Latest / Elevate Podcast: Powered by Braden / Elevate Ep 55: How Derek Bang Built His Business - Derek Bang, Founder/CEO of Kodiak Solutions

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Elevate Ep 55: How Derek Bang Built His Business - Derek Bang, Founder/CEO of Kodiak Solutions · Elevate Podcast: Powered by Braden

• 0:02
  Welcome to the Elevate podcast, where
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  every leader has a story. We bring you
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  conversations with influential leaders
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  who are shaping our local communities.
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  Hear about their path to leadership and
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  experiences that define them and how
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  they're driving meaningful impact today.
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  Hey everybody, Jason M here with another
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  episode of the Elevate Powered by Braden
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  podcast. I've got a reasonably new
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  friend whom when we met on teams I
• 0:27
  didn't realize was 6'8. So seeing Derek
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  in person was a little bit of a
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  surprise, but you don't check into teams
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  with your height and so otherwise you
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  can't really tell. But Derek, welcome to
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  the show.
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  >> Thank you. It's pleasure to be here.
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  >> So excited to hear your story. I know
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  there's a lot of cool things in that
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  journey, but today the current
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  organization. Tell us just where you are
• 0:47
  and the role.
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  >> Um, so I'm the founder and CEO of Kodiak
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  Solutions, uh, based here in
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  Indianapolis. Uh, you know, we have, uh,
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  offices, we have people all over the
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  country. Yeah. Our headquarters is here
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  in Indianapolis. We have offices in
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  Chicago, Nashville, Denver, uh Delhi,
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  India uh as well. But uh we're a
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  healthcare technology platform uh
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  serving hospitals and large physician
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  groups and other types of healthcare
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  entities and even non-healthcare uh
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  businesses, you know, across the United
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  States.
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  >> Yeah, I know that part of your story is
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  going to be great when we get there.
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  Obviously, anytime you have a founder
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  and a CEO, there's always stories that
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  go with that. Excited to hear it. But
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  before we get to that part of your
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  journey, let's go back to the beginning.
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  Where are you from originally?
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  >> Uh I was born in Pittsburgh,
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  Pennsylvania.
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  >> Okay. Um and uh kind of early childhood
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  was in Lynchburg, Virginia.
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  >> Okay.
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  >> And uh father worked for a government
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  contractor. So kind of moved around some
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  and then actually moved to Indianapolis
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  uh because of the four bedroom Harrison
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  but was still operating and his company
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  had a contract with uh the fort.
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  [clears throat] So I ended up moving
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  here in 1989.
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  >> Okay. and uh went to junior high in high
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  school in Caramel.
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  >> Oh, so Carmel. All right. So, what what
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  did high school look like? What were you
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  doing back in those days?
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  >> Anything I could get involved with
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  music? Uh generally I started out in
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  athletics, but I kind of just migrated
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  more towards music for whatever reason
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  as passion and um you know had we formed
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  a rock band. I was in all the school
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  music programs. Oh yeah. So you had a
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  jazz quartet. uh any instrument I could
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  play and learn, I got really interested
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  in as well. And [clears throat] in fact,
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  you know, I originally thought when I
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  applied IU, I was going to go to the
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  Jacob School of Music. Okay.
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  >> Um
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  >> and um I had a wonderful uh music
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  teacher in at Caramel and uh he took our
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  our jazz group uh to Chicago to uh see
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  Ray Brown, bass player. Okay. Famous
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  jazz bass player. Blackstone Hotel stunk
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  us in actually. No, we had a not for we
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  were all underage but he had the right
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  connections and got us in. Yeah. And so
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  we watched Ray Brown play and then we
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  got to meet him uh on set break. And you
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  know as we learned more about sort of
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  the lifestyle and what it took and how
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  they were. I just kind of figured, you
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  know, that's probably not for me in
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  terms of being a professional, you know,
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  musician.
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  >> Okay.
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  >> But I knew, [clears throat] you know, I
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  was good at accounting and and uh other
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  things and I thought, well, I could
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  always have that as a passion, of
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  course. Yeah. Uh and uh a lot of uh
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  people in my mom's side family were
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  accountants. I just thought, well, you
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  can get a job about anywhere doing
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  accounting. IU has a good business
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  school. So, uh not what it is today, but
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  uh but uh great school. And uh so I
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  ended up doing business at IU.
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  >> Okay. Accounting undergrad, MBA.
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  >> Gotcha. All right. So, making the
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  decision to go to IU, let's before we go
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  real quick to IU, let's talk a little
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  bit about high school. So, which
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  instruments were you playing? And I'm
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  curious, in the rock and roll band, were
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  you guys doing covers? Were you writing
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  your own stuff? What What did it look
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  like?
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  >> Sure. Uh I mean, I started in second
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  grade playing violin, didn't like
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  violin, I learned a piano, and that's
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  really kind of stuck with me throughout,
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  but I got you. Schools don't have piano
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  as an instrument auction typically. You
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  know, it's all wind instruments and
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  orchestra or choir.
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  >> Sure. So, I I picked the saxophone and I
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  played saxophone throughout high school
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  as well. And then, uh learned brass
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  instruments, too. Uh, and but stuck with
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  piano as well and jazz programs you
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  couldn't play during the during the
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  school, but they had a jazz band. Okay.
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  He could get involved with so I played
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  piano there. Gotcha. Um, and my other
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  brother older brother was a bass player.
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  >> Oh, yeah.
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  >> And so, uh, he had gotten into a band
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  and that sounded cool to me as well. And
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  so I formed the band with some of my
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  buddies as well. Uh we started
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  performing uh in ninth grade and uh we
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  still play today. So they'll get
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  together for a long time. Um one of
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  them's a professional jazz guitarist in
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  New York City. So he's no longer here
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  local.
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  >> Okay.
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  >> But otherwise, yeah, we still play
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  together. And so we just did that on the
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  side, you know, throughout high school
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  while we were, you know, playing in
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  other kind of organized wow her brands,
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  >> you know, but a lifelong passion. Now
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  that's awesome. So, you decided after
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  meeting some folks up in Chicago that it
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  wasn't going to be the career choice.
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  You choose IU and you're going down the
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  path of business and accounting. What
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  did you think it was going to look like
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  and what were you planning to do when
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  you got out of college?
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  >> Um, well, when I was much younger and
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  living in Virginia, one of my best
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  friends, his dad was a doctor. Okay.
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  And, uh, I was really impressed by, you
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  know, sort of the medical profession. my
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  first kind of exposure to kind of
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  knowing someone personally that was a
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  physician as well. And I thought that
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  might be something I could be good at,
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  you know, helping people, solving
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  problems, um, etc. And then in high
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  school, I took Latin and biology and I
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  hated both of them. [laughter] So I was
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  like, okay, that not that not going to
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  work. Um, and so I kind of put that to
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  the side for a long time. And uh, and my
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  mom actually when we moved to
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  Indianapolis, she worked for St. Benson
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  Hospital at 86 Street. And uh so there
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  was always some kind of healthc care
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  thing going on. Uh and then when I went
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  to I did the accounting program uh and
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  then I did uh this new program at that
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  time was called the 32 MBA program. And
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  around that time they program brought in
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  a lot of outside presenters which was
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  really helpful to kind of help you make
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  broader choices in terms of careers. And
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  uh as I started talking to more public
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  accounting people they talked about
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  their specialization in certain
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  industries. of a I'm a manufacturing
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  accountant or I'm a healthcare or
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  government or technology and I started
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  thinking well industry is going to
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  matter at some point some pick an
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  industry
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  >> so I had an opportunity to do an inter
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  healthcare internship
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  >> okay
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  >> and start learning more and it it kind
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  of dawned on me well this has always
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  been interesting to me and then as I got
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  into it I saw an industry that was uh
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  mostly not for-p profofit
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  >> uh great passion and and and uh mission
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  from a lot of these organizations
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  uh but highly regulated, very
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  complicated, uh kind of behind the time
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  in tech,
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  >> uh you know, when you you don't know
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  meet a lot of people in graduate school
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  that are saying you I want to finish my
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  you know, degree and I want to go work
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  for a hospital,
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  >> right?
