Bill Cilluffo sits down with Eduardo della Maggiora, founder and CEO of Betterfly, to discuss the life-altering events that catalyzed the birth of his company, the importance of social impact in Betterfly's business model and how the platform is integrating the worlds of insurance, well-being and purpose with a big mission to empower people to help them live longer, healthier, happier lives.
Bill Cilluffo sits down with Eduardo della Maggiora, founder and CEO of Betterfly, to discuss the life-altering events that catalyzed the birth of his company, the importance of social impact in Betterfly's business model and how the platform is integrating the worlds of insurance, well-being and purpose with a big mission to empower people to help them live longer, healthier, happier lives.
Thank you. Venture capital firm focused on investing in fintech companies all the way from pre-seed to IPO. Fintech Thought Leaders brings together the most talented entrepreneurs tackling today's biggest problems. If you're looking to learn more about what motivates our founders and team members to succeed, you're in the right place. Hello and welcome to the Fintech Thought Leaders podcast. I'm Bill Salufo, head of early stage investments at QED Investors. Today on the podcast, I'm Bill Salufo, head of early stage investments at QED Investors. Personal journey first, but just to help orient the listeners, I wonder if you can share maybe a 60-second commercial on Betterfly.
Speaker 2:Sure. So at Betterfly, we're a platform that integrates the worlds of insurance, well-being and purpose, with a big mission to empower people, to help them live longer, healthier, happier lives. Right. And we do that in this unique way, you know, integrating these three separate worlds through what we call the butterfly effect, which turns habits daily habits like walking, meditating, saving, investing into positive ways of change right. And we gamify being active and healthy through a very unique experience that again incorporates the insurance world, financial services, health and well-being tools and a very powerful and purpose-driven gamification platform to encourage healthy living. So that is, in a very summarized way, what we do, right? I'm happy to share later in the podcast details of our business model, go-to-market strategy, but at a high level. That's what we do.
Speaker 1:That's awesome, and just one quick follow-on because I think it'll provide good perspective. I know you started in Chile, but now you're in a number of different countries around LATAM and the world. How many countries are you in right now?
Speaker 2:Yeah, so today we're in eight markets, eight countries. So we started, chile was our first market, then we opened Brazil. Today we're in seven big markets, major markets in Latin America, mexico, brazil, chile, argentina, peru, ecuador, Colombia and Spain. We opened Spain a little bit over a year ago and in the process of preparing the company to go further to other markets, not only in the region but, you know, to the US and Europe and above. So yes, eight markets in a little bit over three years since we launched the platform.
Speaker 1:That's pretty amazing context and we'll get back into that more. But I know we don't get too many companies that have had the expansion that you guys have. It's really impressive to see. But even more impressive than that, I think, is a lot of your story that I've heard a couple times now but is always one of the more inspirational stories that I get to hear of our founders which, by the way, are loaded with inspirational stories. But I'd love to hear a bit of your time how you got to the startup world. I mean, I know you started in investment banking and then you know your life took a couple fun detours and so it's. I'd love to you know just start with your banking days and how you got to where you are.
Speaker 2:Sure, sure. So I'm, you know, born and raised in Chile. I'm an engineer, started engineering, most of which I did in Chile. I spent a little bit under a year in San Francisco, but engineering school, right out of school I started working at JPP, morgan and the Latin America M&A group. That's a very unique thing, I think, not only of Chile but of Latam, that engineers go to work in financial institutions. I think it's happening in the US a little bit more, but in Latin America and Chile particularly, very common. So, anyhow, the plan there was to spend a couple of years, then do my MBA. Those two years led to a little bit over 10 years of M&A, mostly covering financial institutions in the region. So I spent, I would say, most of my time working in M&A transactions, capital markets, in the insurance and financial services space and year 2014,.
Speaker 2:Maybe this is where the story starts, you know, to take a detour, I decided to change what I was doing, right? The story of BetterFlights. One hour story, probably, but I'll try to make it short one, right? The story of BetterFlight is a one-hour story, probably, but I'll try to make it a short one, right? So, again, I'll go back to my early years. 15 years of age, I was a big tennis player. Tennis sports was my greatest passion in life. My dad passed away at that moment in time, so I had to change a little bit of plans. Right, I'm the oldest of three brothers. My family did not have proper financial protection. They did not have insurance coverage, so that led me to change a little bit. The plans of becoming a professional tennis players go into engineering school and 2014,.
Speaker 2:You know, life again hit me in an unexpected way. This time around it has a happy ending, but at that moment it didn't right. My mom was diagnosed with a very severe form of leukemia. I was, you know, living the good life in New York, single, 34 years of age, you know, working at JP Morgan, and in one business trip to Chile we discovered she had this very aggressive form of cancer. And that made me rethink, bill, a little bit, what I was doing. Right, as I mentioned, you know, professional success. And I started, you know, asking myself the question you know, if I went out on the street and got hit by a bus, how would I measure, you know, my life? And I started asking myself would I measure it by my professional success? Would I measure it by the grades I got in school? Would I measure it by the money I had in the bank? And I started a very personal reflection process about the meaning of life, literally right, and I came to the conclusion that a good way to measure my life was to see how I was using my time, my skills, to help other people, not only myself.
Speaker 2:So, 2014, I started asking what am I doing today to make an impact in other people's lives? How am I capitalizing my skills to make that happen? And I could not answer that question. So I went to my boss, the head of JP Morgan for LATAM. I told him I'm quitting and he's like where are you going? Goldman Sachs, morgan Stanley? And I told him, no, I'm going to Africa. He's like what, where are you going to go to Africa? And the reality at that moment I just wanted to take six months to do a sabbatical, a pause, and, just for six months, focus my time in, you know, making an impact in other people's lives. Decided to go do a volunteer program and then the idea was do those six months and then come back to normality, right and banking, or whatever that might be. And to your question you know that six-month sabbatical right or that volunteering trip definitely planted the seeds to what later would become Betterfly.
