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Building The Employee Health Stack | Saransh Garg @ Nova Benefits
214 Plays3 years ago
Saransh Garg’s journey represents the quintessential Silicon Valley founder story that began with his first venture being launched straight out of college. An alumnus of IIT-Bombay, Saransh has had a glorious career trajectory working with Boston Consulting Group, a prestigious global consulting firm and Accel, a leading VC fund.
After a successful first inning as entrepreneur, he launched Nova Benefits in 2020. Nova Benefits is a B2B tech-first employee wellness platform helping companies improve their employee wellbeing through better quality health insurance, daily fitness, mental health counselling and wellness programs.
Akshay Datt speaks with Saransh Garg about his journey, learnings and future of insurtech.
Don’t miss:-
- Learnings from “Zero to One”
- Stint at Accel and fundraising strategy
- Takeaways as first time founder- alignment and overcommunication
- Customer acquisition roadmap of Nova Benefits
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Transcript
Introduction and Zencastr Promotion
00:00:00
Speaker
Before we start today's episode, I want to give a quick shout out to Zencaster, which is a podcaster's best friend. Trust me when I tell you this, Zencaster is like a Shopify for podcasters. It's all you need to get up and running as a podcaster. And the best thing about Zencaster is that you get so much stuff for free. If you are planning to check out the platform, then please show your support for the founder thesis podcast by using this link, zen.ai slash founder thesis.
00:00:27
Speaker
That's zen.ai slash founder thesis.
Meet Saranj Garg: Entrepreneurial Journey
00:00:31
Speaker
Hi, Akshay. I'm Saraj, co-founder and CEO at Nova Benefits.
00:00:46
Speaker
Saranj Garg was made for entrepreneurship. His journey is the quintessential Silicon Valley founder story that starts with his first freemium business being launched straight out of college when he created a free ebook that eventually led him to becoming a best-selling author. He started his career with Bain, a leading local consulting company, and then joined Accel, a leading VC fund in their investment team. This served as an ideal launchpad for his first venture that was a part of a YC and raised a Series A round of $12 million.
00:01:16
Speaker
In his current role, Saranj is the co-founder and CEO of Nova Benefits that helps companies improve their employee wellness through better quality health insurance and a host of wellness features. Here's Saranj telling Akshay Dutt about his journey of building multiple businesses worth millions of dollars.
Finding a Co-founder and Startup Idea
00:01:33
Speaker
And I read this book, Zero to One, which talks about building things from not doing incremental stuff, but doing things from scratch. And it also talks about, gives you a framework on how to think about ideas. I found that book very inspiring. And then I read a bunch of other stuff, but that really.
00:01:50
Speaker
push me to going deeper into okay now i was inspired but kase karna hai didn't have a clue yet like you every anyone who's thinking of starting up needs to figure out a co-founder up with complimentary skill sets in my case someone who could actually build the product
00:02:06
Speaker
And then what the idea itself would be. I had neither of those, so I thought maybe I should join a startup or I should join a VC fund to learn what it takes, what are the ingredients. And I ended up eventually joining Axel. It's a VC fund in Bangalore, earliest investors in Flipkart and so forth.
00:02:26
Speaker
And that was a great stint because as part of joining Axl, I got to speak to several entrepreneurs.
Key Factors in Venture Funding
00:02:33
Speaker
And I used to think that you have to have this clarity of thought from day one on what it takes. And I realized you need to have directionally, you need to be right, but it's okay even if you have 30% of the answers on day one.
00:02:45
Speaker
And then at the end of my couple of years at Axl, I found great co-founders and I started my first company. Before we come to that first company, at Axl,
00:03:03
Speaker
form a thesis on who gets funded. And this is a question in the mind of every aspiring founder that, will I get funded? Is this good enough to get funding? Yes. So I was actually looking at field tech investments for Axl, and I was looking at different sectors and cuts. So while there are very business model specific things that you look at, there are broadly a few things that any VC fund and maybe even any founder should look at if they're thinking of starting a venture back.
00:03:33
Speaker
company. So one thing that for example stood out for me was how large the market size should be. I think one very non-obvious thing that a lot of companies don't get right is going for a market that's not a very big market. Because often you're looking to do something unique, but when you're looking to do something unique, you often end up with a market that is either non-existent or very tiny.
00:04:01
Speaker
And it's very hard to find large markets. Large markets broadly mean about a billion dollar in revenue potential. And the reasoning there is like if a startup kind of owns 10% of that, so you'll make a hundred million dollar revenue business and you'll have like a billion dollar unicorn kind of a company. And what I ultimately understood is either you have a large market on day one and great differentiation so that that market moves to you.
00:04:27
Speaker
And it helps if that market is also growing at some space. Or you start with a very small market today, but you have conviction that over X amount of time frame, this is going to become huge and nobody is looking at it in that way. Okay. Got it. And what about the
Co-founder Chemistry and Relationship Building
00:04:43
Speaker
other stuff? So as you have discovered a big addressable market, like quality of founders and stuff like that.
00:04:52
Speaker
Yeah, then the second thing is team. It's really about the founders at the earliest of stage. So you need someone who you, I basically think of it as someone person, like the founding team should have the ability to build and then the ability to sell.
