: But look, it’s really important that we understand other cultures, and someone who facilitates a lot of discussions, understand the culture so I can hear what people are saying and being aware that perhaps the younger person at the table may not be talking and you need to work out a way to get them to talk in the room.
Heather Smith: You mentioned also, so just a dialogue, can have a podcast and just talk to myself totally here. You mentioned that you have a family rule of always be learning. So what’s interesting here is that you’re actually referring to what I would call a company rule, but you refer to it as a family rule, which is quite lovely. And that you watched, which you’ve already talked about how you watched your parents learn how to navigate the American system.
Can you expand on your always be learning philosophy or family rule?
Michael Ly: Yeah, that’s great. As I got halfway through a couple of years into Reconciled, I wanted to articulate what our culture is and a culture is really built by set of behaviours. And so I laid down a set of eight rules that I wanted the Reconciled employees, the early ones to really believe and know that these are the rules like a family would have.
Michael Ly: And I wanted them to think about them that way like the way I, for example, teach my kids cleanliness is I start with make your bed in the morning, pick up your toys before you go to bed. Take your plate and cup when you’re done eating and bring it to the kitchen. You establish these behaviours that creates culture, a culture of cleanliness, it relates.
Michael Ly: So always be learning was something that I always resonated with because I grew up with it. It wasn’t stated to me by my parents, but it was definitely expected is that I would always be learning, always be learning in school, always be learning about American culture, always be learning how to navigate it, always be learning about the adversity we would face as Asian-Americans in America, as one of the few in our neighbourhood and our school.
Michael Ly: And to never look at a situation as only negative, or only drastic, or that would define you completely, especially if it turned out to be a tragedy or a failure to never let that be the definition or defining feature, but always to learn from it and apply a new lesson from it. So that’s what I meant by always be learning.
Michael Ly: And that’s served me well in the accounting profession in my career where I was willing to when asked to do something that I’d never done before, instead of respond in fear or anxiety, I looked at as a learning opportunity. And that gave me the opportunity to learn new software systems, to not be afraid of accounting systems, to not be afraid of new business ventures, to not be afraid of taking on a new job or quitting a job, or knowing that the place… what’s made me very, very successful is taking those lessons and applying them appropriately to the next adventure.
Michael Ly: So that’s really the piece of it. And so for Reconciled, we make it a requirement that our employees have learning in their monthly rhythm. So they have to spend at least an hour and more if they want to on learning something new. And we don’t really care if it applies to their job. So if they want to learn basket weaving, if they want to learn crocheting, if they want to learn a new sport.
Michael Ly: The act of doing that on a regular basis, that discipline expands the mind, expands their character, expands who they are, expands the diversity that’s presented before them and gives a bigger opportunity for them to be shaped and moulded into a better person, I believe. And hopefully they then take those lessons and apply them in some way, whether it’s to the work, or with their customers, or however they want to apply them and it makes them a better person as my belief, our belief.
Heather Smith: Yeah, absolutely. I completely agree with that and I think that’s a really fabulous, especially how you talk about building learning into their monthly rhythm.
Michael, you create a lot of different forms of content from Facebook live shows, to one day conferences, to videos. What have you found to be most effective?
Michael Ly: I guess it depends on what does effective mean and for what purpose. If somebody is creating content for the sake of getting customers for their bookkeeping practice, I would argue that’s not the most effective tool, that there’s other more effective means. If the purpose of your content creation is to elevate your brand and the awareness of your brand as well as elevate the awareness of you as a person in the industry, then definitely it’s been a very effective tool.
Michael Ly: Our or a Friday Night Live podcasts is highly ranked and we have a lot of followers throughout the world that listened to it and follow it. Just the other day I had somebody randomly here in Scottsdale showed up, said that they recognised me from the show in a coworking space and recognised me from a conference that I spoke at and I went, “Wow, this is working. This is having an effect in the industry.”
