Russ: Welcome back to The BusinessMakers Show. My guest today: The Co-founders of BenRevo; Jimson Tharayil, the CEO, and Ojas Sitapara, the CTO. Guys, Welcome to The BusinessMakers Show.

Jimson: Thanks for having us.

Ojas: Thanks for having us. We’ve been waiting to get on the show.

Russ: Alright, good deal. Tell us about BenRevo.

Jimson: So, BenRevo is essentially a SaaS platform that connects with large insurance carriers, and automates their distribution process with brokers, and employers. So, essentially, we help employers buy insurance policies online.

Russ: Wow. We’re talking about health insurance, right?

Jimson: Yeah. Specifically, health insurance.

Ojas: Yeah. We’re part of the seed stage. We’re about a month or two out from signing probably the two biggest carriers in the nation.

Russ: Ok. So, to me, health insurance has always been very confusing. So, but, from what I’ve learned and prepared for this, there’s brokers in the middle that play a key role for almost all sizes of companies. Is that right?

Jimson: Yeah, correct. And they’ve been around for a very long time. And, there’s employers, there’s brokers, and then there’s the insurance carriers. And, you know, I was at Cigna healthcare for over 9 years, and during that time, I kind of, it perplexed me that everything was done through manual processes and paper, especially when these policies are very, very expensive (Russ: Right.), right? And at the industry we’re still so archaic while everything else was revolutionizing.

Russ: But, so when you were at Cigna, and it was archaic, you were kind of presenting what you would propose to a large company, but you were presenting it to a broker?

Jimson: Yep. So everything was done through the broker.

Russ: Ok. And so, and your competitors were also presenting to the broker.

Jimson: Same brokers.

Russ: And so the broker was trying to make a decision of who he wanted to recommend. Does the broker ever take all the options to an employer and say, pick one?

Jimson: Every time.

Russ: Every time. Oh, but he has to present the differences between them.

Jimson: Yes. Everything is done manually, right? And so really, how this came about was, one day, literally, Ojas and I were friends from college,

Russ: But were you in the health insurance business?

Ojas: No, I was not. I was at Intuit for a long time. So, working with taxes, which is, (Russ: Oh wow.) kind of the same archaic industry; very complicated (Russ: Income taxes.). Income taxes. Yeah, so me and Jimson were actually out for happy hour just randomly, and he was talking to me about something that happened at Cigna.

Jimson: Yeah. And essentially, we’re a manual process where a broker had to take information from us and then put it onto a piece of paper that he had to then show the client; resulted in an error, you know, through transcription. And it wasn’t a small error because it turned out to be like a quarter million-dollar error.

Russ: Oh wow. So, wait a minute, so he presented your companies program to this employer and made it a quarter of a million dollars less than what it was supposed to be?

Jimson: Yes.

Russ: But it put you in a competitive advantage to win.

Jimson: Yeah, so we won the case, grudgingly, but we won the case. But then, you know, after the fact, we had to make up for that error. And in the insurance world, where they run on 3% margins and you have that big of an error, you never make it up (Russ: Takes a while.). And so, you know, Ojas was kind of looking at me like,

Ojas: Yeah, so I mean this is what we did at Intuit, was take really complicated things like taxes, (Russ: At Intuit we’re talking about?) yeah, so we took really complicated things and made them really simple. Basically, we were automating an entire tax process. So, when Jimson was telling me about this, I was like, this is like ripe for some technology. We can automate the entire thing, and that’s kind of how BenRevo started.

Russ: How long ago was this?

Ojas: A year and a half,

Jimson: A year and a half, two years ago.

Russ: Ok. And this was in a bar.

Ojas: This was in a bar.

Jimson: Over Moscow Mules.

Russ: Moscow Mules?

Ojas: Yeah we were really (Jimson: I was on my third one.), we had a napkin where we were writing stuff out.

Russ: But I mean, did you actually leave this session at the bar thinking, we’re going to do this?

Jimson: Oh yeah (Ojas: yeah.). Like, that was the day where we said we’re going to do this. This makes too much sense (Russ: Ok.). And then, after a year, we had kind of built up this prototype that says, you know, either we do this or we just forget about it. And so, I said let’s do it, and that was a year ago today.

Russ: Wow, wow. Congratulations (Ojas: Thank you.). And so now, you know, you said we’re still in our seed stage, but we’re real close to maybe be actually inking a deal?

Jimson: Yeah, yeah. So, obviously selling to large insurance carriers is a very long process; it’s a very long enterprise sale. It’s like getting an oil tanker to change course (Russ: Right.), because we’re literally telling them to change the way that they distribute business, and the way that they’ve been doing it for a hundred years. But for them, when they look at this, like we’ve never had somebody say, this doesn’t make sense, right? They look at it and they go, this is completely obvious, but like, getting their arms wrapped around how to do it has been the hard part. So, we literally started the sales process in October, and I would say we are probably one to two months out from signing one or two of the largest carriers in the country.

Russ: Wow. And so you sign up these carriers and then you go get their competitors, and they all kind of agree because that’s the way the business is done?

Jimson: Agreed. And so the idea is, once you prove it with a couple of large insurance companies, because the processes are like, we call it 80/20. They’re 80% the same, 20% different, right? And so, we’re, you know, once we prove it with some of these, two large, large insurance carriers, I mean, that’s two out of the six major players, then everybody kind of tips and starts moving towards, it’s a paradigm shift in the industry.

