[MUSIC] >> Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or in the front lines building it. In each episode, we'll speak with a visionary founder who's building a new category or reimagining an existing one. We'll learn about the problem they solve, how their technology works, and unpack their vision for the future. I'm your host, Brett Stapper, CEO of Frontlines Media. Now, let's dive right into today's episode. [MUSIC] >> Hey, everyone, and welcome back to Category Visionaries. Today, we're speaking with Matthew Sidney, CEO and founder of Beanstalk Benefits, the benefits platform that's raised 7.5 million in funding. Matthew, welcome to the show. >> Well, thank you for having me, Brett. >> No problem, super excited. Before we dive in and talk about everything that you're building, could we need to just start off a quick summary of who you are, a bit more about your background and what you were doing before founding the company? >> Sure, absolutely. So, I've been in the benefits space in particular for about 26, 27 years now, just about on every side as a consultant on the carrier side, the buyer side. And this happens to be my third startup in the space, and living out in Philadelphia, and looking to capitalize some major headwinds and tailwinds in the space. >> Now, some people grow up wanting to be astronauts. Did you grow up just wanting to work in the benefit space, and where did that come from? >> Actually, my father's in the HR space, and so I think my original thought was to be a doctor, and then sort of changed gears after graduate school and decided to move into this space. >> How have you seen the space evolve over the last 25 plus years? >> Yeah, no, that's actually one of the driving forces behind the development of Beanstalk. And it's been really exciting over the course of, I'd say the last seven to eight years. There's just been an immense amount of investment in this space through venture and private equity. In fact, it's just an explosion in the number of, we refer to as point solutions, these wraparound services that are not insurance-based, went from employers selecting their core benefits, and having their next toughest choice was which EAP do I choose, and which disease management vendor do I choose, and that was about it. And now, there's 10 to 12,000 digital and virtual health companies out there calling on employers, and it's not just the volume, but it's the hyperspecificity, the solutions. You can choose anything you want at this point, from pediatric digestive health, to divorce services, to genetic services, and just a really exciting time, but also pretty scary time for employers, because they have to navigate through all of that, and that's really why we developed Beanstalk. >> Let's dive right into Beanstalk. So founded in January 2023, talked to me about those early conversations. You know the space very well. I would guess that you probably have a long list of problems that you've observed in the space. What was it about this problem, and this company that made you say, "Yep, that's it. Let's go dedicate the next year, five, 10 years of my life, building products here, and solving these problems?" >> Sure. So it really is kind of a bit of a passion play. It's kind of a culmination of my time in the benefit space, and watching people make this sort of the same mistakes, and it's not a conscious decision to make those mistakes. This is the industry. This is how it works, and we just sort of lumber through it. When we first started those conversations, we went out and talked to brokers, and consultants, and employers, and employees, and insurance carriers, and reformed two key hypotheses. The first is there's no underlying infrastructure to deliver these point solutions at scale. If an employer wants something like diabetes, wraparound service, or weight loss, it's a motion that they have to go through every time, so they have to find solutions, they have to contract with them, they have to pay them, they have to manage them, they have to tweak them, so on and so forth. So it's very individualized for each one of the solutions, so that makes it very hard to scale. Employers, budgets are getting tighter and more stringent, teams are getting smaller on the benefit side, yet the expectations are becoming greater. The second hypotheses that we formed was, "Well, I will if an employer is offering something to their employees, why aren't more employees using those things?" And what we came to find in the hypothesis we formed was, the industry is kind of disintermediated the end user, i.e. the employee or the member from any transaction decision. So as an employer, I'm giving you something and expecting you to use it, whether you wanted it or not, whether you understood it or not, and then I'm disappointed that you didn't. And so we're sort of flipping things on its head and saying, "Rather than doing that, why don't we give them the facility to make their own decisions as employees, but offer enough solutions, offer enough education, enough tools, AI supported, that help them make those choices, because they know what their problems are and their needs are. They don't know who's going to solve it or how it's going to get solved, but let's give them the facility to be able to do that on their own." And what's the ICP? Who is that target customer that you're selling this technology to or this platform to? No, it's