Introduction
Naren: Jason, I’m so excited to talk to you today. Jason Schuy is an entrepreneur, a very, very, very successful Canadian entrepreneur, who started his own company literally 20 years ago. He was in it for 20 years; we started in 1998, and it was called Auto Systems. They were selling safety and all kinds of related software and technology for hospitals. At the time of exit, they had 2000 Plus hospitals as clients; Jason is one of the co-founders, and the one thing that always stands out is that he’s such a kind, awesome person to be around. He’s always giving and always helpful. So Jason, I’m super excited to have you today. How are you?
Jason: Thanks Naren. Yeah, I’m definitely thankful to be here. Thank you, doing well, doing well, life is good. You know, it’s been a journey, you know, though, starting up a company and, you know, living through the ups and downs of it, as well as, you know, post-exit, and, you know, the trouble that I’m still getting into.
Naren: So maybe I start this conversation by talking about some inflection points, like, how did you get started and a few inflection points, and then maybe we’ll dive deep into certain aspects of the business, like sales and management team, and so forth. So tell us the founding story, like how did this happen? Like, did you have this master plan that you always wanted to tell us how you started?
Jason: Well, It’s interesting, I think, for both Sanjay and me, Sanjay Malaviya, who was my partner, that we both had kind of an entrepreneurial spirit. We were friends from our university days. He ended up working at St. Michael’s Hospital in project management, and he and his team were responsible for building this product for managing complaints, compliments, and suggestions for the Patient Relations group at St. Michael’s Hospital in Toronto. They created this concept because they were enabling something called decentralized complaint management. So, in a hospital, instead of having to go to a different department for you to give your complaint, you could literally tell the nurse or the manager in the department or our unit, you know, what your complaint is, and they can just document it in the system. So, they called it decentralized complaint management, which was a concept that they had developed there. They had proposed they had promoted it, and they had promoted it at the college healthcare executive in the US, the American College, and the response that they had from it from other hospitals saying, you know, what do you use for this, how you enable it was pretty profound. And so they went back to Toronto and, of course, to a hospital. They really didn’t do much from there. And what happened was, I guess, to prove it, and you know, there was a gentleman from Carraway Methodist Medical Hospital, and in Alabama, you he was Dr. Caraway himself, and it was his family’s hospital. And he was driven to get this program up and running in his facility, So he would badger Sanjay at the hospital, who was a hospital employee. Until eventually, Sanjay was like, OK, we’ll have to work something out. And so, but that’s as far as it went, another, you know, the other people that were involved from St. Mike’s. They had a desire to potentially go into it. But in the end, they decided that it wasn’t for them. And so actually, over a poker game with Sanjay at a guy’s poker game, he handed me the system discs, three-and-a-half inch floppies, and said, Jay, what do you think of this? Maybe we should get something going? And that’s kind of how it started.
Naren: That is amazing. So Sanjay, what was his background? You said he’s a project manager. So, he was a programmer or more of a project manager.
Jason: He was more of a project using more of a project manager role. He went to the University of Waterloo; I believe we got a PMS in computer engineering from there. And, and so the hit that’s what he was accustomed to was that and of things.
Naren: What was your background when you first decided to start the company?
Jason: So my background was I, you know, I graduated from University of Toronto in business. And so that was always a focus, especially on the sales and marketing end of end of things. It seemed to be something that I excelled at. And so I worked for software companies, a small software company called the Alumni Computer Group, legal accounting software. And then, I went to compu Gen, which was more of a systems integrator for large implementations. And then I went to work at Novell for networking software, which was a much larger company. So that was really the thing. I have always loved computers and technology; it has always been something that I have been into. And just that, you know, that’s, that’s my passion. And so, when Sanjay and I were talking about it, we had more meetings about it, and just humming and hawing. And whether or not it was, coming from Novell, looking at this, it was really like a database system. It was minor to write home about. But just that it’s the start, you gotta start somewhere. And it’s amazing where things can go just from something so simple. So that’s one of the things that, you know, I mentioned to a lot of young founders: don’t let perfection get in the way of good. So whether it’s the product or the industry, you know, the main thing is to start; just start and see where it goes. And have the faith to stick with it, you know, during the good times and the not-so-good times, and, you know, see and hopefully knock on wood, it’ll go in the right direction.
