Ted Hsu: Personal & Professional Preparation

Craig Castelli (00:04):

Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli, and today my guest is one of our more interesting clients. Ted Hsu is a children’s book author. He’s a competitive marksman, and he’s the founder of Horizon Services, which is now part of the 4M portfolio of companies. Ted, let’s just start at the beginning. You founded Horizon in 1991. [00:00:30] Tell us what was the idea and why’d you think it would work?

Ted Hsu (00:33):

Well, Craig, as a 22-year-old at the time, you don’t have a lot of ideas. We just wanted to get a result. We didn’t even think in terms of success or failure, we just did something and whatever we got, that was quite a reward for us, that we were actually doing something and then as time went on, we expected just a little [00:01:00] bit more each time, right?

Craig Castelli (01:03):

Yeah. Just grow a little bit as you go, a little bit of iteration. Did you always know you wanted to be an entrepreneur or how at 22 did you decide, I’m going to start a cleaning business?

Ted Hsu (01:13):

Yeah, I was talking to somebody recently and the commonality with entrepreneurs is they’re generally combative and noncompliant, and when those two characteristics, your job prospects aren’t good.

Craig Castelli (01:28):

Yeah, yeah. No, [00:01:30] I know a few who fit that profile for sure. So what was most critical to your success along the way?

Ted Hsu (01:39):

With the theme of the low key start? Looking back, I’ve always asked myself, and it’s definitely low expectations, success is success, and failure is really subjective. It’s how you choose to define it and then respond to it afterwards. [00:02:00] So if in the early stages you don’t set very high expectations for yourself because it’s a pretty low risk environment during those days, you’re not going to put yourself out of business. And as you go on, it’s kind of like an inverted curve as you go on, it’s your duty to raise those expectations, but then they’re proportionate to where you are in your entrepreneurial life, and that’s [00:02:30] where people have it backwards, right?

Craig Castelli (02:34):

Yeah. So unpack that a little bit. How do you see the way you ran the business changing as you grew and developed in your own entrepreneurial life?

Ted Hsu (02:44):

Well, I mean, it’s when people compare themselves to other entrepreneurs and unrealistic things, that’s where they introduced 99% of the anguish. Totally unnecessary. It doesn’t need to come into the picture. [00:03:00] Hey, we could be honest. Many of us are not in the top 1% of achievers, but consistently, all the people who follow this pathway are in the 1% of wealth that’s always out there. How do people do it? You give yourself a break.

(04:00):

[00:04:00] In my volunteer work, consulting with hundreds of businesses, this is always the key factor, just taking it slow and allowing yourself to build that success and the time, spending the time. It’s really about allowing the time to get the scale. It’s no different than your investments. [00:04:30] Why would you expect to get such dramatic results? Unless you’re just a Superman, which we’re not. But having the inability to stop allows you to get that long time horizon. So with your investments and every main street business, every company you see out there, that’s the commonality. I see it with the [00:05:00] winners from the losers, and it’s so obvious that nobody pays attention to it.

Craig Castelli (05:07):

Yeah, be patient. Don’t succumb to trying to keep up with the Joneses and build your business your way. I mean, that is what you should be able to do if you’re an entrepreneur. Otherwise, what are you doing in the first place?

Ted Hsu (05:17):

That’s your main skill, right?

Craig Castelli (05:19):

Yeah. So about a year and a half ago, you sell the business to 4M, big PE backed group in the space. We actually had Tim Murch on this podcast [00:05:30] a couple months ago. So interesting contrast to hear, founder of 4M talk about selling to PE and then his life on the other side, and now we get to talk with you who sold to 4M and are part of that environment in a different way. Before we get into the deal itself, had you done much along the way to prepare Horizon to be sold?

Ted Hsu (05:51):

Oh yeah. It’s many years in the making, and certainly Craig, your association and mine working [00:06:00] together, you know that from the years of working with the people, the talent, we always strive for the right people in the right seats. That is always, it’s hard to make up for later, even up to the last nine months. That’s the only way to prepare, and that’s the only way to run and scale a business [00:06:30] well, because it can’t be just the entrepreneur. And number two, the greatest torture for everybody, including the people involved, is working with people who are just there going through the motions. And that’s good enough to get by, but it causes issues along the way, and certainly you cannot exit. And contrary to what I had said prior about low expectations, as you go [00:07:00] towards your entrepreneurial career, it’s a hockey stick. You have to raise those expectations as you get better, you are getting better towards the end, and that is what allows you to scale. And a lot of times that’s the only pay even up to the end that you get just striving for that excellence, which is going after the expectations that you set. Even when, hey, it ends up as a train wreck, it looks like a Picasso [00:07:30] painting, not in a good way, a Picasso painting arms and everything to one side. So

Craig Castelli (07:36):

Yeah, I feel like that concept of raising the expectations though is part and parcel to building that team and continuing to recruit the right butts into the right seats as you grow. Because people join companies at different stages for certain reasons. And if you want to upgrade the caliber, especially if your leadership team, they’re [00:08:00] going to expect a certain thing out of the business. And it’s not status quo, we just want to stay flat. It’s some level of ramping up that growth, ramping up the development to match those expectations.