a great question. Employers that are short-saffed, right? So in the benefit space, they have a small team, someone buying benefits in a very highly competitive employment market, so think engineers. A lot of companies can't compete with the Googles, the Comcast, the Apples, because they don't have the same amount of benefits, and they don't have teams that can run those benefits in quite the same way. We can unlock that. So highly competitive markets, highly diverse markets. So for the first time in US history, we have five generations in the workforce. We also have more social and cultural diversity than we've ever had. How does a benefits person meet all those needs? It's almost impossible. We give them the agency to be able to do that. And what's the marketing strategy look like today to attract that ICP and to get in front of that ICP? Yeah, so from a marketing perspective, we're doing a couple of things from a strategic standpoint. We do have boots on the ground. So from a traditional benefit sales perspective, we have people dialing for dollars, talking to brokers, talking to consultants, talking directly to those employers that we've identified. But I think the toughest piece is how do you raise visibility and awareness of what we're doing? It's different. People aren't necessarily budgeting for what we're doing and how we're doing it. So it's a constant flow of a marketing message that basically says, we'll take this off your plate. We can do this for you. You don't have to invest the dollars in a way to do this, but it's a totally new way of thinking. We do leverage, as I mentioned, we leverage brokers and consultants, force multipliers of our sales from a sales perspective. And what's great about the industry and where it stands today, there's a ton of innovation forums out there, whether they're through a broker consultant, local business group on health, chambers of commerce. And so we're hitting all of them. What is the most effective marketing strategy do you think right now? The most effective marketing strategy for us has been the influencer community. So think those brokers and consultants going out, having them understand what we do. They're a very important part of the ecosystem and benefits, not just for selling insurance, but also advising their clients on what's best for them and meeting their recruitment and retention needs, as well as being a best in class employer. They understand it. They get it. And now they're crafting their stories around that as they're out talking about being stopped. But it's been effective. This show is brought to you by Frontlines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you're a founder, you may be thinking, I don't have time to host a podcast. I've got a company to build. Well, that's exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io/podcast. Now back to today's episode. How do you find those influencers and engage them and get them bought in? For us, that's as much as staffing and experience issues. So part of this passion play has been focusing on making sure we're not only just hiring the right people, but the people that are from the industry. Benefits is a very different space in terms of selling, a very risk of verse buyer. No noise is a great day. And that's very different than a lot of other industries. And so I've used my experience in being in the space to bring on a team and assemble a team that is very focused on the space. So my head of sales and marketing was actually my elephant hunter at my first startup. And she was a major reason why the company went public. She then came and ran sales for me in my second venture. And I have a running sales here. So she has massive Rolodex, though I know people don't use Rolodex as anymore. And she's very well known in the industry. My head of partnerships has been in the space for about 26 years as well and was with me while I was at health equity. He ran partnerships for me there as well. And the rest of the team has benefits experience. And so understanding that and leveraging years and years of relationships has really been very helpful in accelerating a lot of that work. What year was that IPO 2014? What have you learned from that experience? And what was that like? Wow, that was crazy. I wasn't the CEO. I ran sales and marketing for that company. And a lot of effort goes in and preparation. It is not necessarily just a one cycle thing that takes a fair amount of work. It's very rewarding when it happens. But your whole life changes. You go from a certain cadence as privately held company to a quarterly cadence. And it is a cadence. I found that I was spending more time talking to the street, talking to the board, talking to investors than I was being out in market with my team. And I really missed that. And that's a major reason why I decided to jump in and start something else. Have you ever been tempted to go into a different industry? Or do you just know that the benefit space is the space for you? There's just so much opportunity and so many problems that need to be solved here. I have thought about other industries. But to your point, there's a lot of work to be done in this space. It's really one of the only industries that hasn't fully embraced technology. We use Synologus to beanstalk as we look at the financial services space. Today, you can go on your phone and you can buy stocks, bonds, a piece