“5 Lessons I Learned When I Created My Software Company”, With Tom Hui and Mitch Russo

Do you know your business could be much bigger than it currently is, but aren’t sure how to get there? I can help!

Develop an accurate understanding of the market’s needs and assess the competition. Launching my company wasn’t the endgame, it was the result of doing a strategic review of the current market, anticipating where the market was going, and identifying existing gaps where a new type of service could make an impact. I was confident that my company could serve a need that was lacking at the time, and not only did I look into how we could fill an outstanding need, I devised how to do it so that we’d be far ahead of the competition by the time they understand the market. Taking time to step back and think about how to not only be competitive, but remain competitive, is essential to success.

As part of my series about the “5 Lessons I Learned When I Created My Software Company,” I had the pleasure of interviewing Tom Hui, Founder and CEO of HST Pathways, software solutions company for the ambulatory surgery center (ASC) industry. As founder of two of the industry’s most valuable technology companies, Hui’s innovations have been helping ASCs enhance patient outcomes, improve operational efficiencies, and optimize revenue cycle management for more than 30 years. Hui is a key contributor to the strategic growth of the ASC industry through his foundational technologies and he helped shape the industry through critical transformation periods. His technical leadership has been influential in leading the ASC industry through three technology cycles: DOS, Windows Client-Server, and now, web and browser Cloud-based deployments. Hui saw that emerging cloud-computing technology could be leveraged to simplify software deployment and management, enhance security, and support enterprise-wide scalability for ASCs. In 2005, Hui founded HST Pathways, a provider of cloud-based solutions for ASCs. HST Pathways cloud-based ASC solutions have since been adopted by more than 800 healthcare facilities nationwide. Hui also created Surgicenter Information Systems (SIS) when the ASC industry was in its infancy. SIS was an on-premise, ASC practice management software that revolutionized the industry in the early 1990s by facilitating and automating ASC workflows. Hui later sold the company in 2001, but SIS lives on today as a legacy client-server on-premise software system. Hui and his wife have a non-profit organization working to promote young women and men in STEM careers and educational settings. He holds a Master’s degree in Business Administration, a Master’s degree in Biology, and a B.S. in Biology.

Thank you so much for joining us Tom! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

In 1986, an anesthesiologist opened one of the first and largest surgery centers in San Jose and hired me to help him automate certain critical office functions, such as insurance claims and patient registration. A few years later, I turned the custom programming project into a company and launched SurgiCenter Information Systems (SIS). SIS grew to be the industry leader over the next twelve years, and became the largest software company serving the ASC industry. Sutter Health was one of my earliest customers (1990).

What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?

It was clear to me that that surgery centers were hungry for more efficiencies. The Internet, along with available and inexpensive bandwidth, had arrived. There were many more corporate chains of surgery centers which demanded “enterprise” solutions to help with standardization and compliance with best practices. When I began laying the groundwork for a new company, I saw that data centers were abundant and that made them affordable. The convergence of ASC industry trends and technologies made a compelling business case to start a company with a focus on becoming a leader in “cloud deployments” and “Software as a Service (SaaS).” In 2005, I started our new company, “HST,” for “Healthcare Systems & Technologies.” Many of my customers called it “SIS on steroids.”

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

I was blind-sided by the credit and financial crisis of 2007. It froze IT budgets and investments in business dried up. We lost money for 54 consecutive months before turning a profit in April of 2010, which was disheartening. But I never considered giving up. My favorite saying is “failure is not an option.” I knew we had a solid business plan and I had assembled an all-star team for the company. Through their perseverance and sacrifice, we were able to get through those tough times and emerge stronger than ever. I take great personal satisfaction that we did not have any layoffs or salary reductions during those difficult times.

How are things going today? How did your grit and resilience lead to your eventual success?

Since April of 2010, we have had consecutive quarters of increasing revenues, earnings, and free cash flow. Today, we are completely debt-free as we paid back all of our line of credit that we used during the financial crisis. Our sound business plan of matching recurring revenues with recurring expenses eventually paid off. In fact, we were recently awarded the 2019 Inc. 5000 award which recognizes the nation’s fastest growing private companies. HST Pathways experienced a growth of 233% over the past three years, and we only continue to grow — in client volume, product offerings, and our service team.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

I was asked to make a formal presentation to a chain of nine surgery centers. The Chief Operating Officer (COO) had assembled his facility administrators for the meeting. I started out by saying, “There is a lot of talent and knowledge in this room, and you collectively know more than a high price consultant from who’s fresh out of an MBA program and telling you how to run your surgery center.”

I should have known something was wrong because the rest of my presentation was very quiet and there were no questions at the end. As I was leaving, a young man that was in the meeting handed me his business card…and he was from the very firm I’d just made fun of! Not surprisingly, I did not get the sale. I learned to not assume I know anything about anyone, and that it is very important to frame my information in a “positive” way — play to my strengths and not trash the competition. We don’t know our audience or their biases! It was an expensive lesson because I was dismissive and careless, but an invaluable one.

What do you think makes your company stand out? Can you share a story?