Naren: That’s awesome.
Jason: There were definitely times when it did not, you know, then when it was when there were moments of truth, right? And I’m sure you can call those two in, you know, in your history. As an entrepreneur, I remember there was one time when we were down to the last $5,000 in our credit line.
Naren: When was this?
Jason: Probably a couple of years into it. OK. And maybe maybe three, no two, we still weren’t paying ourselves. So, Sanjay, carry Absolutely, as well; our CFO and I made this agreement that we would not pay ourselves unless we pay each other the same amount. Right. So it’s this thing. So you know, when it came to our staff, they definitely had to get paid. But when it came to us, we said, OK, well, we’ll do whatever it takes. And so there was, I remember, there was this one time where we were down to 5000 in our credit line, and you know, payroll was coming up. And I called everybody in anybody because, at that time, I was the sales guy. So I was calling anybody and everybody that we had as leads who were in that pipeline and ready to sign on the dotted line. And I remember one day, I literally had exhausted everything. I was working from home at the time, and I literally just sat back in my chair and thought all right, well, I can’t do anything more. Yes, this flies or flies. If it doesn’t, it doesn’t. Thankfully, we got a check from a big hospital the next day to literally save our Caboose.
Naren: So let’s fast forward Jason to the exit, right, because then we will go back into certain inflection points. Then, talk more about it. So this was in 2018, 20 years into the journey, and you are 250 people, full-time staff. One of the largest exits at the time in Canada, hundreds of millions of dollars, it was kind of a merger slash acquisition. So they acquired and they managed it. So, describe to us both the feeling and some of the things you did to create that situation for yourself.
Jason: Boy, there were so many moving pieces that went along with something of that magnitude, and there were so many parties involved. That it’s, you know, I can talk for me personally, but, you know, it was interesting, because our management team, the interesting thing is over all that time, our management team, the core of the management team stayed the same the entire time, nobody has had left, nobody was disenchanted and wanted to do something else. We had a lot of fun. And up until that time, RL just wasn’t for sale; we kept saying that we were incredibly well capitalized. We weren’t really worrying about where the money was coming from; we had a good war chest, everything was going well, we had a cult of clients, and we were having fun. And, you know, but you know, as time goes by, people get older. And so all of us were starting to get into our 50s. And, and so, of course, bring you the way it is with private equity and venture capital, you know, when people see something good, if they can participate in it, it could be a really good thing. And so, you know, we’ve, of course, recorded over the years from a variety of different organizations and never really took them up on it. Because we weren’t for sale, we were just having fun. So what happened was that an organization came to us and said we wanted to do this. At the time, it was Five Arrows Associates, which was the private equity arm of the Rothschilds family. And they wanted to, you know, they had a very big grand vision of where things could go as far as being a globally dominant player. And, in a lot of ways, it was very exciting to think that way, because we always thought we’re gonna, we want to be a billion dollar company, we have what it takes to do that. Let’s, you know, let’s drive, let’s drive ahead. And so as part of it, we have had an employee shared ownership program. So as part of that, we had to value our company every year, we had to go through the process, and what how that person, you know, how somebody participated was we never gifted shares to anybody, they had to purchase the shares based on market value every year, and we had a little mini market, so people can even buy and sell shares if they wanted to. So it was a really thriving kind of thing that I know a lot of people look forward to every year, and it’s a certain amount of excitement on both sides. And so, you know, when we looked at it, we were, you know, we were a certain value at that point. And at least from our calculations, and we’re just like, what will it take to get to a billion-dollar company? And so we basically, you know, asked the team because we said, you know, we have an opportunity to, you know, to lock in with some other partners and drive this thing forward, not, you know, not so organically. Or we could do it ourselves. What do you guys think? And, you know, the management team was incredibly positive and charged up and fired up saying, yes, we want to do this, we want to do it ourselves because one of the challenges we were having was moving from, you know, from the system we had, which was well received and incredibly configurable, powerful to, you know, but that was it was a mixture of client-server and web-based technology. And to move that to the cloud is, you know, it would take reengineering what we were doing. So, we had a meeting about it in January of 2017. And then, we basically said that, you know, you guys want to do this fine. We’re gonna give you a year, a year to get things going And so during that year, everybody was blown away in the ways that they do from a development perspective, from a product management perspective, to try and deal because a lot of the challenge wasn’t building the new software, it was legacy. How do we move the times? Yeah, how do we convert all our 2000 clients to our new platform? If it’s not at least as good as our current system, we will have a lot of unhappy clients. Ethically, we just couldn’t do it. So we had a year to not only come up with a plan and start to develop a new platform, but also come up with a strategy and what it will take to convert all of those clients to the new platform. And so a year came by, we had our management retreat, and literally, not much had changed at all. So it was, it was challenging. It was, you know, it was what it was; we gave the team an opportunity. And, we just decided after that, that, you know, looking at that, you know, the actions and the words, not totally hitting the mark, we just thought maybe it’s a better option to take option two. That’s when we started really moving forward with an acquisition nurture.
