john sung kim five9 doctorbase

Hospitalization in California – A Patient Perspective Meets Ironic Justice

As an executive at a leading health technology company in San Francisco, I often viewed both patients and medical providers as a bit whiny. I mean, I go to a lot of conferences, give a lot of customers and partners my personal cell phone and am fairly active on patient support forums.

So a lot of the time, as they’re railing against “ObamaCare” or “intolerable patient families” I’m thinking “Oh, do you need me to take you for a ride on your Whaaambulance?”

After all, at least we live in a system where hospitals don’t turn patients away and being a nurse or doctor still has plenty of social esteem. And when you’re dealing with healthcare at a meta level (we have 15,000 providers servicing over 6 million patients on our SaaS platform) getting caught up in individual provider or patient stories can seem like a waste of time.

That is, until you end up in the hospital yourself.

The following is how my recent overnight stay in a Northern California hospital exposed me to amazing providers, horrible IT and billing bordering on mail fraud. And, I’m told, it’s all just “part of the system.”

I crashed my motorcycle and broke my arm.

Because my humorus was shattered, there was no surgery needed. Just a CT scan, 8 shots of Diladid, cable TV and bed (no HBO) and a rather bland continental breakfast. Guess what the bill for that one night stay was?

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That’s not typo!

While the hospital charged $49,674.80 for that one night stay, my insurer only paid $34,772.36. The rest was “forgiven” by the hospital. I called both the insurer and the hospital – the insurer told me I was fully covered and the hospital made it nearly impossible to get a detailed bill.

After several phone calls and some faxes I have yet to receive an itemized bill from the hospital. But it gets better (or worse) as a subsequent parade of bills started to arrive.

The ambulance bill

The local contracted ambulance company billed my insurer and got paid. Then they went to my auto insurer and demanded payment. They sent me multiple invoices asking me to pay. When I finally called the ambulance company I could only reach the contracted 3rd party the ambulance company used for collections. I had to fax them paperwork from my insurer showing them they had gotten paid. meanwhile my auto insurer started sending me form letters asking me to document that the ambulance company hadn’t been paid.

After multiple calls and faxes a representative said to me, “Mr. Kim, it takes a while to update our records and I understand your frustration but I don’t work for the ambulance company. I work for ______ services that contracts the billing.”

I had a sneaking suspicion that the ambulance company knew full well it had gotten paid, but was doing this as a routine way to get paid multiple times, if possible.

Maybe I’m a pessimist, but let me explain the other bills that followed.

The orthopedic appliance bill

This was around the same time that ______ Orthopedics started sending me bills. Now this was probably my favorite conversation with a representative. It went something like this -

Me: “I got a bill for a device that i wasn’t given. Why are you sending me collections notices?”

Representative: Mr. Kim, are you telling me you’re going to destroy your credit for $600? We already gave you a substantial discount from what I can see.”

Me: “How do I get a discount on something I didn’t get?”

Representative: “Mr. Kim, I’m not here to argue with you. I’m staring at a piece of paper right here with your signature on it saying you will pay for this device.” Me: “Wow that’s cool IT you have. What does my signature look like?”

Representative: “Excuse me?” Me: “I have a very unique signature, it’s a common shape. You’re staring at it right now, right? Is it a circle, a square, a triangle?”

The representative hung up on me.

When I called back I got fast busy signals throughout the rest of the day. So the next day I decided to call the parent company.

After a few transfers someone explained to me, “We have no record of your bill, because _____ Orthopedics (a $550 million market cap company) operates its locations all independently, so we don’t have billing records of any one office here.”

When I asked why that location sending me a bill wasn’t answering their phones, she told me “that branch is now closed. You won’t receive any more bills.” One has to wonder if these organizations create a degree of separation from corporate management to billing so that if someone gets caught for fraud, management can feign ignorance.

I’m not saying that’s true, but look at this ridiculous “bill.” How many senior citizens can’t understand this bill and simply just pay?