00:05:09
Speaker
If you have either one of those missing, you don't have the right set of co-founders and the complementary skills. Got it. Okay. Would VCs look to fund where the co-founders have just met, say, the way you were thinking that, okay, I want to find a co-founder and start something?
00:05:32
Speaker
So do they look at like a history between them or can you just like pick up two random people and make a team of three? I mean, random meaning like fairly new. Right. I think I'm actually an example of, you know, where both companies, we got back, but I didn't have a long pre-existing history with my co-founders. But I think it's very important that before you decide that someone is your co-founder, you need to develop that working chemistry and relationship and values alignment.
00:06:00
Speaker
at least over a three to six month time frame. So it's not needed that you know the person from long back, but you need to have a lot of comfort, a lot of time needs to be spent before you actually join a startup. And so it's going to be very natural for a VC to ask you those questions and you should be able to articulate why
00:06:22
Speaker
you know we've done we are very comfortable with each other this is all the things that we've done so i was in my two years at axel i was always looking for co-founders parallelly a paul graham of y combinator has this really good idea where when you think of starting up with someone start working on side projects it will not be the actual idea maybe a thread opens up there
00:06:42
Speaker
But at least you know what the working equation is going to be as part of that process.
Startup Challenges and Y Combinator Experience
00:06:47
Speaker
When I was at Axel, I was looking at FinTech investments and this was like 2016 to 2018. We were funding a bunch of lending companies and consumer lending, B2B lending and so forth.
00:06:58
Speaker
And one of the qualification criteria that we used was how good is the collections strategy of the company. Because in lending, it's easy to give money, but how well you're able to collect back is what really matters. And there were no companies which were actually just focusing on collections because it's an unsexy industry. There are, you know, nobody wants to be the guy who's kind of calling and asking, but it's also a very valuable industry.
00:07:26
Speaker
because there's an element of client servicing and relationship with the borrower. But also, if you're not able to get the money back, you don't have a business that exists. So that was our initial thesis. You need digital tools to improve the borrower experience of collections while also improving the total collections that a company is able to do.
00:07:46
Speaker
So this was like a SaaS product that I thought of. Correct. So with this concept in mind, we started very quickly. We realized, you know, this is great, but then, you know, the whole journey of product market fit is quite tricky, but that was the initial insight. And, you know, market size, this was a large market. We were focused on the US market. So market was huge.
00:08:08
Speaker
So actually, even in my last few months at Axil, we were already brainstorming this idea and we had also applied to Y Combinator. And when we got the interview call, I was like, okay, folks, I want to move out now for sure. But I was kind of ready to move out even before that, but that was one of the triggers.
00:08:28
Speaker
And then finally quit. We did the interview in San Francisco for YC. And the great thing about YC is even at the earlier stages, they will back a company. And we fortunately got through that. They essentially back founders rather than businesses.
00:08:47
Speaker
I would say both. So they are agnostic. They also look at business metrics and do it. But yes, even if you're just a few people with an idea, it's also a path. And we were fortunate to get the YC investment. We spent the next three months in SF through their bootcamp and refined
Finding Product Market Fit
00:09:08
Speaker
our idea and our pitch and our product.
00:09:12
Speaker
Okay. So what did you want to build? Was it like a CRM where you can upload a list of people to whom you have loaned money and then it will automate the communication and all?
00:09:28
Speaker
Correct. Yeah. So our initial ideas was that today, collections are done. There's no intelligence that is used in terms of where the efforts need to be directed. It's just a very human driven process where someone is calling. So we said, okay, we'll start with collection scoring, where we will break up the borrower segment into who's more likely to pay. There are basically two variables, how likely someone
00:09:54
Speaker
ability to pay and intend to pay. These are metrics which you have to kind of build a score towards and then based on that you can have a strategy for communication over text, emails, even maybe a phone call and so forth.
00:10:10
Speaker
So our initial hypothesis was text messages aren't being used, so let's explore that. Intelligence is not being used, so let's do collection analytics. And our third thing was like, today a lot of conversations are happening on the phone. Can we record those conversations and use that data to improve the scoring of ability to score and intent to score?
00:10:30
Speaker
Interestingly, the idea which we thought is least likely
Exiting the Startup and Co-founder Vision
00:10:34
Speaker
to work is the one that actually worked. So this was the call recording and using speech analytics. And even there, a slightly different version. But I'll tell you the story is very interesting. So we start off with this idea of text-based collections in the US market. And very quickly, we realized you can't even text people without their permission in the US.
00:10:57
Speaker
Oh, okay. You get like a straight $1,000 fine and so forth. Very quickly, that idea went off the roof. On collection scoring, companies were already doing that. And if we wanted to do it for them, they would have to give all of this data to us. And it was a very long and tedious process.
00:11:19
Speaker
What is collection scoring? Collection scoring basically means probability of recovery. Yeah, it essentially is that you're trying to predict who's more likely to pay. If you have loaned a bunch of money to a bunch of people, what is the actual value of your portfolio and based on that what your strategy should be?