Michael Ly: So it definitely elevates your presence that you’re participating in the industry. I never went into it thinking, I’m going to use this to get customers mainly because I’m not really talking to my end customers, I’m talking to other others in the profession. I think you could tailor content towards your end customer if you’re… We have a friend Brittany Brown at LedgerGurus who does that very well, creating content for E-commerce customers, and I think I could be an effective means for that if that’s your goal.
Michael Ly: That was never my goal. And so it really depends on your goal, you want to go with the route that’s most effective towards your goal.
Heather Smith: Yeah, absolutely. I don’t want to take up too much more of your time, but you do have another business which you haven’t mentioned, so maybe we need to get you back.
Would you like to briefly share with our listeners about your business Saasable, a financial reporting act to measure recurring revenue metrics?
Michael Ly: Oh yes. Well, you just gave quick introduction to it. After working with hundreds of customers at Reconciled, one of the pain points that we began seeing is that for anybody measuring recurring revenue, whether that’s a SaaS company, or an E-commerce subscription company, or anybody with memberships, any type of recurring revenue and the metrics surrounding recurring revenue like LTV:CAC annual occurring revenue, churn rate, we found that almost all accounting firms as well as our clients were creating and measuring those metrics in Excel or Google sheets.
Michael Ly: They weren’t using any dashboards of tools out there that could do that. And frankly, we found the market short of those tools. Most financial reporting apps were built to make the basic reports like income statements, and balance sheets, and cashflow statements look prettier and be able to use them better, and easier, and help you dissect the data out of those, but most of the apps aren’t meant for recurring revenue metrics.
Michael Ly: And we also have this thesis that the trend for more and more industries and companies measuring recurring revenue and the impact of these metrics continues to increase exponentially, and the value of recurring revenue is the highest revenue that exists. That’s why SaaS companies are valued at eight to 10 times their revenue price, and other industries have that same metric when recurring revenues involved because it’s consistent guaranteed revenue. So it’s very healthy.
Michael Ly: So we wanted to build an app that lets you do that right out of QuickBooks through Xero or the payment platforms you use and not have to manipulate that data in Excel or anything. So you can set up rules to allow the dashboard to manipulate certain customers, or invoices, or expenses so that it would measure them appropriately.
Michael Ly: And so yeah, we’re currently in building the beta version. We should have that launched soon for accounting professionals to use, and then we’ll launch into QuickBooks online app store first, and then hopefully the Xero store sometime later this year. And then we’ll connect it to other payment platforms as well.
Heather Smith: Excellent. You’ve certainly diversified and hitting all those problems out there that you see out there that need to be solved. Thank you very much, Michael for talking with us today.
Is there anything else you’d like to share with our listeners and how can I listen this get in touch with you?
Michael Ly: Oh great. That’s great. Well, thank you Heather for having me on. You’re an inspiration and one of the few and I think fortunately the first Australians I’ve ever met and gotten to know, and I think amazing representation of the country. So thank you so much for that and-
Heather Smith: Thank you very much. That’s very kind of you.
Michael Ly: … if the rest of Australians are as lovely as you, then I can’t wait to go and visit Australia and meet more Australians. If people want to reach me, they can go to LinkedIn, I’m easily reachable on LinkedIn. I check it every day and all the time. I love LinkedIn. It’s probably where most of my best content sits.
Michael Ly: Or you can check me out on Friday Night Live on Facebook and on podcasts. So feel free to reach out. I love connecting with accounting professionals across the world, definitely willing to do a connection time just to learn about each other’s firms. And I love learning, so I want to learn from your listeners who might be building something similar or better than me and I want to learn how they’re doing it so I can get better at what I’m doing.
Michael Ly: But thank you, Heather. This has been wonderful.
Heather Smith: Thank you so much. Now for our listeners listening in, it’s Michael Ly, spelled L-Y. So Michael Ly, which you can find on LinkedIn. Excellent. And Friday Night Live. You just search for it on Facebook, don’t you? To find that link.
Michael Ly: Yeah. Friday Night Live with the accounts, you’ll find it. Yep.
Heather Smith: Yes, absolutely. Thank you so much, Michael.
Michael Ly: Thank you so much, Heather