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  >> You know, they're going to you know,
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  Fortune 500 company or a tech company or
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  investment banking or private equity or
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  something like that. So um great talent
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  that was there but not necessarily uh
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  you know a lot of the leading edge
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  things were happening in the industry.
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  Uh so I saw an opportunity and he took
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  solve problems to help things and um my
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  freshman year at IU my my father's
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  company they shut down the fort uh Fort
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  Benjamin okay here and uh his company
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  cut down that
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  >> you know that contract essentially he
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  lost his job and that was kind of eye
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  opening to me thinking about
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  >> cyclical industries you know government
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  spending up and down construction you
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  know different industries come and go uh
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  ride different ways well healthcare
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  everyone gets sick.
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  >> Yeah. Healthcare doesn't really It
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  changes, it evolves, but ultimately it's
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  always going to be required. Right.
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  >> Exactly. Every community has hospitals
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  and healthcare need and you know the
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  spending at that time was probably 13
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  14% of GDP. Now it's 17 maybe 20% of
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  GDP. So say yeah it's a huge uh it's
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  just a huge market. Uh and um so it just
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  seemed like okay well you know I'm not
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  going to be a doctor but maybe I can
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  help on the business side of health care
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  and make a difference. That's right.
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  >> And so that was exciting to me.
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  >> Okay. So coming out of IU what was the
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  first role? Where'd you go?
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  >> Um so uh I was recruited by Ernston
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  Young at the time. So I went into public
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  accounting and um they had at that time
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  the uh largest healthc care professional
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  services practice. So they audited more
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  hospitals than anybody. uh had a huge
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  consulting practice really wanted wanted
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  to do was consulting so more that con
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  consulturing sheriff solving problems
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  but I had never worked for a hospital I
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  had no industry I never worked for
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  Medicare or an insurance company uh so
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  they essentially said we can't do
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  consulting yet
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  >> so why don't you do audit for a while
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  okay and learn how to audit hospital
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  systems and so I did that for a few
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  years and then after I did that they
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  said okay now you can transfer it to
• 9:06
  consultant so I had that I got my CPA I
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  had that you know understood sort of uh
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  the financial statements well of a
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  hospital.
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  >> Mh.
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  >> And then once I moved into consulting it
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  became known well we you know Derek is
• 9:21
  is someone that understands sort of the
• 9:23
  financial statement risks of the
• 9:25
  hospital well and the biggest hospital
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  financial statement risk is net revenue
• 9:29
  accounting.
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  >> Okay. So when you think about uh when
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  you go see the doctor and then the bills
• 9:35
  get paid, you know, you have a
• 9:36
  deductible and co- insurance a lot of
• 9:38
  times and then there's a contracted rate
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  that your insurance company pays which
• 9:42
  is different from what Medicare pays or
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  Medicaid pays or somebody that doesn't
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  have insurance, maybe they'll work out a
• 9:46
  payment plan or maybe they won't pay at
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  all. So you think about the just the
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  thousands and thousands of of patients
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  that come through the doors of a large
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  hospital system. you know, how did they
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  then estimate what they'll ultimately
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  collect from patients
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  >> to record that on their financial
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  statements? Yeah. And that became still
• 10:05
  is the biggest risk from a financial
• 10:07
  statement reporting perspective.
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  >> Okay.
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  >> So, if you're a CFO, you know, the you
• 10:13
  have to get the financial statements
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  right.
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  >> And the number one reason why, you know,
• 10:17
  CFOs get fired is errors in the
• 10:19
  financial statement.
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  >> Of course. Yeah.
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  >> If you're if you're given bad results
• 10:22
  and bad reports, obviously you can't run
• 10:24
  the business that way. Yeah, they get
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  let go. Okay.
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  >> Right. No credibility. So, uh, so that's
• 10:29
  sort of sort of, you know, what I
• 10:30
  started to specialize in that revenue
• 10:32
  accounting
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  >> side of that. But from a consulting
• 10:35
  standpoint, so I wasn't auditing it
• 10:36
  anymore in terms of did they do it right
• 10:38
  or not,
• 10:39
  >> but working with them on
• 10:41
  >> how do we help you do a better job with
• 10:42
  it? What is the one thing close process
• 10:45
  look like? What are the models? And it
• 10:46
  gets sort of statistical actuarial in
• 10:48
  terms and trying to come up with these
• 10:50
  models of methods to really predict on
• 10:53
  hundreds of millions you know you know
• 10:55
  of of receivables in terms of what's
• 10:58
  what's going to translate to cash.
• 10:59
  >> That's right. So it it's interesting. So
• 11:01
  you cut your teeth at EY you get a
• 11:03
  chance to do some some work up front.
• 11:05
  Then you get into consulting. Eventually
• 11:07
  you end up becoming a founder and a CEO,
• 11:10
  right? So that's at at at some point you
• 11:12
  make that decision to throw your hat in
• 11:14
  the ring and kind of start a company,
• 11:16
  but I'm curious after EY and and the
• 11:19
  learning there, where's your journey go
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  next?
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  >> Sure. Uh so
• 11:25
  doing consulting at EY was great for a
• 11:27
  while and then um Enron collapsed and
• 11:31
  there was a lot of the sort of early
• 11:33
  2000, you know, financial fraud and
• 11:36
  things of cursor. As a result of that,
• 11:38
  they passed the Sarbain Oxley Act
• 11:41
  >> and there were a lot of rules. In fact,
• 11:43
  that's when Arthur Anderson, the big
• 11:44
  public number one public accounting firm
• 11:46
  at that time, essentially collapsed.
• 11:48
  >> That's right.
• 11:49
  >> Uh because their role in the Enron
• 11:51
  debacle.
• 11:53
  So there were new uh requirements placed
• 11:55
  on public companies and uh while most
• 11:58
  hospitals are public companies, they
• 11:59
  adopt a lot of public accounting public
• 12:02
  company standards as well. One of those
• 12:04
  was, you know, there's very there many
• 12:06
  fewer things that um auditors can have
• 12:09
  their consultants do within, you know,
• 12:11
  their same uh firm.
• 12:13
  >> Sure.
• 12:14
  >> As well. And so I was doing consulting
• 12:15
  for a lot of audit customers because EY
• 12:18
  audited all the hospitals at that time,
• 12:20
  essentially all the big hospitals.
• 12:21
  >> Yeah.
• 12:22
  >> And those were my consulting customers
• 12:23
  as well. And there were a lot of things
• 12:25
  I could still do for them with the
• 12:27
  appropriate approvals, etc. But my
• 12:29
  belief was um consulting is very hours
• 12:33
  driven. It's very time intensive. It's
• 12:36
  very expensive.
• 12:37
  >> And that we would see a lot of projects
• 12:39
  where you go in and you would do some
• 12:41
  work but then uh you'd step away and
• 12:44
  things would maybe
• 12:45
  >> not stick that they would go back to the
• 12:47
  way they were. So you would make some
• 12:48
  progress and improve some things but
• 12:50
  then it wasn't sustainable. Project
• 12:52
  ends, no one's leading that anymore.
• 12:54
  They go back to old way. They have some
• 12:55
  turnover. Who knows what etc. And so my
• 12:58
  belief was you why aren't we using
• 13:00
  technology more to create more
• 13:03
  sustainable solutions. So okay we're in
• 13:05
  this unique chair where we see all the
• 13:08
  problems from working with all these
• 13:09
  hospitals across all over the country.
• 13:11
  We can see what is a you know systemic
• 13:13
  issue and where there's no solution can
• 13:16
  we create using technology tools a more
• 13:19
  scalable uh business model to kind of
• 13:22
  help implement these solutions and then
• 13:24
  solve it just on an ongoing basis. Yeah
• 13:26
  sure. So the technology plays you start
• 13:29
  thinking about that and and what's this
• 13:31
  technology going to look like first what
• 13:32
  year was that?
• 13:33
  >> That was 2005.
• 13:34
  >> So 2005 21 years ago, right? Tech has
• 13:36
  changed immensely. But I'm curious where
• 13:39
  do you you start formulating this idea?
• 13:42
  Where does that idea go? Where do you
• 13:43
  take that?
• 13:44
  >> Sure. So um I was uh
• 13:49
  my third son was on the way.
