Making big changes of any kind, in both personal and work life, is often hard for people to embrace.

In startup world, change is nearly constant, and you have to embrace change when it’s needed or you will fail. Often times, making changes means you’re forced to let go of opinions or beliefs that you once lived and breathed by—which is probably biggest reason why most people don’t like change.

As with any new venture, product or goal, the most well laid plans often fail, which means you need to make changes. (In startup lingo, substantial business model changes are also known as pivots.) It sucks and can be demoralizing, but it’s not the end of the world.

My dad, a very successful entrepreneur in Omaha, has always reminded me that I will learn more from failures than successes. I would prefer to win of course, and so I choose to use failures as motivation.

Facing change at benefitbay

When you’re in the trenches trying to get your business going, it’s more natural to keep fighting the battles at hand. But it’s so important to constantly make sure you are working on solving the right problem for customers. If you’re not careful, you will end up losing the war despite winning a few battles.

Thanks to our sponsor

Become an SPN sponsor »
Meet our sponsors »

For example, at benefitbay we launched in Omaha with a strategy of distributing our custom-tailored employee benefits software through a network of independent brokers. A couple of our founders, who are long-time insurance agency executives, saw a need for a new small business benefits solution based on the legislation changes brought upon by the Affordable Care Act (ACA).

We spent months visiting with benefits brokers at established agencies all across the nation and learned first-hand that many of these agencies shared a similar need. Our early analysis showed that small businesses could save lots of money by switching from group to individual ACA medical plans.

All of our modeling and research told us a platform like ours would help businesses save money because the new ACA plans would be inherently more expensive due to the expanded benefits and coverages that ACA plans must contain. We were convinced our cost-saving platform was going to be a winner for brokers and employers.

In hindsight, we were wrong to have such a narrow focus. After we launched in early 2014, the brokers and employers were not compelled enough to adopt our platform in large part because of a last-minute regulation change which delayed a key requirement of the ACA until 2017. Essentially, business owners could keep their current group plans (non-ACA plans) rather than adopt the new ACA plans. In almost all cases, these older non-ACA plans are cheaper because they typically have less coverage than ACA plans.

None of us could have foreseen this eleventh-hour change, but we also didn’t build a solution for non-ACA plans. (Why would we? They were going away under the law!) While the delay did not render the platform obsolete, we soon recognized the reality that we had built cutting-edge technology, but the demand for the platform wasn’t there in volume levels that would sustain our business.

A future we had not imagined

With brokers and employers basically staying put rather than switching to ACA plans available via platforms like ours, we knew we had to make changes in order to survive to another chapter of our company. We felt that going direct to insurance carriers could yield us licensing revenue and put us closer to a true SaaS (Software-as-a-Service) model.

We had been talking to some carriers about the idea of private-labeling our platform as a way for them to distribute their plans to their brokers, but we hadn’t discussed any deal terms. We knew this would be a considerable pivot and would require us to make a number of internal and external changes to the team and to the product.

Ultimately, we decided it was the best course of action for our shareholders, and we went all-in. It was difficult at times for all of us on the team to adjust to the new strategy. It required us to think differently and understand the needs of our new customer. However, we prevailed and the market response was just what we needed.

After several months of preparation, sales and negotiation, we ended up landing a material license deal with Humana, one of the largest health insurance carriers in the world.

Point being, I don’t think any of us on the team would have imagined a license deal when we started, but we embraced the pivot, rejiggered our approach, and propelled the company forward to another chapter. As an early stage startup, you never quite know what the future will hold; and that’s okay if you acknowledge the risks and prepare yourself for the idea of change.

It’s difficult to admit that an idea or methodology was wrong. The reality is that most initial ideas are wrong or have flaws, and the sooner you recognize this and adapt, the more successful you will become.

—

Patrick Fisher has been involved in software startups for the vast majority of his professional career.  At benefitbay, Patrick joined as a co-founder to lead the product development and launch of the platform before the Board of Directors asked him to become CEO. Patrick holds a Business Management degree from the University of Arizona and was born and raised in Omaha, Nebraska, where he resides with his wife and three children.