Episode #15 - Ian Chiang, Partner at Flare Capital Partners

Written By Omar Mousa

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Description

Ian Chiang is a Partner at Flare Capital Partners, a leading venture capital firm focused on early-stage healthcare technology and services companies. With extensive experience in digital health, Ian has been instrumental in guiding startups that are shaping the future of healthcare. His work with Flare Capital spans across AI, value-based care, and innovative specialty care models that aim to improve outcomes and reduce costs. In our conversation, Ian shares his insights on:

  • Current Health Tech Landscape: Ian discusses why this is a pivotal time for digital health, fueled by generative AI and the move towards sustainable healthcare solutions.

  • Generative AI and Scaling Specialty Care: Ian highlights how AI streamlines operations, improves documentation, and expands specialty care access in fields like oncology and cardiology, creating scalable, cost-effective care models.

  • Successful Startup Pitches and Cultural Alignment: Key elements Ian values in pitches include clarity, scalability, and profitability. He also stresses the importance of early cultural alignment between founders and investors to avoid tension.

  • Product-Market Fit: Ian offers advice on how startups can validate market demand, gather feedback, and use metrics to demonstrate strong product-market fit.

  • Advice for Product Managers: Ian provides guidance for PMs joining startups, emphasizing mission alignment, adaptability, and understanding company growth via the cap table.

  • Investment Principles: Ian’s criteria focus on long-term value, customer fit, operational efficiency, and team adaptability.

  • Transitioning to Venture Capital: Ian shares tips for PMs entering VC, including shifting from control to influence, recognizing patterns, and building a two-way learning relationship with founders.

In this episode of Concept to Care, Ian provides a comprehensive view into the venture capital perspective on healthcare innovation. His insights on product-market fit, cultural alignment with investors, and the evolving role of AI in healthcare are invaluable for founders, product managers, and healthcare leaders looking to drive impactful change in the industry.

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Some takeaways:

  1. The Current Landscape in Health Tech

    1. Health tech growth post-COVID: While COVID accelerated digital health adoption, Ian believes the current period may be even more transformative as companies shift from short-term, pandemic-driven solutions to long-term strategies focused on sustained innovation and integration into core healthcare services.

    2. Generative AI’s operational impact: Generative AI, especially large language models, is poised to transform healthcare operations.

    3. Scaling Specialty Care with AI: AI offers a powerful solution to address provider shortages in specialty care sectors like oncology, cardiology, and behavioral health by enhancing clinical decision-making, expanding access, and supporting more cost-effective care models in value-based care settings.

    4. Rise of AI-native health companies: The next wave of health startups will be “AI-native,” building AI into their foundation from the start to create adaptable, scalable solutions that can meet complex healthcare challenges with greater speed and efficiency.

    5. Addressing unmet needs in behavioral health: The demand for mental and behavioral health services continues to exceed supply, presenting a significant opportunity for health tech solutions that leverage AI for triage, support, and management to bridge the provider gap effectively.

  2. Generative AI’s operational impact: Generative AI, especially large language models, is poised to transform healthcare operations by:

    1. Streamlining administrative tasks: AI can automate repetitive processes like billing and scheduling, reducing manual workload.

    2. Improving documentation: Large language models assist in generating, organizing, and managing medical documentation more efficiently.

    3. Enhancing operational efficiency: By automating these tasks, AI helps healthcare teams focus more on patient care, reducing operational bottlenecks.

  3. Scaling Specialty Care with AI: AI offers a powerful solution to address provider shortages in specialty care sectors like oncology, cardiology, and behavioral health by enhancing clinical decision-making, expanding access, and supporting more cost-effective care models in value-based care settings. Key areas where AI can help include:

    1. Shortage of specialized providers: Specialty areas struggle with provider shortages, limiting access to care. AI can help by supporting decision-making for less experienced clinicians and enabling remote monitoring to reduce in-person visits.

    2. Limited scalability of expertise: Specialists are often concentrated in certain locations, making it hard to reach underserved areas. AI can replicate key decision-making processes, using diagnostic tools and triage systems to expand access remotely and at scale.

    3. Resource constraints in triage and diagnostics: Specialty care requires significant time for accurate diagnosis, leading to delays. AI tools can speed up analysis of images and patient histories, allowing faster triage and prioritization of high-risk cases.

    4. Cost-intensive care models: Value-based specialty care must balance quality and costs, but provider shortages add pressure. AI can reduce costs by automating routine tasks and identifying at-risk patients for early intervention, lowering emergency care expenses.

    5. Provider burnout: High caseloads in specialty care lead to burnout, worsening shortages. AI can ease workloads by automating repetitive tasks and enhancing decision support, allowing providers to focus on complex cases and reducing burnout.

  4. What Makes a Successful Pitch: To capture investor interest and build confidence, founders should focus on key elements that demonstrate their understanding of the market, strength of their team, and viability of their business model:

    1. Articulate the Problem Clearly and Early: Clearly define the problem your product solves within the first few minutes, using data to quantify its scope and urgency. Investors should quickly understand the problem's significance and market impact.

    2. Present a Scalable, Well-Defined Solution: Emphasize what makes your solution unique and scalable, whether through technology, IP, or a distinctive business model. Explain how you’ll expand the customer base and grow operations without sacrificing quality.

    3. Demonstrate Product-Market Fit and Demand: Highlight metrics like user growth, revenue, or partnerships, along with any testimonials or case studies that validate market interest and confirm demand.

    4. Define a Clear Go-to-Market Strategy: Describe how you’ll reach and acquire customers, noting distribution channels, customer acquisition cost (CAC), and lifetime value (LTV) to show a viable path to growth and retention.

    5. Emphasize the Team’s Strength and Market Fit: Showcase team members with relevant expertise and give examples of how the team has adapted to challenges, proving they can navigate the market landscape.

    6. Present Financial Discipline and Path to Profitability: Outline how raised funds will be allocated and share financial projections, including milestones that demonstrate a path toward profitability and responsible capital management.

    7. Create a Compelling Narrative: Craft a narrative that highlights your team’s unique position to solve this problem and demonstrates mission alignment, engaging investors on a deeper level.

    8. Anticipate and Address Risks Proactively: Be upfront about potential challenges, outlining mitigation strategies and preparing thoughtful responses to potential investor concerns to build credibility.

  5. Cultural Alignment with VCs: Avoiding Tension and Ensuring Long-Term Partnership Success: Ian emphasized that cultural alignment between startups and VCs is crucial for a productive and harmonious partnership. Misalignment often stems from differing expectations around growth pace, strategic priorities, and decision-making approaches. Founders can identify and address potential mismatches early by taking these steps:

    1. Understand the VC’s Investment Philosophy: Before engaging, founders should research the VC’s track record and portfolio companies to understand the investor’s growth expectations and risk tolerance. Ask direct questions about their expectations for growth timelines and milestones.

    2. Assess Communication Style and Decision-Making Approach: During early interactions, gauge how openly the VC communicates and their approach to collaboration. For example, some VCs prefer hands-on involvement, while others take a more passive role. Choose a partner whose style complements your team’s way of working.

    3. Align on Core Values and Mission: Misalignment often arises when the VC’s goals diverge from the startup’s mission. In early discussions, ensure both parties agree on the mission’s importance and core values that will guide the partnership. This includes agreeing on the company’s impact, whether it’s growth at all costs or a balanced approach focused on sustainable, mission-driven success.

    4. Seek References and Talk to Other Founders: To get a clear sense of what to expect, reach out to founders who have worked with the VC. They can provide insight into the investor’s involvement style, support during challenges, and alignment on values.

