Ep447: Andre Hsu – Trust Your Partner before Investing in Their Idea

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it. To join our community go to my worst investment ever.com and receive the following five three benefits first, you get the risk reduction checklist I created from the lessons I've learned from all of my guests. Second, you get my weekly email to help you increase your investment return. Third, you get a 25% discount on all a Stotz Academy courses. Fourth, you get access to our Facebook community to get to know guests and fellow listeners. And finally you get my curated list of the Top 10 podcast episodes. Fellow risk takers This is your worst podcast hosts Andrew Stotz, from a Stotz Academy, and I'm here with featured guests, Andres shoe, Andre, are you ready to rock?

Andre Hsu 00:56
No, no,

Andrew Stotz 00:58
let's do it. I'm going to introduce you. I'm going to introduce you to the audience. Andre is a thinker, and business strategist based in Singapore, he started his entrepreneurial journey at 17, working on a real estate project, while juggling three academic degrees completed concurrently in Australia. He is the author of three books about qualities mindsets and frameworks that are relevant for business, which he observed in several business tycoons who left a deep and lasting impact on his life. Andre likes to use multiple techniques to read, predict people assess situations and formulate strategies that are suitable for properties and negotiations, deal structuring related to assets. He likes to educate, share knowledge, insights, and reasoning of strategies to business associates, who then proceeded to implement them. He looks forward to doing this with people who share similar value and vision like many of you, my listeners, Andre, take a minute and fill any further tidbits about your life.

Andre Hsu 02:03
Actually, initially, at the beginning of my life, I was also quite a timid guy, actually. And I didn't really like to study I just went on. And then gradually, I saw my father built up his business. And then I followed him around. And then I learned along the way, I became a bit more curious. So. So I saw him, build the Empire and things. And then I saw, I saw his business friends. And some of them were business icons. And I saw that they were quite unique in their approach in their style. And even some of the techniques they use the foresight of situations, which, which is just not about, you know, being analytical, or just thinking through situation, they can be quite perceptive, and they're open to other possibilities them, but they're basically very broad minded people. So I've done many things during that episode. But subsequently, after my father had some success, I became a bit more complacent. So I begin a bit more relaxed, and then a bit more easier. And then, and then things begin to fall apart. So if everybody in my father's company, so then gradually, he got to dismantle the whole thing, and then we got to rebuild. So, so and then, I began to study, as you mentioned, I did study three academic degrees concurrently. So I went into high speed. But then after a while, you know, I learned that in studies or everything, even though I was the best, we know, so but, you know, I talked to some of my actors at the time, that there's got to be more than this to success. It's not only about study, it's not only about making money, or as I and my family rebuild things. Then I begin to learn about many other things like, Oh, you mentioned are the two strategies and stuff to hit situation to add people to the characters, which, you know, again, not through the success on me. But interestingly, as you pointed out, in our previous correspondence that it learned from mistakes, actually, some and some of them were quite painful, you know, not just I say, my father's one, but even my own. So, which I guess is something I get to share here. So the audience can learn from Oh, great.

Andrew Stotz 04:35
So I'm, what one question I have for you is like, what do you do in your free time?

Andre Hsu 04:40
What do I do in my free time? I like to hit all kinds of books, even comics, comics directory, because even comic books, creativity, and actually in business, problem solving, and even negotiations usually To observe a lot of behaviors and people, and you need to be imaginative moogerah, even something comics are quite fond of it. So, I mean, seriously, and I like to watch movies too. Because from movies, especially, not the scientists, not the fantasy ones, it's more like the diamond ones, because I get nervous, because I do see drama. So you know, in real life, as being too dramatic and things, I do see them from time to time. So they're real, to some degree, they're not quite like the poor in the AMA, where the guy at halls, you know, it's not quite that bad. But you know, the basic behavior is there to you, which I do officers in business families are quite eccentricity and the answer come extended eccentricity and things, which you do need to know. And in something in business negotiation business, almost helping you do need to factor that in, because you do deal with people, you don't deal with buttons, you just deal with people, you need to relate to them, you need to understand them. When you need to understand the worries, anxieties concerned, and you need to understand their true motives, which they don't always tell you a fan. You did need to read it carefully. You need to understand the character and wish you know, all these arlindo not so much my success successfully just happens when you just happen to invest in there, I think boom, right? Yes, see that asset class, you go in, you make it or you go into a particular asset class, you add value to it, you fix it, to make it. But those things you don't have as much just because it's already in use with you happen to get a ride. Or as you do make fun making good learning from mistakes. You know, what one