Russ: Ok. So would you actually, potentially, disintermediate the broker?

Jimson: No, I mean, that is not our goal. We’re channel agnostic (Russ: Ok.), right? Because coming from the insurance world, I think brokers will have a lot of value in this market, right? Especially when it comes to health insurance, right? It’s a sensitive subject, and you want to be able to talk to somebody that you trust and care about. And that’s not necessarily what Silicon Valley wants to hear about all the time. They don’t want to hear that you’re helping an industry evolve. They want to hear that you are going to disrupt it and then take all of it, right? But health insurance is a massive, massive space. You know, you can do really well just by helping it evolve.

Russ: Right, ok. So, you mentioned Silicon Valley. So, are you raising money there?

Jimson: We’re now starting our seed round. We had bootstrapped this company up until now because we wanted to prove to ourselves that it could be done, and we also didn’t want somebody else telling us how to get there. Uh, but now that we’ve got there, I mean, we are a three man start up selling to Fortune 20 companies, and now we’re at the end of the rodeo, right? We’ve gotten there and now we are like, alright we’ve gotten there, and now we can go raise some capital to scale up.

Russ: Ok, but will they listen to you in Silicon Valley based on what you just said, because they want disruption and takeover, and you’re a different model.

Jimson: Well when I have a contract with two Fortune 20 companies, then I think they’ll listen.

Russ: Ok. Probably so. Alright, so I was just reading in the Wall Street Journal, yesterday, about a company that seems to be, that starts with a Z, what’s it called (Jimson: Uh, Zenefits.), Zenefits. So what’s Zenefits? How do they, do they, are they in the same thing you’re doing?

Jimson: Yeah, so Zenefits, two years ago, was a company walking around Silicon Valley saying, we’re going to eat the entire broker community up through software.

Russ: Oh, oh. So they were just going to disintermediate.

Jimson: yeah, and so they’re selling the story, right? And they raised 5 hundred million dollars at a 4.5-billion-dollar valuation, because everybody ate the story, because everybody in Silicon Valley saw the hockey stick and wanted to be a part of it. But, again just like everything else, you know, they didn’t really understand the healthcare ecosystem, how the health insurance industry worked. Because at the end of the day, Zenefits was selling software. And as you know, software can be replicated, right? So, if at the end of the day, you have a choice that, you know, I’m going to go with software through this new startup company, with an account manager that’s 25 years old and working off of a book in a call center, or if my broker has the same software, and I’ve known that guy or girl for 20 years, who am I going to go with? The person that you care and trust if everything else is the same.

Russ: Right. So you’re going to be giving the software to the broker.

Jimson: Exactly. We’re not trying to cut them out.

Ojas: They also play in a different space, right? 0 to 50, right? So, all the rates and benefits there are static, where we’re in a place where it actually gets quoted.

Russ: 0 to 50, what do you mean? They’re mainly targeting small companies?

Jimson: Yeah, so it was 0 to 50 and now it’s 0 to 100. And that market, rates and benefits are static. They’re filed once a year by the insurance carriers, so automation is aggregating a big spreadsheet. In our market, they’re dynamic. So, you send in characteristics, and based on those characteristics you get rates back.

Russ: Wow, ok. So, I mean, you’re probably not on the radar of Zenefits right now.

Jimson: I would like to be, but no.

Russ: Maybe after this you will be.

Jimson: Nor do we see them as a competitor, because Zenefits, at the end of the day, is a broker, so they would use us in the larger space if they want us.

Russ: Ok. And they’re kind of in that professional employer organization category, right?

Jimson: They would definitely be a PEO competitor. I mean, there’s a lot, even the ADP is in that space in a big way, right? They have like great startups like Justworks, you know, it’s a new PEO startup. There’s a lot of players in that space because there’s such a lack of innovation there.

Russ: Is this extra complex from a development standpoint?

Ojas: It’s not. Well, the industry I was in, it’s not complex. So, we understand, really complex taxes and that, so benefits are kind of a subset of complexity, and for engineering wise, that’s nothing new for me.

Russ: Ok. So, I’m still intrigued by this thing about not disruption, and what Silicon Valley doesn’t like it because you’re going to take over, but it also seems like if you had, you know, how many major insurance companies are there? Four, five, (Jimson: Six.) six. So, if you did get them all to play, you’re going to be sitting in pretty good shape, right?

Jimson: And that’s the idea. We hope that we can get everybody to play, but then we don’t want to keep it to ourselves either. We want to have everybody play, and then have open APIs. So, if you are a PEO, you know, if you are another broker, if you are ADP, you can all connect with us and then pass information back and forth. Because, at the end of the day, if all these insurance carriers, they have very sensitive systems, and information, right? They don’t want a million people tapping into them. So, we want to create that safe ecosystem where everybody can and make this whole process more efficient for everybody.

Russ: Cool. Well, I kind of feel the passion and excitement about this. Maybe you guys are like that all the time.

Jimson: we are, just not at 8am.

Russ: Well, I really appreciate the session, and I would say good luck, for sure.

Ojas: Thank you.

Jimson: Thank you, I appreciate it.

Russ: You bet. And that wraps up my discussion with the Co-founders of BenRevo; Jimson Tharayil and Ojas Sitapara. And this is The BusinessMakers Show.