Chinaccelerator Batch 18 8X8: Lily Liu, Co-founder & CFO at Earn.com

Summary

The speaker shares their journey from being a Stanford pre-med student to becoming a CFO and entrepreneur. They highlight their transition from traditional roles in finance and consulting to building startups, including a hospital in China and a distressed tech company. Emphasizing the importance of pragmatic, analytical thinking, they discuss managing risk, resource allocation, and the strategic role of a CFO in startups. The talk underscores how foundational business principles apply to both large and small companies, and the unique challenges and opportunities faced in the startup environment.

Takeaways

• 🌅 The speaker is presenting at 4 AM in the Bay Area, showing their commitment to the event.
• 🌟 The speaker met Oscar in Shanghai and has maintained their connection over the years.
• 📊 The talk focuses on the speaker's journey from CFO to entrepreneur, sharing personal experiences and insights.
• 🎻 The speaker grew up in Piedmont, California, as a Chinese-American, following a traditional path with activities like playing violin and swimming.
• 📚 Initially pursuing a pre-med track at Stanford, the speaker shifted interests to political science and economics, leading to a master's in East Asian studies.
• 🌏 An internship with Morgan Stanley in Hong Kong and a job at McKinsey in New York led to various global experiences in business.
• 🏥 The speaker's first startup experience involved building a hospital in China, despite having no prior knowledge of hospital construction.
• 💼 The speaker's second startup experience was turning around a distressed company, 21 Inc, into a new company, Earn, which was later sold to Coinbase.
• 📈 The role of a CFO in a startup is more about managing risk and resources strategically, not just finances, often requiring a pragmatic, analytical approach.
• 🧠 The speaker emphasizes the importance of business fundamentals and common sense in startups, regardless of the specific industry or product.

Q & A

What was the speaker's initial career path and how did it change?

The speaker initially pursued a path towards becoming a doctor, studying pre-med in college at Stanford. However, they developed interests in political science and economics, leading them to a master's in East Asian studies. They eventually entered the business world, working at Morgan Stanley in Hong Kong, McKinsey in New York, and in private equity at KKR.

How did the speaker end up working in a startup-like environment in China?

In 2011, the speaker took a job in China to build a hospital, which was a challenging and character-forming experience. This was their first startup experience, even though it was not in the tech sector, and they were asked to be the CFO.

What was the speaker's role in the hospital project in China?

The speaker was the CFO of the hospital project. Despite not fully understanding what being a CFO entailed, they took on the role and learned to manage the financial aspects of the project.

What was the second startup the speaker was involved in and what were its challenges?

The second startup was a company called 21 Inc, which was heavily funded but in a distressed state. The company had a negative balance sheet and no functioning product or team. The speaker had to help restructure the company and eventually sold it to Coinface.

How does the speaker view the role of a CFO in a startup?

The speaker sees the CFO role in a startup as more than just managing money. It involves managing risk, strategic resource allocation, and taking a holistic approach to the business. The CFO needs to think pragmatically, solve business problems, and help the team make informed decisions about product development and team composition.

What are some of the core skills the speaker believes are important for a CFO in a startup?

The speaker believes that core skills for a CFO in a startup include thinking pragmatically, solving business problems analytically, and being able to apply common sense. They also need to be detail-oriented and have a quantitative approach to resource expenditure.

How does the speaker describe the difference between working in a large institution and a startup?

In large institutions, the speaker notes that things are more established and there is an existing business model. In startups, the focus is on finding product-market fit and being willing to do whatever it takes because the structure is not as established. Startups require a more flexible and adaptable approach.

What was the speaker's educational background before entering the business world?

The speaker was born and raised in Piedmont, California, and attended Stanford University. Initially on a pre-med track, they shifted their focus to political science and economics, and later pursued a master's in East Asian studies.

How did the speaker's early experiences in business influence their approach to startups?

The speaker's early experiences in business, particularly at large institutions like Morgan Stanley and McKinsey, provided them with professional training and a foundation in business principles. These principles, they found, were applicable in startups, albeit in a more flexible and adaptable manner.

What advice does the speaker have for those considering a career in startups?