• 13:52
  >> Still on Yeah. On the way. still a young
• 13:55
  young parent as as well and so I wasn't
• 13:57
  ready to just you know completely you
• 13:59
  know be an entrepreneur at that time so
• 14:01
  I had some ideas and I looked around
• 14:03
  >> and I was still in that kind of I wasn't
• 14:06
  sure if the tech piece was going to take
• 14:07
  off as well that that's sort of an idea
• 14:09
  I had but I knew how to do consulting
• 14:11
  well okay
• 14:12
  >> I knew how to do professional services
• 14:13
  so
• 14:14
  >> uh I approached Crow uh Crow LP now it's
• 14:18
  Crochisic at the time
• 14:20
  >> and um they didn't have a healthcare
• 14:22
  consulting practice at So Crow was
• 14:24
  really well known in banking and public
• 14:26
  sector and a few other industry
• 14:28
  manufacturing but they and they had a
• 14:31
  desire to get into healthcare knowing
• 14:32
  what a big you know industry is and they
• 14:34
  really had done nothing in that space.
• 14:36
  >> Okay. And so I approached them and you
• 14:38
  know I wasn't a partner yet at EY
• 14:41
  um and basically said I think I could
• 14:43
  build some type of business and
• 14:45
  healthcare here uh if you know if you
• 14:48
  are willing to you know essentially hire
• 14:50
  me on and then if that goes well I'll
• 14:52
  become a partner
• 14:53
  >> and have some equity in that business.
• 14:55
  >> Sure.
• 14:55
  >> As well uh and if it doesn't work then
• 14:58
  I'll take it with me
• 14:59
  >> and um and know you what happens. So 05
• 15:03
  you you go to Crow and and I'm curious
• 15:06
  in that process because this is a a
• 15:08
  point where I think some people could be
• 15:09
  at in their career or maybe they have an
• 15:11
  idea or something to think about and you
• 15:13
  approach Crow I guess maybe first
• 15:15
  question would be why approach Crow.
• 15:18
  Second question um when you when you
• 15:21
  made that approach to them did you have
• 15:23
  any inroads? Did you know people there?
• 15:26
  H what was that like actually kind of
• 15:27
  getting the first conversation started?
• 15:29
  >> Sure. Uh so a person that I worked with
• 15:31
  at UI had joined Crow in Chicago as an
• 15:35
  auditor
• 15:36
  and uh and I had respect for him and so
• 15:39
  I just kind of reached out and said how
• 15:40
  do you like Crow? What do you think of
• 15:42
  it and how's that going? What are you
• 15:44
  doing etc. Uh and he had good things to
• 15:47
  say and u and he knew my reputation at
• 15:50
  EY. So pretty quickly they had people
• 15:51
  calling me saying hey are you
• 15:53
  >> okay
• 15:54
  >> facing up doing something we want to
• 15:56
  bring you in interview and as I learned
• 15:58
  more you know I knew that they had an
• 16:00
  innovation program which was MD uh at
• 16:03
  least among accounting firms okay and I
• 16:05
  knew they had a lot of uh technology and
• 16:07
  software engineers as well they were
• 16:09
  building custom software products for
• 16:10
  for customers which UI didn't do that
• 16:13
  and most of the firms didn't really do
• 16:15
  much as well in fact a lot of a lot of
• 16:18
  large firms had divested that capability
• 16:19
  but crow didn't. And so as I went
• 16:21
  through and [clears throat] started
• 16:22
  meeting some of the partners, um, you
• 16:25
  know, I like the values and the culture
• 16:26
  and the commitment to innovation and the
• 16:28
  the ability to build software products
• 16:30
  and I and I said I had some ideas that
• 16:32
  could turn into tools, but it could turn
• 16:34
  into nothing. But I think, you know, I
• 16:35
  was I'm still scrappy enough. Yeah. You
• 16:37
  know, I'll find a way to to build a
• 16:39
  business.
• 16:40
  >> Okay.
• 16:40
  >> I just didn't want to, you know, put a
• 16:42
  shindle out on my own at point in time
• 16:44
  to take on that risk with my, you know,
• 16:46
  personal situation.
• 16:47
  >> Well, you got you got your third kiddo
• 16:48
  on the way, by the way. Three kids
• 16:50
  total.
• 16:50
  >> Yes.
• 16:51
  >> Okay. Yeah. Ages of the boys.
• 16:52
  >> Um so about to be 25, 23, and 21.
• 16:56
  >> Oh, that's awesome.
• 16:56
  >> So all the birthdays are coming up here.
• 16:58
  >> Yeah, that's We talked about that last
• 16:59
  time. My big three around those same
• 17:01
  ages. Obvious have the little two as
• 17:02
  well. And Okay. All right. So 2005, you
• 17:05
  take this to Crow. Clearly, it must go
• 17:08
  well. How does the How does that journey
• 17:11
  go to where now you're the founder and
• 17:14
  CEO of Kodiak? What would that look
• 17:17
  like? and and how did you end up getting
• 17:19
  to where you are now?
• 17:21
  >> So, started at Crow just myself. Um had
• 17:24
  existing uh customer relationships and
• 17:28
  uh was really just doing everything on
• 17:30
  my own.
• 17:30
  >> So, you've got a book of names, right?
• 17:32
  You've done business for in the past.
• 17:33
  >> Correct. I mean, no contracts to bring
• 17:35
  with me, so to speak.
• 17:35
  >> So, but you're starting fresh people
• 17:37
  that you could call on.
• 17:38
  >> Correct. I said, "Do you need help with
• 17:40
  XYZ?"
• 17:41
  >> But you're in sales at this point.
• 17:43
  That's 100% sales.
• 17:45
  >> Sales. I'm in delivery. doing it all and
• 17:47
  you name it, you're the practice.
• 17:49
  >> I'm picking up lunch. I'm doing I will
• 17:52
  shut the lights off, you know, whatever
• 17:53
  was needed. I I've done it all. Uh
• 17:56
  >> and you know, um someone that I worked
• 17:59
  with at EY over the years and I was
• 18:00
  continuing to do work for uh when she
• 18:02
  joined St. Benson as their controller.
• 18:04
  >> Um was to kind of do a lot of that work
• 18:08
  on their net revenue close on their the
• 18:10
  financial statement reporting on their
• 18:11
  month end close. And it was a very labor
• 18:14
  intensive process. It was something
• 18:16
  called a hindsight analysis.
• 18:17
  >> Okay.
• 18:18
  >> So a hindsight analysis is required by
• 18:21
  auditors to do on a regular basis.
• 18:24
  They'll take all the receivables. Let's
• 18:25
  say hospital has $200 million worth of
• 18:28
  receivables on their financial
• 18:29
  statements. Uh the auditors will say,
• 18:32
  "Show us a run out of all those
• 18:33
  receivables and prove that that actually
• 18:36
  turned into 200 million of cash."
• 18:38
  >> Okay. Yeah. Yeah.
• 18:39
  >> So you said it was worth X. Show us it
• 18:42
  was over say a 12 months or an 18-month
• 18:44
  period of time. Yeah.
• 18:46
  >> So to do that it's very labor intensive.
• 18:49
  It was back then.
• 18:50
  >> Sure. A manual process of you know
• 18:52
  millions of accounts and transactions
• 18:54
  etc. So I was doing that for a lot of
• 18:56
  the Saint Vincent hospitals on a manual
• 18:58
  basis once a year.
• 18:59
  >> Okay.
• 19:00
  >> And so I had the idea to automate that
• 19:03
  process.
• 19:04
  >> So I approached St. Vincent and said, "I
• 19:06
  think we could build a tool that, you
• 19:08
  know, if you look at what you're paying
• 19:10
  me to do this once a year, professional
• 19:12
  fees." Um, you know, I think we could
• 19:15
  build it and for reasonable cost, you'd
• 19:18
  have a perpetual tool that would do it
• 19:20
  automatically for you and not just once
• 19:21
  a year instead of a point in time. Press
• 19:23
  is now real time.
• 19:24
  >> You could do it every single day. You
• 19:26
  wanted it and do it as many times as you
• 19:27
  want as a software tool instead of
• 19:29
  having me do it manually.
• 19:31
  >> Yeah.