00:11:40
Speaker
So the reason my collection scoring did not kick off is people were already doing that. And if we actually had to do a job better than them, they would have to share all of the CRM data with us, which is very risky for a very new company in a very regulated industry. So that didn't take off. So then we came to speech analytics and we talked about
00:12:08
Speaker
how there is a lot of conversational data which can help predict. All of that was interesting and fancy. But there was a here and now problem that, you know,
Founding Nova Benefits and Idea Selection
00:12:20
Speaker
comp lenders in the US wanted to solve. And that was, there's an entire book of things that a person needs to follow, a collection agent needs to follow. There are entire rules.
00:12:32
Speaker
For example, even to open a conversation around debt collection, an agent needs to say the purpose of this call is to collect a debt, anything that you say will be used against you. Now, if that statement is not sent, there's a reliability on the company collecting the money. And like that, there are 50, 60 other rules. Compliance issues, yeah. And the entire process was manual where a person is going to listen to the call, 2% of calls will listen to and you will kind of say, okay, this was followed, this was not done, and the feedback was given.
00:13:02
Speaker
And we said, okay, let's do it for 100% of the calls and let's give instant feedback or at least within 24 hours. And that started taking off. That became like a wedge in the market because that's a pain point that already existed and people were spending a lot of time and money.
00:13:17
Speaker
That was actually my first experience. What does it mean about finding that product market fit? You start with a bunch of hypotheses and then you're very convinced that this will work, but until you've not had these 50 to 100 conversations with your
00:13:35
Speaker
With your clients, you're not sure what you're doing and one of the advice, in fact, Axel invested in the company, one of the advice our partner gave us was that just speak to 5200 customers. You've not done that yet and that really caught us on the path of finding the value.
00:13:57
Speaker
Okay. Okay. So, but you didn't like continue in that, right? Yes. Yes. What happened? Yes. Yes. So I did Prodigal for about 18 months and Prodigal is continuing to do well. They've raised their series. Me personally, I had to move back to India and this was a more US focused business. So I kind of took a backseat because it would require me to be in the US and for personal reasons I wanted to be in India.
00:14:23
Speaker
So my co-founders are kind of continuing it and then I kind of came back and thought like. But you knew from day one that this is going to be U.S. focused, right? Like what changed? I think initially our idea was that we could run it as a U.S.-India setup. Like ops in India. Correct. But since I was handling product, often for good product management you need to be on site and on the location.
00:14:51
Speaker
So that was one of the things. And I think the other thing was like, you could also have differences in terms of with your vision for the company. So, you know, we, we wanted to take the companies in slightly different directions as co-founders. And, and, and so that also meant like, it's more prudent of me to kind of step back. Cause I had a different idea and for my co-founders to kind of continue and take it forward, which is, which is what we did, ended up doing it.
00:15:15
Speaker
So which is where you were talking about the importance of alignment of vision of co-founders? Yes, yes, yes. So I think one of the things as a rookie first-time founder, I didn't appreciate as much as how important it is to stay aligned on a day-to-day level.
00:15:34
Speaker
I think that is definitely something that I took away and I respect a lot more in my second instant that you need to kind of actively work to stay aligned on a week-to-week basis. So for example, in my current company, me and my co-founder, we every week have half an hour sessions just around alignment.
00:16:02
Speaker
with no other agenda, just, you know, this is what's happening at my end, this is what's happening at your end, and if there are any open questions that we kind of address. So yes, I think that was also something that was my take of it.
00:16:16
Speaker
So as co-founders, you need to over communicate. Yes. Make sure that both are aligned. Correct. Correct. You need to almost, yeah, like you said, over communicate, just set time for it and, you know, constantly stay aligned on all aspects of the business. Got it. Okay. Okay. So when you came back to India, did you get some sort of exit from that or like,
Evolution of Nova Benefits: Health Insurance and Wellness
00:16:41
Speaker
Yeah, so in startups, you have a vesting schedule, and then whatever equity is invested, goes back to the company. Whatever is vested kind of stays with you. I chose to continue to hold my share in the company. Big believer in protocol. My co-founders are building a great team, and they're taking the company forward. And so that's how kind of my... I'm like a cheerleader for
00:17:13
Speaker
This vesting thing is basically a way to make sure that those who stick around in the long haul get more equity, like it takes care of that, like the duration. I think vesting is a great mechanism of ensuring that for the value you've created, you are kind of compensated and the value which you might have created or are not able to create, that goes back to the company which can be reallocated. So I think it's a great balancing mechanism in that sense. Yes.
00:17:29
Speaker
the company and
00:17:42
Speaker
Okay, so then what did you figure out to do? So I met Yash, my co-founder. I met him through a friend from IIT Bombay. He and Yash were colleagues in Samsung Korea. Yash is from IIT Delhi and he has the computer science background. Once we met, we said, okay, let's do a site project and both of us would
00:18:06
Speaker
be quite into it. We would always turn up on time. We started having daily catch-up sessions. So if the person you're thinking of starting up with is actually not just talking in terms of words, but is also giving time and helping you think through ideas and you're actually spending time and investing. I think that's what I started seeing, both Yash and I started seeing with each other.
00:18:31
Speaker
And we spent that three, four months brainstorming, ideating, building stuff together. And at some point we became very comfortable with each other and we said, Hey, why don't we, let's just start up and so forth. And that's how it kind of happened. And tell me about the hunt for the right idea.