Andrew Stotz 07:02
of the things that you said at the beginning about observing business tycoons and what they were doing, you know, I came to Thailand 30 years ago, so to Asia 30 years ago. And even then things were already developed quite a bit, you know, compared to other places. But you could just look at the tycoons across Asia and realize like, it's so different from let's say, in, in the West, or in a developed country where a whole infrastructure is set, I mean, everything set, the laws are set, roads are set, you know, buildings, and everything's there. But for the early entrepreneurs and visionaries in Asia, it was like, you know, maybe back to 100, or 200 years ago, in the US, for example, when nothing was said, it's like you're constantly in quicksand, and you're trying to construct something without a lot of infrastructure in place. So you've got to have a really clear vision. And you've got to be able to operate in a really complex, you know, way where there's just so many moving parts. Whereas now, in some ways, you could argue that business is a lot more simple, the infrastructure is there. So those tycoons, you know, really can teach us quite a bit.

Andre Hsu 08:12
Yes, and, and they do make mistakes, though in the person as far as in business life. And they deal with high pressure, which not just any fun experience in their life, which, which, therefore, people cannot imagine sometimes what life is like, even though they're all they're also humans, but they faced one set of circumstances.

Andrew Stotz 08:37
Well, that's a great background. And I think we all get to know you a bit, which is exciting. And now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it then tell us your story.

Andre Hsu 08:53
I do when I was in my 20s and just fresh from uni. And first of all, my initial rest adventure, I was doing quite okay. In uni I was doing well. I was thinking of going into investment banking and things like that, and the traditional career path for people who achieve hydrator but I decided to, to go more into the family business side of things and then I went to try to do my own thing, which was to get involved with some software company. Again, it was also the Microsoft of things. You know, it was a small software company, which I saw potential in, in the business. The POS system actually released Watson song well, us in early 2000. It wasn't so widespread. A lot of people were just using cash registers at that time.

Andrew Stotz 09:47
So for the listeners out there, pos stands for point of sales,

Andre Hsu 09:52
point of sale sale point of sale. So which you know, you may take it for granted in the West that you know everyone was using it every single sale was using it. And then it makes the accounting also easy, right. But in emerging Asia in early 2000s, it wasn't so common. I saw a lot of juggling just using case and justice. So we thought, there's a good opportunity in there, right? For these shops, especially those who begin to open more branches, they got to systemize, they cannot just use every nickel, not just that every branch use cash registers is subject to your thieves, tabs and things like that. So we thought, Why no sales would be a good thing to implement, even though Yeah, there were some emerging competitors, which invalidated our idea that Yeah, it is the thing to do. So I did not create it. In fact, I just went into partnership with this software company, I invested some money. But then, but then, you know, business opportunity is one thing. And True enough, if you see now is, is the amount of businesses, shops, retail shops to use that they normally use only casadesus anymore. But then the mistake I made, I mean, that was what the people, which is why I hired more, but the people, because he will, if you deal with people who actually you should not have passed it. No matter how good the business opportunity is essentially useless. Because they don't do the right things. They don't hire the right people to run the show, they just have a nice looking product. Supposedly a system that works. So they only got the defect in it, they didn't get the type in the sales. They didn't get into management. And they were just got sloppy in things because they thought, Oh, they still cash to burn. So in the end of the day, I got tired of pumping cash into the business just just goes off, because you know, no point. So and it wasn't, it wasn't that big mistake, but it made, it's one of those trigger points that made me feel that it's a lesson that I got to understand people better. Much better because I was I got this quantitative background in engineering, finance, at least. So I understood maths better, but I figured the only way that I better understand people better.