Naren: That’s awesome. Jason, I’m going to ask you some rapid-fire questions to mix it up. Did you sell to hospitals? What are three things? And were you very involved in the sales? Right? What are three things you would tell somebody who’s interested in selling to hospitals?
Jason: Tell somebody as far as, Oh, you mean, like, company is CEO of a company? Going into the healthcare field? I would tell them, first of all, to be patient. Hospitals move extremely slowly. Right? I would tell them that hospitals also look to other hospitals as an incredibly incredible influence. So if you’re nowhere, that will make it very difficult for you. So that’s the other one. So for example, you know, being patient would be a sales cycle, typically for us was six months to a year. That’s the sales cycle. That’s, you know, and it could be even longer than that. So if you’re looking for something that’s really quick and you can do on a quarterly basis, healthcare is a challenging one to do. When it comes to influence, one of the things that we did right from the onset, because we recognize that hospitals are very influenced by their peers, was to have something called an innovator partnership program. So it was something where we had an agreement with that client. So these are, especially for new entrepreneurs that might have something that they’re coming out with, and they’re looking to get some proof of concepts or, you know, some initial sales. What we did was recognize that it’s a huge discount that you have to give somebody because they’re taking a risk just by using you as part of their operations. But the benefit in having them on as a testimonial as a reference site, is invaluable there, they will be your best salesperson. Because they are ethical, you have no vested interest. And I guess it’s, you know, typical buying behavior where you go where, you know, if the crowds go into it, you’re not the only one that’s not going to look like an idiot if it doesn’t work. So, as part of this innovator partnership program, as an example, you know, they would have to agree to be part of a case study. They would have to agree to take X number of reference calls per month. And there might be some other things that go along with that, for our benefit, but then on the other end, we would give them a significant discount and make sure that they’re successful. Right. And that program worked incredibly well for us. As we grew, it just grew more as long as it put the heat under our belt. So because we had to make sure that we fulfilled and fulfilled Well, right.
Naren: And so, three, did you pick and choose who got it depending on, like, how did he, like I said, I assume that you had this program for a long time, not just when you’re brand new.
Jason: Well, this was the thing. So they are similar to celebrity endorsements. You want to go with people that are really well known. So there’s, you know, there’s the USA mile clinic. So US News and World Report’s come out with their honor roll hospitals every year. These are the top hospitals in the United States. So everyone knows those hospitals; those hospitals are just known. So like you said, Mayo, Johns Hopkins, Cleveland Clinic, UCLA, you know, there’s just a variety of organizations that typically wind up in that honor roll, and they are organizations that have a culture of excellence. If you ever get a chance to go to the Mayo Clinic in Rochester, Minnesota, you should take that chance. If you think Mayo Clinic is a clinic, how big would that be? And then, you know, I remember going to Mayo because they became a client of ours. And I go into Rochester, and basically, the entire city of Rochester is male, there’s over 1000 employees in one site. Right? Massive, massive, just just incredible. So having those people on, literally has probably made us millions of dollars, and lowered our sales cycle. And, and probably, it lowered our sales costs overall. Because once we say, oh, yeah, Mayo Clinic’s using this or Cleveland clinic’s using it well, you know, sales done the good. They can take that then and they can go to exit the executive and say, why don’t why aren’t we moving forward with this. But I can tell you that a lot of our sales were not just going to the, you know, the CEO; a lot of our sales were grassroots, like going to the people that will use it. Because these are typically the people that will be your internal champions in a healthcare organization because it is very institutional-based.