  6. Achieving and Demonstrating Product-Market Fit: Ian emphasized that product-market fit (PMF) is about proving that your product solves a genuine, urgent problem for a specific audience and that this value is reflected in measurable market traction. Key steps Ian highlighted to achieve and demonstrate PMF include:

    1. Validate the Core Problem and Solution Early: Ensure there’s a significant, persistent problem that your product uniquely solves. Collect qualitative feedback from early adopters to refine your solution before focusing heavily on growth.

    2. Focus on Customer Engagement Metrics: Metrics like customer retention, repeat usage, and referrals are strong indicators of PMF. High engagement shows your product is essential to users. For example, tracking monthly active users (MAU) or customer lifetime value (LTV) helps demonstrate the product’s value to the market.

    3. Use NPS and Customer Satisfaction as Validation: Net Promoter Score (NPS) and customer satisfaction surveys give direct insight into user satisfaction and loyalty. A high NPS indicates that customers are not only using the product but are likely to recommend it to others—showing product-market resonance.

    4. Adapt to Customer Feedback for Continuous Fit: Achieving PMF is not a one-time milestone; it requires ongoing refinement. Regularly collect and analyze customer feedback to understand evolving needs, and adjust the product accordingly. This flexibility keeps your product aligned with the market as it grows.

    5. Demonstrate Market Demand with Consistent Growth: Investors look for steady growth trends as evidence of PMF. Showing consistent revenue growth, customer acquisition, or positive conversion rates signals that your product meets a demand and that your business model is scalable.

  7. Key Milestones and Proving ROI for Early-Stage Startups: Ian shared that VCs look for specific mile markers to assess a startup’s growth, scalability, and potential ROI. Startups can build investor confidence by focusing on these milestones:

    1. Achieve and Sustain Product-Market Fit: High customer engagement, retention, and positive feedback are strong indicators. Use data like retention rates and NPS to validate that the product resonates with the market.

    2. Demonstrate Revenue Growth and Profitability Path: Show steady month-over-month revenue growth, positive unit economics, or repeat customers. Transparency on financials helps investors gauge sustainable growth.

    3. Establish Scalable Customer Acquisition Channels: Efficient and replicable customer acquisition is essential. Metrics like CAC and LTV reveal if the startup can scale with a healthy ROI.

    4. Hit Key Growth Milestones: Consistently reaching user, revenue, or expansion targets signals steady progress. These growth markers show that the company is on a predictable, upward trajectory.

    5. Showcase Operational Efficiency and Cost Discipline: Highlight lean approaches to funding allocation and cost control, demonstrating a commitment to responsible growth.

    6. Share a Customer Impact Story: Beyond metrics, impactful customer stories illustrate tangible product value and reinforce ROI.

  8. Advice for Product Managers Considering Startups

    1. Mission Alignment: Product managers should only join startups where they’re passionate about the mission. Startups require resilience, and mission alignment can be a critical motivator.

    2. Learning and Growth: Ian suggests that startups are ideal for product managers looking to build a diverse skill set quickly. The role demands adaptability and a general management mindset.

    3. Evaluating Startups: Prospective employees should research a startup’s cap table to understand investor involvement and ensure enough equity is allocated for future employees, which speaks to the company's approach to growth.

  9. Ian’s Investment Principles

    1. Long-Term Value Creation: Ian values startups that pursue a path toward value-based care, emphasizing sustainable growth over short-term gains. He believes healthcare needs to move from fee-for-service to models that deliver better patient outcomes.

    2. Customer and Market Fit: For early traction, Ian looks for clear indicators of product-market fit, such as customer growth, high net promoter scores (NPS), and improving gross margins, all of which reflect customer satisfaction and retention potential.

    3. Operational Efficiency: Startups demonstrating efficient growth—using resources effectively while driving sales—are particularly appealing. Metrics like the SaaS “magic number,” which tracks revenue growth efficiency, help gauge if the company is scaling responsibly.

    4. Team Strength and Motivation: Ian emphasizes the importance of founder-market fit, particularly in healthcare. He seeks founders who show deep expertise and a strong motivation to tackle the specific problems they’re solving, as well as the resilience to navigate complex healthcare markets.

    5. Beyond Capital Support: Great investors offer more than just funding; they provide strategic introductions, access to networks, and expertise that can accelerate a startup’s go-to-market and operational scale, especially crucial in long-sales-cycle industries like healthcare.

  10. Transitioning from Product Management to Venture Capital: Moving from an operator role to venture capital requires a shift in mindset and approach. Ian shared these guiding principles:

    1. Adapt from Player to Coach: In VC, guiding and supporting entrepreneurs without directly managing is essential. Allowing founders room to grow independently while sharing insights adds value without being prescriptive.

    2. Focus on Pattern Recognition: Recognize patterns across companies and industries based on past experiences. Pattern recognition, coupled with openness to new insights from founders, enhances strategic input.

    3. Develop a Bi-Directional Feedback Loop: Effective VC work requires a strong two-way communication channel where both the VC and entrepreneur learn from each other, building trust and fostering a collaborative relationship.

    4. Shift from Control to Influence: Unlike direct operations, VCs work through influence rather than control, supporting founders’ autonomy while offering strategic guidance.

Show Notes

Where to find Ian Chiang:

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Where to find Angela and Omar:

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Referenced:

Transcript

[00:00:00] Ian Chiang: I think by and large, joining a startup, you really have to truly believe in the mission of what the company is trying to solve. The product and the services and the solutions that it creates could generate a 10x impact with non linear, scale non linearly. For the benefits of the societies, right? Well, for the industry.

[00:00:23] Ian Chiang: And then lastly, I would say someone has to join a company where they truly appreciate the culture, as well as the colleagues and the founders that they're working with. 

[00:00:37] Angela Suthrave: Welcome to Concept2Care, where we hear candid stories of science. Success and failure discuss strategy and dive into the details that offer advice on what to do and what not to do in health tech, 

[00:00:48] Omar Mousa: whether you're a seasoned pro growing your career or just starting out.

[00:00:52] Omar Mousa: Our aim for this podcast is to be relevant, real world and tactical. We're dedicated to not only entertaining you all, but also empowering you with actionable insights that can be applied beyond the podcast. One concept at a time. 

[00:01:03] Angela Suthrave: This is Angela 

[00:01:05] Omar Mousa: and this is Omar. 

[00:01:06] Angela Suthrave: Welcome to concept to care 

[00:01:08] Omar Mousa: today. We're thrilled to welcome Ian Chang.

[00:01:11] Omar Mousa: Partner at Flair Capital Partners, an influential investor in the digital health space. Ian's journey from McKinsey, to founding his own venture, to his entrepreneurial role at CignaCare Allies, and now to investing gives him a rich perspective on what it takes to succeed in health tech. In this episode, we dive into some of the most exciting trends he sees today, like the impact of generative AI on healthcare operations, And the evolving role of value based specialty care.

[00:01:40] Omar Mousa: Ian also shares insights on what makes a pitch stand out, how to evaluate product market fit, and how healthcare startups can navigate today's capital landscape with discipline. This experience offers valuable guidance for founders, product leaders, and investors looking to make an impact in healthcare.

[00:01:58] Omar Mousa: We hope you enjoy this episode.

[00:02:05] Angela Suthrave: Ian Chang, how are you? 

[00:02:07] Ian Chiang: I'm doing well, Angela. 

[00:02:09] Angela Suthrave: We're so excited to have you on the show. So you've got an incredible background. You're a Taiwanese American. You went to Cornell for undergrad, Harvard for your MBA and your career. I found very inspirational. You went from doing research to McKinsey, to being an entrepreneur.