Andrew Stotz 12:33
So maybe, maybe you can explain what you learn from this experience. And I know that shaped A lot of you know who you are today.

Andre Hsu 12:41
So as an intern, you know, when I was with my business, some of my family seniors also got to see these people and unless they told me, you know, if you observe their body language, you will observe the way they talk, if you observe just the way to conduct things that you should not even have costed them. Don't even look at the business. So you should not even have to look at the business at all. So sometimes you need to observe who they are, what they are like. So they invite me, because, you know, I thought you had the numbers in my summer Should I work? So mugnaini was me in my 20s at the time. So but internally, there was an openness, which, you know, in as a percentage of the whole investment that we had, which was until today still mostly in SF updated in terms of our summer and family holdings. It wasn't that big, but it's one of those painful things. It was a blunder. But for our family. I shouldn't even have passerbys people.

Andrew Stotz 13:55
Maybe I'll just share some my takeaway from that. I think, you know, one of the things is I like to say that when you're investing in a startup, you need to look for a few things. The first thing is trust. If you don't have trust, don't waste your time, like you said, even if it's a good idea, it's going to blow up. The second thing is, is the idea. So if you have trust, and you go to the next step, which is the idea, it's a good idea, go for it. But if it's not a good idea, don't do it even if you trust them. So if you have trust, and you have a good idea. The next question is execution can these people actually execute the idea is very different, you know, skill set to execute something that is to come up with the idea. So if you trust them, you like their idea, and you think they can execute. The last part is money capital. And what I always say is make sure you're not the only provider of capital. If you're the only provider of capital, then they're going to come back to you for more money and if you don't have the ability to do that or you don't want To commit more and more to it, you're going to be stuck. So trust, idea, execution, capital, those are the things that I look at a lot. You know, the second thing that I take away from your story is that when we're young, and in school, everything adds up. It's all a formula, you know, we learn the formulas in engineering or in finance and accounting, it all balances, we just apply the formula. But when we get out to real life, you've just demonstrated that it's not the formula is the easy part. It's about reading the people understanding the motors, figuring out where, where is the team that's together, that will stay together and bring value. And so a lot of people come out of school, and they feel really confident, because they think that they've learned the key things. But in fact, what they've learned is the easy stuff.

Andre Hsu 15:46
Anything you would add to that. And there are many ways to get people as I learned over the years, you can read, you can see the expression, obviously incorrect. You mean, you can retell expressions, whether they're sincere, or whether they are liars, I mean, he can see because they always face away. So, and you can kind of tell, I said there, they can, they can feel quite uneasy dealing with you, especially when you see a look into the eyes, then you see from their body language, or sometimes even before you meet them, if their public figure or if there are some other ways you can, you can know so that they can you can find out something that you potentially you can see from it. And then and then, and then if you go into certain situation, business situation, and you need to assess is what you will do from here, and say, Well, this business that you work on, for example, you can use logic to some degree, right? You can use fact you can use your research and to some degree, but sometimes All this can lead to something inconclusive, sometimes in life, because you can be in the dilemma, let's say, in the case of some businesses experiencing the effects of COVID. For example, you can be in the dilemma, what to do. So we do this, or should we do that? So what should you do? Sometimes I use different tools to create situations I say, and then I check the energy formation. And I see whether certain ideas can I talk about whether certain corporation or partnership energy worker, that's reading this equation, not really reading the paper? maximally, you need to read the paper also. And then you need to sometimes when you see a person you watch their environment, because the environment is even their home, or the office, and then something about them. Right? So someone Wait, wait, Well, okay, the obvious lesson, well look at the deaths Id even though the person is some of it, whereas the person who very messy debts, and then not be one where proper work goes properly. And then and then who are always very chaotic in doing things may feel uneasy, dealing with a car person.