Naren: Alright, let me ask you the same question. You built a management team right from the start. And you feel that was one of the reasons you succeeded and you kept growing at a pretty rapid rate for like 20 years without outside funding all Bootstrap? right from day one. So tell me two things. Looking back, what are some of the benefits you got from that strong management from the team from early on? And then what would you tell that Founder CEO who’s trying to emulate what you did in terms of building that strong management team?
Jason: Boy, you know, it’s funny because there is a certain amount of luck that goes into being an entrepreneur, as you’re probably familiar with over time as well. Yes. So I wish I could say with total certainty because just to edit humility, I, you know, I don’t want to say it with too much conviction because you could try these things, and they could totally blow up in your face anyway. However, that being said, if you hire people that you like spending time with, that shows you in different ways that they are exceptional at what they do, and that they are willing to take it for the team. And that in some way, shape or form, they exude that, or they have examples that they can say to you on that. That goes a long way. That goes a long way. Because our culture was very close. We had a very close culture, we were all really good friends. We still keep in touch regularly. Maybe not as regularly as we want to but you know, we’re still keeping in touch and meeting and have you know, going for dinners and drinks and stuff and talking about the old days and still even talking OK, you know, we had such a great experience. What about starting something? Dangerous conversation?
Building a Management Team
Jason: Exactly, I don’t tell Paul that very much. But, you know, what we found was over time, especially when the going gets tough. You need people like that, that you can trust people that have your back, people that will, you know, work. Like we had it, we had one opportunity to do one for an entire province in Canada, province of British Columbia, it was like a $15 to $20 million deal. It was a big deal. And it was down to us and our competitor who we ended up merging with eventually, the name of our company was RL solutions. Theirs was Datex. And we eventually when you when the acquisition merger happened, we merged into RL, who got the deal, you had the competence. So, this was the challenge that it was during the time that we were still developing our web version. OK, so they got it. And so even though they wanted to go with us, OK, it Yeah, it didn’t, it didn’t work that way. But as part of that, literally, everybody on the management team was involved in that opportunity. We all went out to Vancouver, and we all met with the team that was responsible for it; it was a two-day gruel to know everything and anything about the software. And so everybody had to be. So having anybody that would complain and wouldn’t be up till like three in the morning, if needed, or all night, if needed, just didn’t work for our culture, our culture, although it was very compassionate. And we do anything for our staff. There was this expectation of excellence. That’s one thing that we expected if you needed to, you know, to stay in for the entire thing. You’re, you’re you’re going to stay in and you’re not going to give us a hassle about it. Each, each person on the management team had shown that time and time again. And the thing is, some people in the management team didn’t start as Cheryl Moran, who was our first love, she literally started when she was one of the first. She was one of the first five in the company. And her job was to go out and do implementations and training. And eventually, as we grew, she became VP of client success. And she drove that organization to become an incredibly successful cult engine. Our clients were fanatical about RM, fanatical and not in large, you know, in large part because of the efforts of her and her team. You know, Len Georgiou, who is, you know, he started out as our senior sales guy, over, you know, over a three or four year time period, he just kept bringing in deal on deal and they just kept getting bigger and bigger. And he was just a person that was larger than life and lived it. And he eventually became our VP of sales and just, you know, started to drive this, you know, this boat forward, when it came to, you know, revenue generation and building a, you know, a successful sales process, sales organization. So, you know, it’s amazing, and, you know, even with Carrie Levine, who was our CFO, originally, he started as a contract position to help us clean up our books. And eventually, you know, he just showed that he was so interested in what we were doing, he’s so keen and committed that it just, these are the kinds of things that you know, it’s kind of it’s hard to say whether we chose them or whether life just made these things possible at these points in time where the organization needed somebody like them in that role to elevate you know, the company to that next level. We even had that with clients we had that with staff we had that with clients it’s amazing what the right time that somebody showed themselves and it became obvious that that person you know, does deserve to be in that role. Didn’t always work that way. We did bring in people that didn’t totally work out. So I don’t want to seem like it. It was total destiny, but thankfully, the core group of Cat Singer was another one that was in the mix there, and Jan Xao, who was our Chief Technology Officer, right from day one. All of us were just a family. We’re all brothers and sisters. Like that’s how close we were.