• 19:31
  >> Uh, and you know, they at St. convention
• 19:34
  had grown from you 86 Street Hospital to
• 19:36
  a caramel to I think at that time they
• 19:38
  16 hospitals.
• 19:39
  >> Yeah.
• 19:39
  >> In their system they were struggling to
• 19:40
  keep up with all the you know reporting
• 19:43
  you know in in the hindsights around all
• 19:46
  the the net net uh net revenue
• 19:48
  reporting. So you know it was good
• 19:50
  timing. They said yeah that makes sense.
• 19:52
  Uh and so they essentially funded the uh
• 19:55
  the prototype development.
• 19:56
  >> Oh no kidding. For
• 19:57
  >> so they came on board. No product yet.
• 20:00
  >> Correct.
• 20:00
  >> Right. But but on you know the idea we
• 20:02
  could build this.
• 20:03
  >> Yeah. The original powerpoints I showed
• 20:05
  them of some diagrams of like we think
• 20:07
  we can move this data over here and do
• 20:09
  these calculations and it would be a
• 20:10
  good ROI for you guys if
• 20:12
  >> you know if this works for you and then
• 20:14
  we get to keep the intellectual property
• 20:16
  and
• 20:17
  >> do see of course we'll productize it
• 20:19
  right you guys are going to come on and
• 20:20
  be a user of the product. Correct.
• 20:22
  >> And so now now you build this and this
• 20:24
  is pretty early on and
• 20:26
  >> yeah I mean within 90 days of starting
• 20:29
  at Crow.
• 20:29
  >> Oh no kidding. So this is 2005ish.
• 20:32
  Okay. All right. Y
• 20:33
  >> and so now and that's the genesis for
• 20:35
  the product and then you evolve the
• 20:37
  product or are there multiple products
• 20:38
  you build over time? Well, it took about
• 20:40
  a year just to get a prototype built.
• 20:42
  >> Okay.
• 20:42
  >> So that was called spring of 2006. And
• 20:45
  then once we figured out we could
• 20:47
  actually do it. We didn't know if it was
• 20:49
  going to be possible to do. Then um
• 20:52
  started using my network of of
• 20:54
  relationships in the states. I think
• 20:56
  Union Hospital in terote was customer
• 20:57
  number two and community monster up in
• 20:59
  monster was free and you know from there
• 21:02
  just get the next customer you're using
• 21:04
  it see what we can learn how to iterate
• 21:06
  and
• 21:06
  >> well they all have the same challenge
• 21:07
  right at the end of the day all the same
• 21:08
  challenge and like you said going into
• 21:10
  that business the stat you gave with GDP
• 21:13
  you know 13 to 14% now maybe it's 17 to
• 21:16
  20% something like that they all the
• 21:18
  same challenge and it just continues to
• 21:19
  grow because it's not getting smaller
• 21:22
  right okay so now you're spreading
• 21:24
  across Indiana does Does it spread
• 21:26
  across the US or where does the
• 21:28
  >> It does. So we uh uh there was a system
• 21:31
  in Chicago that was I think they had six
• 21:34
  hospitals at the time. They don't exist
• 21:36
  anymore today but uh
• 21:38
  >> uh that you know they were probably a
• 21:39
  customer number four and you got a few
• 21:42
  more here and then we picked up um a
• 21:44
  large system out of Cincinnati as well.
• 21:46
  And then things really changed for us in
• 21:49
  fall of 2007.
• 21:51
  We had uh St. Vincent's part of
• 21:53
  Ascension Health. It's one of the
• 21:55
  largest hospital. Yeah. Sure. Really
• 21:57
  healthcare business. They're in a lot of
• 21:58
  things beyond health beyond hospitals
• 22:00
  these days. But um you know at that time
• 22:03
  they had maybe 100 120 hospitals. So St.
• 22:06
  Vincent was maybe you know a good chunk
• 22:08
  of them but they share hospitals all
• 22:09
  over the country.
• 22:10
  >> Okay.
• 22:10
  >> And uh St. Vincent was using our product
• 22:14
  and one or two other Ascension
• 22:16
  facilities had heard about it and had
• 22:17
  licensed it from us. But uh they had
• 22:20
  their third year in a row where they had
• 22:22
  an audit adjustment for one of their
• 22:24
  hospitals
• 22:26
  where there was an error in their net
• 22:27
  revenue accounting and they had to book
• 22:28
  an adjustment.
• 22:29
  >> The system CFO at that point basically
• 22:31
  said look I've had it.
• 22:33
  >> Yeah.
• 22:33
  >> You know we have to stop these errors.
• 22:36
  Uh and so let's just implement the RCA
• 22:40
  tool which what we call revenue cycle
• 22:41
  analytics is the name. Okay product.
• 22:43
  Let's see if we can implement that
• 22:45
  everywhere. you know, make it a
• 22:47
  standardized. At that time, each
• 22:48
  individual hospital is allowed to close
• 22:49
  their books on their own. Gotcha. Okay.
• 22:51
  They weren't centralized. So, we were
• 22:53
  really the first, it was really, I
• 22:55
  think, the first central application
• 22:58
  >> in that at least from accounting
• 22:59
  perspective other than the GL um that
• 23:02
  asia never really did. Okay.
• 23:04
  >> And so, you know, we went from I think
• 23:06
  the largest we had done at that time was
• 23:08
  maybe a six hospital system. So, the
• 23:10
  phone call was can you do this and put
• 23:12
  all 100 hospitals in a single database,
• 23:14
  >> right? Yeah. and get this done in like
• 23:15
  six months for next year end. We can
• 23:17
  book to it.
• 23:18
  >> Sure.
• 23:18
  >> And um so you know I said absolutely and
• 23:21
  then I about passed out.
• 23:22
  >> Yeah. Hung up the phone.
• 23:23
  >> Sure. Now how do we get this done?
• 23:25
  >> Exactly.
• 23:25
  >> But but at this point I'm assuming
• 23:27
  you're building a team at this point.
• 23:28
  You're building out a practice,
• 23:30
  >> right? So you're you're now at in the
• 23:33
  beginning you were all sales all
• 23:34
  everything. You get this together. You
• 23:36
  now get a proof of concept here in
• 23:38
  Indie. You start growing that
• 23:40
  organization. You start building out a
• 23:41
  team and a practice. What's the
• 23:44
  evolution of that? And then where does
• 23:46
  how does Kodiak become part of the
• 23:49
  picture?
• 23:49
  >> Sure. Well, we went, you know, one
• 23:51
  employee for about a year. I think it
• 23:53
  was just me. Um, and you know, had some
• 23:55
  funding barring staff and resources
• 23:57
  wherever I could find them and
• 23:59
  contractors. Uh, after about a year, I
• 24:01
  think we added three or four more then
• 24:04
  to 10. you know, and just kind of as we
• 24:06
  went get them got that um that uh
• 24:09
  contract, you know, we obviously had to
• 24:11
  staff up very quickly and
• 24:13
  >> Sure.
• 24:14
  >> etc. So, it it grew that business
• 24:16
  largely grew uh and then we kind of hit
• 24:19
  a wall when the financial crisis hit,
• 24:22
  >> okay,
• 24:23
  >> when we first developed the product,
• 24:25
  this was I think software as a service
• 24:27
  existed at that time, but no one was
• 24:29
  doing it.
• 24:29
  >> It was pretty early.
• 24:30
  >> Exactly. Yeah. So at that time everyone
• 24:33
  bought software on premise.
• 24:36
  >> So you paid for a license, you put it on
• 24:38
  your own server, you bought the server,
• 24:40
  you paid for implementation and support
• 24:41
  was like a 20%,
• 24:43
  >> you know, small annual fee for updates
• 24:46
  and bug fixes and that kind of stuff and
• 24:48
  then you would buy the next release, you
• 24:50
  know, when there was a new release over
• 24:52
  time and that was a capital purchase. So
• 24:55
  uh whereas a software as a service now
• 24:57
  is you're you're kind of paying a
• 24:58
  subscription that's on our side expense.
• 25:00
  So when our financial crisis hit, all
• 25:03
  capital budgets were completely frozen.