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The bill that’s not a bill.

Having said all this, the care I received from the nursing staff was exceptional, and the communications efficiency on their Vocera devices made it seem like the internal coordination amongst doctors and nurses was amazing.

Afterwards, not so much. The hospital had bought a “post discharge care coordination platform – for mobile!”

So I got a survey in the mail weeks later.

This entire experience has further reinforced my belief that the “problem” with our healhtcare cost crisis has nothing to do with the medical providers themselves and that punishing or burdening the providers isn’t addressing the real problem.

If only I knew where the real problem was.

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How I Started Five9 (a publicly traded SaaS Company) Knowing Nothing About Software.

In 1997 I was graduating from school and the Internet felt, well old.

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Mark Cuban got the Internet’s future potential. I didn’t. I’m very jealous of a lot of people, but especially Mark Cuban.

After graduating I worked a relatively easy corporate job at a brokerage firm, but it didn’t strike me how much potential the Internet had until the wife of a computer science professor at UC Berkeley walked into my office to deposit a restricted stock certificate for a company called Akamai. She had it folded up in her purse while negotiating with her three kids (two of whom had picked up pens on my desk and were trying to stab each other).

The stock certificate was worth a little over $20 million dollars.

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If it was easy we’d all be doing it.

A few days later her husband showed up to sign some papers dressed in shorts and sandals (it turned out he had been an early employee of Akamai and had ‘retired’ in his thirties to become a professor). I remember he had driven up in an early version electric car. He looked relaxed, happy and I wanted to be just like him.

So I quit my job the next week. Six months later I hired my boss. More on that later.

Having no idea what kind of Internet company I wanted to build, I looked around at the most expensive software I knew of and thought, “I’ll just recreate a cheaper version of that and sell it for less.” The brokerage firm I had worked at gave us all two weeks of training in how to execute online stock trades at one of their call centers in San Diego. That’s when I had my brilliant idea (except it didn’t turn out to be brilliant until I changed it four times).

The call center manager who monitored our training was in his late twenties and had a smug grin on his face all day, every day. “This call center technology I’m teaching you costs $30,000 a person,” he mentioned, several times.

I was pretty sure he was having sex with one of the other trainees, a young Spanish girl with a great smile. She never smiled at me though. Not once. I was counting.

I kind of hated that guy and his smirk.

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If only they all would smile in my direction.

That’s when it struck me that if I could build cheaper call center software, I could make my own Internet company.

And have revenge on the Smirker and get the beautiful Spanish girl to smile at me and say, “You complete me. In this call center. Viva la revolucion!”

And I would have my revenge on all Smirkers who had smirked me before. I’d get rich, then wear shorts and sandals all the time to work, just like the young UC Berkeley professor. Or just generally do whatever I pleased. Like Mark Cuban.

John Kim Five9 DoctorBase
And the man can dance. Kind of.

I started canvassing anyone that might know anything about business software. Because I was clueless.

My college roommate  Elliot had worked for a startup in Boston called Webline that had become acquired by Cisco for $440 million dollars. He was a low level QA engineer and “no,” he said. He certainly wasn’t going to quit his job (pussy). But he referred me to a very talented Cisco engineer named Ray who was unhappy working for a mega corporation and got the two of us in touch.

I convinced Ray that Silicon Valley and the Internet “was our opportunity to reinvent the call center business.” While he was no pussy, he did turn out to be slightly insane, but hey – we’ve all got issues.

Ray flew out to San Francisco. We went drinking at places we couldn’t afford and celebrated our newfound independence from the “Matrix of Corporate America.” It was 2003 and Neo references still had street cred. Within a few days of partying (throw in a trip to Vegas) we were nearly broke.

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The Clift hotel on any given night has a collection of cougars, Valley wannabes, escorts and an occasional celebrity.

Based on Ray’s former connections at Webline, we were able to get a meeting with Dave Keshian and Bill Kaiser at Greylock Partners, a large, venerable VC firm in Boston.