Ted Hsu (08:14):

And I guess the last thing to prepare was all along the way for years, I always interviewed people that I wanted to be later in my life after exit, because that’s the only way you can get perspective [00:08:30] and to the other three issues.

Craig Castelli (08:36):

So when you say that, because my next question was going to be asking about just preparing yourself personally or mentally for a sale and life after. So as you were having those conversations, how much of that was to apply to the business and how much of that was just for your own personal preparation and development?

Ted Hsu (08:57):

Yeah, they’re very distinct [00:09:00] and sometimes intertwined, which I’ll cover the first issue, which is, hey, your business is not your identity. Some people it is, and there’s more to unpack there, but if it takes years to work through that and how would it look like afterwards? And you have to have a plan. Number two for after you can’t exit and plan then because you’re halfway across the river. I have [00:09:30] many ventures that I’m planning to work partially working on. There’s preparation, there’s the increased need for exercise as you hit your fifties, and then the research that could be mistaken for leisure. All that is pretty intricate, and that has to be planned before, and then you need to war game your investments. What’s your risk tolerance? That number is different for everybody and it [00:10:00] changes. A lot of people use it as not a reason to plan. That’s very bad advice. And then you need to talk to the people you want to become after the sales process and take their guidance and think about it over the years. That’s the personal prep work for me anyway.

Craig Castelli (10:22):

Yeah. So can I ask, who are you becoming? Who is Ted Hsu works his way [00:10:30] out of Horizon.

Ted Hsu (10:32):

I’m becoming the best person I wanted to be, which is back to myself as a child. There’s no greater joy when people were just out there playing in the yard and while creating and thinking about original questions that adults forget to ask.

Craig Castelli (10:53):

Yeah, yeah. No, it is very easy to forget, for sure. So let’s talk about the sale process itself a little bit. [00:11:00] Reflecting back and what would you say went really well and what would you do differently if you could redo anything, if anything at all?

Ted Hsu (11:10):

Well, Craig, with your help with Peter’s help with Sam’s help, all that we planned for went well, right? Those were the known knowns. It when we needed to pivot, we pivoted because those were the areas that we knew. The things that didn’t go well [00:11:30] were the unstated agendas of people because there’s lots of parties involved.

(11:40):

My just advice, and this is similar to everybody I’ve spoken to before and after, my advice is pay attention to people who have nothing to say because it’s not that they have nothing to say, it’s what they have to say is unspeakable.

Craig Castelli (12:00):

[00:12:00] Yeah, I was hoping you would say something more along the lines of when they finally do speak, it’s going to be a very impactful statement. So you threw me a curve ball there. But yeah, I mean, that is a good point, right?

Ted Hsu (12:15):

Yeah. I think that’ll help people nail down who they need to speak and continually chat with. I think I’ll leave that there, right?

Craig Castelli (12:25):

Yeah, fair enough, fair enough. So you [00:12:30] look great, you look relaxed, you seem happy. So I kind of assume the answer to this question, but for everybody else who may not be watching us on video here, how’s life been on the other side for you?

Ted Hsu (12:44):

Craig, it’s everything I could ask for. I mean it. It’s all that we have methodically planned and worked towards the fruits of a lifetime of work. And I speak on all the people that [00:13:00] have gone through the journey and they’ve uniformly gotten the same results because they’ve controlled and managed all the micro factors, the things that come up. And so we get the result we wanted. And all we have to concern ourselves with now are the macro factors, which is what the world concerns itself with stability of the dollar, will it stay the reserve currency? What about hyperinflation? [00:13:30] That’s all we need to worry about anymore because the micro we’ve resolved. And in a strange way, even though it’s a problem for everybody, it’s less of a problem than the people who have planned because certainly they have more firepower to deal with it, and they’re used to planning the unknowns. And we even have a plan for total economic collapse. I hope that you’ll include for everybody in the show notes, but [00:14:00] I’d love to share that with people because it seems to be on everybody’s mind, some type of world order collapse and being people who plan. We’ve planned for that too in our best capacity because we’re human beings. We have a lot of agency, right?

Craig Castelli (14:20):

Sure, sure. I mean, is that something you want to share? You mentioned putting it in the show notes, but I’m happy to spend a few minutes on it right now because you certainly piqued my curiosity.

Ted Hsu (14:29):

Yeah. [00:14:30] My next venture is a nonprofit. It’s a charity, but it protects people for really dire situations. And we do it in a positive way by working with people and helping them work together ahead of any type of event and putting them in small family groups that we can link together across the country. And we call it USAbackup.org, right? It’s what we pay the government to do. [00:15:00] But the private side, the private nonprofit side has a personal interest in being that, Hey, my ass is involved too. So I have an interest in doing a very good job on that because

Craig Castelli (15:16):

This seems like something people would pay good money for. So why do it as a nonprofit,

Ted Hsu (15:23):

It gives you credibility, and we are not strictly for the profit motive. We’d love to get that [00:15:30] result and have great collaboration and relationships along the way because it’s those relationships that will get tested in the afterlife. And unfortunately we talk about it in those terms, the current life, the afterlife, what are things, a non-religious sense of course, but just taking care of the basics and we’ve got a good plan for that.