Andrew Stotz 18:18
It's interesting that I sometimes when I've interviewed people, I've asked them, describe to me what your bedroom looks like. It's amazing, you know, some say, Oh, I'm really, really careful, I don't let anything in except this, I don't have much in my bedroom or another person says add some masks, I get stuff everywhere. And it's just funny that you start to get some of their character by them describing what their bedroom looks like. And so and it's trying to get to some of this, particularly if I'm looking for someone for a job that really needs to be orderly and structured, you know, for some jobs, where I'm really looking for that, you know, you really have to go beyond because everybody will say, Oh, yeah, I'm bored of the instruction. But if you ask some questions, or you try to observe, you know, you can chart to get some information about, you know, the way that they're, they really are acting.

Andre Hsu 19:11
I mean, we're investing in someone's company, as Yeah. I mean, my role is not just as an investor engineer, I wouldn't consider myself as an investor But no, I share with you. That's my personal story. Am I think I bisoke I'm because I, even in my own businesses, I begin to step back a bit more the things that he does, and I give advice cannot think I advise More, more, my friends do and then someone will be honest. And I hope to do more and more. So I go back and I look into things bigger and better in thinking. But my, what I observe in people, let's say even from their date of birth, it can you can read the potential and potential risks. I mean, to some degree, so you can sort of see whether a person has the potential for success in legislation. In my opinion, not everyone agrees with me. But I see, let's say, for example, a person can be very innovative and have strong leadership qualities. And then another person, I said, you should not be even managing people. So it's, you know, the hope for the world of fashion. It's about placing the right people in the right place, and then everyone paying accordingly. Not everyone will be will be wondering as to No, actually no. And not everyone supposed to be ended up on us? Because I think most people fail in their journey. Yeah. Okay, I'll give you one example, recently, that someone is trying to pitch an idea of some back. Venture, okay. So I just, I just see the date of birth, or one of the key people I see is still a long way for the person to make money, make serious money. So just judging from there, I wouldn't even touch it. That's the first indicator, second indicator, I see his conduct very sloppy. So just looking at is not, may or may not be right, when I, when I see, see that the decision will be not even to, to invest and not even to introduce anyone to invest in a company. Because I see, unlikely to make money. Yeah, but if the, the, the, the main person there is unlikely to I mean, I don't see the publisher, or the person making serious money during this period of time, as I do in this cycle of his life, I probably won't even touch, you know,

Andrew Stotz 21:58
I have a story of a friend of mine who, despite being very, very talented, is extremely poor. I mean, in the area of his talent, he's got to be within the top 1% in the world. He is extremely talented. But he can't get money, and he can't keep money. And I had, we spent about two hours talking about until we went back to his history and all that. And then I learned some things about his past that shaped the way he thinks about money and the way he reacts to money. And what I realized after this long discussion was that he's never going to have money, his mindset has been set to reject money, like money is something bad, you should be doing it for, you know, the good of the world, you know, and he never was able to justify why he shouldn't be able to receive it. And sure enough, he doesn't have never had any money, despite the fact that he has skills that he could be earning a million dollars a year from. And that is just a perfect example of something about someone's character that shapes their outcomes.

Andre Hsu 23:14
Do some of the elders say in Asia, just from the way you shake their hand, you can tell they can tell what kind of person you are. Because you are and they can, they can certainly feel your hand whether you're handed money or whether you can whether your hand is heavy enough to hold authority they can Ambassador you. Then such thing I say there are different ways to observe people, right. So I like discovery. So like, one of my friends here in Singapore, who actually gave consults to some vice presidents of banks. And yeah, people of that nature. I mean, there was one times see even also felt my hand. I said, just shaking my head is secret, give them the authority man. It's heavy enough, can be submitted for authority. Can you hold the and hold the position? Because, you know, it's like holding a tone. But it's not. It's not an emperor or king of fondue, right? It can be a vice president can tell no, you know, a power system. Right?