The speaker advises that being a part of a startup requires a willingness to take on various roles and responsibilities, as well as the ability to think pragmatically and analytically. They emphasize the importance of understanding business drivers, being detail-oriented, and being able to test and innovate quickly.

How does the speaker view the role of a CFO in terms of revealing 'secrets' in the business?

The speaker views the CFO role as not just about managing finances but also about using data and analysis to reveal insights that can influence strategic decisions. This includes understanding market dynamics and bringing a perspective that can help in resource allocation.

Outlines

00:00

🌟 Journey to Becoming a CFO at a Startup

The speaker begins by acknowledging the early hour and thanks the host for the invitation. They recount their background as a Chinese-American from Piedmont, California, with a traditional upbringing that included playing the violin and studying hard with the intention of becoming a doctor. However, their interests shifted towards political science and economics, leading to a master's degree in East Asian studies. The speaker's entry into the business world was somewhat accidental, starting with an internship at Morgan Stanley in Hong Kong, followed by roles at McKinsey in New York and private equity at KKR. The narrative then shifts to the speaker's first 'startup' experience, building a 500-bed hospital in China, which was a challenging yet character-forming experience. They also mention their role as CFO in turning around a distressed company, 21 Inc, which was heavily funded but faced significant financial and operational challenges.

05:00

🚀 The Role of a CFO in Startups and Risk Management

The speaker delves into their experiences as a CFO in startups, highlighting the differences between large institutions and early-stage businesses. They emphasize the importance of pragmatism, structured thinking, and analytical problem-solving in a startup environment. The speaker challenges the stereotype of a CFO as merely a number-cruncher, arguing that in a startup, the role is more about managing risk and resource allocation, particularly time, which is often more valuable than money. They discuss the necessity of a holistic approach to business strategy, product-market fit, and the importance of making informed decisions on product development and team composition. The speaker also reflects on the value of their experience in larger companies and how it has shaped their understanding of what makes a business successful.

10:00

📊 Insights from a CFO's Perspective on Business Growth

In the final paragraph, the speaker focuses on the role of a CFO in driving business growth, emphasizing the need for a structured and analytical approach. They discuss the quantitative nature of the CFO role and the importance of understanding business drivers and operational metrics. The speaker also touches on the concept of 'secrets in plain sight' and how data analysis can reveal insights that influence resource allocation. They reflect on the value of their diverse experiences and how they have contributed to their ability to understand and grow startups. The speaker concludes by challenging the traditional separation between technical and business founders, arguing that there are universal principles of success that apply to all well-run businesses, regardless of their stage or industry.

Keywords

💡CFO

Chief Financial Officer (CFO) is a senior executive responsible for managing the financial actions of a company. In the video, the speaker discusses the role of a CFO at a startup, emphasizing how it involves not just managing money but also managing risk and resource allocation. The speaker's transition from a CFO to an entrepreneur highlights the broader skill set required beyond traditional financial management.

💡Startup

A startup is a young company founded to develop a unique product or service and bring it to market. The speaker describes their experiences in various startups, including building a hospital in China and transforming a distressed company into a successful one. This context illustrates the dynamic and challenging nature of startups, where adaptability and innovative thinking are crucial.

💡Resource Allocation

Resource allocation involves distributing available resources among various projects or business units. The speaker explains how, as a CFO at a startup, resource allocation is a strategic task that involves managing both time and money effectively to minimize risks and maximize growth potential.

💡Product Market Fit

Product market fit is the degree to which a product satisfies a strong market demand. In the video, the speaker mentions that achieving product market fit is a critical goal for startups, differentiating them from larger, established companies. Finding this fit often requires continuous testing and iteration.

💡Operational Metrics

Operational metrics are key performance indicators (KPIs) that measure the efficiency and effectiveness of business operations. The speaker highlights the importance of using operational metrics to provide an objective view of the business's health, aiding in decision-making and strategic planning.

💡Analytical Approach

An analytical approach involves systematically analyzing data to make informed decisions. The speaker attributes their success in various roles to thinking pragmatically and in a structured way, using data and analysis to solve business problems and drive growth.

