Jake Aaron Villarreal: I'm Jake Aaron Villarreal, born and raised in Silicon Valley, and here to take you behind the scenes to share what it's like to be a startup founder. The journey they're on, the problems they solve, the products they build in effort to make our lives better. I'm excited to have with us today William Chan. He is CEO and co-founder of Iodine, an AI revenue management software company trusted by more than a thousand healthcare systems nationwide. Prior to starting Iodine, William was co-founder and Vice President of Product at Crimson, a company focused on improving healthcare provider quality and profitability. Welcome to the show.
William Chan: Thanks, Jake. Glad to be here. Thanks for the invite.
Jake Aaron Villarreal: Well, before we jump in, William, where are you joining us from today?
William Chan: I am here in Austin, Texas.
Jake Aaron Villarreal: When I started this podcast, I had this vision to go behind the scenes to share what it's like to be a startup founder in Silicon Valley, where I'm born and raised. And weekly, we dive deep in the trenches to find the wins, the losses, and the lessons learned with the hopes that it helps you run a better startup. But here's the thing. If you've gotten any value out of these conversations or been inspired at all, hit the subscribe button. And I get it, your podcast feed's probably overflowing. But to stay up to date what's going on in Silicon Valley, stick with us because at the end of the day, we're all just trying to build something that matters. And we're better when we do it together. So, hit that subscribe button and follow us wherever you find your podcasts. Now, let's get back to the show.
Oh, nice. I love Texas. Lots of companies are in Texas. In fact, one you and I both worked at, Oracle, moved to Texas, and a lot of startups are innovating in Austin and Dallas and different parts. What was it that brought you to Texas or are you originally from there?
William Chan: No, I'm not originally from Texas, but I was brought here because of the growing startup industry that is in Austin. This was, you know, quite a while ago. It's probably about 15, almost 20 years ago. I came here to to join the startup environment. Came to work at a startup company. I wanted to see if what was successful in Silicon Valley could be replicated outside of Silicon Valley.
Jake Aaron Villarreal: Yeah. Well, we hear a lot of benefits about having a company in Texas, from taxes to talent to a lot of different things. Let's go back a little bit into your origin story. Where are you originally from and kind of walk us through some of what shaped you to eventually get into being an entrepreneur and in technology?
William Chan: Yeah, happy to do that. You know, I'm... I was actually born and raised in Malaysia and I came to the US when I was 17 to go to college to study computer science. But one of the key things I still look back at this time... when I came to the US, I didn't know a soul here. And so there was every concern for myself that things could get ugly for me pretty fast, fall in the wrong company or what have you. And so that's kind of when, you know, it kind of drew me back to my Christian faith as I was growing up and I started to read the Bible quite a bit more. And one of the things that it talks about in the Book of Genesis, for example, is, you know, God kind of brings order out of chaos. And I really like that idea of bringing order out of chaos, of, if you will, bringing efficiency out of disorder.
And that spoke a lot to me. And that really kind of shaped what I wanted to do and who I wanted to be. I wanted to be that person that, right given my God-given talents, would be somebody who could bring order out of chaos, you know, efficiency out of disorder. Given the background that I had with computer science, uh it it felt like I had a role to play in building new technology, building new software, building new solutions that would allow me to to do exactly that.
Jake Aaron Villarreal: Yeah, I love that. It's... I'm a Christian as well and was baptized by Rick, Pastor Rick Warren out of Saddleback. And so I go pretty deep there and I've been on missions and built a church in the Philippines and a lot of stuff that I don't talk about often. But it's funny that you bring that up because we just had a podcast with another guest out of Mexico. And one of the stories he was talking about was, you know, as you go out and raise capital, it's always important to do what you have to do, but also be patient. And it's trying times when you're trying to raise capital. And one of the... he was also a Christian. One of the things that he brought up was, you know, God gives you the strength to have the patience even during the tough times when you're trying to get what you want or go where you want, but it's not going as quickly as you want it to go.
So, you know, it's it's good to to have an anchor where you can pull from when you need to and also support you. Because as a leader, you know, people look at you, they look up to you, they look for your vision, they look for you to solve their problems, but when you go home at the end of the day and you're in your bed or doing whatever you're doing, you don't always, you know, have the strength sometimes to figure things out, but it's always good to have something or someone or a way to problem solve.
William Chan: So, I I really like your word, Jake, that there is an anchor. Like what is it that anchors me where at the end of the day, to your point, what is it that drives me to come back and do what I do? Because, you know, not every day is going to be easy. There going to be those days where, you know, you're going to get hit on all sides or just get punched in... punched in the mouth and you know you got to get up and say, "Okay, why am I doing this, right? Is it worth it?" And you know, I I believe that, you know, I was called to do this and my goal here is to to do to the best of my abilities to deliver this efficiency out of disorder, especially in healthcare.