[00:02:29] Angela Suthrave: And then from there, you were an intrapreneur within Cigna at Care Allies. And now you're with Flair Capital. As an investor, you also chair some cool conferences like next health summit, and you're the proud dad of two kids. How did I do with your intro? Anything to add? 

[00:02:48] Ian Chiang: No, you covered all by thank you.

[00:02:51] Angela Suthrave: We're excited to talk to you today and just get your perspectives. So we'll go over some things with, you know, trends and what you're seeing as an investor, especially around AI. We'll talk a lot about go to market and. Joining startups and then a little bit about your transition to a VC 

[00:03:09] Omar Mousa: sounds like a plan and we want to start off with the macro trends here.

[00:03:13] Omar Mousa: So you, you've said yourself that right now it's the most exciting time you've seen in digital health and in the general health landscape you is, uh, in the VC, right? Have a bird's eye view on so many up and coming companies and innovative ideas. Tell us about some of the macro trends in health tech.

[00:03:31] Ian Chiang: Sure. And thank you, Omar and Angela for the questions. Um, so as a venture investor, while the last couple of years there, there were some ups and downs, and of course, we have seen a peak during the COVID era, Um, but I think this is actually more exciting, a period that's more exciting than even during the COVID era.

[00:03:53] Ian Chiang: Um, I would say in addition to like just a lot of what we have seen over the past couple of years in the, uh, in the rise of tech enabled services, we're also seeing technology, especially in generative AI and large language model. Um, There are now starting to pick up momentum and we'll be able to create, like, create the kind of impact that the previous generation of AI tools have promised but have yet to be able to deliver.

[00:04:28] Ian Chiang: So from a macro market point of view, we're really excited about the technology trends and also the emergence of the generative AI and large language model. Application within health care, of course, starting with some of the more on the administrative and operational side of the house. Another area of strong interest, and I think we're still solving for a ton of unmet needs is on the specialty curative size of the house over the last decade, or even one could argue two decades, There was a strong movement towards family based care, and of course we have seen the emergence of direct primary care or advanced primary care, including some of our Flare portfolio companies like IRL Health.

[00:05:20] Ian Chiang: But as a former operator, we all know that in order to truly Get us to the maybe there won't be a holy grail one and state of Valley based care, but to get as close to what we really need to control the specialty care costs. So, over the last several years, we have seen the emergence of a number of really high performing virtual specialty care.

[00:05:48] Ian Chiang: Well, Valley based care, fairly based specialty care provider. Like in the oncology, in the cardiology, in the MSK space, so really excited about, I personally do believe that there are still big companies to be created in those specialties I just mentioned, but there are also emergent specialties like GIs.

[00:06:11] Ian Chiang: So those are a couple of the areas. And of course, mental and behavioral health is still an area. of huge unmet needs. We just simply don't have enough supplies to ever address the insatiable demand of the behavioral health. So, so I, I'm still really excited about companies that are tackling and trying to address the unmet needs in the mental and behavioral health space.

[00:06:37] Omar Mousa: You got me thinking when you mentioned AI first and then you followed up with specialty care, you know, both Angela, I come from a specialty care, value based care provider, and. AI is also a very big topic and something that we like to share back with our investors. Like we think our unit economics are going to be improved with the new age of companies that are coming out.

[00:06:59] Omar Mousa: Do you guys view it the same way where you think these eight as these AI companies sort of mature that the specialty care companies will start to deploy AI a bit more and you know, that next, next layer of better unit economics is going to come from that or More so just better execution on their care model.

[00:07:19] Ian Chiang: I think it's a little bit of both, right? So, I, I think there's no way AI or any technology is not the silver bullet to solve the unmet needs, right? So, ultimately, Whichever companies especially coming from the specialty side, right? It's the care model. It's the clinical, the frontline employees, the people who are touching the patients, right?

[00:07:44] Ian Chiang: They're the one creating the impact. And of course, there's a novel business model as we're looking at many of the specialty care. Because of technology and also because of the innovation care model, they're more and more willing to taking on novel risk arrangement contracts, right? So that to me is an area of business model innovation.

[00:08:08] Ian Chiang: But I would say technology is such an important ingredient. To our ability to be able to scale any of these assets, right? Like any of these specialty model, because I think, as I mentioned in behavioral health, like, but we can look across all specialties, right? We have a shortage of providers and these.

[00:08:31] Ian Chiang: Other care types of care provider, AI tools will be able to amplify and multiply the supply of our very scarce resources, right? Like one of my portfolio company, we joked around like, uh, the company's chief medical officer is this, uh, industry luminary, right? And we needed to be able to replicate her in all the markets and every single one of their assets.

[00:08:59] Ian Chiang: Thanks. Obviously, we cannot clone her, so the only way we can do is leveraging technology using AI to perhaps create clinical decision support tools that can empower someone who's less experienced and less well trained to be able to provide the kind of triage diagnoses, the same way that Dr. Angela Fitch is able to do, and of course, be able to scale the care delivery in a clinical setting.

[00:09:29] Ian Chiang: A nonlinear fashion, right? And bring down the cost because we, we also face another challenge, which is the cost that currently exists in our healthcare system to make many of the care, make it very affordable for from a consumption side. 

[00:09:48] Angela Suthrave: wanted to give a plug for a write up that flair recently did, which was about the 10 year look back of AI funding and it we'll plug it in the show notes.

[00:09:59] Angela Suthrave: But it was talking about where the investments have landed and does it match the AI hype? And When I looked at that write up, which was terrific, so with all new technology, we're going from something like the peak of inflated expectations. And I think now we're following down that slope to the trough of disillusionment.

[00:10:22] Angela Suthrave: At the same time, I don't feel like A. I. As a technology is going anywhere, right? I think particularly in health care. This is the technology that we've been waiting 30 plus years for. You've already gone over some of the cost benefits and some of the benefits of scaling expertise. I think also a lot of health care is very A lot of the workflows are very arduous that could be automated.

[00:10:49] Angela Suthrave: And then I would also combine that with the shortage of healthcare workers in general. Can you give us your take on, on some of those things? 

[00:10:57] Ian Chiang: Absolutely. FLIR since the inception, we've been very actively investing the AI space tools as well as companies leveraging AI as part of their care delivery. Of course, like all innovations and all technologies, it will go through some ups and downs in terms of the cycles, just like the way you described.

[00:11:19] Ian Chiang: We have segmented the overall AI landscape by the different user types, like payer provider, life sciences company. And we have seen, of course, there are some use cases that have gained tractions. Much like in a much faster, rapid deployment than some of the other use cases. I would say, just from my personal point of view, AI is not hype, right, and a lot of what we have seen as an investor, of course, there are a category, many, many companies are building AI tools to enable better care delivery, more efficient administrative, better operational workflow.

[00:12:05] Ian Chiang: Reduce inefficiencies in our existing system, but I think I know so very excited and actually, frankly, perhaps even more excited is to see that a number of our companies. Be it within our Flare portfolio, what companies now we are seeing emerging that really already build upon an AI native technology stacks, right?

[00:12:32] Ian Chiang: Like, so, I would say the past 10 years, we have seen primary care, specialty care delivery, behavioral healthcare delivery companies that are digital first, digital native. And now we're starting to see. A whole generation of companies that are going to be AI native and to be able to deliver cost care delivery in such a cost efficient manner by leveraging some of these like tools that we five years ago, we just frankly could not have imagined.

[00:13:09] Ian Chiang: Right, so this is a really exciting era for us when it comes to like an AI revolution. Of course, while being cautiously optimistic, a lot of the policies and regulations are still evolving. But we do think that just like in other industries, AI will create a profound impact to transform the industry for the better.