• 25:05
  That's right. Yeah. No capital spending
• 25:07
  whether it was on construction or buying
• 25:09
  software. No capital spending occurred.
• 25:11
  Well, we were a capital purchase.
• 25:13
  >> So we had some existing customers at
• 25:15
  that time. But uh we didn't sell a
• 25:18
  license for about two years.
• 25:19
  >> Oh, no kidding.
• 25:20
  >> And so we had to really um figure out,
• 25:24
  you know, we you know there's a lot of
• 25:25
  risk in just having one product doing
• 25:27
  one thing. And one of our uh customers
• 25:29
  at the time uh was the largest diialysis
• 25:33
  uh company in the world. We had we had
• 25:35
  no idea our product would work for
• 25:36
  dialysis,
• 25:38
  >> but we got a phone call saying, "Hey, we
• 25:39
  heard of your product and we have a
• 25:41
  billion dollars worth of receivables
• 25:43
  across clinics everywhere."
• 25:45
  >> No kidding.
• 25:46
  >> And uh and so we want to put, you know,
• 25:50
  put uh put your tool in. And as we were
• 25:52
  implementing them right before the
• 25:54
  crisis hit, we saw that they had $100
• 25:56
  million worth of credit balances sitting
• 25:58
  here.
• 25:58
  >> Okay?
• 25:58
  >> So credit balance would be, you know,
• 26:01
  somebody paid twice or there's an error
• 26:03
  in the posting, but essentially says
• 26:05
  instead of a receivable, we owe you. We
• 26:07
  owe a son some money. Well, they had
• 26:08
  $100 million worth of credit sitting on
• 26:10
  books.
• 26:10
  >> So they got $100 million they got to pay
• 26:12
  out to somebody else.
• 26:12
  >> Correct.
• 26:13
  >> And there's state sheet laws all over
• 26:15
  the country that says you can't just
• 26:16
  hold on to that money. So you're
• 26:17
  supposed to turn it over to the state
• 26:19
  after a period of time. Like here in
• 26:21
  Indiana, you go to Indiana unclaimed
• 26:23
  >> and see if you had money. Well, that's
• 26:25
  every state has a law on that.
• 26:26
  >> Okay.
• 26:27
  >> But there's exemptions for that uh as
• 26:29
  well. So certain states have exemptions
• 26:31
  to those those laws. So if they did
• 26:34
  nothing, they would really have to take
• 26:35
  $100 million, cut a check. It's not
• 26:38
  really to the states, but I had just
• 26:40
  hired somebody that had a background in
• 26:43
  estate laws and knew that well, you can
• 26:45
  actually go through there and figure out
• 26:47
  a lot of those are errors, their own
• 26:48
  meal credits, they're testing problems,
• 26:51
  >> uh or they're exempt from thisment
• 26:53
  because it's state laws that say, you
• 26:56
  know, after a certain period of time,
• 26:58
  you know, and you've met this criteria.
• 27:00
  Yeah.
• 27:00
  >> You don't have to turn it over.
• 27:01
  >> So, it's not 100 million. You're
• 27:03
  whittling it down to something smaller
• 27:05
  than 100.
• 27:05
  >> Correct. Yeah. So we we did a project
• 27:07
  for them and uh you know it was a huge
• 27:10
  project but I think we saved them 30 $40
• 27:12
  million.
• 27:14
  >> Um and so we started doing that as a
• 27:17
  second business.
• 27:18
  >> Oh I see. Okay.
• 27:19
  >> And we would do it on a sort of a
• 27:20
  contingency fee basis.
• 27:22
  >> Yeah. So it's consulting but you're
• 27:23
  going in saying you got 100 million
• 27:24
  sitting out there. If we say to you 30
• 27:27
  million we're going to get a percentage
• 27:28
  of the savings. Right. Okay.
• 27:29
  >> Gotcha.
• 27:30
  >> Yeah. And so that's essentially what has
• 27:31
  got us through the financial crisis.
• 27:33
  >> No kidding. was that we still had the
• 27:35
  software business and that was going but
• 27:36
  it wasn't growing because no one could
• 27:38
  buy it
• 27:38
  >> right
• 27:39
  >> and so we started doing you know this
• 27:41
  credit balance business well and finding
• 27:44
  a lot of money and then we figured out
• 27:45
  well if we do this for all of our
• 27:46
  customers all of our customers seem to
• 27:48
  have that same problem no one knows what
• 27:49
  to do with their credits they kind of
• 27:50
  sit there
• 27:52
  >> um and if they don't then they get in
• 27:53
  trouble right penalty
• 27:56
  >> so that's where we started this journey
• 27:59
  you know to where we are today in terms
• 28:00
  of you know becoming a more of a broad
• 28:02
  business platform because again everyone
• 28:04
  had a credit balance problem. So every
• 28:06
  time we would implement the RCA tool, we
• 28:08
  would see what their credits were and so
• 28:10
  we could pretty quickly see uh you know
• 28:12
  with their permission you have you know
• 28:14
  either either you have a process issue
• 28:16
  or you might even have a compliance
• 28:17
  issue right yeah as well and so uh we
• 28:20
  just started expanding the business from
• 28:22
  there.
• 28:23
  >> Okay. So I called the product revenue
• 28:25
  cycle analytics not accounting tool or
• 28:28
  something like that and there would be
• 28:30
  broader uses for it but of course yeah I
• 28:32
  usually describe myself as just a dump
• 28:34
  bean counter
• 28:35
  >> so I'm good at I'm good at accounting
• 28:37
  but I couldn't tell you how to optimize
• 28:40
  your revenue cycle you know patient
• 28:41
  accounting and billing clinical coding
• 28:43
  yeah
• 28:44
  >> all of those other things that's very
• 28:46
  complex and highly regulated data
• 28:48
  dependent so I knew I had was getting
• 28:50
  all of this data
• 28:52
  >> from the hospitals to do the accounting
• 28:53
  calculations. Could we use it to
• 28:55
  actually not just report the numbers but
• 28:57
  improve their business like we were
• 28:59
  starting to do with credit balances?
• 29:00
  >> That's right.
• 29:00
  >> So in 2010 we uh expanded into revenue
• 29:03
  cycle process improvement co and so we
• 29:06
  brought in uh some leaders to help build
• 29:08
  that out particularly in clinical
• 29:09
  revenue management. So identifying
• 29:12
  opportunities to uh to find where
• 29:15
  they're not uh billing and charging for
• 29:17
  things
• 29:17
  >> okay
• 29:18
  >> the way they they could be or should be.
• 29:20
  And uh then we uh acquired a risk and
• 29:23
  compliance business in 2013. Uh but
• 29:26
  otherwise and that was another
• 29:27
  professional services type of business.
• 29:30
  Otherwise, we really just grew
• 29:31
  organically over time because again,
• 29:32
  we're still sitting inside a CPA firm.
• 29:34
  >> Sure. Right. You're still sitting inside
• 29:35
  of Crow, right?
• 29:35
  >> Correct. We're sitting inside of Crow
• 29:37
  and Crow doesn't really know what to do
• 29:38
  with us. And so we grew and grew and
• 29:40
  grew to where we became 10% of the
• 29:42
  firm's revenue. Oh wow. And about 20% of
• 29:45
  the bottom line.
• 29:46
  >> Oh, no kidding. And we're now over a
• 29:48
  thousand hospitals, 1500 hospitals. You
• 29:51
  know, that business growing through the
• 29:52
  I don't know what you call it, the
• 29:53
  2010s.
• 29:54
  >> Yeah. Right. Yeah.
• 29:55
  >> As well. And uh early on, you know, I I
• 29:59
  formed a user community, talking about
• 30:01
  communities. Uh and uh one of the things
• 30:04
  that they wanted to see was some
• 30:05
  benchmarks, performance benchmarks with
• 30:07
  the data that we were getting. And so
• 30:09
  all of our customers started opting in
• 30:11
  to allow us to deagre uh deidentify and
• 30:14
  aggregate their data to create
• 30:15
  benchmarks.
• 30:15
  >> Oh, no kidding. Yeah. So for all of our
• 30:17
  customers, we're collecting all this
• 30:18
  data. All of that's growing.
• 30:20
  >> Sure.