Andrew Stotz 24:33
You know, it's an interesting point about this is that if you go back to the west, and you look at the average American, if they listen to this type of concept, it's very foreign to them. And they may think, Oh, it's not nothing reliable there. And I think many of my Western friends are out of touch with those things. And in fact, from a Western school, Management nowadays, what are people learning, they're learning numbers, numbers, numbers, they want KPIs. And they think that you can manage people by numbers. And the reality is, is that they're becoming less and less connected with the people around them and the people that they manage. Whereas in Asia, I think there's a, there's definitely much more of a connection between the manager and the people that they manage.

Andre Hsu 25:25
That's, that's all the more unit, the power unit of the grip, and you need to have the person energy. Otherwise, you cannot afford the pulse. You just cannot, you will not be respected by the people. You don't respect.

Andrew Stotz 25:42
Yep. And I also tell a little story of when I worked for Pepsi in Los Angeles, if anybody asked me where I work, they, I would say I work in Pepsi. And now in Thailand, one of the businesses I have is a coffee business. And it's my best friend Dale and I that have owned it. And Dale has been running it for 25 years. And when people ask, Hey, where do you work to our employees, they say I work for Dale and Andrew. And so the connection, particularly in Asia is not necessarily to the company. It's the loyalty to an individual. And so that personal power, the personal leadership, is something that really matters, particularly in Thailand, where it's a hierarchical situation in the society.

Andre Hsu 26:25
So it's still the same for even your neighboring countries, your Philippines, Indonesia, Malaysia, Vietnam.

Andrew Stotz 26:34
Yep, yep. And even for me, in the Thai society, I have some people above me that are much higher above me, in political and government and finance and economics. And a few of them are really, you know, people that that helped me, and in some cases, protect me, in some cases, advise me, in some cases, keep me out of trouble. But you know, that looking up, and then that means that also, if I'm not taking care of the people below me, it means that they're not able to rely on me, and then you'll find that they have to go somewhere else in a society that's hierarchical. People are going to go and follow the people that can get them what they need in that society. So it's very different from let's say, what I learned in the West, and it took me a long time to really figure it out. But I would say, after more more years in Thailand than I lived in the US now, you know, I think I understand it pretty well. So it's very fascinating to hear, you know, you talk about it.

Andre Hsu 27:38
Yeah, I mean, it does matter. And everything does matter. And these are the things the qualities that the business tycoons, when they look for people to be in their inner circle, these are things that they pay attention the most is not, not how intelligent you are. It's not only that, yes, they're impressed by intelligence. But if they see that you can only be tested, you cannot be in inside the inner circle, you can never be.

Andrew Stotz 28:06
So let's go back to your story. And I want to ask you this question. And I want you to think about a young man or woman coming out of school, they're confident they've got the numbers down. Think about that person who's listening to this podcast. And I'm going to ask you this question based upon what you learn from this story and what you've continued to learn in your life. What one action would you recommend our listeners take to avoid suffering the same fate?

Andre Hsu 28:30
I think you get a very good framework. Yes. You said Firstly, you need to see journey, whether you can pass the person next to you if you cannot even pass it, forget the whole thing. Really just forget about the whole thing. No matter how good mmm thing, the idea is, you want to be the winner if you get cheated by for me weakness. So, so not the only trusted

Andrew Stotz 28:54
person. Actually, what's great about that advice, Andre is that that's not what you learn. You don't learn that in school. Yes. So that's,

Andre Hsu 29:05
I mean, seriously, you don't look at the into the ideas, but you see, you see the kind of people you work with first person isn't going to even be workable. So once you get the passer, I agree with you, then you look at the idea. And then you add execution and you look at the funding, whether the funding demasi because some of the soccer enterpreneur ventures, it takes time to prove you know, so, for example, internet ideas, you know, internet based ideas in emerging Asia in early 2000s. It requires a lot of it requires a lot of patience, because it wasn't really a thing in imagination early 2000 y'all remember that dial up internet, data data? modern. Internet was so slow. Ecommerce was taking off you need a lot of cash to burn for you to last. If you don't have Then the last point which you mentioned, funding or capital, you'll be gone before it gets off. But you need all those ingredients, when you put in a very good framework.