💡Risk Management

Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings. The speaker discusses how managing risk is more critical than managing money in a startup environment, as startups often operate with limited resources and high uncertainty.

💡Strategic Thinking

Strategic thinking involves planning for the future with an understanding of long-term goals and objectives. The speaker emphasizes that a CFO's role in a startup includes thinking strategically about how to allocate resources and manage risks to ensure sustainable growth and success.

💡Entrepreneurship

Entrepreneurship is the process of starting and running a new business, typically involving considerable risk and innovation. The speaker shares their journey from being a CFO to becoming an entrepreneur, highlighting the diverse skills and mindset required to successfully launch and grow new ventures.

💡Institutional Training

Institutional training refers to the professional development and skills gained from working in established, large organizations. The speaker reflects on their experiences at companies like Morgan Stanley and McKinsey, noting how the training received at these institutions provided a solid foundation for tackling the challenges faced in startup environments.

Highlights

The speaker met Oscar in Shanghai and has maintained contact, appreciating the opportunity to share insights on being a CFO at a startup.

Transitioned from a traditional path to medicine to business, reflecting a non-intentional career trajectory.

Educational background includes Stanford and an initial interest in political science and economics.

Started in business almost by accident with an internship at Morgan Stanley in Hong Kong.

Worked in various prestigious institutions like McKinsey and KKR, gaining global work experience.

The speaker's first startup experience was building a 500-bed hospital in China, which was a challenging and character-forming venture.

Second startup involved taking over a distressed company with significant debt and no working product, leading to the creation of a new company.

The speaker's role as CFO was not by initial intention but emerged from a need to be useful in various situations.

CFO role involves managing risk and resource allocation, not just financial management.

Being a CFO in a startup requires a holistic approach to managing both money and time.

The importance of applying common sense and business principles learned from large companies to startups.

The difference between working in large institutions and startups, with the latter requiring a willingness to do what it takes.

The speaker's approach to being the most useful in any given situation, leading to taking on the CFO role.

The misconception of CFOs as just number crunchers, while the role involves strategic thinking and revealing market insights.

The role of a CFO in startups involves understanding business drivers and operational metrics to inform decision-making.

The value of the speaker's experience in large companies became clearer over time, especially in the context of startups.

The speaker's view on the integration of technical and business roles in startups, emphasizing the commonalities in what makes successful companies.

The speaker's thoughts on the foundation provided by their CFO experience for future startups.