Naren: Thank you. So, looking back on building a management team, what I got out of this is like, hire people who are really committed to the vision and who will do whatever it takes right and who will have each other’s back and do it slowly. So don’t just rush into it, but at the same time have the foresight to, you know, hire them, even, even when you are tiny or like, start thinking about the management team even early in the early in the journey, right? Is that correct?
Reflecting on Mistakes
Jason: There were times when we brought in people, and financially, did it make sense to? But it just seemed like this person was so exceptional that we couldn’t say no.
Naren: What are some of the mistakes you made or you would, I mean, again, the same question you’re talking to a CEO of the founder, what would you tell them, like things, you know, you would tell them knowing what, you know.
Jason: There definitely were a lot of mistakes that we made along the way. Actually, really, we, you know, being a global company, had an office in Adelaide, Australia. We had clients in Australia. They were very happy. We were starting to build the seeds to try and move into that market a lot more dominantly, and we had what it took to do that. We had a really good reputation over there, and the way that it works in Australia is a little different because here you can go to each hospital or health system and you can make a deal in Australia. It was very much state-driven. So the state would do it. You wouldn’t have too many individual hospitals that you’d be able to go to. You’d actually have to go through the government for that. So, we’ve won deals like that before. Like the entire country of Denmark rolled out our system across the entire country and it was cool, it makes it a lot easier. It’s a big deal. So it’s worth spending the time on, but what? So what were we doing? Australia was just moving to this way of doing it. This is how it is today. Back then it was still a little bit wild West. So hospitals still had their own budget and they could go ahead with something and so we were gaining ground and what happened was we had a reseller down there that was working for us. So they were the ones that were making the deals happen and we went over their performance, it was coming up to their milestone, it was a five year milestone they had and we recognized that they just weren’t performing at the level that we wanted them to. So we were going to close off that relationship and take it on ourselves and so, we ended up doing that, but as part of the strategy on that, it’s kind of like, OK, well, how do we support our clients down there? So we had to hire people that were down there. So we hired a couple of people from the reseller that was Kosher. They both agreed that it was OK to support and then it was kind of like, OK, well, now, instead of this reseller charging for support, we have to go in and charge for support. Well, our support in North America was significantly higher than our support in Australia. And so we had the management team have a lot of discussions on what are we going to do here because there was, there was some man on the management team that was saying we should push, we should push hard. Let’s get it up to levels that we would have here in North America and others who will remain nameless.No, I’m not saying me but others had said, you know what that we’re probably gonna we’re probably gonna, you know, really disenchant our clients that are down there.And so we ended up basically doubling their support costs overnight. And after, you know, after you implement a system like ours that’s organizational-wide, it’s not, it’s sticky. You can’t just get rid of it. So when a vendor does that, it says something and it basically disenchanted almost every single client we had in Australia.And so even though we had clients that were still there, our reputation was not the greatest. And right at that time is when they were going out to statewide reporting systems when they were having these.And so literally, we were getting involved and, you know, they’d be like, oh, are all solutions and like it, the word spread.And I have to say that was probably one of the biggest mistakes that we made.
Naren: Meaning did they like terminating the relationship with the vendor the, the reseller?
Jason: I think that was part of it because they really weren’t doing that bad a job. They weren’t living up to what was in the agreement. But if we were to not just take that, but also just look at the overall view of it, I think, I think the other, the other part was we, we, we definitely, you know, we could have done more with that. And we didn’t. But the other thing is just, you know, when you have clients that are reliant on you and you have an opportunity to profit at their expense, you’re going to lose, they will not allow you to win because you’re not helping them to win. And that is, that is one example where we did that and I can tell you that those folks that brought up that before learned a valuable lesson from, from that experience, that’s for sure. But, that was painful. That was very painful for all of us.
Post-Exit Activities
Naren: Thank you, Jason. Now let’s switch gears to post exit, right? Tell us a little bit about what you have been up to since 2018? Since, you know, you sold the business, and I know you still own shares in the new business, but you exit at or at least somewhat excited.