Andrew Stotz 30:13
For that, then the only way I came to that framework is because I lost money. And I had to develop that framework, because I could see where it went wrong. Because the people that I invested with I did trust, and I still trust, the idea was excellent. But they couldn't execute. And I never thought about that part, I only thought about the idea and trust. And then I was the only provider of capital. So I really learned a lot from that particular investment. My last question for you, what is your number one goal for the next 12 months

Andre Hsu 30:51
or better two levels, one level, I manage my family's investments. And the second level as, as you probably begin to know when you know more and more is that I paid to express more about what I can do more the strategic thinking advisory kind of thing. And I hope to do this actually, for more businesses, which is why I'm even stepping back from my own businesses not stepping out completely, but stepping back so that you are the partners can run them. And I can do it in I can contribute to more people, because I think I can do more study thinking for more people. My organization, which I think when I take into my own destiny, I think that's what I should be doing. So there are two things. So two things are bad in so we didn't talk governments. Now money is a very difficult question to answer because normally people overestimate what they can do within 12 months, but they underestimate what they could do in three to five years. If we remove the time limitation, I think the two things I hope to do will be I do my own investments, I hope to simplify, so that I can free up my space in my mind, to do more of the strategic thinking thing, which is something I like to do, I like to observe, like to read situation, I like to sort of like, come up with new ideas, I need to come up with new solutions for hopefully for more businesses, which I don't know when I get to meet them at once. to actually work with for the very long term. Preferably the bigger organizations, I think that's why I'm supposed to be so to fulfill my own destiny. So it's about fulfillment, it's not so much about the cavemen, right, it's about living, right. So. And it's more than just happiness. Happiness is a vague concept. You can be happy for just a moment after as you feel nothing. Why is it when you feel fulfilled? Is something more self sustaining? And I think I should be doing more of contributing my thinking contemplating my thoughts, which is what I do in LinkedIn. So as you notice, as I share my ideas, maybe I should do it for more organizations and other ones. So at the bottom of it, you know, that probably understand the kind of concept I just shared with you in this podcast, and, you know, the personal power things. They're building questions. How can you just read situational? Well, you know, military advisors in those in ancient times used to do that. Yep. But, but in business, why these days? Not everyone do that? Yeah. Actually, some people tend to just use numbers. Whereas, you know, you need to wait situations in a more holistic sense. Yeah. Go ahead. Sorry. Oh, my goals will be to, to do more this, you know, to get more people in, the more I the business context. And I think I think these ideas work better actually, a bigger organization, because, you know, they do seem to strategize a bit like in a war or battle kind of thing, because they don't have big stakes player, so so they there, then it was time to judge in a very tactical, long term strategy have some effect because you need to balance.

Andrew Stotz 34:23
And for the listeners out there, you can follow Andre on LinkedIn. That's where I first came across Him and follow some of his writing. And I've appreciated there so I'll have all the links in the show notes and get in touch with him and listeners. There you have it another story of loss to keep you winning. My number one goal for the next 12 months is to help you mind listeners to reduce risk and increase return in your life. To achieve this I've created our community at my worst investment ever.com you And I look forward to seeing you there. As we conclude, Andre, I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Andre Hsu 35:21
Basically, anyone can read my earning impulse, right? So anyone with anything in account can just read my posts or my articles. So feel free to do that. And then yeah, thanks, Andrew, for inviting me on this podcast.

Andrew Stotz 35:36
Great, great to have you on and great to have you share. And that's a wrap on another great story to help us create, grow and protect our wealth. Fellow risk takers, this is your worst podcast host Andrew Stotz saying I'll see you on the outside.