Transcripts

all right sounds good well um let's see

it's a little bit early

my time um it's uh you know one of those

in between hours at 4am i'm here in

the bay area um so um

but thank you for having me um i met

oscar uh

in shanghai a number of years ago and i

think it's amazing that we stayed in

touch just a little bit and said thank

you for thinking of me and having me

um oscar asked me to speak about sort of

what it means to be a cfo at a startup

he asked me to speak about uh how i went

from from being sort of a cfo to

entrepreneurs so um just wanted to share

a little bit about

um what uh you know how i came to

you know be where i am today um a lot of

it was not necessarily

intentional um but just a little bit

about sort of how i got started

i'm from here in the bay area um uh i

started you know if you go to the left

um i'm chinese american i was born and

raised here

in piedmont california which is where i

live now

um i have uh i put a little icon of like

a violin on there because i was like a

very

um a very sort of typically

uh chinese-american kid i played the

violin i swam

no balls to injure my head right

i studied really hard from a young age

i was going to be a doctor right hence

like little pre-med sign over there i

wasn't pre-med in college i went to

stanford

um and so i kind of you know did

everything the way i was supposed to do

things

um and uh you know was

maybe two classes away from actually

applying to med school but i kind of had

um interests more in political science

and econ

and you know really came around to

thinking well i'm not really sure that i

want to be in med school for

uh in some form really for the next 10

years to be studying and then you know

it's like a very prescribed track

um instead so what i did next is i was

like well you know i'll do a masters in

east asian studies i had a long-standing

interest in

um uh in you know chinese politics

chinese reform and you know

fundamentally how did one

um had a 20 of the population com go

from being

um sort of in the throes of of of you

know many things to being very

um fairly prosperous today right uh

i kind of landed a little bit randomly

into the business world

so um i you know almost by accident got

an internship

with morgan stanley in hong kong all the

way to the right

um ended up joining mckinsey in new york

worked in private equity at kkr

um and had also you know traveled around

the world

worked in you know quite a number of

places um worked for studying quite a

number of places so i was you know very

i've been very fortunate uh and was also

um sort of you know also fairly

conscious about um

being associated with uh you know

institutions right

because that's kind of the way you're

supposed to do it um

and uh and you know i will say that

uh they were you know very good places

sort of be trained

professionally um and then uh so i did

that from when i graduated

up until 2011 and then um

you know i joke that kind of all fell

apart a little bit

right so i took this crazy job in 2011

um where i built a hospital in china

um about three hours away from shanghai

that's how i originally got to know

uh osgar and um we you know had

basically plotted dirt and we built this

500 bed hospital

which is still operating today and that

was really like my first

startup if you will although not

necessarily what you think of when you

think about a startup

is where you think about software and

apps and technology and so on and so

forth

but this is really my first startup and

they asked me to be the cfo

um and uh i didn't really honestly i

didn't really

know what that meant but i feel like at

the time i was like okay well you know i

can probably

go figure it out um and then uh

and you know i talked about that

experience at length but it was

a very very challenging experience and

also a very character-forming

experience and then uh and then the

second startup i did um i was also the

cfo

um i took over um

this company called 21 inc um which was

heavily funded had like a lot of press

about it but was actually

a very very distressed uh company uh

they basically raised too much money had

a huge amount of kind of debt burden

um had a lot of press to kind of live up

to um

and so we took over a company with a

negative 50 million on its balance sheet

in terms

in terms of all its liabilities um with

no working product

no functioning team um and we had to

both get out of all of that um

and we ended up starting an entirely new

company

um in that which earn and then end up uh

selling that to coinface

so um kind of joke that you know these

uh these two sort of experiences a lot

of the time i was like well you know i

don't really

know anything about building a hospital

right i don't really know

anything about bitcoin mining hardware

um

and uh and then starting a company where

you're basically selling you know pay

per email response well i don't think

anyone really knows anything about that

per se um and so

you know what is having what does being

a cfo have to do with any of this

right oh and then now i've started

started a couple of other a non-profit

or for-profit related

to um related pandemic stuff but anyways

so um so for me i've never actually

considered myself

as being a cfo um i kind of fell

into that position um because um you

know here were some of the things that

um you know i've i considered you know

be

my core skill sets um and in

um and then in the you know situations i

was in

um the way that that was the most useful

was

i suppose taking on the role of being a

cfo right and so what are those things

um thinking pragmatically right thinking

in a structured way

um uh being able to solve business

problems

and that's that are sitting in front of

you doing that in an analytical way

um for me i've always seen um a lot of

stuff happen in the business world and

really

you know particularly in the startup

world um is really just being applied

common sense

um in my uh in my view sort of

you know a startup is ultimately a

business

um and a lot of the business principles

that you learn

you know for large companies um is

actually very similar to what gets

applied

with small companies um the bit the the

you know part of the big difference

being um in a large company

obviously things are very established

there's an existing business model on a

small company you're looking for that

looking for product market fit

um but you know a lot of the things that

sort of drive

private uh product market fit and

whether you're gonna be successful

um to me are um it actually can't be