00:18:48
Speaker
Yeah, that was quite interesting. So we started putting ideas on a spreadsheet. At some point, we had like 66 ideas and it wasn't going anywhere. It kind of felt like this academic exercise, but there's a company that we had to start and we weren't able to make much progress. So then we said, okay, let's find a common area of interest, financial services.
00:19:13
Speaker
So we just started looking at ideas in financial services. Even then there was lending payments, investing, insurance and so forth. Then we added a bunch of criteria. So our first criteria was how passionate are we about each of these problem statements. Both Yash and I would rank ideas on a scale of 1 to 10 and any idea where the average was less than 6 we eliminated. The next one was how large is the market.
00:19:43
Speaker
And then the next one after that was, is there day one monetization? We were starting during COVID time and the sentiment wasn't great for starting new companies back then. And we said there should be like money should be made on day one. We didn't want an idea which will take some time and then you monetize that kind of an environment.
00:20:02
Speaker
And then the next thing was like, what is the Delta we can create in terms of an experience? There's a Kunal Shah's famous Delta 4 theory, something very similar to that. Can we do something? What is that theory? Can you just talk about that? Yeah. So Kunal Shah, he basically says that.
00:20:20
Speaker
If you are able to provide a Delta 4 experience to a customer and he basically says Delta 4 is a level of differentiated experience, then once the customer has tried back, he will not go back to the older way of doing it. For example, Uber and Ola had that Delta 4 because you could press a button, you could get into a cab and you don't even have to pay because it gets automatically adopted. Once you've experienced that, you will never go back to the older way of doing it.
00:20:49
Speaker
That's what we felt we could create in the employee wellness and operate health insurance space. These were essentially the four parameters on which we took the entire set of ideas as a grinder.
00:21:05
Speaker
you know, narrow down to, uh, insurance. And then within that we focused on health insurance because of COVID and, and fine. And then like, you know, we ran a bunch of experiments to figure out that B2B was the right way to do it instead of B2C, but that was basically the framework. Uh, okay. So, uh, like you wanted to do health insurance, like, uh,
00:21:29
Speaker
the customer experience in general or did you like figure out that there is more pain in the corporate side?
00:21:36
Speaker
Yes. So when we were actually looking at insurance, there was motor insurance and health insurance. These were the two big markets. But because COVID happened, all the cars were locked up and everyone was thinking about health. We started thinking about health insurance as well. And then whether to do B2C and B2B, we ran an experiment. We asked people that you pay us for our time, pay us an hourly rate. We'll save you the effort it takes to figure out which policy to buy.
00:22:08
Speaker
We will help you decide and you pay us for that.
00:22:12
Speaker
for our time. And what ended up happening is we had like five people pay us like 500 bucks and we had one company pay us 15,000 bucks because that company was taking it for some 30 employees. And what we realized is that it's much easier to go down the B2B path. It takes less effort. You're covering a larger number of people. And that's why we kind of doubled down on the B2B side.
00:22:38
Speaker
You also looked at data. Most people in India are covered by their employers first. Even if I go back, my first health insurance was through BCG. So most people in India are going to get covered through their employer first and then they'll take additional insurance.
00:22:55
Speaker
So that's why we went down that route and also like the existing solutions were pretty bad on the B2B side. On B2C you still had some platforms, but on B2B side you just had these offline traditional brokers where it's super complicated and there's no transparency. So the role of take care would have been in terms of
00:23:18
Speaker
creating an e-commerce experience to compare different policies and choose one in your cart and then check out. That was the role of
Partnerships and Comprehensive Health Platform
00:23:26
Speaker
Tech in this. Actually, we first spoke to 100 HRs and tried to understand what's the real problem over here.
00:23:34
Speaker
We realized that yes, the buying process is difficult. There's no transparency on what the right pricing is. Across insurers, there could be like a 50-100% pricing. And it's also not a standardized product like a B2C policy. Every company has their own policy and you have to kind of take that into account and give a price. The second problem was the claims experience is bad.
00:24:00
Speaker
People don't have transparency on when the claims will get done. If there are certain reductions from the expected claim amount, why those reductions are there? And a lot of back and forth that goes on between this. So the customer servicing part was broken.
00:24:15
Speaker
But the HR, every month they have to add new employees and remove the ones who've left the organization under the policy. That process was entirely manual. And then another insight that we had is that ultimately health insurance is given by a company to retain their talent.
00:24:36
Speaker
And if you want to retain your talent, you're giving a benefit that is only taking care of like health insurance is used only by five to 10% of people who are actually falling sick. But there are a bunch of other employee wellness initiatives that you can do as an organization so that everyone in the company feels like they've gotten a benefit.
00:24:55
Speaker
And that kind of led us to realize that what we need to build is an employee wellness company where health insurance is one part of it, but there's doctor consultations, there's mental health, there's day-to-day fitness, and all of these pieces together then ensure that all employees feel taken care of and it helps the company in its goal of retaining its talent.
00:25:17
Speaker
Okay. How would the non-insurance pieces be monetized, like a doctor's consultation, fitness? Like you thought of charging extra for that? Correct. There is a willingness in companies to pay for it as well, because especially during COVID, people weren't able to access a physical doctor and a lot of these consultations were happening on the phone. So a lot of companies were purchasing these teleconsultation solutions.