of art, a portion of a piece of art. You can buy a piece of real estate. You can buy gold. You can buy pork bellies. You can buy foreign currency. You can buy anything you want at the click of a bot. You can't do that in benefits. Everything is surrounded by this calendar of events of open enrollment. And things don't happen just in October, right? In November, your life changes throughout the year and your needs changed throughout the year. And we look at it as you should be able to change a lot of your benefits or support services, not necessarily your insurance, but your support services at any point when something goes bump in the night. Why do you think the space has been slow to adopt technology? I think there's a lot of traditional players in the market who have been doing it for the same way for quite a while. It is a market dominated by 800 pound gorillas, very heavy on the insurance side. And you have these organizations that have built these massive businesses and the underlying infrastructure or technology isn't necessarily able to keep up with technology in other industries, because it is very intense and it is very complicated. There's no simple answer to this, but we're leveraging Beanstalk to try to change those things. What about your market category? In the intro, I called you a benefits platform. Is that the category or what do you think that market category is going to be? I'd almost think of us as an on demand benefits platform. I think would be the term that I would use. We're not the magic by any means. We are a technology platform. The magic is all the services that we bring to bear through our partnerships. We're currently at a one or 22 solution provider partners. It offers about 50 different services ranging from pediatric services to MSK to things like that are a little more bespoke like music therapy for anxiety and depression, dealing with tantrums and breastfeeding and all kinds of different things. And the idea being these are some of the most innovative organizations in this space. And we want to bring them to bear whether you are a 10 life company or a 10,000 life company. You should be able to have access to these services. This show is brought to you by the Global Talent Co, a marketing leader's best friend in these times of budget cuts and efficient growth. We help marketing leaders find higher vet and manage amazing marketing talent for 50 to 70 percent less than their US and European counterparts. To book a free consultation, visit global talent.co. What are you doing to evangelize this or maybe not what you're doing today, but what are you going to do in the future to create this category and to get the market to say, yes, I need an on demand benefits platform because it sounds like that's not necessarily an established line item that they're going to have. You're going to need to convince the market that they need to create a line item to have an on demand benefits platform. How are you going to evangelize that and make that happen? Yeah, I think there's a multi-prong approach to that. I think the first is to continue to beat the drum with the influencers. And those influencers come in the form of the brokers and consultants, even the insurance companies in that instance, and just make sure that they are aware and they understand it. If they are surprised in any way, that's not good, right? So making sure those influencers are on board. Number two, proof points. So to move an enterprise level employer into purchasing something, usually they'll take you 12 to 18 to 24 months. We're going a little bit further downstream. So the 5,000 employee life employer market and below, all the way down to two employees or one, if you're an individual founder. And the idea being that we want speed and we want proof points so that we can elevate those as we continue our marketing and grow upstream. I think the area that's really interesting for us to get into the larger cases, though, are things like gig workers and part-time employees who don't necessarily get all of the benefits. We afford an inexpensive way to offer a full suite of services to wrap around insurance that doesn't exist today, that they can offer those folks because they're important parts of those organizations too. And they have needs. We're here to help meet those needs. What about the lessons from fundraising? So as I mentioned there in the intro 7.5 million a day, what have you learned about fundraising throughout this journey? Yeah, it wouldn't just be this one. Fundraising is difficult. It's gotten harder over the last couple of years. That's no surprise to anyone. I found that at least for me, the best thing with the first time that I started fundraising was find people that have done it before, leverage those folks. And regardless of whether those are VC, private equity, other CEOs or founders, I can definitely say in my first go round of raising and it wasn't a beanstah, I made a massive mistake, which was I tried to raise too little for a Series B. And as I hadn't raised the A and the company I took over, I went out and was looking for a Series B. I only needed really five million dollars. And that's too little. People don't want to take the time to price a round. That's five million like they would have seed. And so it took an added time and time's not your friend. The other thing that I would say is preparation, preparation, preparation. From