One of most important and strategic decisions I made in 2005 was to focus. Rather than trying to tackle multiple things at once, we initially focused on the core Practice Management System and delayed entry into the electronic health record (EHR) offering. eChart, HSTpathways’ EHR platform, has been successful because of the timing. By 2013, there were many advances in technology and software development tools that made developing an advance charting system practical. In addition, the ASC industry starting to look at electronic health record systems not as a regulatory mandate but in terms of how it can help them with better patient care and operating efficiencies. Because of our leadership and success in practice management modules, our customers had confidence in our ability to deliver a reliable and transformative clinical solution. Our employees have helped us stand out by their personal commitment and ownership in helping our customers. It reflects positively on HST Pathways that many of our employees were former customers and users of our products. It means that our staff is knowledgeable and understands the daily workflows and needs of operating a surgery center.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Treat your journey as a marathon and not a sprint. Avoid getting into situations where a heroic effort is needed on short notice on a regular basis, because these efforts will burn people out over time. If you are a manager, strive to achieve success among your team that is reproducible, consistent, and sustainable. It is also useful to remind yourself of the big picture and separate out the “noise” — you can’t see the forest if you’re lost in the trees.

Human resource issues are also one of the leading causes of “burn out,” because they can be so emotionally detrimental. Identify individuals that are causing problems early and work to either remediate their behavior quickly, or remove them.

Personally, I also like to keep a daily “Key Personal Success” checklist. I evaluate myself in these three areas: (1) Have I challenged myself intellectually? Have I learned anything new? (2) Have I done anything to help others? What is my spiritual score? (3) Have I maintained or improved my physical health? It is my way of achieving balance and checking in with myself on areas that are important to me. Being a leader can be very lonely. It is important to develop a network of people you trust and respect.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

I have received help from many people along the way. First, I have to give credit to two school teachers who taught me English when I first arrived in the United States (I didn’t even know the alphabet, nor could I count in English when I arrived). With their help, I was able to catch up by the eighth grade. Today, I consider my command of the English language to be one of my most important skills in business success. Second, the president of a bank told me to “never find myself in a position where I have to have a deal done. It often leads to poor decisions.” Their advice has come in handy multiple times throughout my career. My third most influential resource is a compact book, “22 Immutable Laws of Marketing,” which gives numerous practical examples of successful campaigns.

Approximately how many users does your software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?

We currently have over 800 customers, which includes ASCs, hospitals, and corporate management companies. The three main steps we’ve taken to build our community were to: (1) Identify and engage with strategic and influential customers; (2) Recognize customer retention as important as customer acquisition; and (3) Anticipate and respond in real time to trends affecting our customers. And of course, happy customers lead to positive referrals.

What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?

A prerequisite of monetization is “critical mass.” It takes a large customer base before monetization becomes a reality. With the changes to healthcare financing, I see a great deal of potential for HST Pathways to deliver benefits from introducing “fin (financial) tech” to our customers. Another area that is ripe for monetization is “supply chain.” With HST Pathway’s large user base, Business Analytics and Big Data become feasible, relevant, and disruptive. Finally, with the rapid increase in adoption of electronic health records (EHRs), HST Pathways will deliver savings by improving patient care, aligning health insurance companies, and healthcare service providers.

Based on your experience and success, what are the five most important things one should know before they start a software company? Please share a story or an example for each.

(1) Develop an accurate understanding of the market’s needs and assess the competition. Launching my company wasn’t the endgame, it was the result of doing a strategic review of the current market, anticipating where the market was going, and identifying existing gaps where a new type of service could make an impact. I was confident that my company could serve a need that was lacking at the time, and not only did I look into how we could fill an outstanding need, I devised how to do it so that we’d be far ahead of the competition by the time they understand the market. Taking time to step back and think about how to not only be competitive, but remain competitive, is essential to success.

(2) Assemble the best team you can. A small, but highly experienced team is capable of being very effective in delivering quality products on time.

(3) Decide what the correct technologies are that should be applied. We recognized the impact of the Internet and its importance in changing commerce. It took many companies a long time to recognize the non-linear positive influence on markets of a “connected and networked” business community.

(4) Capitalize the company properly based on realistic expectations. We were within 5% of proforma for our cash needs for the first 24 months when we started, and made appropriate plans for necessary capital for operations and growth. Many companies make poor decisions based on a lack of working capital, and that is one of the worst reasons to fail.

(5) Have a comprehensive marketing and sales plan before you start; make sure your pricing model can stand the test of time. Technology startups commonly make the mistake of not placing enough planning and effort into marketing and sales. A great product and service organization does not guarantee business success. When I started HST, I brought on a VP of Sales two years before we even had anything to sell. Our goal was to “freeze the market” and let potential customers know that HST was coming out with a transformative product and platform. The strategy worked to perfection, and by the time our product was released, people were hungry for it.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

I devote personal time and money to education. Students often ask me how to cultivate imagination and creativity. I believe that we gain fresh insights by learning how to ask good questions. For example, many science historians think there were better physicists and mathematicians than Albert Einstein in his day. So, why was Einstein able to transform modern physics? One explanation attributed Einstein’s breakthroughs to his ability to pose questions about his observations of the universe in a unique way. These thought experiments still torment physics students today. The answers we get are biased by how we ask questions. I think if our education system could promote our skills at asking good questions, it would lead to more effective, innovative solutions to many of the problems facing society today.

How can our readers follow you on social media?

HSTpathways is active on a few social media platforms, notably LinkedIn, Facebook, and Twitter (@HSTPathways). Our website (www.hstpathways.com) also provides news and information about our company, as well as links to all of our social media platforms. You can find my personal LinkedIn page here.

This was very inspiring. Thank you so much for joining us!

Always happy to help.

“5 Lessons I Learned When I Created My Software Company”, With Tom Hui and Mitch Russo was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.

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