00:25:47
Speaker
another model could be like, you know, where the company gives this access employees to the first call for free, then you can, you know, charge for the next call after that experience has been made. So there are these various forms of monetizing of that both the company paying or like a mix of company paying and then the employee paying and so forth. Okay, okay. So what was your like product version one? And how did you go to market?
00:26:12
Speaker
Yeah, so our V1 was very simple. We basically created a great UI in frontend for helping people with this. It was not even the buying process. It was more first, once the purchase has been done, where
00:26:36
Speaker
where all the employees have a mobile app and a web app on which they can see the insurance policy, they can see what's covered, what's not covered in the policy very transparently. And then they can also track the claim status, the HR can see at a company level and an employee can see for their individual level. And we also kind of integrate with HRMS systems of companies to automate the additional deletion process. This was like the V1.
00:27:02
Speaker
Yeah.
Market Strategy and Expansion Plans
00:27:04
Speaker
So essentially then it was more about helping them manage their existing health insurance better, like the V1. Correct. Taking the pain of not having claims done on time and this enrollment process, that was essentially the V1. Yes. Okay. So this was more like a benefits approach rather than a selling insurance approach, at least in V1.
00:27:32
Speaker
Yes, it was more experience. We were solving for our customer experience in RV1. So for tracking claims and stuff like that, how did you get all that data? The insurance companies did an API integration or how did you get access to that part?
00:27:53
Speaker
Yes, so initially, you can always set up a manual process where you're picking the information from a very old school database, and then you're just manually feeding it into your system. But now we started the process of integrating with insurance companies and TPS, which gives that information more readily and at a higher frequency. Okay.
00:28:15
Speaker
And for the insurance company, you were essentially like a convenience partner. Correct. I see it very similar to new banks where they would work with a bank.
00:28:32
Speaker
but like create the entire experience part of it. So I think that's like that was like a V1 as well where we're working with insurance companies but improving the experience for our clients. Now, however, our vision is much bigger where we
00:28:50
Speaker
are building the entire employee wellness stack. So we are ensuring that all the health and wellness related needs of a company, not just when someone falls sick, but even when to encourage them to stay healthy, they can get through Nova.
00:29:06
Speaker
So tell me like a chronological sequence of how this evolved. So in V1, I guess you were not really selling insurance products per se, but you were selling a wellness package, I guess, with those other benefits that you mentioned. That was what you were selling in V1.
00:29:21
Speaker
So V1 was more like the UI layer just for health insurance. And if a company wanted to purchase other benefits, we could facilitate that for them. So this you would have been giving away free, right? Because there was no monetization in this.
00:29:37
Speaker
Correct. We did get a licensed insurance broker. When you're a licensed insurance broker, the way you earn money is the insurance companies pay you a commission. And the premium collected. Correct. So that's like the business model for the company.
00:29:54
Speaker
And then if companies want to add other benefits other than health insurance, we can facilitate that as well for them. So that was like V2. So in V2, because as we spoke to HRs in terms of why they're really giving health insurance and what are the other challenges they're trying to solve, we got to know that, okay, there are all of these other wellness offerings that they're looking for. And with us, we become like a single point of contact where all of their needs are being met.
00:30:27
Speaker
If you like to hear stories of founders then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts and subscribe to the show.
00:30:49
Speaker
So did you integrate with other companies for those other needs, like, say, teleconsulting? Or did you build all of these in-house?
00:31:01
Speaker
Correct. So as a startup, you can't build everything. And it's not even wise to do because you need to stay focused. So our approach has been to partner with companies that are already great at doing it. And that's what we've been doing. So on the doctor consultation side, we are working with Practo and Find Medibuddy. On the health checkup side, we are working with companies like Xyla Health and Cube. And similarly, we are exploring other partnerships for other offices.
00:31:31
Speaker
And so you would be able to aggregate services from two, three different partners and then sell it at like a monthly subscription fees, which would be including multiple services for
Traction, Product Evolution, and Future Plans
00:31:44
Speaker
the corporate. So it becomes easy for a corporate.
00:31:48
Speaker
to cooperate and design what is the right gamut of employee wellness benefits that would make sense for them and then operationalize it as well for them. What was your go-to-market? How did you onboard customers? How did you acquire customers?
00:32:05
Speaker
Yeah, so I think in the B2B side, you essentially have like your inbound and your outbound channels. So on the inbound channels, you do a bunch of SEO, SEM,
00:32:20
Speaker
We are quite active on LinkedIn as well. And based on that, you get inbound leads and then you have your inside sales team, which is speaking to clients and converting. And then on the outbound side, you reach out to the right decision makers in the companies, you set up meetings and then you give a demo and then you try and win that account. So it's the standard B2B sales process that we are following as well. I think what's interesting is just the number of channels that are out there for building your brand and
00:32:50
Speaker
even to kind of generate leads is expanding and so we're always kind of playing kind of try to learn in terms of what's working out there and try to execute that as well. So what is your sweet spot in terms of organization like what sector or what headcount you know like
00:33:13
Speaker
Yeah. Yeah. So we, we work with, uh, companies, uh, you know, as small as even seven employees, uh, and all the way up to 2000, 3000 employees as well. We put clients like, uh, dream 11 coin, DCX, pharmacy, and, and the likes. So, you know, a very high growth startup, uh, just getting started to all the way as, uh, you know, medium sized companies we are working with.