the very start, you can make your life a heck of a lot easier if your file structure and how you store information is well-organized. That makes it much, much easier. I engage, you know, you have services that support you with your cap table. Get one. Don't do it in Excel. They're not very expensive and they're getting better and less expensive as you go. This all just makes things easier because the worst thing to happen is you start getting L.O.I.s and once they start doing their due diligence, they can't find things. You don't have things, right? It's not well-organized. It adds time. But even worse yet, it adds risk to the process. And you want to minimize that as much as possible. Talk to us about the launch that happened in April. What were you working on leading up to that launch? And what did you do to make sure that launch was a success? Yeah. So we had a couple of pilot clients leading up to that. We were putting some polish onto the platform itself, finalizing our ability to be a transaction processor for these services. So that was sort of the tactical work around the platform. But in terms of marketing, go-to-market strategy, we were accelerating our conversations out in the market and getting people ready, teasing them, if you will, around what are the things, what's coming, right? What's coming? And just sort of kept laying down that groundwork from that perspective. I actually ended up bringing on a marketing consultant to help us that specialized in digital marketing. And she was amazing. She helped keep us on track because we are a very small team. And so trying to run the go-to-market and launch strategy, plus continuing to build the platform, plus signing vendors and partners, plus trying to find new clients, we put a sort of a special emphasis on this to make sure that it was done correctly and that someone else other than just me was doubting the eyes and crossing the teeth. For any founders that are listening in that want to build in the benefit space, what advice do you have just based on your entire career that you've dedicated to the space? Yeah, I think a couple things. One is the space is very unique from a buying perspective. Make sure you find folks that if you're looking for sales folks in the space and marketing folks, they have a little bit of experience. They understand the buyer itself, the ICP. Essentially, as I mentioned, it's very risk-averse. Benefits is a cost center within an employer. And it's there to attract and retain employees and help with productivity and presenteeism. Sure, it's really there to attract and retain employees. And so anything that creates noise or could create a problem for the employees that all comes back on the benefits team. So you want to be very careful about that. Two is make sure you understand the environment that you're in. In terms of when you're outselling, it's very different to sell to a 50 life group than it is a 50,000 life group. The motions are different. The timing is different. Take that into consideration. The last piece is anybody who sells in the space tries to break it. There is a calendar of events. And with the Super Bowl being open enrollment, we keep trying to break that cycle, but it's very, very difficult. So just be prepared that sales tends to be very calendar driven. It helps you set your expectations with your board and your investors. Final question for you. Let's zoom out three to five years into the future. What's the big picture vision look like? Big picture vision is all about getting every American and hopefully, internationally, the services that they need. And it sounds a little silly, but the reality is the ability to connect with our multi-sided marketplace, we make it very, very easy and inexpensive to do that. And so how do I spread my wildfires as fast as possible? And then we fully recognize we're going to be in the smaller group market and the mid market for a while, but the ability to expand into enterprise and large group is there. And it's all about data, data, data. The more data I have, the better my recommendations become, the better the experience becomes. And so that's the underlying driver of everything that we do, which is trying to be proactive and make it very easy for someone to go, "Oh, I have a need. I'll just go to Beanstalk and I'll see if I can get that need fulfilled," without having to think about it. Because people only tend to think about their benefits when they absolutely need them. It's 2 a.m. and you're in the ER. That's when they start thinking about it. But the reality is, is that there are things that employers are doing, things that we're doing, that could help an employee all throughout the year. Amazing. Matthew, this has been a lot of fun. We really enjoyed it. Before we wrap, for founders who want to follow along with you, where should they go? You can go to BeanstalkBenefits.com or my LinkedIn page. Amazing. Well, thank you so much for taking the time. Really appreciate it. Fred, thank you for having me. This episode of Category Visionaries is brought to you by Frontlines Media, Silicon Valley's leading podcast production studio. If you're a B2B founder looking for help launching and growing your own podcast, visit frontlines.io/podcast. And for the latest episodes, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we'll catch you on the next episode. (upbeat music) (upbeat music)