Jason: And, having liquidity for the first time because we never really took any money out of the company the entire time. I think we only started paying out dividends 15 years in, but you were getting paid a salary after the first few years. But even that was, you know, we, we knew that our value came in our shares or potential dividends down the road, but we were incredibly conservative. It was nice to get to a point where I had some liquidity. So there were definitely things that I wanted to do, like, you know, from a Phila philanthropic perspective. You know, we had a private foundation for initiatives when it came to things like, you know, conservation efforts and climate related kinds of efforts. We actually created a charitable organization called beaches, sandbox in the beaches in Toronto. It’s a community center that does community programs for Children, seniors, and people with special needs. Also, being an angel investor was one of them. I had signed up for three angel investing networks and realized that that was probably way too much. I think I, you know, I’ve heard from a number of entrepreneurs that had exits, you know, take a year off before you start things that are not kind of how I worked. So getting involved in other, you know, early-stage companies and also spending time with the family.
Leadership Insights
Naren: Thank you, Jason. I really, really appreciate our time today. I really appreciate your journey. And the last question I wanna ask before I wrap up is, I’ve met lots of entrepreneurs, many of them are friends, including you; you are different. I think you are like, you know, like it’s just very unique. I’m not saying other than are different.
Jason: But is that a backhanded compliment?
Naren: It is a compliment, and you are different in the sense that I don’t know; I just think you’re so kind, and you bring out the best in people. So I don’t know if there’s a formula that other founders who, who have big dreams, who want to do something over 20 years want because usually you don’t need it if you are exiting in three months or three years. But for a 20 year journey, like who you are as a person, whether it was God’s gift or you figured it out as you grow older, whatever you, whatever it is, right? I think it would be a good advantage. So what are some of the things you do as a leader? You are kind of like a person who’s not like I’m the big shot. Listen to me, you know, like you’re just the opposite. So tell me a few things that, you know, hopefully some of us Taipei you know, drive. I’m not saying you don’t drive, but I’m just saying, you know, like, like people can learn from to kind of mold our complete package. Like what are some of the things? What are some of the suggestions you would make, especially if a CEO found us or any kind of leadership, leadership role?
Jason: From day one there were, there were a couple of things.So, I always had my vision for personally, for our company that it would be a stepping stone for everyone involved so that they could reach their dreams.I would say that often. And I, I meant it, I thought for everybody, I just wanted to be worthwhile in some way in their journey in life. So that one second is to work yourself out of a job. That was that every single day. That was always my job. That was always my drive, which was to work myself out of a job regardless of what I had. If I could, work with somebody else that could take that on and learn it, that had a desire to learn it or had a desire to take it on and run it and could, you know, could be successful at it, or have, you know, or, or was really driven, work yourself out of a job. That’s that from day one, that was another thing that I did, and that’s why, you know, being president or CEO was never that, that was never an ambition for me. I just wanted to create something that would be valuable that would create some kind of positive impact in the world in some way. And it was at a time when, you know, it wasn’t very like back in the mid-nineties, and companies were still going pretty hard. They were still like, it was not easy working at a lot of companies. It wasn’t like it is now. You know, we felt like we were the anti-company because we were treating our staff with respect. We were giving people the benefit of the doubt, you know, we were doing, we were taking our time and being available for them so that they could be successful. A lot of times, you know, a lot of other companies during that time, if you’re, I’m sure you can remember, you know, they, you know, it was, you know, what do you do? What have you done for me lately? So, you know we built an English pub in our office on the 23rd floor of the Toronto Star Building. You know, that, that was not something that was financially,, you know, justifiable, in a lot of you know, quantitative ways. and our CFO Carry Levine was always happy to remind us of that all the time. But the funny thing is, I remember 10 years after we had that Carry came up to us and said, you know what, now I understand why you guys put the pub in here because it was, it was not, it was an investment in our people. It was an investment in our culture. It was the way that we wanted things to go that let that pub say friendship, right? So, not to say that you have to be friends with all your employees and stuff like that. You know, you do have things to do, but as best as possible, have fun along the way.
Naren: Thank you so much, Jason. I really enjoyed our time together. And, you know, I know a lot of listeners who are young, you know, halfway through the race marathon. And, of course, later in the journey, I would get a lot of value from this conversation. So I really appreciate it. Have a wonderful day.
Jason: Thanks so much. Naren, this is great. I wish any of the founders listening to this, especially in the early days, and I wish you all the best. Just keep your eyes on the road, and hopefully, things will work out. Thanks for having me on.
Naren: Thank you so much, Jason. Bye for now.