[00:13:31] Omar Mousa: Thanks, Ian. I want to switch over into our audiences is made up of product managers, product leaders, operators, entrepreneurs, investors, and founders, et cetera. And I think you have a very good perspective given that you sit and see so many pitches. So I want to talk about the pitch just generally like you see so many what makes a company stand out when they're pitching.

[00:13:53] Ian Chiang: So as a, as a VC, so Flare, we invest across the full life cycle of the company, despite our entry point tends to be earlier in stage, right? So I would say seed A and B tend to be the phase that we start our investment. For every dollar we invest, we've reserved two to three dollars for follow on investment.

[00:14:17] Ian Chiang: And so we also. continue to partner with our portfolio companies throughout their life cycle. I would say when I look at companies that come and pitch to us, right? Like usually at the early stage, the team and jump south, right? Like, so I know it's kind of cliche. People talk about the TAM and the team, right?

[00:14:40] Ian Chiang: But that is really what we look for. The earlier we go, We try to prioritize the team. And it's not just a founder. Of course, we place disproportionate amount of our effort and diligence on the founders, but we also look at the broader team, right? So who's on the team and also who are the advisors? Has the founder being able to build an ecosystem of a network of great people, right, to help them succeed.

[00:15:12] Ian Chiang: On top of that, we also look at. You know, the founder market fit, right? Again, not to sound too cliche, right? Like, we do like to understand founders motivation and why she or he wanted to tackle this very thorny problem, right? But the other, as we moved later and later to across the, like, some of the company, what was stood out to us is really the, the commercial traction.

[00:15:40] Ian Chiang: So we. We always will start looking at whether or not there are signals in addition to the product market fit, but the ability for the company to be able to grow in an efficient manner, right? So, of course, the later we go, probably we have more data to analyze, but in some ways, we don't need to be able to see like, oh, wow, 10 million of revenue to justify that.

[00:16:11] Ian Chiang: But if a. Entrepreneur, a founder can come and show us evidence of what would help the companies to go from one customers to 10 and to be able to show us the evidence that will really stand out to us. And lastly, I think what I personally also look for is companies that has unique. business model, right?

[00:16:36] Ian Chiang: Like, so to be able to truly, I think personally, coming from that value based care enablement. background, like, I, I firmly believe in that the only way for us to get out of our current healthcare, many of our affordability crises is to be able to move towards value right so the companies that are willing to be able to go through go from it's okay to start with fee for service.

[00:17:09] Ian Chiang: But if they have a clear path towards to move their payment model to across the value based care continuum fee for value continuum, I think that's what stood out to to me. Right? 

[00:17:22] Omar Mousa: So that's a great perspective. And I'm wondering, you know, just curious what stories that you've heard recently that's resonated really well and what stories or pitches that you heard did not resonate well.

[00:17:38] Omar Mousa: You know, feel free to withhold any sort of information that feels necessary. 

[00:17:42] Ian Chiang: Yeah, so on the story that went really well, Sai, I mean, without naming the company, we're going into details into some potentially confidential information. I think one of the companies like that, Went really well, not just with me, but also with our partnership was the founders were able to come in, share with us a clear articulation of what exactly the problem it's solving.

[00:18:11] Ian Chiang: It's a little bit of a later stage company, so it has a lot more financial data to be able to show, but the clarity in terms of showing the growth as well as its approach to acquire customer in an efficient manner. I think that stood out, right? Especially for early stage investor. We weren't anticipating a company at that stage to be able to track the magic number for the past three years, right?

[00:18:38] Ian Chiang: And this company was able to proactively share that with us. I think for any financial investor, especially coming out of this growth at all costs kind of a mindset or face of the market, I think the more a founder is able to show the financial direction. I think that resonates well with the investor and even if we are We all understand no one can really predict the future.

[00:19:04] Ian Chiang: But the fact that an entrepreneur is able to be thoughtful and then to be able to walk us through the financials in such a detailed manner, I think that resonates well. And, um, And lends a lot of credibility to us to believe that they will continue to run the company in a methodical, thoughtful, and disciplined way, right?

[00:19:28] Ian Chiang: And the other thing I would say that company really stood out. And resonated well with our partnership is the simplicity of the product, right? So, it's a provider, it's a solution that sells into the provider. The value proposition for the customers, in this case, the provider, is just so clear, right? And so intuitive.

[00:19:51] Ian Chiang: In some ways, it's like, it's so novel, and yet, You're like, wow, how come no one has ever thought of that? So when a company can clearly articulate the business model in a very simple, intuitive way, I think that will always resonate well with the audience, right? Be it an investor, or a customer, or anyone else.

[00:20:17] Ian Chiang: On the flip side, I think Omar, you asked, The question about pitches that did not go well, right? Like, I think oftentimes, I think similar, like, if we can really understand the product until 15 minutes into the presentation, I think oftentimes I would say, We we get many of those pitches during a week, right?

[00:20:39] Ian Chiang: So those are usually no matter how great the company is It's just a challenge for us to be able to lean in right? I think one thing Entrepreneur may not appreciate is like at any given moment Every single one of us is trying to balance a portfolio of sometimes double digit number of companies that we need to work on at various different phases of the diligence, right?

[00:21:05] Ian Chiang: So, I cannot stress the importance of to be able to tell a linear, crisp story. Tell us what the product does, right? And what's the business model? And what kind of unmet needs you are solving? Right. And what's the mode? Uh, I think by and large companies that didn't perform well during the first pitch, uh, often don't tell a very clear, uh, story given the short amount of time we have with each of them.

[00:21:35] Omar Mousa: Got it. So for those who are listening and have pitches coming up, if you make time yourself and make sure if you haven't mentioned the product and what it does in the first 15 minutes, you need to revisit. Ian, you mentioned magic number. Can you just, what is that? What is the magic number? Right. What does that mean?

[00:21:51] Ian Chiang: The magic number I was referring to is the SAS magic number, right? Like, so I think the formula is current quarter revenue minus the previous quarter revenue multiplied by four, and then divided by the previous quarters of sales and marketing expenses. It's a, it's a metric that we use to look at how efficient the sales is, right?

[00:22:14] Ian Chiang: And how quickly it Obviously, it's a number. That, you know, of course, the higher the number, it means there's a greater the efficiencies, right, like, because you don't need to spend as much on the sales and marketing side to increase your revenue, like from quarter to quarter basis. However, it also just shows you.

[00:22:38] Ian Chiang: Perhaps a company may have underinvested in the sales and marketing, right? I think coming out of the growth at all costs, like kind of a mindset, we have seen so many companies, right? They need to continue to increase their sales and marketing costs to chase the next dollar, right? So I think as a technology investor, health tech investor, we're now a bit more overindexed.

[00:23:02] Ian Chiang: To companies that can grow in an efficient manner, right? So in that case, this is a company like was magic number would suggest the company has historically perhaps under invested in the sales and marketing, right? And from our point of view, we would love to be able to invest in the company to help them build their commercial infrastructure, because we know that even with the.

[00:23:28] Ian Chiang: The limited amount of resources they have had, they were able to grow in a very efficient manner. So now we can really leverage our capital to help them get to the next stage. There are other metrics you can use to track that, so I just happened to, I was impressed the company has such a thoughtful quarter by quarter, year by year tracking of the magic number.

[00:23:54] Angela Suthrave: Now tell me about a story where the startup pitched to you, the pitch went great. And then they didn't get the term sheet. What happened? 

[00:24:05] Ian Chiang: Well, I would say, uh, also it varies by the different faces of the companies. Right. So, so I think as a, as a former entrepreneur, I also pitched to a lot of the investors, I thought the presentation went well, uh, and somehow did not materialize into a turn sheet.

