Sometimes you have to go “all in”
A year ago, we were faced with the first of many “bet-the-company” decisions.
It’s never an awesome feeling, but in a way, it is… liberating. We decided to go all in on the business customer—with a health benefits offering. We had been testing a B2B model for a few months, in a relentless pursuit of viability, and going B2B appeared to be our best bet as a way to get to the consumer. Some call this a pivot, but really, it was the result of constantly testing, week after week for months. #relentlesspursuitofviability. Our cash reserves were growing thin and that has a way of focusing the mind.
We were still in our pilot cities, Toronto and Seattle, and all we had to sell were simple health services (e.g., massage days, fitness, yoga, lunch n’ learns) and Lifestyle Spending Accounts. But we went for it, and started to accelerate our spending toward enabling our much, much bigger aspirations.
In January, we signed our first customers, with dozens in trial. We were getting traction, and by February, we doubled sales month over month. By March, we had grown another 150% month over month. It was working, but our Health Services offering was really just the first leg of the stool. In April, we introduced a Health Spending Account (HSA), another ‘card’ in the League digital wallet, and we started selling a higher ticket offering: a supplemental benefit, or for some small businesses, their entire benefits package. We discovered that a shocking percentage of businesses offered no benefits to employees, and those that did generally hated paying for a product that was no longer a fit for their employees and got more expensive every year.
We were moving upmarket, as HSAs are typically 10-20 times the cost of what employers spend on wellness. For starters, our HSA had the benefit of being digital, super convenient, customizable, and connected to our growing health marketplace. Paired with an LSA (Lifestyle Spending Account), a small business could cost-effectively offer a set of benefits to their teams—without all the typically frustrating restrictions. The curve was looking good, and while early, we decided to start meeting with investors about our budding “health benefits” business.
There comes a point when you need to decide: Are you the elephant, or the fly?
It was March 29th, and we had a plan to spend a couple of days on Sand Hill Road in San Francisco, and another 1-2 days between New York and Toronto. We knew it was still early to have a Series A conversation, but we thought it would be a good checkpoint and an opportunity to learn. We timeboxed the effort, only spending a handful of days pitching, and set a plan with a target date to get term sheets. We learned three things: (1) most investors heard “healthcare” from a bunch of Canadians and ran for the hills, (2) some investors heard “insure-tech,” liked the story but had some ‘conflicts’ and wanted to see more progress, and (3) some investors wanted to get to know us with a view towards a deal in the fall.
We were early. Many a startup founder would have been discouraged. Having done this a few times, I was used to “the suck,” as in most of these conversations suck. I find it funny that regardless of the industry, I’ve heard the same thing: “You don’t understand the XYZ industry in CountryABC. It’s different here. Come back when you’ve figured it out.” After a week or so, the term sheets started arriving. Including some out of the ordinary, or ‘strategic’ players.
We had received 6 times the total we wanted to raise worth of term sheets. We had two flavours of term sheets: (1) start small, and raise more later, and (2) raise more now, and go for it. As we started to construct our syndicate, we had a decision to make. Would we…
…build our platform and “sell our software” to big incumbents (i.e., be the fly on the elephant)? OR
…build our platform, and go for it, direct, and build a much bigger, new kind of company (i.e., be the elephant)?
We decided to raise more than we had originally planned, and focus on becoming the elephant. We successfully raised $25M USD led by OMERS Ventures, and others, including some strategic investors: RBC, Power Financial and Manulife. 8 weeks, start to finish.
All of a sudden, everything became clear.
There comes a time—an explosive, all powerful, transformational time—when the laws of physics don’t apply and everything is changed forever. The Big Bang. In the time from June to October, we changed everything while still driving consistent month-over-month growth. This is usually a crazy idea, but for us, it was a moment and we were going for it. We introduced a new brand, a new experience, a new business model, new partnerships, new insurance products, new licensing and regulatory compliance, a new distribution strategy, a new executive team member (Lori Casselman), and a new national health network in just over 4 months. It was exhilarating.
All aboard the rocketship
Everything changed, and we began accelerating. We grew another 100%+ month over month in September, and October was more of the same. Then we tripled month over month in November. We hit, and quickly surpassed, some major sales milestones. As a digital alternative to traditional health benefits, we were all of a sudden a “Fintech” company. We got on the Top 50 Global Fintech list by KPMG, and on the Fintech Five by PayPal. Our name appeared in lights in Times Square, as we announced our partnership with RBCI and our first insurance products. We moved offices, and we put the hiring engine in higher gear. With a “stack” of health services, spending accounts, and insurance plans not only did sales grow, but we started talking in terms of ACV, ARR and MRR. The numbers started getting big, fast.
Building a Life Optimization Company
When in doubt, refer to the mission. With accelerated activity comes accelerated problems. And you can’t solve them all. You have to force yourself and your team to re-centre. And when you do that, you need to start with your mission. Empowering people to act every day to live happier, healthier and longer lives. This was never about building an insurance company. It was always about empowering people to take charge of their health, empowering people to Be Better(TM).
We are building the next generation of health insurance companies—what we like to call a “Life Optimization Company,” and that is super exciting. A year from now, we’ll look back having booked our first quarter billion in premium/equivalents, enabling thousands of businesses, hundreds of thousands of people, (or our first million maybe….), operating a SaaS model with real revenue$, profitability and our first billion dollar year on the horizon.
It’s been a #Sweet16 for League, and I have only gratitude for our team, our customers, our partners and investors. It takes a team of extraordinary people to create something amazing out of nothing. With an extraordinary culture, people can become bigger, better versions of themselves and the impossible becomes possible. We have big plans, and now (omg) two decades of experience upending categories and industries. Watch out 2017, here we come!