I was so excited I didn’t get any sleep the night before and had practiced my pitch so much that I had every word memorized. So practiced in fact, it sounded like a shrill hype man on a soap box.

If you can imagine a 5 foot 9 hype man with a megaphone nervously rattling through a powerpoint presentation, that is. Three slides into my pitch Bill Kaiser stopped me and said, “Whoa! Whoa! Whoa! Kid – cut the hype.”

Let me also mentioned that before the meeting I had handed out to each VC t-shirts that had our Five9 logo in the front and the screaming loud sentence on the back, “In the Call Center Business? Try Us Now!”

* Fortunately Bill Kaiser turned out to have a great sense of humor – a few years later he told me that he still had the t-shirt and actually helped me out with a small favor. Maybe he pitied me a little.

Now I’m sure we all have those handful of moments where we look back and cringe at ourselves. This was one of them.

We had absolutely no fucking idea what we were doing. In any regard.

And then at the height of my panic and desperation I remembered something random I had heard about Spike Lee (the movie director). Spike Lee had funded his first film by applying for every credit card possible.

So the next logical thing to me seemed to be to immediately apply for every credit card that would have me as a member.

I thought, “OK, if the VCs won’t have us, fuck it – we’ll bootstrap this Spike Lee style.

Eventually I got 6 credit cards totaling $30,000 in credit.

But how could we market ourselves to customers?

Not being able to afford a PR firm, or any advertising of any kind, I decided to learn as much as I could about promoting our company online, though we didn’t yet have a product.

While Ray wrote the code to create the product (a product we would have to completely rewrite no less than 6 times) I wrote content, traded links, and begged and borrowed to have people help us for free.

Google was becoming the dominant search engine back in 2003 and I tried to learn as much about “becoming number one” for things like “virtual call center.” It was hard. It was exhausting.

I grew up loving computers and the Internet (AOL) when I was a teen, but I was working so hard at ranking well on Google I started referring to my computer as the “slave box.”

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#1 this week, #2 next week, #1 next week, #4 next week…..

But eventually it worked. Ray was an extremely gifted programmer and could build anything I wanted. If only I knew what I wanted to build. But…. There’s a lot of functions call centers do.

So I bought an old Nortel PBX manual on eBay for $15 and read through it all. I documented 117 features. Ray looked at me and said, “Which ones do you want?” “I don’t know, ” I said. “I thought you were the engineer.”

John Sung Kim
“Bro, huh?”
“Huh, bro?”

As we argued which features to build (we argued a lot) a potential customer saw one of my search engine links and called me. His name was Joe from Provo, Utah and he wanted just the predictive dialer for his call center  but didn’t want to pay Avaya for all of the other functions he didn’t want. I quoted him $80,000 even though I didn’t have it.

He called my bluff but said he trusted I would get it built, but the price had to be $40,000.

We were officially in business.

So then we started shipping Dell machines with a Dialogic telephony board inside loaded with our call center software. It wasn’t sexy but it sustained us enough to hire a few more people and start growing. Then one day for some odd reason I was thinking about long distance phone calls and it struck me.

And when it struck me I didn’t feel a moment of “Eureka” or a lightbulb going off – I felt like, “Fuck! I’m so damn stupid! Why didn’t I think of that before?”

The idea: Instead of building software to load up on cheap servers, why not build one “mega-server” that we host ourselves and let people rent the functionality over the web?

My first boss Gus Laredo (who we had hired as our 5th and very key employee) told me, “No, that’s stupid.”

The finance guy told me “No, that’s killing the Golden Goose.”

The engineers told me, “No, that’s going to be a pain in the ass to build.”

I said, “Guys, what’s the alternative? You want to be the low cost leader for the rest of your lives hustling these shit-boxes?” I pointed to the growing pile of Dell server boxes accumulating in our small Walnut Creek office.