[00:24:26] Ian Chiang: And when I decided to switch sides about five years ago, one of the things I really wanted to learn was to understand how venture investors make decisions. So since, uh, I have always been on the other side of the table, right? I think for the past five years, what I have seen is any venture investment has a multifaceted approach.

[00:24:48] Ian Chiang: The pitch could have gone well. And then I think one of the most. Sometimes the entrepreneurs don't see the type of work we have done in the past, behind the scenes when it comes to diligence, right? And also the kind of underwriting like models that we have to put together to justify the investment.

[00:25:11] Ian Chiang: Because ultimately, in addition to loving the product, liking the company, loving the founders, we also need to be able to underwrite to an exit that. Our like we are be able to uphold our fiduciary duties to our LPs right so our investors. So oftentimes I would say, even for the companies we love. We didn't get to the finish line, get to getting to a turn sheets.

[00:25:40] Ian Chiang: It's often because of the stage right like so like as an example. Oftentimes, when we look at an earlier stage company, love the technology, love the founders, but like many of the earlier stage company, their business model can evolve in many different directions, right? So for us, the benefit of being a slightly A fund that can invest seed A and B, right, like we often would say, okay, we would like to see the company mature a little bit more before we lean in, in a, in a even more meaningful ways, right?

[00:26:16] Ian Chiang: And as evidenced by many of our portfolio companies that we invested at Series A or Series B, we have been talking to the founders. Since when they many of them just started the company were even before they even started the company when it was just a concept, right? So I think my advice to founders is don't take any one pitch.

[00:26:44] Ian Chiang: Don't go on the extremes, right? Don't like a great pitch. Don't think that it's uh, it's just because it's a great pitch that will quickly lead to a turn sheet. But also don't be overconfident. Like, upset if the pitch didn't go nearly as well or even a great pitch that did not lead into a turn sheet, right?

[00:27:05] Ian Chiang: And, but I would say partnering with the investors because here's one thing I would say, right? And one thing I've learned now that I switch side is your deal sponsor, the person you pitch to on the venture side, they are also pitching to their partnership, right? So it's really a collaboration, it's a partnership.

[00:27:24] Ian Chiang: Yeah. To partner with the investors to get to a turn sheet, 

[00:27:29] Omar Mousa: just thinking about, you know, you guys invest in various stages of the company early to more mature as a, as, as time progresses, the cap sheet gets more investors. And I'm wondering what your thoughts are around cultural fit between the startup and the VC and.

[00:27:47] Omar Mousa: Where have you seen the cultural misalignment lead to tension and like, how do you identify that that early on in the process and kind of just, you know, resolve it in a favorable outcome for everybody involved? 

[00:27:57] Ian Chiang: Yeah, no, for sure. Omar, as you said it nicely, right? Like, as the company grows, there will be more and more investor on the cap tables, right?

[00:28:07] Ian Chiang: So, so I think. You know, of course, this is really a two way street, right? It's as much as the VCs are evaluating the companies, the founders for culture fit, as well as it really should be also be the other way around, right? Founders should also evaluate the VCs to understanding whether or not they are a good match, right?

[00:28:32] Ian Chiang: So, I think, from me personally, and maybe having been on both sides of the fence. I would say transparency is paramount, right? I think it's always great for the entrepreneur and then the venture investor, be the lead or whomever is part of the, the syndicate, right? Like to be very transparent about the intention, right?

[00:28:59] Ian Chiang: Why, what's the motivation behind building this company? What would be that ideal outcome of the company, right? Like, What value adds the VC can bring? Right? What do the startup need? Right? What does the founder want from the VC? Right? I think the sooner the two sides can be transparent about their intentions, and their, their values, Optimal desire outcome.

[00:29:29] Ian Chiang: I think the better it is, right? Obviously, you know, sometimes things could change like from round to round, but I think having that kind of a transparent communications, I think, is what I have seen the best way to do it. Build a successful relationship, right, like, and in some of the cases, I think that misalignment in terms of expectation is probably what gets the investors on the cap table, and the management team or the founders get into a little bit of a disagreement, right, like, so I will always advise, Up front transparency and don't be afraid, right?

[00:30:10] Ian Chiang: I think a lot of the founders I have seen they're so eager to convince a venture investor to invest in their company, they will say whatever in their mind, what they What they have found out what the VC wants to hear at the end of the day, you just have to be true to yourself, right? To the type of company you want to build and the kind of people you want to be surrounding yourself with.

[00:30:36] Ian Chiang: So I, I think just, just try to be genuine, right? Be authentic to what you set out to be since building a startup is such a noble pursuit, right? So you want people who are fully on board with. But that mission, 

[00:30:53] Angela Suthrave: Ian, I loved what you said. I'd love to double click on that when you say, and I agree with you. I think that, you know, people who are building organizations, they are very eager to impress the VCs during their pitch.

[00:31:06] Angela Suthrave: I'm curious, you know, you said something that I really liked, which was, you know, what value does the VC bring? So if I am a founder and I'm looking for, I'm pitching to various VCs, what would you say different VCs? can bring and how would you evaluate that? 

[00:31:25] Ian Chiang: First and foremost, venture capital investors, well any investors, we bring capital, right?

[00:31:31] Ian Chiang: But obviously, I think someone once reminded me, everyone's dollar is the same shade of green. So, so I don't think anyone would be able to purely differentiate between Based on the capital, right? Like, I think what I have seen, and we also strive to do that at Flare is, uh, so number one, I think on the personal level, right?

[00:31:52] Ian Chiang: Like, As an entrepreneur, you are looking for your investor, be lead investors or others on your cap table is for to for that person to be able to be there for you right through the thick and thin, as well as the ups and downs of building the company right so so I think sometimes I would say, when I was still building a startup I probably spend more time talking to my advisors and even angel investors more so than to my wife.

[00:32:23] Ian Chiang: Right? So, I think some of my angel investors got me through some of the toughest times, right? Like, so, so to be able to find an investor who's truly invested in you, that's so important, right? That's something you can't even measure based on the, the, the The, you know, put in dollar terms, right? Well, concretely, but other value adds, I would say, right?

[00:32:48] Ian Chiang: Like many of the investment firms, including flare, we have platform teams, right? So, as a, and especially as an early stage, a fund that partners with many of the early stage founders, even repeat founders, many of them have not been able to navigate. Like, for example, on the PR side, right, on the marketing side, on the operating side, on the operations, on the legal sides, right, I think value, good, great investors, value adding investors will be able to provide not only the experience, but even some of the hand holding.

[00:33:24] Ian Chiang: To navigate, uh, founders, repeat or first time founders through some of those company building processes. One other area I would say is probably most particular in to healthcare entrepreneurs is great investors in this space, bringing experiences and network to be able to make the proper introductions.

[00:33:49] Ian Chiang: For portfolio companies, and I would say for as an example, right, we track this number, so since we have dozens of strategic LPs, and our portfolio companies tend to sell into many of our strategic LPs, right, so we actually track this number over 11th. decade, our portfolio company sold over 800 million worth of revenue into our strategic LPs.

[00:34:18] Ian Chiang: And of course, I will always say as a former operator, like the entrepreneurs and the teams are the one doing the hard work, right? Like, but, but I have seen firsthand how some of the valuable introductions that can be made by Like valuable funds like flair and others that can materialize into a celebration of a contract being done.

[00:34:40] Ian Chiang: Right. So I think those are some of the value adds like, especially in health care is really valuable, right? Because many of these, you know, Enterprise customers, but they buy early stage company based on confidence, right? So if you can get a investor that they trust to make that recommendation, that can accelerate the commercialization and go to market by quite a bit, right?