Jake Aaron Villarreal: Yeah, which is the the world I live in now. Well, we'll talk about that. Give us give us the inspiration behind Iodine. So, you had a company, you built it, you got acquired, you've had a lot of success as a leader. What was the inspiration? What was the problem you saw that you thought, "You know what, this is something we could tackle. We could go out and solve and make the world better for it?"
William Chan: Yep. So, you know, prior to Iodine, as you mentioned, you know, I had had a previous company called Crimson, and that was my first introduction into healthcare. And the picture I saw inside of healthcare was an enormously complex ecosystem, but a highly manual ecosystem at that. A lot of processes, but the processes are managed and operated by people running very manual processes. And so basically there is a lot of manual activity going on in healthcare. There is therefore a lot of manual or waste that is going on because processes aren't as efficient as they can be. And so Iodine's goal or Iodine's mission is we want to ensure that hospitals and health systems capture the full value of the care that they deliver. That means that they're getting reimbursed at the proper rate and that they're doing this as efficiently as they possibly can with the resources that they can. You know, some CFO at a hospital once told me a long time ago, "No money, no mission," right? You have to be able to do the work and be able to make some money out of it. Now, hospitals don't make a lot of money. Their profit margins are very slim, but they have to be able to keep a positive profit margin in order for them to keep on going. So, we believe Iodine is a part of that solution in ensuring that hospitals continue to be financially well, financially solvent and and financially healthy.
Jake Aaron Villarreal: Talk a little bit about the profit margins because I know they're slim, but I don't know if the general public knows how slim it takes to operate a hospital before it has to go belly up.
William Chan: Well, you know, a lot of hospitals operate... a typical hospital probably operate on a 3 to 5% operating margin. So, that's pretty slim. You know, when you compare that to say a software company where the margins could be 50% or more, right? So, that's a huge difference, right? You're running an operation that is essential to the well-being of an entire country. Hospitals are obviously, you know, a required part of and health systems are obviously required within the United States and within any any nation, but you have to operate it at very much very much lower margins and so you'd have to therefore operate very efficiently. So we looked at some of these operational inefficiencies to see how we could try to improve upon them.
And when we when we looked at it, we saw that there were actually a lot of situations where clinicians, nurses, physicians were being recruited and used to make clinical decisions. But these clinical decisions aren't in the direct care of a patient. They serve to move the administration of a patient throughout the hospital, but they don't actually take care of the patient, right? They take care of the administration of the patient. And when hospitals grow and they need more of these administrative processes to perform, hospitals have historically said, "We're going to just go hire more of these people." And hiring clinicians, hiring nurses, hiring physicians... one, there are not enough of them. There's a shortage of these people in the United States and they're also very expensive. And so it's in that kind of environment where we looked at that and say "You know what, there is a potential technological solution that can bring additional efficiencies into this kind of a process."
Jake Aaron Villarreal: So you're solving a couple problems. You're helping hospitals be more efficient with technology. The technicians or the clinicians are also making decisions on patients, right? They're looking at data. They're saying "This is based on everything you've done. This is what we think is the next thing you have to do," maybe like making sure that they're aligned with the types of medications or whatnot. But if that goes wrong then you have a patient that also is getting the wrong support, the wrong, you know, solutions. Yeah. So talk to that.
William Chan: Yeah, absolutely. So in a hospital, right, hospitals want to make sure that they're delivering the best care they can to their patients. And in order to ensure that that is the best care, they want to make sure that the patient documentation, for example, is accurate, right? Approximately 30% of the time, the the patient documentation isn't as accurate as it needs to be. That doesn't mean it's necessarily wrong. It's just not accurate and not as precise a description of what the patient is going through. So, hospitals want to make sure that that documentation is precise. And in order to do that, they hire clinicians, nurses, in hospitals to double check that documentation to make sure that it's precise. Now, that obviously you can see where this manual administrative work kind of comes into play. It's highly manual and highly labor intensive and therefore inefficient. Can we use technology to review all of that and identify the times when the documentation is not accurate? Remember, only about 30% of the time is the documentation not accurate. So 70% of the time everything's fine.
Jake Aaron Villarreal: Yeah.
William Chan: You know, you don't need to review. You don't need a human being to review 100% of all the documentation. You probably need technology to identify the 30% where it's not accurate and then dive into that 30% that is not accurate. So that's what our technology does. We try to identify the areas that 30% where the documentation isn't as accurate as it can be.