• 30:21
  >> And um and then uh the business was like
• 30:25
  I said up about 10% of crows uh revenue.
• 30:28
  COVID hits
• 30:30
  >> and a lot of hard decisions have to get
• 30:32
  made at at that time and then you know
• 30:34
  everyone did okay coming out of COVID
• 30:37
  but um
• 30:40
  I think it the firm kind of stepped back
• 30:41
  and reflected to say you know this is
• 30:43
  really a technology business.
• 30:45
  We're a a professional service business,
• 30:47
  right?
• 30:47
  >> You know, we're a hourly billing rate
• 30:50
  type of company.
• 30:52
  >> Um they're collecting all of the data.
• 30:54
  That makes us nervous.
• 30:56
  >> Um they want to invest a whole lot
• 30:58
  because now, you know, we were an old
• 30:59
  on-rem business. We want to replatform
• 31:02
  to move to the cloud. We were already
• 31:03
  starting to do that.
• 31:04
  >> Yeah.
• 31:05
  >> Uh so we're kind of pushing the envelope
• 31:07
  all the time with, hey, we have all this
• 31:08
  data. Yeah. We need to make it sure it's
• 31:10
  secure, but we we also need to be
• 31:12
  cloud-based and figuring all that out.
• 31:14
  >> It feels risky.
• 31:16
  >> Correct. As some kind, right? You guys
• 31:17
  feel a little risky in that.
• 31:18
  >> Yes. Exactly. And so you got some of the
• 31:20
  board members and stepping back saying,
• 31:23
  >> you know, there's a lot of data here. I
• 31:25
  don't really understand. They they want
• 31:27
  to invest all this money in technology
• 31:29
  improvements. I don't know. As a
• 31:31
  partner, I want to keep investing in
• 31:33
  that. And by the way, I I think they're
• 31:35
  really valuable,
• 31:36
  >> too. And so, you know, we essentially,
• 31:39
  you know, came to agreement to say,
• 31:40
  "Look, it makes sense to kind of unlock
• 31:41
  the value of this company and get it out
• 31:43
  of Crow."
• 31:44
  >> Yep.
• 31:45
  >> So, uh, I was charged with essentially,
• 31:48
  you know, leading the effort to spun
• 31:50
  spin us out into a standalone company.
• 31:52
  Of course. Yeah. Wow. It's awesome. by
• 31:54
  the way. So from one person who had an
• 31:56
  idea in 2005 to growing it to 20% of the
• 32:00
  bottom line, 10% of Crow's revenue over
• 32:03
  the course of that time across the
• 32:04
  financial crisis and the pandemic and
• 32:06
  all those other things. Congrats.
• 32:09
  >> So now Kodiak, before we learn more
• 32:12
  about what Kodiak's currently doing
• 32:14
  today, you got to share the story why
• 32:16
  why the name Kodiak come from.
• 32:18
  >> Sure. Sure. Um, so,
• 32:22
  uh, as my son, when my sons were
• 32:23
  younger, they, um, you know, vacations
• 32:26
  were usually, you know, go to the beach
• 32:27
  with pool and that kind of stuff. And as
• 32:28
  they got older, I wanted to expose them
• 32:30
  to the outdoors more.
• 32:32
  >> Okay.
• 32:33
  >> And, um, always loved the outdoors
• 32:34
  growing up. Never really had the means
• 32:36
  to go and explore and see a lot of the
• 32:38
  parks out west. 2016 was the, uh, 100
• 32:42
  anniversary of the park service. I
• 32:44
  thought that would be a great year to
• 32:45
  sort of take uh take them to Yellowstone
• 32:47
  and take them to Glacier and uh Grand
• 32:50
  Tetons and start, you know, they were
• 32:51
  old enough at that point in time, I
• 32:53
  think, to start appreciate it. And so,
• 32:54
  uh we started going out to national
• 32:56
  parks and just saw, you know, just some
• 32:59
  of the most amazing things that were
• 33:00
  seen like her and the animals. I'd never
• 33:02
  been out there before. And I had my
• 33:04
  iPhone with me and I was trying to take
• 33:06
  these pictures and you know, of course,
• 33:07
  right away you see a bear, you see,
• 33:09
  you're right, an elk or whatever else
• 33:10
  and and you you snap the picture and you
• 33:13
  know, you're so excited about it, but I
• 33:15
  was, you know, I'm kind of uh once I get
• 33:17
  into something, I tend to get into it. I
• 33:19
  need you better. Boy, I really would
• 33:20
  love to, you know, have better capture
• 33:22
  that moment we saw.
• 33:24
  >> So, you know, shortly thereafter, I you
• 33:26
  know, got her a good quality camera.
• 33:28
  >> Okay.
• 33:29
  >> And then kept upgrading and getting
• 33:31
  better gear. Next thing you know, it's
• 33:32
  not just taking the family on trips, but
• 33:34
  I started going on my own wideeyed
• 33:36
  photography trips as well. And
• 33:39
  ultimately, if you get in go down that
• 33:41
  rabbit hole, you end up in Alaska.
• 33:43
  >> Yeah.
• 33:43
  >> And that's where everybody wants to go
• 33:45
  because that's where you get to see some
• 33:46
  of this stuff and it's untouched to
• 33:48
  >> nature, right? All right. Exactly. You
• 33:50
  know, it's still the last frontier,
• 33:52
  right? You know, and that's where, you
• 33:53
  know, the biggest bears are, biggest
• 33:55
  moose, you know, caribou, you name it,
• 33:59
  you know, all the amazing stuff is
• 34:00
  there. So I started to take trips there.
• 34:03
  >> Okay.
• 34:03
  >> As well and um bears were my favorite
• 34:06
  thing to photograph.
• 34:07
  >> Perfect.
• 34:08
  >> So when uh when we kind of agreed to do
• 34:10
  this carve out of of the business from
• 34:12
  Crow uh if you've ever been involved in
• 34:15
  M&A and all you know everything has a
• 34:17
  project
• 34:18
  >> has project same project star project or
• 34:21
  rocket project this or that. So they
• 34:23
  said well you've found a business why
• 34:25
  don't you name the project?
• 34:27
  >> Yep. And so, uh, so I said, "Okay, well,
• 34:30
  how about project Grizzly?"
• 34:32
  >> You know, bears are on my mind, I guess.
• 34:34
  And they thought that sounded kind of
• 34:36
  scary. Yeah. So, we compromised on
• 34:37
  Kodiak.
• 34:38
  >> There you go.
• 34:39
  >> Um, so that's And then when we were
• 34:40
  trying to come up with a company name,
• 34:42
  everyone had, you know, all these ideas
• 34:44
  and for months, no one could agree on
• 34:46
  the company name at all. And finally, I
• 34:48
  can't remember even who said it and
• 34:50
  said, "Why don't we just call it
• 34:51
  Kodiak?"
• 34:52
  >> Yeah. I I don't know if it's available.
• 34:53
  And sure enough, our CMO did a search
• 34:55
  and
• 34:56
  >> Okay. So yeah, we can we can use that.
• 34:58
  So there you go. Love the name. By the
• 35:00
  way, we we actually did a couple of spin
• 35:02
  in my past history. Had a couple of
• 35:05
  companies and we'd have projects going
• 35:07
  as well and we launched another company
• 35:08
  out of it, but the project was called
• 35:10
  Tomato.
• 35:11
  >> And so we didn't we didn't opt to keep
• 35:12
  that as the name. It didn't seem like
• 35:14
  it'd be applicable in that space. But
• 35:16
  with Kodiak, we know the history kind of
• 35:19
  the genesis of what you were thinking
• 35:20
  about in '05. But it's 2026 now. Who are
• 35:24
  you guys serving? Is it the same
• 35:25
  marketplace? How are how have things
• 35:27
  changed? Kind of what's new now that you
• 35:29
  guys have spun out of Crow?
• 35:30
  >> Sure. Yeah. I mean, we've um since out
• 35:34
  of Crow, I mean, we've I think by the
• 35:37
  end of this year, hopefully we'll almost
• 35:38
  double the business. Okay.
• 35:40
  >> In three years. So, um so it's it's it's
• 35:44
  been a great experience and a great
• 35:45
  unlock um for our people. I think it was
• 35:48
  a good thing for Crow, for our customers
• 35:50
  as well. You know, that's really how we
• 35:52
  co-create value. what Aaron is down to.