[00:35:07] Ian Chiang: And, and those are sometimes. Especially in healthcare where, you know, the sell cycle is so long, right? It could be 12, 18 months long. So, any sort of acceleration, any sort of a boost, can make a huge difference, right? Like to an early stage startup. So, I would say, Those are some of the things that great investors bring in beyond just their capital, right?

[00:35:36] Ian Chiang: And one last thing I would say on the value add, I think often times it's hard for any investors to tell an entrepreneur what to do. They should be doing because we are not as close to the market right when I seen the data, but having having spending having spent quite a number of years on the payer side.

[00:35:59] Ian Chiang: There are certain things I can probably tell people.

[00:36:05] Ian Chiang: So sometimes I would like to think that some of our value add is to share some of the mistakes we either have personally made in my, in the case of myself, or what we have seen other companies have made, and then to guide them The entrepreneurs and the startup to a direction where they can save a few cycles and not repeat the same mistakes other people have made.

[00:36:31] Angela Suthrave: So, Ian, you know, you shared that with flair. You typically invest in seed stage series, a series B, oftentimes at these stages, the organizations are still looking for product market fit. Can you talk a little bit about strategies? To find product market fit quickly and how, as an investor, you're able to guide organizations to do so.

[00:36:56] Ian Chiang: Yeah, no, great question. Angela. And of course, different stages. We look for different product market fit signal, but from the very early stage, right? I think the general rule of thumb, at least I personally look at, I think most of the investors. Would look at it is whether or not there's number one people using it Two are their enterprise customer in the healthcare settings?

[00:37:22] Ian Chiang: Interested in the product and willing to use it And then the third is really and perhaps the most important part, right? Are people willing to pay for it because ultimately we're still backing companies that are Going to hopefully go on to become the best Very successful businesses, right? So, at least in healthcare, slightly different from maybe some of the consumer, what, consumer tech, that you just need to build up the user base and trying to find ways to monetize later, right?

[00:37:55] Ian Chiang: By and large, healthcare companies, you need to have a pretty well defined business model early on in order to, Move to the next phase stage, right? So I think those are the three kind of dimensions we look for for product market fit, right? And I think we have investing companies that have lots of users early on before they have clear, like, you know, the end stage business model, right?

[00:38:25] Ian Chiang: They can start with fee for service and then having a number of, you know, customers be patients or. The providers, right, but with a clear view on how to evolve their business model in the long term. So, I would say, but ultimately, what we look for is the buying signal, right? And I think be showing, reflecting that in a P& L statement, or the ability to put a large enterprise customers in front of an investor and validate it.

[00:39:00] Ian Chiang: Their interest in the solution and that they are going through contracting process right like so I think those are some of the ways for us to evaluate the product market fit for the companies right and of course, as we look at. Later stage companies were hoping that to be able to see replicability of that business model right to truly validate that there is a true product market fit and many, many people, many, many organizations are willing to vote with their dollars, right?

[00:39:36] Omar Mousa: Let's talk about when the company's coming off the ground and they're oftentimes attention on what to build and how to allocate resources. Can you just describe to us like what do good decisions look like and capital allocation in the early stage? 

[00:39:51] Ian Chiang: Yeah, no, great question, Omar. And of course, depending on a series seed versus a series B company will have different types of capital allocation profiles, right?

[00:40:04] Ian Chiang: I think let's start with the early stage, right? Like if it's truly early early stage. I think, of course, quite a bit of capital should go into developing the product and the solutions, right? Like, since if you're building like a care delivery business, you have to be able to hire clinicians, right, to provide their services.

[00:40:27] Ian Chiang: And also, if you are a software platform, right, like, especially, let's say, selling into an enterprise customers, right, no one is going to just buy a bunch of wireframes, right, like, they need to be able to see the actual, um, product at work, right? Like, and then, you know, a large payer or health systems, IT department, or supply chain, or security team, compliance team, they need to be able to evaluate the technology, right?

[00:40:58] Ian Chiang: Review the source code. So you have to be able to build something. Right. So, so right off the gate, like obviously building that product or that tech enabled services to be able to demonstrate product market fit will be important, right? But one area I think we shouldn't under invest, like one shouldn't under invest is also to, to have the commercial team, right?

[00:41:24] Ian Chiang: So oftentimes, of course, startups are founder led sales, so that's totally fine. But we would like to see founders or entrepreneurs management teams to place a little bit of emphasis on investing into the commercial infrastructure, right? Especially if a company. Is looking to scale, like quickly, having the ability to, it doesn't have to, you don't need to hire like a chief commercial officer at the seed stage, right?

[00:41:59] Ian Chiang: Like, but to be able to invest in building that, you know, sort of a commercial infrastructure to be able to scale, the company will quickly test out product market fit in different categories, different customer segments. It's. It's pretty important, right? And we have seen some of the best companies.

[00:42:19] Ian Chiang: They're able to scale quickly is because of sound. The investments they have made in the early phases. 

[00:42:27] Omar Mousa: I want to pull on that a little bit. Commercial has always been very peculiar and hard, I think. And the why I say peculiar, it's like, let's let's talk about specialty care and value based care arrangements, value based care arrangements, you know, through the contracting process.

[00:42:42] Omar Mousa: It's like, it's pretty complicated, right? Right. And you mentioned like early on, you know, founder led sales make sense and then eventually invest in the commercial team. I wonder what that looks like, like, in a sass in a sass environment. Yeah, like there. It should be. We should be investing in that. We should be bringing on other resources.

[00:43:01] Omar Mousa: But it's also seen in some cases where, like, The deals are, the deal cycles are very long and the deal itself is pretty complicated and it's very network driven. It's very like, like, does the founder even know people at the payer or, you know what I mean? And so what do you think about those kinds of businesses and like, how does, how does that commercial spend change?

[00:43:23] Ian Chiang: Yeah. And I would say. Clearly, healthcare, especially in B2B enterprise sales kind of environment, network, and relationship is a, is critical, right? Like, I don't want to, like, I don't want to ignore it because many people buy solutions from people they know well, right? And when I was still on the operating side, I used to joke around.

[00:43:52] Ian Chiang: It's, uh, that's why the best product never, oftentimes. It doesn't win in healthcare, right? Well, in many of the B2B settings, or highly regulated industries, right? So, I think, when I talked about commercial infrastructure, like, it doesn't mean that you need to build out, like, uh, an army of salespeople, right?

[00:44:16] Ian Chiang: Like, hiring a chief commercial officer, and build a sales organization, or growth organization of a CSB company. I think The ability to invest into not just, it could be an individual or a network of individuals, and we have seen startups done a very good job in terms of building an advisory board, right?

[00:44:40] Ian Chiang: Commercial advisory board, and some of that is like very incremental investments, and that can go a long way, right? Like, as Omar, you described, like the network effect. Right. And then also, the other thing I would say, and not to plug for any investors, right, and but also maybe tie to some of the value add questions that Angela brought up like a few minutes ago.

[00:45:05] Ian Chiang: I think having the right investors around the community. the table. I know oftentimes early stage founders tend to want to minimize the dilution, right? But I think in some cases, bring the right investor and sometimes even take on a little bit more dilution to have more value added investors around the table.

[00:45:24] Ian Chiang: Like, investors could also serve as an extension of the team, right? So I think, you know, That would be another way to invest into that infrastructure right like so, so maybe it's not a direct way from like you raise capital, where do you invest right so but think about as an entrepreneur think about if you can bring in more capital, and from more value adding.