00:33:42
Speaker
And so like mostly on like tech companies or do you also do like say manufacturing and like other old school businesses? Yeah, we like to say employee first companies, any company which is putting culture first is thinking from a very HR centric lens and it need not be tech companies. Well, yes, there's a great overlap, but we found like several manufacturing companies as well. We found lots of IT services companies as well who are thinking from that.
00:34:12
Speaker
So those are the more progressive employers who really care about employer branding, who really care about the employees and are investing in their HR practices. Those are the words that we work with. Got it. Okay.
00:34:28
Speaker
So let's continue down that product journey. So in V2, you added on the suit of benefits that could be purchased. So when did you do stuff like launching the app for employees to manage on their own and stuff like that?
00:34:45
Speaker
Yes. Initially, we just had a web app where kind of HRs and employees could start using, but the natural question that HR started asking us is, is there a mobile version of it that we can access and so forth? And we would say that, yes, you could download. We would say, yes, you could just go to the mobile browser.
00:35:07
Speaker
and then log in from there. But that was also not good enough. And we had this request of can we actually have a mobile app as well. So we executed that in both on iOS and Android now. We have we have clients with them. But that was not needed on day one. On day one, we just had that app is basically for the user like the employee.
00:35:26
Speaker
Correct. Yes. That is for the employee of the company. The HR as an admin can also access, but it's more meant for the employees as well so that they can see all the benefits that a company is giving and also start utilizing, making claims and track them and get them completed.
00:35:45
Speaker
Okay. So that becomes their one-stop shop to see what all do I get when I join this company. It should be like an employee joins a company. It should feel like they've entered the matrix. They press the button and there's a superpower in terms of benefits that they can now be plugged into. That's the feeling we're trying to create.
00:36:06
Speaker
Are we at the present stage now? This is the most recent? Yes, we are at present. We are only 15-18 months old. But this is where we are right now. So what's the road back? In terms of what do you think you will build next in the product?
00:36:27
Speaker
Yeah. So our long-term goal is to create happier and healthier workplaces in India. One of the things that I see happening is as the startup economy is growing, there's a lot of pressure on people because of the hustle culture and kind of executing at a rapid pace. We want to be an antithesis on that. We want to bring employee wellness and work-life balance back into the picture. Otherwise, we run the risk of all burning out and this not being sustainable.
00:36:57
Speaker
And the way we are trying to do things differently is make benefits simple to use and personalized down to every individual. And that will happen when everyone in the company feels like the company has noticed me, given me something that I actually use, and I have benefited from it, and it's improving my health and wellness, not just for me, but for my family members as well. So that's the goal with which we are building all of our services. Essentially, you're like a
00:37:25
Speaker
HR helpdesk for an employee, but focus more on health and wellness. Yes. And what about, you know, like you spoke about making people fitter by giving them tips or like, you know, gamifying fitness or like say, helping people to quit smoking and stuff like that. It's not yet out, but we're trying to see how we can help people set fitness goals and gamify that and
00:37:51
Speaker
I had a social layer to it so that there's like a healthy discussion happening on things other than work within a company which is also like an HR pinpoint on how do I get my
00:38:02
Speaker
employees to be talking to each other outside of work as well. So people could use the app to, for example, form a badminton club and stuff like that. Like more social element could come into the app. Correct. So at least they will all be able to set their goals and then be encouraged by their team members to move towards those goals and then also get rewarded for it as well. So yeah, that's the direction we're thinking in.
00:38:32
Speaker
Mm-hmm. Got it. Okay. Okay. So like what's been the traction so far? Like, you know, when you launched, how many employees were you signing up every month? What is that rate like right now? Like tell me about how the numbers have grown.
00:38:49
Speaker
Correct, correct. So I think in our first month, we had like two or three companies, about 20 employees each.
Customizing Corporate Health Insurance
00:38:59
Speaker
So about 60 employees were being added. But then in month four, we started seeing that even the biggest companies out there, like the largest brokers, clients were already shifting from them to us. And we were actually quite surprised that we had a new kid on the block and these clients are already having a not so good experience with the largest companies out there.
00:39:18
Speaker
And then since then we've kind of now scaled up to almost 100,000 people covered on our platform more than 200 people. Is the migration easy to do? Say I already have an existing
00:39:31
Speaker
Yeah. The thing is because the competition that we face are not SaaS companies. They are like traditional brokers. They've not really built any stickiness with their clients. So it's, there's more have been replacement. There's a very simple replacement that can happen where we come in and it's a very smooth transition and even claims from the previous insurer are taken over by us and we help process those. So we've got face that challenge. Um,
00:40:00
Speaker
I mean, even in terms of technically getting that data. So in terms of how that switch happens, the way insurance companies price an insurance policy, they look at what is the risk profile of the group.
00:40:17
Speaker
And for that, they asked for three pieces of data, the last year policy copy, which has the terms and condition, the present day demographics of employees like date of birth, age, gender, and so forth. And then what was the claim's history so that they can assess the risk profile. And then based on that, a pricing is given and then the client decides whether to switch or not switch or continue with the existing. So those are the three documents that are very easy to get.