• 35:55
  So, it's really we've uh we're able to
• 35:58
  move faster.
• 35:59
  >> Um you know, when you're in a larger
• 36:00
  organization, um a global public
• 36:03
  accounting firm, you know, now you you
• 36:05
  can, you know, they have a lot of
• 36:06
  different things going on. That's right.
• 36:07
  I took it with technology. So, right, so
• 36:09
  what's needed for us wasn't necessarily,
• 36:12
  you know, going to work for everybody
• 36:13
  else. Same thing with marketing. Same
• 36:15
  thing with so many different things.
• 36:17
  >> So, we've been able to essentially, you
• 36:18
  know, I think accelerate our investment
• 36:20
  in primarily technology. uh bringing in
• 36:24
  talent. Yeah. Um a lot of the different
• 36:26
  you know collaborations that we do with
• 36:28
  customers, we've been able to increase
• 36:29
  that significantly
• 36:31
  >> and uh and uh you know it's just been a
• 36:35
  wonderful experience. Now a lot of
• 36:37
  that's having the right partner. So you
• 36:39
  know we we had a
• 36:41
  >> a great opportunity to kind of pick and
• 36:44
  choose who our financial sponsor or even
• 36:46
  we ended up with uh TBG. Okay. one of
• 36:48
  the largest private equity funds out
• 36:50
  there and they just really understood
• 36:53
  our business and they've been great
• 36:54
  partners, very helpful, very engaged in
• 36:57
  business.
• 36:58
  >> Excellent. Beyond just sort of being
• 36:59
  passive investors.
• 37:00
  >> Sure. What a great experience. So, by
• 37:02
  the way, we talk a little technology.
• 37:04
  So, you start in 2005 with this idea and
• 37:07
  you take it to the local hospital here
• 37:10
  and and run it past them and see how
• 37:11
  let's do this. So, 06 07 you come out
• 37:14
  with this and you start to grow. How is
• 37:16
  tech evolving, you know, over the last
• 37:19
  20 years and then now with AI and where
• 37:22
  things are going? It's everything's
• 37:23
  happening so fast. Where do you kind of
• 37:25
  see things going in the near future for
• 37:27
  you guys?
• 37:29
  >> Sure. I mean, we'll always be ultimately
• 37:31
  about solving customer problems. You
• 37:32
  know, I think the technology serves that
• 37:34
  purpose. That's right. You know, so I I
• 37:36
  try to always keep that in mind. The
• 37:38
  tech is interesting and I've gotten a
• 37:40
  little ahead on the skis before. So, you
• 37:42
  know, a lot of talk about AI right now.
• 37:44
  I hired my first machine learning uh PhD
• 37:48
  in 2013.
• 37:49
  >> Okay.
• 37:50
  >> So, you know, we started I mentioned
• 37:52
  benchmarking and started collecting all
• 37:53
  this data. Sure. You know, I had the
• 37:55
  opportunity to hire somebody through uh
• 37:58
  through my network that was just
• 37:59
  actually uh had just finished his PhD at
• 38:02
  NYU under Yan Makun who did all the
• 38:05
  Facebook who' been the head of uh he's
• 38:07
  on his own now but he was sort of the AI
• 38:08
  leader at Facebook.
• 38:09
  >> Sure. and uh he was looking for an
• 38:12
  opportunity in Minneapolis and you know
• 38:14
  at time it worked out and so I I learned
• 38:16
  a tremendous amount just thinking well I
• 38:18
  don't know what problem we're going to
• 38:19
  solve but we have all this data can we
• 38:21
  apply some machine learning models uh to
• 38:24
  AI you know being the same concept or
• 38:26
  sort of a more specific field
• 38:28
  >> and uh so we started building a machine
• 38:30
  learning team we didn't have a really
• 38:33
  clear problem we were trying to solve we
• 38:35
  were thinking well if we could start
• 38:37
  applying these models to the data and
• 38:38
  they tell us
• 38:40
  And we we burnt a lot of money in doing
• 38:43
  um and it's a very it was an expensive
• 38:45
  lesson in you know you know the
• 38:49
  technology is a tool
• 38:51
  >> but you always have to sort of solve the
• 38:52
  customer problem first and foremost our
• 38:54
  revenue sign analytics
• 38:56
  >> you know product solved a problem that's
• 38:58
  right the technology was really
• 39:00
  secondary to that and so you know AI is
• 39:03
  an incredible I mean it's exponentially
• 39:05
  getting more and more powerful
• 39:08
  >> and uh Yeah, I think there's a little
• 39:10
  bit of a of exuberance around it, I
• 39:14
  would say, right now. Um, people get
• 39:17
  really excited about things. You they
• 39:18
  talk about the SAS apocalypse, you know,
• 39:20
  I think that's overdone.
• 39:22
  >> Personally, uh, will will AI replace
• 39:26
  things? No doubt, right? You know, but
• 39:28
  but we'll continue to evolve. um you
• 39:31
  know I think just the agentic
• 39:33
  capabilities are really uh excellent way
• 39:36
  to interact with technology tools that I
• 39:39
  think has been probably the most
• 39:40
  gamechanging of late but obviously you
• 39:43
  know people aren't coding as much
• 39:44
  anymore you know so it's it's replacing
• 39:46
  that productivity layer
• 39:48
  >> in a lot of ways um you know we see it
• 39:50
  as a product productivity enhancer for
• 39:52
  our people not replacement
• 39:54
  >> for our people at all so we're in growth
• 39:57
  mode and it's always hard to find really
• 39:58
  good people so we have really good
• 40:00
  people so can we free them up more by
• 40:03
  you know giving them agents to help them
• 40:05
  yeah you know
• 40:06
  >> increase their capacity
• 40:07
  >> you know it's interesting I think one of
• 40:09
  the best things there that people to for
• 40:11
  think people to think about is the first
• 40:13
  thing is to solve client problems that
• 40:15
  that's what we're here for the
• 40:17
  technology and the tools allow us to do
• 40:19
  that but we're also mired in our days of
• 40:22
  all of these things that we have to get
• 40:24
  done that theoretically you know working
• 40:26
  in the spreadsheet or putting something
• 40:27
  in this or doing If that can be
• 40:29
  automated, it allows me time to do human
• 40:32
  intelligent things, which we ultimately
• 40:34
  want our teams to do because that's
• 40:36
  really where a lot of the creativity
• 40:37
  comes from is by freeing up their time.
• 40:39
  I I really like the idea of how you talk
• 40:41
  about kind of just tech in general. And
• 40:44
  one of the things you've talked about
• 40:45
  also kind of in your story, you
• 40:48
  mentioned when you called on Crow to
• 40:50
  take this idea to them that someone that
• 40:52
  you knew before at EY had gone to work
• 40:54
  for them in Chicago, kind of checked
• 40:56
  these things out. So community as you
• 40:59
  think about you know community in
• 41:00
  general the community that you've you've
• 41:02
  worked with and served what's community
• 41:05
  mean to you?
• 41:06
  >> Yeah I think you know community is a lot
• 41:07
  of things to us obviously we have
• 41:09
  offices and our people live in their
• 41:11
  local communities and that's something
• 41:13
  we always want to support their
• 41:15
  professional communities. So healthcare
• 41:17
  financial management association as
• 41:18
  example is one that we're very involved
• 41:20
  with. So you know how do you you know do
• 41:22
  do that? We've created a lot of our own
• 41:24
  communities at Kodiak as well. um you
• 41:27
  know with our you know we have
• 41:29
  communities for revenue cycle leaders
• 41:30
  for our our users of our products as
• 41:33
  well and we've created advisory boards
• 41:35
  and networks things like that um talent
• 41:38
  you know where we're bringing in people
• 41:40
  universities I'm very involved with with
• 41:42
  IU still
• 41:43
  >> okay
• 41:43
  >> and that's a passion of mine uh as well
• 41:46
  and um and so there's a lot of different
• 41:49
  directions I think you can go with
• 41:50
  community um but you know we have to
• 41:54
  continue you know we have to be thinking
• 41:55
  more broadly I I'll believe about sort
• 41:57
  of we you know how are we impacting our
• 42:00
  customers? How are they impacting their
• 42:01
  community? I think being involved in
• 42:02
  health care
• 42:03
  >> by nature makes you kind of think about
• 42:05
  the communities that you're serving and
• 42:07
  the impact that you can have on um you
• 42:10
  know our impact is on the business side.