Jake Aaron Villarreal: Yeah, that's great. Really cool. Well, AI is, you know, integrating into every system and every industry and making leaps and bounds of how companies are operating and, you know, tightening up efficiencies around how they, you know, build products or manufacture or ship. In healthcare, there's lots of systems, archaic systems, lots of data. Getting into a hospital is probably half the battle of just getting them to take a look at your company. But you've been around, you've bootstrapped this and you've scaled it up and you've got thousands of clients. Couple questions. What was it? What was the decision to bootstrap this without raising capital like? And now where you're at today, are you able to continue to just grow and scale or is that, is raising funding at some point part of the picture for you?
William Chan: Yeah, so in the early days we wanted to make sure we had the product-market fit, right? We didn't want to get ahead of our skis by raising a lot of money potentially and then just spending it on something that might not have made sense. It might not have stood the test of being in the real world, being used by an organization to solve a real problem. And that's why we decided we wanted to bootstrap it. We had to make sure that we were very efficient ourselves. We want to be efficient with our own capital. So my co-founder and I used our own capital to to fund the company and we wanted to make sure that we were solving the exact right problem. That's why we decided we wanted to bootstrap it and determine that we could do this ourselves. Otherwise, no one else should invest in us. If we can't invest in ourselves and make sure that it's the right decision to be made every step of the way with the product, no one else should invest in us.
Jake Aaron Villarreal: Yeah, that's smart. In those early days going back to the bootstrapping, what was that like? I mean, you know, you're building a business without funding. Did you feel like you had enough runway to create a solution that was going to have market fit pretty quick?
William Chan: I think one of the things about being an entrepreneur is you try to be an optimist, right? And so you always think that you're going to be able to make it. In reality, you probably have to set some timelines for yourself. And so we set ourselves some timelines. We said, you know, within 16 months, we're going to make our first, if you will, $10,000, you know, or $20,000. You got to, you got to show some return, even if it's small to show that somebody is willing to put uh some put money where their mouth is or make a bet on you. So, we set those timelines for ourselves. And if we were able to hit those timelines, then we would move on to that next stage and say, "Okay, we can take this on for another 12 months," right? "But within the 12 months, we're going to double the amount of income that we're going to need to make." So, you kind of set stages for yourself and attempt to hit them. And if you can hit them, you keep going. If you don't hit them, then you have to make some significant trade-offs.
Jake Aaron Villarreal: Yeah. Well, you've got a lot of success so far early on, and I say early on, but you've been around for a while. What's the state of the company today? How big are you employee-wise? You've got thousands of clients. Are you recognized in the market in healthcare as like a big player in in...
William Chan: Yeah, we I think you know like you said we have about you know over a thousand hospitals around the country that use our software. We are recognized as the leader in AI solutions right, specifically in revenue cycle management in the area of clinical documentation and utilization management. We've been very successful there. We won multiple awards for the software and have high NPS scores from our customers. From a company size, it's still a still a midsize company about, you know, 250 to 300 employees. We, again like everything else that I talked about, we try to be very efficient with our capital allocation. We try to be very efficient with the teams that that we build around the product and the teams that we build around managing the company.
Jake Aaron Villarreal: Yeah. You know they say that you know if you don't have problems you don't have a company because it's about solving problems. You hope for the better problems to solve and not the bad problems to solve. But as a company every company evolves and you have challenges to overcome and grow and scale and whatnot. What's one of the bigger challenges you look at in the market today and face?
William Chan: You know I think in any dynamic environment, especially like healthcare where there is a significant desire to improve, there will always be competition. And so the the biggest challenge is to make sure that you don't rest on your own, you don't rest on your laurels, and that you're always looking around the corner to ensure that your product continues to deliver value to your customers and that they're always delivering value in a larger, better scale compared to your competitors.
Jake Aaron Villarreal: Yeah, well said. You know, as a leader, you've now got this company to where it's at today, 250, 300 people. The company has had some success, some breakthroughs. How have you evolved as a leader?
William Chan: Ah, that that's a... that's a great question. You know, there's a proverb that says, "As iron sharpens iron, so one person sharpens another."
Jake Aaron Villarreal: Yeah.
William Chan: I think one thing that I've evolved as the company has evolved is that I've learned that, you know, just because you're the leader doesn't mean you figured it all out. And that's probably as you grow as a leader, you realize there's a whole lot more that you actually haven't figured out. And so you need help, you need answers. ChatGPT is all very helpful, but really you need others who are with you on that same journey who can come alongside with you. So one of the things that I've learned is to ensure that I have others, you know, other CEOs who can come alongside me, who can speak to me, help me through the challenges and the issues that I run through. I have an executive coach. These are some of the things that have helped me evolve and the realization that I can't do it all alone, that I need a group of other people who will come alongside me.