[00:45:49] Ian Chiang: Parties that could even amplify the effect right 

[00:45:53] Angela Suthrave: and I loved how you were able to boil down product market fit into those three areas to look for as a follow up to that question. What would you say are mile markers to look for? So that startups are able to start to prove out their ROI and have you seen a company do this well?

[00:46:12] Ian Chiang: I think for us like Obviously different types of company will have different types of metrics that we measure them to will measure product market fit Right like a SAS only company will be very different from a tech enabled services company So so I don't want to generalize the A set of specific metrics, right, like just cuts that cuts across all the like different types of business model that we we invest within the health care subsegment, but I think by and large.

[00:46:47] Ian Chiang: We want to be able to see growth in customers, right? Like in users. So, so I think even for a company that's quote unquote, may or may not have figured out the long-term business model, right? We want to be able to see signals of, uh, customer growth, right? And user growth. So I think that's pretty universal no matter what kind of a business model, right?

[00:47:12] Ian Chiang: Like I think too is, I think in healthcare space, I, I think. By and large, like, people use NPS a lot, right, so we do like to look at companies, like, whether or not we can measure the NPS score, right, like, so, of course, the higher the better, but we often use those as another kind of interim milestones, right, like, to see whether or not the companies are truly meeting gaming product market fit, right.

[00:47:43] Ian Chiang: And maybe one other question. Another set of metrics we will also use is, uh, to look at certain gross margin profile, right, and whether or not the gross margin will continue to trend favorably, right? I think that also tells a lot, because if you can see improvements in gross margin, that means it shows, you know, There's a leverage like the company could scale it like in an asymmetric manner, right?

[00:48:12] Ian Chiang: So, so obviously we won't be able to tell the end stage gross margin for perhaps another round or a couple of rounds later. But for companies that are able to show improvement in gross margin, I think that goes in a long way, right? So even for early, early stage startup, as soon as they start. Shipping products on the software side would deliver services could be AI enabled or tech enabled.

[00:48:42] Ian Chiang: We would like to see, you know, like their overall gross margin profile and then how the cost of goods sold or cost of service trends over time. 

[00:48:52] Omar Mousa: You know, I want to, I want to switch the framing of this conversation. As a VC, you're often evaluating startups. Let's, let's think about the perspective of the product person thinking about joining a startup in, in tech.

[00:49:02] Omar Mousa: There are, you know, there are product managers who are in a much safer, you know, higher income situation, maybe just a lot more stability in a more mature company. And when you go into a startup, you're kind of, there are trade offs there. I'm curious what your thoughts are, like if you were a product person or going back to your entrepreneurial experience, like what are the best outcomes or things that you should be looking for that would render the best outcomes if you're a product person evaluating startups?

[00:49:34] Ian Chiang: Yeah, no, great question, Omar, and I think I'll start with some of the some ways of thinking about career, startup career, even just. Perhaps universally true before diving into product people specifically. I think number one, if someone has a very good job, like maybe from a large company, Google, Facebook, or like one of the larger companies, and thinking about joining a startup, right?

[00:50:06] Ian Chiang: Like, I think by and large, I would say, You have to join startup for reasons other than financials, right, and also lifestyle, because I think if someone wants to join a startup, just because of the opportunity to be to optimizing on the financial side, as well as optimizing on the lifestyle side. I think the person should just stay at his or her current employers, right, because that should not be the motivation of joining a startup.

[00:50:44] Ian Chiang: I think by and large, joining a startup, you really have to truly believe in the mission of what the company is trying to solve. The product, the services, and the solutions that it creates could generate a 10x impact with nonlinear solutions. Scale nonlinearly for the benefits of the societies, right?

[00:51:08] Ian Chiang: Well, for the industry. And then lastly, I would say, Someone has to join a company where they truly appreciate the culture, as well as the colleagues and the founders that they're working with, right? So, so, so I think that those are the three things like for anyone thinking about going from a large company with like a very well high paying stable jobs.

[00:51:35] Ian Chiang: And to make that move to a startup settings, right? I think on the product side, I would say maybe three things I will also look out for if I were a product manager joining a startup, right? So number one is, The learning aspect, right? Like, whether or not the company is building something that you can not only contribute right away, but also to be able to learn and advance your technical products, like, like experiences and skill sets in to advance your career, right?

[00:52:17] Ian Chiang: So I think. Oftentimes we have here people from large companies, they feel like their learning has plateaued, right? So, there's no better place at a startup setting where you can challenge yourself and excel your technical skill as well as other many skills. Across many other facets, right, and startup is being a product manager at a startup is truly drinking from the fire hose, I think, too, is some levels of autonomy, right?

[00:52:48] Ian Chiang: Like, because I think being a product manager at a startup, you're almost like you're you're running the certain parts of the product, you also have to have that CEO mindset, right? So I think to join, to go from a large company to a smaller company, it's really about like building and developing that general management and mindset.

[00:53:14] Ian Chiang: I think for a person who are like looking for that, Types of challenge like joining a startup will be quite rewarding, right? And lastly, I would say to go from a large company to a smaller to a startup, right? I think ultimately you want to be able to say you are doing something meaningful, right? Like you're not just a cog in the wheel.

[00:53:40] Ian Chiang: So so I think for product person That's the best The type of impact you want to be able to create is you have to be convinced that you can only create the kind of impact at a startup setting, right? So, so those are probably some of my advice for people who are going through that career transition to trying to evaluate large company versus a startup, right?

[00:54:05] Angela Suthrave: And then Ian, you know, I think that the cap table can also reveal a lot. And so if I'm a prospective candidate, what can the cap table signal to me? 

[00:54:16] Ian Chiang: Well, so obviously as a, I would encourage anyone who's considering a startup job to really understanding the, who's on the cap table. And obviously some of the details might be harder to find from outside in, you know, Able to get to that level granularity even during the, the interview process.

[00:54:42] Ian Chiang: Right. But I think number 1 on the investor side, right? I would absolutely make sure look for if there are investors that you. You strongly believe that they will be value add, right? So, so I think so much of the success of the company, like having the right investors on the cap table, can signal at least the likelihood of a startup.

[00:55:08] Ian Chiang: To succeed right like so so I think that's number one, I would absolutely look out for right so there's a reason why people gravitate towards taking money from brand name was established investors, right? I think the other thing I will also call out is maybe today is more of a, there are many incubators or companies that are kind of leaders type of firms right and companies spinning out of an incubator.

[00:55:41] Ian Chiang: I think one thing I would look out for is just the overall the cap table structure to see how it's being divvied up, like the full on the fully diluted ownership standpoint between people who are actively Uh, at the company adding value and contributing to the future of the company versus people who are more of a have added value in the past.

[00:56:05] Ian Chiang: Right? So, so I think, um, oftentimes we have seen cap tables that may need to be reworked, right? Just because of, you know, perhaps The new set of employees are not getting compensated with, uh, the front incentive standpoint doesn't weigh due to certain, uh, characteristics of the cap table, right? So I would definitely as a, anyone who's considering joining a startup, right, to make sure that there's enough option pools being created to, to like for recruiting.

[00:56:42] Ian Chiang: Employees as well as executives who will help the company get to the next phase of its growth. 

[00:56:49] Omar Mousa: And you made me think of a follow up to that, you know, I'm thinking about the, you know, we came out of an economic climate where the interest rates were low and capital was cheap. We moved into a higher interest rate market where capital became expensive on we were in and you guys are high conviction investors.

[00:57:07] Omar Mousa: So I'm, you know, your perspective on this would be really interesting. I hear from a lot of product leaders, like, They don't know if they're joining a company where the equity is just in the water and they don't really know if it's, it's worth it. Like, cause it's still a lot of work and they are in a high outcome position.