• 42:11
  So hopefully if we can help help our
• 42:13
  customers you know simplify the business
• 42:15
  of health care that can free them up to
• 42:17
  then put more resources to patient care
• 42:19
  which helping our community as well.
• 42:21
  >> Has a ripple effect down line.
• 42:23
  Absolutely. So before we get to our last
• 42:25
  question, which is what's fun outside of
• 42:27
  work, those types of things, you're a
• 42:30
  founder and a CEO today. You had an idea
• 42:32
  in 2005. There's a lot of folks, I
• 42:35
  think, that maybe have some ideas, some
• 42:37
  thoughts, and and believe that maybe
• 42:39
  they might be able to go out and hang
• 42:40
  their own shingle or do something on on
• 42:42
  their own. What encouragement might you
• 42:44
  give them or what things might you think
• 42:46
  about now that you're a few years into
• 42:48
  this, let's say 20 years from kind of
• 42:50
  the genesis of that thought? What
• 42:51
  encouragement would you give people?
• 42:54
  mentorship I think is really helpful.
• 42:56
  Really helpful. Um you know I had a lot
• 43:00
  of good teachers over the years that
• 43:02
  gave me confidence. Okay.
• 43:03
  >> You know I think you have to have a
• 43:04
  certain degree of confidence I think to
• 43:06
  build anything.
• 43:07
  >> A belief in yourself and and where do
• 43:09
  you get that? Uh
• 43:11
  >> you know and then when you think about
• 43:12
  building a business you know one of my
• 43:15
  uh mentors years ago told me you know
• 43:17
  success in business is three things.
• 43:18
  It's strategy it's management and it's
• 43:20
  luck.
• 43:22
  And so, you know, a lot of people will
• 43:23
  have an idea and they start a business,
• 43:25
  but they don't sort of understand those
• 43:27
  three things.
• 43:28
  >> Strategy being, you know, why will we
• 43:31
  win? What makes me different? What makes
• 43:32
  me want to work with Braden Systems
• 43:34
  versus I anybody else as an example?
• 43:37
  What makes them different special? Then
• 43:39
  the management is the execution of that
• 43:41
  strategy. You know, the example that my
• 43:43
  men used to give me was was Kmart. You
• 43:46
  know, they they had great management.
• 43:48
  They had the lights were on. The shot
• 43:49
  rate cards were there. There were stuff
• 43:51
  on the shelf. They had a bad strategy.
• 43:52
  >> Yeah, I was right. So, you have to have
• 43:54
  a good strategy. You have to have good
• 43:55
  management. But then luck is what you
• 43:57
  can't control.
• 43:58
  >> So, I had no control over the financial
• 44:01
  crisis hitting in 2008.
• 44:02
  >> That's right.
• 44:03
  >> You know, and capital budgets, we had to
• 44:05
  find a way. So, sometimes you get bad
• 44:06
  luck. We did. Sometimes you get good
• 44:08
  luck like some of the legislation that
• 44:10
  was passed that you know put money
• 44:12
  towards technology you know and so you
• 44:14
  kind of have to be willing to adapt to
• 44:17
  to luck as it occurs but you also have
• 44:19
  to recognize that's something out there
• 44:21
  you can't control and u you know having
• 44:24
  a mentor to try to coach you through
• 44:26
  some of those things uh like some I
• 44:29
  don't know if we talked about this or
• 44:30
  not but you know when the financial
• 44:31
  crisis hit I was pretty freaked out.
• 44:33
  Yeah, it was very scary. You know, I was
• 44:34
  forced and I'd hired all these people.
• 44:36
  We were trying to get this business
• 44:37
  ramped up and all of a sudden everything
• 44:39
  comes a screeching halt and uh the CEO I
• 44:42
  was working with at the time, he was
• 44:44
  former CEO, you know, he essentially
• 44:45
  said, "Look, you know, I was through the
• 44:47
  financial crisis. I've been through the
• 44:49
  the S&P 87, you know, I've been through
• 44:52
  Y2K." Y
• 44:53
  >> look, you know, you you get, you know,
• 44:56
  you you use your grit and you throw ways
• 44:58
  and you get through a little scrapbook.
• 45:00
  I've been there and it kind of just
• 45:01
  calmed everybody down. Yeah.
• 45:03
  >> And having mentors that can come in and
• 45:05
  and do things like that, you know, can
• 45:07
  help an entrepreneur particularly in
• 45:08
  those like fragile early stages of
• 45:10
  getting business off the ground.
• 45:12
  >> That's right. Yeah. It's a great great
• 45:13
  advice. And by the way, those things,
• 45:15
  they're all seasons, right? That that
• 45:16
  seasons will end. They will change.
• 45:18
  Everybody, I think, knows that. But when
• 45:20
  somebody's been through a season and
• 45:22
  come out on the other side, there's
• 45:23
  something comforting to have them say,
• 45:25
  "Look, yeah, this is it's tough. It's
• 45:27
  going to be hard, but we'll work through
• 45:28
  this and we'll get there." and they've
• 45:30
  done it and they've made it and you've
• 45:32
  known them on the other side of that
• 45:33
  season. It's very comforting. Great
• 45:35
  advice, by the way. So, obviously music
• 45:37
  and photography and all those different
• 45:40
  types of things, but if you're not
• 45:41
  working, what do you do it for fun?
• 45:43
  >> Um, I get into all sorts of things, but
• 45:45
  yeah, I play music. Uh, I mentioned, you
• 45:47
  know, I stay pre-involved with IU, both
• 45:49
  the school of business and the athletic
• 45:50
  department. I love food and and drink
• 45:53
  and travel. uh as well. Um love cars,
• 45:57
  motorsports, uh
• 46:00
  >> a little bit better.
• 46:01
  >> I think I'm a continual learner. So,
• 46:02
  yeah, you know, I like to get into
• 46:04
  things and learn all I can about them
• 46:05
  and and
• 46:07
  >> add that to my portfolio of things that
• 46:09
  I like to do and then find the next
• 46:10
  thing.
• 46:10
  >> Yeah. Find this. I was not doing a lot
• 46:12
  of photography right now, but I've
• 46:13
  pivoted other things. Yeah.
• 46:14
  >> I still love that and it's still there,
• 46:17
  but you know, I just I think I like to
• 46:18
  learn more than anything.
• 46:19
  >> Yeah. It's it's interesting. A lot of
• 46:21
  folks have been in this chair with me.
• 46:22
  We've had over 50 episodes I believe
• 46:24
  we've done now. But the continuous
• 46:26
  learning tends to be a theme, right? I
• 46:29
  think community and the way folks think
• 46:31
  about community and and creating kind of
• 46:34
  a ripple effect. They can help somebody
• 46:35
  whether it's in their business or even
• 46:37
  if they're a nonprofit, how they're
• 46:38
  helping community, but how that has a
• 46:40
  ripple effect outside of that
• 46:42
  interaction. You kind of hear that as a
• 46:43
  common theme. Um, you also hear the
• 46:47
  mentorship. I think that's something
• 46:48
  that we hear on a fairly regular basis.
• 46:50
  It was great for you to kind of bring
• 46:52
  that back around to, you know, to
• 46:54
  someone to give you some mentor
• 46:55
  mentorship and advice and be able to
• 46:57
  work with and remind me the three things
• 46:59
  that that mentor said from a business
• 47:01
  perspective to be successful. What were
• 47:03
  the three?
• 47:03
  >> Strategy, management, luck.
• 47:05
  >> Strategy, management, luck. That's
• 47:06
  awesome. Derek, man, I appreciate you
• 47:08
  being on the show. Thanks for sharing
• 47:09
  your story with us.
• 47:10
  >> So, it's my pleasure. Yeah. Thank you
• 47:12
  very much as well.
• 47:13
  >> Thank you for listening to the Elevate
• 47:14
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• 47:29
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