Jake Aaron Villarreal: Yeah. You know, companies build products, but they're nothing without the people. So the fact that you're utilizing whether it's a coach or an advisory board or just in general people that you can brainstorm with, you know, I myself have a coach as well and I think it does give you an edge to brainstorm, to solve problems, to see blind spots you don't see with yourself and be able to strategize and and really solve problems. But it all goes back to people. Talk about the culture that you've built and the type of people that fit your company from an innovative perspective, from a work ethic perspective. What, what's it like to work at Iodine?
William Chan: Yeah, I think one of the key things in our world is we want people who are always curious and always trying to innovate. And so there's always a challenge, always a push that I try to cultivate with my team and have my team cultivate with their teams is that we try to be innovative in everything that we do. That we try to be efficient, try to be effective in everything we do, but we also want to make sure that we are innovating and it's not just in our product, but it's also in our processes. So there is always a push, a constant push for us to rethink how we do things, right? Whether it's building a new and better product or a new and better process internally or how we serve our customers, so that we can always ensure that we're doing the best that we can and as efficiently as we can. So I think that is probably one of the key cultural traits at Iodine. There's an innovation and a push towards innovation and towards effectiveness.
Jake Aaron Villarreal: Yeah, that's well said. You know, innovation is important. You look at AI and what the world sees today is, you know, ChatGPT and the UI and it's easy to use and brainstorm and get data very quickly. But you started your company way before ChatGPT was well known to public. What was AI like for you machine learning wise and now with LLMs so prevalent? How has that changed or shaped your company if at all?
William Chan: Yeah. Well, it definitely was the foundation of the company way back when when we tried to solve this problem. We wanted to build clinical intelligence that would help administrators and hospital personnel make clinical decisions for for administrative purposes. And we started by writing a lot of rules. We thought we could do it by writing a bunch of rules and just you know write write programs that would just do rules. And very quickly came to the realization that decision-making or clinical decision-making is so complicated, you can't just simply write rules. And so we decided we were going to take the leap and use this newfangled artificial intelligence capability. Back then it was machine learning, neural networks, and see if it actually worked. And so we jumped on the bandwagon early.
And so that's always, so AI has always been a foundational tool that we've used to build our technologies. So as new AI tools have come into the picture like generative AI, like large language models, like agentic AI that's coming down the pipe now, right? We continue to just embrace these new approaches, these new algorithms, if you will, to see if they can better solve uh these same use cases, these same problems that we've been tackling for quite a while. Can we do that better with an LLM versus a machine learning model? And guess what? The answer is not always yes. LLMs are very good at certain things. Machine learning models are actually good at other things. And so over the years, we've been able to understand and know which types of algorithms, which types of AI approaches work best for the problems that we're trying to solve.
Jake Aaron Villarreal: Yeah, really good to have two perspectives. One where it was before the LLMs and now after I think gives you a real advantage. A lot of companies are are are you know built on having a moat around their technology or their business so they can protect and defend their their space. Do you have a moat or has that changed? Where are things at from how you defend what you've created in your territory?
William Chan: The the moat really is the fact that we've been using AI for a long time and so we understand how you can apply the different kinds of AI to the different kinds of problems that you see along the way. We have built out machine learning models that have stood the test of time, right? And they continue to be improved upon. The precision of the predictions continues to improve over time. That's the moat that we hang our hats on and that's the moat we will continue to reinforce over time.
Jake Aaron Villarreal: Yeah. Well, I like the position you're in as you continue to evolve and look ahead. What are you excited about? What's on the roadmap that you want to take your company to in the next 12, 18 months or beyond?
William Chan: Well, the challenge is that, you know, the healthcare administrative waste is, you know, waste and chaos and all of this is still a $260 billion problem. I think McKinsey did an analysis and that's where that's where this number comes from. There's still so much waste in healthcare. And so again, Iodine's continued mission is to go look into this world to see how else we can apply AI, how else we can apply the machine learning and AI models that we've built to address all these inefficiencies, to address all these pieces of waste. You know in my world, how else can we improve hospitals' ability to capture the value of the care that they have delivered to their patients? How else can we continue to make impact to the hospitals so that they continue to be financially sound and financially viable. That is the future roadmap that... sorry that's the mission that we continue to see and the road map is how do we take all these new technologies, these new algorithms and continue to apply them in additional use cases as we uncover them through our journey into healthcare.