[00:57:27] Omar Mousa: And, you know, so they, they see a lot of hurdles in front of them. So how do you, how do you know? You know, whether the equity is underwater and whether it's, you know, if that's it, maybe that's okay. I don't even know. 

[00:57:40] Ian Chiang: Yeah, and it is really good questions. And in some ways, it's nearly impossible to tell, right?

[00:57:47] Ian Chiang: Like because we have seen, I mean, just in the market, right? Plenty of startups seem to seemingly doing really, really well, and then suddenly You know, run into troubles right and then but we have also seen startups that seemingly stall for many, many years may not have gone anywhere. And then, you know, maybe not suddenly, but over the years, I becoming growing, like in a very healthy pace, and then ultimately end up to becoming a really like a very successful companies, right?

[00:58:22] Ian Chiang: So, so I think Omar, so much. That's the, the, having also gone through like being on the early stage startup side, and now as an investor, right, so I think for anyone joining a startup, you really cannot like put financial motivation as your, like, Like, I almost have this, we encourage people to have this mindset, right?

[00:58:48] Ian Chiang: It's like, you have to believe in the company. You have to believe in the mission. You have to like the people you're working with on a day to day basis. You have to believe in that you are solving, making a difference to make healthcare, make our world a better place. And then money is secondary, right?

[00:59:06] Ian Chiang: Money will follow. If the company is creating. differentiated impact, disproportional amount of impact to, to the customer, it will be able to capture the financial value and ultimately, it will be reflected in the, in the stock options, right, like, so, so I think first and foremost, just, it's really hard for anyone to predict which company is going to end up.

[00:59:32] Ian Chiang: being successful. So don't spend too much time trying to calculate. Oh, like whether or not my stock options under the water was suddenly, wow, like a millionaire because of the company and go on to raise a couple, a couple rounds of really nice up rounds, right? Like just focus on the day to day value creation and let the money to follow.

[00:59:58] Ian Chiang: But of course, you know, If someone is leaving the company and needing to exercise the option, then it has to place a bit more of, you know, need to think through that carefully, right? Like, because there are a lot of companies that are sitting at a very high valuation, not just in healthcare, but just in general, right?

[01:00:17] Ian Chiang: Like, whereas exercising the option may or may not be the best option. the most prudent financial decisions for someone's, uh, from a personal finance standpoint. 

[01:00:28] Angela Suthrave: All right, Ian, we would love to hear your insight into The transition over to a VC, what are the main considerations and how would a person know if they're ready to go from player to coach?

[01:00:40] Ian Chiang: That's an interesting question because I have actually, if you ask me this question, six, you asked me whether or not I'll become VC six years ago, I would say I was a. Like you must be out of your mind. I I never thought of myself as a VC, right? And of course, I I had the great fortune of being able to join the team at Flare.

[01:01:03] Ian Chiang: So it was a very happy and lucky coincidence but for a lot of the former operators, founders, who are looking to becoming A VC, I would say it entails a very different kind of a career track and use different types of muscle, right? Like, so I can't really say when the person will be ready, but I would say, I think most of the people, if you go from an operator to becoming a venture investor, one of the most important things to watch out for is the ability, the willingness to, To partner with an entrepreneur without being very like, like, without being there on a day to day basis, right?

[01:01:52] Ian Chiang: And then also kind of letting the entrepreneur to, to be able to operate and learn from the process rather than being prescriptive. And then to be telling them what to do, right? So I think I love your analogy using player versus coach, right? Like, I think. It's our job to be able to share some of our learnings and wisdoms and also our pattern recognitions as an investor with the entrepreneurs, but also I think it's also very important for us to develop that two way, like, um, The bi directional, like kind of the feedback loop, right, like to truly create that fluid communications that we can coach each other, right, like to help each other, you know, progress and, and get to the same goal, right?

[01:02:43] Ian Chiang: So I don't think there is a time, like I could say, yeah, this person is ready. And I would say probably we're never fully ready, right? Like, but I think it's more of a change of mindset. Uh, to go from needing to be in control of everything to now being able to, willing to share the experiences, be a good ones, or some of the past failures with different peoples.

[01:03:10] Ian Chiang: So hoping that they can do a better job, like a much, much better job, and by and large, entrepreneurs are the ones who are always doing a better job than the investors who were a former operator.

[01:03:33] Omar Mousa: All right, Ian. Thank you so much. Um, so we've reached the exciting concept closing call portion of our show. It's meant to be fun and fast lightning round. So we'll ask you five questions and you answer them. First question. Are there any frameworks, methods, or processes that you found to be especially useful in your work?

[01:03:51] Omar Mousa: And, um, that others might also find to be useful 

[01:03:54] Ian Chiang: as a former product and solution person. I have always found the jobs to be done theory to be extremely valuable when it comes to building and developing products and solutions. Another 1 is the non consumption theories. I will encourage all product leaders as well as people building products and health care to read up on both of those theories and frameworks.

[01:04:20] Angela Suthrave: And what is a tool that is highly valuable to you that you think others may not be using? 

[01:04:25] Ian Chiang: Again, I have found Professor Clayton Christensen's disruptive innovation theory to be one of the most valuable tools when it comes to evaluating the true disruptive potential of a technology. One thing I would call out is that many people use disruptive innovation to describe https: otter.

[01:04:46] Ian Chiang: ai I will highly encourage folks to reread or read up on the innovator's dilemma and the innovator's solution before applying this theory. 

[01:04:57] Omar Mousa: Are there any concepts in healthcare that excite you outside of some of the macro stuff you've already shared? 

[01:05:03] Ian Chiang: I would say many, but, uh, as an investor, as well as a former product builder, I will always use this.

[01:05:11] Ian Chiang: The concept of, uh, value based care as well as the quintuple aims. I know we have evolved from triple aims to quadruple aims and now quintuple aims But I will always recommend people to apply what you are building using the quintuple aim theory, because if you're solving one or many of the aims, then the product will have someone who will find it valuable.

[01:05:38] Angela Suthrave: Do you think that investing is an art or a science? 

[01:05:43] Ian Chiang: That's a great question. Um, I would say investing is both an art and a science. The earlier, We go, the more art it is, uh, since there's not much data, uh, to analyze. But as we're looking at some of the later stage deals, it definitely becomes more of a science, but of course, as an early stage investor, no matter how early or late we go, we have to apply both muscles.

[01:06:10] Omar Mousa: All right. And now Ian, where can people get in contact with you if they wanted to reach out and do you have any shameless plugs? 

[01:06:18] Ian Chiang: And 

[01:06:18] Omar Mousa: thank you so much 

[01:06:19] Ian Chiang: for having me. Um, I would welcome anyone to reach out to me, both, uh, people building companies, building products, uh, fellow investors, uh, fellow operators, just anyone, feel free to reach out to me.

[01:06:34] Ian Chiang: Anyone can email me at Ian at flarecapital. com where they should be able to find my contact information from both of you. Thank you so much for having me on this podcast. I, I thoroughly enjoy the, all the thoughtful questions that both of you ask. and cannot be more grateful for the opportunity and looking forward to meeting many of your listeners and, uh, uh, together we'll make healthcare better.

[01:07:06] Ian Chiang: Thank you once again.

[01:07:11]Omar Mousa: Hey, thanks so much for listening to the show. If you liked this episode, don't forget to leave us a rating and a review on your podcast app of choice and make sure to click the follow button. So you never miss a new episode. This episode was produced and edited by Marvin Yue. With research help from a DT Atreya or Angela and Omar, and you've been listening to concept to care.

 

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