Craig Castelli (15:57):

Okay, well, that’s great. Who’s the target [00:16:00] audience? Are we talking mostly business owners or is this anybody?

Ted Hsu (16:03):

Everybody. Everybody who has family who would like to talk to their family and friends about it, but don’t have the language or the means to talk about it. We have a system for them and they can just do as little or as much as they’d like or are able to because everybody has skills, and it’s a question of putting those skills together and working together and practicing.

Craig Castelli (16:30):

[00:16:30] That’s great. We always worry about people retiring, especially retiring young. Are they going to find another passion? Are they going to have something to do? Clearly? Clearly you have found your passion and you’re not missing a beat jumping from one to another.

Ted Hsu (16:47):

Well, running a business is pretty unpredictable and lots of obscene things happen. So I think it’s in keeping, right.

Craig Castelli (16:55):

Yeah, no question. No question. So let me ask you a final [00:17:00] question here, and you’ve doled out some good advice already, but give us one more piece of advice for any business owners who might be listening.

Ted Hsu (17:11):

Well, I thought you were going to chat about difference between private and PE, or

Craig Castelli (17:16):

We can go there. I was shifting gears just because we got into more of a personal note, but before

(17:22):

We get there, tell us you’re almost out, but you have spent the last 18 months making that transition from [00:17:30] owning your own business to working for a PE-backed business, which has very high expectations, very demanding. So talk about compare, contrast, the differences between those two states, the journey you’ve taken, acclimating to being into this new environment, all that good stuff.

Ted Hsu (17:53):

It’s been a great journey with Tim Murch and his team and with all of them every day [00:18:00] all throughout the country. And I really enjoyed my time because they are real professionals as they represented, and I understood from the get go, and it’s just been pure joy. So with that said, in your business, if you had cared about systems which allow you to scale your growth and you care about learning, you’re not going to see any difference. [00:18:30] I enjoy each day because there isn’t any difference. We’re looking to do the most with the least. But if you have run a owner-centric, lifestyle business working in niches to avoid the competition, then expect big differences. But in keeping what we’ve been talking about since I was 22 and many, I would say the majority of business owners in keeping with day one advice, [00:19:00] why would you have handicapped yourself and put yourself in that position to run anyway? So I think it’s all good. If there’s a surprise at the last day, what have I missed?

Craig Castelli (19:15):

Right? Right. Well, you know what? That’s great to hear. Tim is a standup guy, so no surprise to hear that things have gone well. It was pretty clear that was a good fit right from the beginning. But you bring up a great [00:19:30] point because so many owners do run these, as you put it, owner centric businesses and don’t fully develop the systems. They develop systems that work exclusively for them and not for the business overall. And that does make it more challenging when you try to integrate into a larger business that can’t run if it doesn’t have the right systems in place.

Ted Hsu (19:51):

And the worst part is it’s not fair for your people, your team who’ve been loyal for years, you let them down as a leader.

Craig Castelli (20:00):

[00:20:00] Yeah, they bear the brunt of it.

Ted Hsu (20:02):

Yeah, unfortunately.

Craig Castelli (20:04):

Alright, now can we get that piece of advice?

Ted Hsu (20:06):

Yeah. Yeah. Craig, I’ve been dead serious about everything I’ve said. This transcript is going to be available in print for everybody to read. I have no more advice to give. If there was advice, I would’ve said it

(20:26):

Out in the audience. If you read it and you do it, what we talked about [00:20:30] over time, as many the same advice that many have shared with me, right? Your results could be exactly similar. There’s no trick advice. I’m not going to tell you call Mr. Big at eight three oh something something. There’s no such thing. You’re Mr. Big, right? Just read the words. They’re boring, they’re repetitive, but there’s nothing else. There’s nothing else to do. We’ve just done it for 35 years. That’s all like every 99% of [00:21:00] all the other people that successfully transitioned.

Craig Castelli (21:04):

Yeah, I mean, that is why a lot of business books and a lot of speeches ultimately in one way or another, talk about a lot of the same concepts because there is no magical elixir that only a few have discovered. If there was, I’m pretty sure if somebody would be selling it to all of us right now. So Ted, this has been a lot of fun. Tell us the web address again of your new organization, [00:21:30] and if someone wants to get ahold of you or find out more, where should they go?

Ted Hsu (21:33):

Yeah, it’s USAbackup.org. You can find us on the web or reach out to me personally at—am I okay to give my cell number out there?

Craig Castelli (21:45):

If you are okay with it, I’m okay with it.

Ted Hsu (21:48):

8 6 0 7 2 9 2 8 6 0.

Craig Castelli (21:52):

All right. There we go. Ted Hsu of Horizon, and so many other things. This was a lot of fun. Thanks for being a great client. Thanks [00:22:00] for joining us and thanks everyone for watching us on The Close.

Ted Hsu (22:03):

Craig, thank you for everything.