that complicated otherwise it will never

scale right

uh and then you know the other big

difference between working in the very

large institutions that i've

done plenty of um and being in a startup

situation is that you're just willing to

do what it takes

um because startups they all look like

this when you start

right um and so you know if there's an

expectation for existing structure

then um then you know there isn't a

whole lot to stand on so you kind of

sort of got to do the biz tracking

yourself of course

right um so as i kind of went to these

situations the way i end up being

the you know cfo was uh you know i

always

approached uh the the situations and

companies i was working in is sort of

how could i be the most useful

right um and so you know thinking

pragmatically thinking in a structured

way

being analytical um looking at problems

um you know for a cfo um i think

you know one of the conceptions people

have is that um

you're just managing money right you're

doing spreadsheets

crunching numbers and you know there's

like the stereotype there's kind of like

the green eye shade accountant sitting

behind a desk

and like you know doing your uh doing

your numbers right

um so uh so i think that that

perception can exist and comes from the

role that a cfo can typically play in a

larger setting

um but i really thought about it as um

you know a company yes you are to an

extent managing money

um but if your role is to sort of take a

longer perspective think strategically

about resource allocation um because

startups are so risky you're not it's

not so much about

managing money because a lot of times

you don't have very much of it

it's really more about managing risk

right

in managing risk in terms of you know

how you spend

your more important resource which is

actually really time often times than

money

because those two are so interrelated

and in helping your team

kind of figure out all right um what

bets do we want to take in terms of

product um the products that we want to

build the futures that we want to build

where we do want to deploy our limited

capital

um what sort of team members are going

to be making

the most the biggest difference right

and inherent in a lot of that

is thinking about um uh business

strategy

um product market fit um and

uh and so you know that's for me one of

the big differences between

being a cfo in a very structured setting

right

uh which is more about managing money

right and in a startup setting it's

really

uh taking a more holistic approach to

managing risk

and principally not just around how you

spend your money but also how you spend

your time

um so um so you know as a cfo

of a startup you know uh

that might have been my title but you

know like many other people in early

stage business

a big part of the value and my job is

how can i grow the business

right um so thinking about that in a

structured way

right um taking an analytical approach

to that what i mean by that um

being a cfo is an inherently

quantitative role right you're expected

to

you know have a quantitative approach to

resource expenditure

and oftentimes take a look at

not just sort of the dollar and cents

that are coming and going

and you know being paid and received and

those types of things

but also sort of taking a uh an

operational view on that

right looking at the operational sort of

metrics of the business uh

and uh and you're providing that view

in a fairly objective way right because

then and and tell the

tell those facts and tell that story in

a way that sort of everyone can buy

into um and you know i was also reminded

of what peter thiel often times um would

write about which is you know

um what a lot of what makes a lot of

founders sort of

very insightful in their markets is that

you can see those secrets that are

hiding in plain sight

right um and so you know the role of

um being a sort of you know the cfo at

least in my view

um has been not just about the dollars

and cents but also

you know helping reveal those types of

secrets through data through analysis

and it's not um and that applies to the

market that you're in

and sort of uh in bringing that you know

perspective to bear

because ultimately what that does is it

has a big influence on how you allocate

resources

right um and so from my view you know um

all of the uh all of the work that i did

earlier

in my in my in my 20s when i was working

at i'm sorry

large larger companies um for a while

it it didn't sort of become clear to me

how that was actually that useful

um i think you know as the years have

gone on

i've become much more appreciative of

sort of

how all of that how i got started in a

lot of those things

um because at the end of the day

startups you know they are businesses as

well

um they're actually much harder

businesses to run because oftentimes

you're not even really sure what the

business is quite yet right

so you have to keep on thinking um keep

on innovating not just on your product

um but you know sort of the the business

model the same time because you're

trying to find that fit there

um and so you know as you go about that

process

um sort of being able to um have

uh to understand business drivers right

to understand

operationally sort of what makes you

stronger or weaker

being fairly detail oriented and

analytical and that just really sort of

cuts down the cycle time on being able

to test

and test and sort of get feedback on

what you are doing

right um and so you know that approach

is also

uh it also has made me think you know uh

particularly the last couple of years

that um

you know oftentimes there uh in my view

there's these conceptions about you know

oh this is a technical founder this is a

business founder and there's a little

bit of segregation of roles

um in my view you know that doesn't

necessarily have

to be the case right at the end of the

day um there are just certain

um consistencies about what makes

success what makes companies

after you get a product market fit but

then after that you know there's

quite a number of just things that are

true of all well-run businesses

right um and um and having sort of

uh um you know the the

views and like on a business that at

least i got to

have as being the cfo i felt like um

have been

uh very useful um and

also really a foundation of um you know

all of the future startups that i would

be doing in the future

so um yeah so those are some of my

thoughts

um and you can get my contact

information find me on social media but

thank you for having me

thank you very much