00:40:46
Speaker
But the insurance companies and brokers are obligated to give it to a client. So they just need a request that goes out to all the companies that might be competing for the business of a client. And then based on that, the client finally decides based on value propositions, the tech platform and price before they want to move it. But this should only happen at the time of renewal, not like mid-years.
00:41:10
Speaker
Yes, it's a one-year contract and so it typically happens once in a year. And how do you help insurance companies to onboard? Like you said, even a company with like 10 employees. So I guess typically insurance companies don't really deal with that size companies.
00:41:35
Speaker
So there are a bunch of insurance companies that are quite comfortable with 7 to 10 employees as well. And what has been missing is someone who's responsive to a client where they ask for a code and they can get quick answers, they want to change policy terms, they understand the price implication. Insurance companies are not structured to do that yet on the B2B side.
00:41:58
Speaker
and there's a long lack time and then you alternate comparisons across each other. So that's where we come in and bring that transparency and bring that experience for companies.
00:42:10
Speaker
Okay. So you basically have this brokerage license, which allows you to sell insurance policies of all insurers. Yeah. And then you collect details of policy offerings of each one and then productize those details into easy to compare, like easy to compare format so that customers are then able to do the decision making in a crystal-free manner.
00:42:34
Speaker
Correct, exactly. And do the insurance companies customize policies for you or there's like off the shelf, like policies are already made. Correct. So the interesting thing about corporate health insurance policy are like B2C policies, all the policy terms can be changed.
00:42:56
Speaker
So every company has their own policy. For example, one variable is, what is the family definition?
Data-Driven Risk Assessment and Cost-Saving
00:43:01
Speaker
Are you covering only employees or spouse and children or parents as well? Another criteria could be like, what is the sum in short? 3 lakh, 5 lakh, 10.
00:43:10
Speaker
room rent limits, copayments, waiting periods, and so forth. So all of these are modifiable parameters. For a company taking it for the first time, what we tell them is like, look, these are five other startups like you. This is what they're going for. And this is what you should kind of try and do. For a company that is much larger, they already have a set of policy. We tell them that, you know, these are certain improvements you could make in the policy. We also give them other benchmarks.
00:43:35
Speaker
then we consult them as to this would be the right set of benefits to give and help them that process. Got it. Okay. Okay. Okay. And so, you know, we were talking of the, the numbers in terms of traction. So now, like, what is your like, how many additions do you have every month? Like, how many employers sign up?
00:43:59
Speaker
Yeah. I could tell you the overall numbers. We've now got about more than 200 clients and about 100,000 lives on our platform that are in short. Your earning is only through the Commission on Premium or are you also selling those value-added services?
00:44:19
Speaker
Yes. Right now, our main earning is through the commissions. Right now, we're just acting as a facilitator for other offerings. But maybe later down the line, we will explore some of those options as well. But our main source of earning is through the commissions from the insurance companies. Okay. So these value-added services, you are just building a pipe for the service providers and the employers to get connected.
00:44:47
Speaker
Correct, correct, correct. We are, I know, solving for experience, becoming a single platform where they can access everything. Yes. Got it. Okay. Okay. And what, what do you earn like for every policy? So like, what does your unit economics look like?
00:45:03
Speaker
Right. So typically, in the corporate health insurance space, you roughly earn about a margin of 5% on average for insurance policies that you send. And yeah, that's essentially the business model. So whatever is the policy amount, about 5% is what we earn.
00:45:23
Speaker
I guess the average policy amount would be like between 5 to 10,000, I guess, something like that. So at a client level, you can say like about 10 lakhs, 20 lakh in that kind of a range. And then per employee, it would roughly be about 5,000 rupees per employee. Right. Got it. Okay.
00:45:47
Speaker
What's your plan in terms of growing customer base, like your customer acquisition roadmap? By 2025, we expect to be growing from a race of 100,000 to 10 million people in short through our platform. That's the journey we are on right now and building towards that.
00:46:09
Speaker
Like in what ways? Like, do you have some, like, you know, for example, do you want to do like a TV ad or do you want to get a celebrity influencer or like, you know, what's the plan there in terms of?
00:46:22
Speaker
Honestly, I don't know. I still have to figure it out. That's the question I'm asking. But some of the things I think definitely building a brand is one part of it so that people like the baby message and how we can get people's attention about how we're doing. That's definitely one part of it.
00:46:40
Speaker
But also in terms of how we could add value in our sales process itself by giving companies benchmarks, by telling them what they could be improving in their policy. If let's say Omicron is happening, what does it mean in terms of risk for them and so forth. The more specific channels, like what channels will actually help us get there is something we have to figure out. We found a mix of
00:47:05
Speaker
inbound and outbound helping as well. The larger the company gets, you need to have a more higher touch sales process as well. There'll be more decision makers and you have to speak to all of them. That's what we are doing. Is it built to be self-checkout or it's built to be sold with a consultative call and then
00:47:32
Speaker
Yes, yes. So for smaller companies, for like, you know, less than 100 employees, we even have a calculator so you can almost do a self checkout. We've not yet closed the loop where you will make the payment because we found like people still want to call, it's still a two lakh, three lakh kind of amounts, they still want to speak to someone on the phone.