Jake Aaron Villarreal: Yeah, you know, we're talking to and working with a lot of companies specifically in the AI space currently and some that are not, but one of the trends we're seeing are companies are hiring only those that have experience with AI tools. So think of an engineer. They might be coding, you know, 90% of the time today, but with tools, with a Cursor and different tools now, you might not only need to be coding, I don't know, 30% of the time or 40 or 50. We're seeing companies that are actually only hiring people now that have experience with AI tools. And not just coding, but marketing and sales and just are they interested in learning about those technologies that's going to make them more efficient and more effective? What's your take on AI tools in helping your own company optimize?
William Chan: Oh, we're we're I'm always making sure that I'm pushing my team and the entire company to be utilizing all of these AI tools, right? In some ways, you kind of have to eat your own dog food.
Jake Aaron Villarreal: Yeah.
William Chan: You want to make sure that you're using AI because that is the technology that we were also delivering to our customers. But the value is there. You know, I I can I can do a lot more with ChatGPT than I was I was able to do on my own before, right? And my team, my marketing team can put together copy a lot faster. My development team can write code a lot faster, right? It's still not perfect, right? They can write code, but the the AI code sometimes still hallucinates. And so, you still need people who understand coding, who can look through the code and double check the work, right? So you're still... it's still not as efficient as it can be. It's getting better. You know, tools like Cursor and what have you are always going to get better, but you still need the people who have the fundamental expertise in the business. You need you need still need the best coders because the best coders will know when the coding that is being generated by AI isn't up to par. You still need the best marketers because they're the ones who can read the copy and say "this is good copy or that's not as good copy." Right? But the the human in the loop is still key to ensuring that AI is leveraged to the best of its abilities.
Jake Aaron Villarreal: Yeah, we're pushing AI in every single way, but we're making sure that people are still checking to make sure that it's all right. Yeah. I mean, I I see this world and my belief is that there's going to be multiple systems that have AI agents that humans are going to be orchestrating and managing the agents. And it's going to be for sales and for marketing and for operations and for HR and all different departments, but it's going to take less people to manage the process of companies to be more efficient, more profitable, at the same time creating value that you know, companies will want to use that company's service. So, you know, I think there's a lot of option, opportunities to to win in the space, but we're ourselves looking at technologies that we could best use.
In fact, we actually built our own too. So, we have a system that we built which are, you know, AI agents that allow us to do our job better, faster in terms of looking for candidates and sourcing. But more importantly, the communication between our clients. There's like a lot of friction sometimes between "you told me you wanted to hire a C-this kind of role. Here's the job description." When you took it back to the team, they had some questions. There's a lot of back and forth and "we think I think this is what they said. Did they really say this? Let's clarify and verify." There's a lot of human back and forth. But to have a system that that can take what you need and what you want, put it into a system. We're validating, "We think this is what you shared," we're sending candidates. It's getting smarter. It's now understanding you as a client and you no longer have to tell us who you are, what you need, and "no job hoppers," you know, in this industry. You know, it's got to be this many years of experience doing XYZ. Like all that's going away and now it's we're thinking before you're telling us because we know what you want. And that's the value that we're seeing in AI. So yeah, that's more of a trusted value proposition that we're seeing really works that now we're, you know, exploiting it and scaling it out.
That's just one part of the business. But when I look at companies like yours, which is really saving lives, on a mission to keep hospitals in business, doing the right thing for the country in a lot of ways, right? I mean, you're helping the the the organizations that are keeping people alive to stay around. And I just, that's, we're doing our part. You're doing your part. And I can't think of a higher mission to be a part of. So, I'm excited to hear what you're doing today and where you're going and for taking your time to share your story with us here. It's it means a lot. Hopefully, it's going to save more lives in the future. I'm sure it will. If anybody wants to find Iodine or they want to connect with you, where do they go?
William Chan: Well, they go to www.iodinesoftware.com. Right. We're And we're on LinkedIn as well, on Facebook. That's how you find us.
Jake Aaron Villarreal: Very cool. Any last words? Anything else you want to share before we wrap up here?
William Chan: No, I think we've talked through a lot.
Jake Aaron Villarreal: Okay. Really cool. Well, thanks so much for your time here, William, today and for the listeners that have listened. It means a lot to me you spent your time with us today. I'm your host, Jake Aaron Villarreal, signing off for now, but can't wait to catch up with you all on the next episode. Until then, William, the world, take care. If you like what we're doing, don't forget to subscribe, leave a review on Apple Podcast or wherever you listen, and follow us on YouTube where we go behind the scenes to learn what it takes to be a startup founder.
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