To the team’s credit, they eventually let me have my way, and I ended up becoming the roommate of Andrew (engineer #2) – mostly so I could harass him into programming day and night.

Eventually it started to work and it turned out far, far more customers were willing to pay $600/month than $10,000 for a Dell box that couldn’t change or expand.

As we grew, we ended up hiring the VP of Marketing at Salesforce.com, a lot more managers than I would’ve liked and finally got a great office space that impressed everyone except my father – who kept asking me why I wasn’t a doctor yet.

And so we just kept keeping on. It felt like crawling through miles of glass on your hands and knees, but after that first year of real growth I was able to look back see just how far we had crawled. The first year we had done $0 in revenues, the next year $900k and the next year $3M.

I took the company to $10M ARR before I left – After 5 years I was tired and I needed a break. Today, the company is traded on the NASDAQ market under the ticker symbol FIVN, building an industry changing product and employing hundreds of Bay Area Californians.

john kim five9

Whenever I call into a corporation’s call center and hear they’re using my software I can’t help but smile. Until I’m on hold for longer than 2 minutes.

I get asked to speak at various conferences on “how to do it,” but the truth is I honestly have no idea how we two idiots managed to start all that. I really don’t. But given that experience if I were investing in a SaaS startup today I would look for -

1) A product in a boring ass industry (healthcare?) that has a large TAM (Total Addressable Market) and is relatively recession proof.

2) A product that offers either a 10x better value proposition or is 10x cheaper cost. Or is 10x easier to use.

3) A tenacious team that’s a little crazy and a little too stupid to know it can’t be done. Because believe it or not, especially in the early days – a little crazy and a bit of stupid helps.

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@DoctorBase Growth Metrics

What I gleen from this is that while our usage is growing rapidly, we need to do a better job supporting our free version customers and create a better a better funnel for our doctor and nurse users to ‘mark & resolve’ the status of replied messages. However, as developers and designers – this is largely our job to design their user experience to allow for this to be easier; instead of an “extra task,” at the end of each patient reply. Great job by my team to make the reality of medically mobile communications a reality, but still tons more work to do.

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New Top 5 Signs Your StartUp Is Going to Fail

Hopefully this helps, not insults. Being in the heart of the technology scene in San Francisco, I actually try not to go to tech industry events if I can help it. Focusing on my team-mates, customers and product often doesn’t leave time for much else, but these are the top 5 latest things I hear around town that sends a shiver down my spine (or would if I was their investor/spouse/business-partner).

1) “We’re going to change user behavior.”

God couldn’t change user behavior. If a user’s life was depending on it, they still wouldn’t change their behavior. Trust me, I’m in healthcare.

2) “That’s what Steve Jobs would do.”

The only problem is that you’re not Steve Jobs. I’m not Steve Jobs. His rules don’t apply to us save for a few aphorisms that likely can be applied to any industry with nursery-rhyme like depth.

3) “That _______ (that’s super popular) is a rip off and ours is way better because _________.”

Focusing on a popular platform and assailing it worked for Marc Beniof against Seibel (anyone remember Seibel?) but it’s rare that B2C products or B2B SMB products can get similar results – primarily because the dollar size of the deals aren’t that big. As well, selling as the low price leader is for suckers. Your customers will be the crappiest of all time, take down your brand and your support team. Zoho is free. Salesforce is expensive. Which one would you rather own?

4) “I love our ______ because it really helps me _______.”

Waxing on (or off) about how much your product helps “you” doesn’t mean it will help the masses. Quite often, entrepreneurs (myself included) are egocentric narcissists whose view of the world rarely translates into other perspectives en mass.

 5) “Now I want you to imagine ______.” 

I don’t know why, but people who don’t have a product yet or customers yet and say this fail.

* May I now leave you with the best video compilation of epic fails (non startup related but hilarious nonetheless). I mean, since you’re here…

Epic Fails – “Best of” – in Fast Forward