00:47:49
Speaker
before closing out on that. For larger companies, for policies which are more than five lakh, people expect a consultant. They want to have lots of iterations on their policy terms. So it is like a human in the loop in the selling process. You know, you are collecting data and does that data give you any unfair advantage or does it help you build a better mode because you're getting data of
00:48:14
Speaker
employees of the corporate, what kind of claims they are making, what is the claim settlement ratio and stuff like that. Does that generate to some sort of a flywheel for you? So I think in terms of data, Dev helps in terms of capturing the risk of what is the risk of the population. But that data is available to everyone because during the renewal process, that data is available to everyone.
00:48:40
Speaker
What is more interesting is, and that's not happening in the industries, when you receive the data, how are you analyzing it and giving insights to the client. So for example, telling a company that, hey, you have a large base of people who are in the 25 to 35 age group, but you don't have a maternity policy. So you might want to add that.
00:49:02
Speaker
or let's say you have a large number of claims coming from parents and it's happening because employees are not being very discerning in terms of the expenditure that the company is taking. So maybe you want to have like a copayment of 5 to 10% so that employees also have some skin in the game when they're deciding which hospital to go out. I think that
00:49:23
Speaker
how to use that data itself much better is something that can be done. I think over a longer period of time, what you could do more interestingly is, for example, if there are employees who are not making any claims, could you reward them in some way because they're not really benefiting from the policy? For example, could you sell them a personal health policy which comes without any waiting periods? Those are some interesting things that we looked at with that data.
00:49:53
Speaker
I don't think it's going to be a mode. Everyone's going to have access to it, but it's more on how you analyze that and create unique value propositions for the client. That's going to be the more interesting part. Essentially, this data would help at renewal time. When the client is renewing, then you can give them AI-generated recommendations. Right. Absolutely. Yes.
00:50:16
Speaker
Okay, these are the terms that you should incorporate when you renew. Yeah, for example, one of our other role is that healthcare costs are rising and so there will always be a cost inflation on the premium next
Enhancing Claims Process Transparency
00:50:32
Speaker
year.
00:50:32
Speaker
But how could we help a company to flatten that cost curve by suggesting certain recommendations? For example, if let's say there's another third wave of COVID expected, how about taking a lower cost COVID policy and have the COVID claims be booked on that policy so that the main policy's claims ratios don't shoot up too much? So there are some of these permutation combinations which can
00:50:59
Speaker
help the company give the benefit, but also flatten the cost curve. How do you enable a smoother claims experience for employees? Yes. So I think on the claims part, you would think that it is all about reducing time, but it's also about expectations and reality. So the thing is like people expect that claims will happen at a certain time and then they don't happen, which is why they have a bad experience.
00:51:26
Speaker
What has been missing is a Zomato and Swiggy like order tracking flow. This is where I'll get it. This is the stage where it's at. That is the level of transparency that is needed. Then if there are
00:51:43
Speaker
If there are certain deductions that will happen in the policy, a person needs to know why it is. What does my policy terms say? Based on that, this is why a certain deduction has been made in the policy. So, for example, one of the most misunderstood policy terms is room rent limits. There's a clause, let's say, of five lakh policy and it will have like a room rent capping of, let's say, 5,000 rupees. Now, someone has stayed at a 10,000 rupee room for five days. So, the assumption is, he can't pay for it.
00:52:12
Speaker
on a total bill of let's say 5 lakhs. However, the billing system of a hospital is like a restaurant. But since you're only eligible for half the room, on a 5 lakh bill, you'll only be paid 2.5 lakhs.
00:52:35
Speaker
And this is important to even consult a client when they are purchasing the policy the first time around. And let's say if they've taken a policy which has only a 5,000 rupee room rate limit, that needs to be explained to the employee that this is the reason why a certain reduction has happened.
00:52:51
Speaker
So I think that transparency on that step, awareness on day one, even like, for example, when the employee is choosing which room to go after, can we consult and tell him then and there that this is the policy term and this is the recommended option, this is that. So these are all the experience gaps on the claims front that we're...
00:53:11
Speaker
What about taking care of the paperwork? I know filing claims needs a lot of paperwork. You need to collect all the bills and then submit those bills and all that. Yes, so we provide a claims concierge who is on the call with the employee and hand-holding them through every step of the way. Today, they can upload documents on our mobile app. We do a check if everything is through. They can just click using the mobile camera. Correct.
00:53:38
Speaker
Now, there are some insurers which are processing claims just based on soft copies. There are some insurers which are still requiring you to physically courier the documents. But I think the industry is moving in the direction where it will be completely paperless and you can just take photos and get it done. If you like The Founded Pieces podcast, then do check out our other shows on subjects like marketing, technology, career advice, books and drama.
00:54:05
Speaker
Visit the podium.in for a complete list of all our shows.
Conclusion and Zencastr Outro
00:54:16
Speaker
Before we end the episode, I want to share a bit about my journey as a podcaster. I started podcasting in 2020 and in the last two years, I've had the opportunity to interview more than 250 founders who are shaping India's future across sectors.
00:54:32
Speaker
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00:54:53
Speaker
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