Speaker 2:Right Before Betterfly, the name of the company was Burnt to Give, and I'll explain in a second why that's important. So, anyhow, two things happened in that journey in Africa I discovered the reality of childhood malnutrition. And number two, I reconnected with my passion of sports through a video I saw on the internet of the Ironman Triathlon in Kona right. Believe it or not, I think I've told you the story, but I was an overweight, overworked banker. After 10 years of banking, I was probably 25, 30 pounds heavier than I am today. Health and well-being were not a big part of my life. I saw that video when I was in Tanzania, in Africa, of the Ironman triathlon and something in my gut, in my heart, was like what happened to your passion of sports that you had when you were young? You know the tennis dreams, you know. And I just signed up for a race, not an Ironman, a small local triathlon right, and I connected that right.
Speaker 2:As I mentioned, I went to Africa. I discovered malnutrition and I'll explain why. That was one of the seeds for Betterfly. And, anyhow, finished those six months, bill moved back to Chile, started training for that local triathlon race. And Chile started training for that local triathlon race. And in one of these bike rides, a crazy thought crossed my mind and I said what are the pounds I'm losing Because I started training, eating healthier right, losing those extra pounds of weight?
Speaker 2:And I said, what if I could convert those kilos I've been losing, or those pounds I've been losing, into pounds of food for these kids I met in Africa? And what if we could convert calories of sports into calories of food right? And what if we could use the power of purpose, the power of helping others, to help each person live healthier, happier lives? And let's start with something very simple let's convert calories of sports into calories of food right. And that's how the company got started right Under the name Burn to Give Burn Calories to Give Calories right.
Speaker 2:And I think in that part of the process, when we first met right towards the end of that journey and just to connect it with BetterFlight right, we spent a couple of years building our platform.
Speaker 2:Right At the beginning it was just connecting, you know, healthy living with giving back right. And then in that process, one of the things I think was very instrumental and that's why we reached out to you guys, and then you know everything that comes later on was that we discovered one of my views and this is where the professional background comes in right is that who should be the biggest payer of well-being in society. Our vision was it should be the insurance industry. Right, because they have a natural incentive. You know, healthier, happier clients, customers, whatever they be, right. Not only you know are healthier, but they live longer, and if you compare a customer of an insurance company, right, one that is unhealthy or actually averaged, compared to someone who's healthy and active, this customer over here will be between three to five X more profitable than this one over here, right? So that's where insurance came in and we integrated insurance as the backbone of our business model, and BetterFlight was created, was launched as a combination not only of purpose giving back healthy living but also financial services.
Speaker 1:So fascinating, fascinating story. I mean so much to unpack. Let me start back on this sabbatical to Africa. It's interesting. You talked about firsthand seeing the malnutrition and the impact that that had. Ironically, I spent two nights ago I watched the Netflix documentary on the we Are the World story.
Speaker 1:So you know somebody else who was inspired by a very similar thing and took action in a very different way, you know, but had great impact. I guess you know what was it about that in particular that you saw that was able to. You know, many people get moved by a lot of things. Very few people get inspired in the way that you have to literally create your entire professional life around, partly directly, partly indirectly giving back to that cause. I mean, what was it about that that moved you so much?
Speaker 2:Yeah, that's. That was a really good question and it's actually not the obvious answer someone might expect. For me, the biggest impact that that six-month sabbatical had in me was, you know, I was coming from New York, where you know you have all the abundance, all the richness. You know I was coming from New York where you know you have all the abundance, all the richness. You know, one of the wealthiest cities in the world, right, and I went from that to a place in the world where people had barely enough to eat Actually, some people were dying of malnutrition. And I met really happy people, right. And I met people you know, the volunteer workers I work with. They were intrinsically happy people and what they had in common was that they were dedicating their lives in doing something beyond themselves.
Speaker 2:And I remember going back to Chile, bill, and when I got back to Chile, everyone was like going from banking to Africa. Everyone was like, oh, congratulations, that's incredible. And I felt like the person who had been more transformed by that journey was way more myself than the kids I helped in Africa, right, like what they gave me was way more than what I was able to give them by volunteering for six months in a school right. So that fulfillment that I felt for six months and that I saw in the country, in the region, people doing for decades, was what I wanted to bottle and use technology as a motivator to get people living better right. And for me, what I felt there, going back, was like I'm so privileged to be able to have spent six months doing this. Not everyone can do that. What if we could bottle this and use it as a carrot, if you will, to get people moving active, healthy, right and living better lives? Again, it was not obvious for me Up until this day.
Speaker 2:I'm still in touch with a lot of the folks with whom I volunteered there and that was, for me, the biggest insight that I got and the concept that we're as human beings. We are designed to give back, to help others, to live in community right, and when you provide anyone anywhere, regardless of religion, you know what country they're from the opportunity to help others. Human beings do not hesitate to do so. And that was the biggest, biggest insight and I was like there's no way I'm doing anything else in my life than building a company or working in something that brings this to life right, and that's how it all started to be honest, and it would never have happened if I hadn't taken that jump, which made no sense at that time. Right, everyone was like why are you quitting JP Morgan at this moment, when they're promoting you? You know you're going to be a managing director next year and blah, blah, blah, blah, blah. And it was one of those things that you know changed my life.
Speaker 1:Yeah, well, it's great to hear about such a transformative experience and that directly led you to Burn to Give, which was actually a nonprofit correct me if I'm wrong about promoting folks to take their exercise and use that to lead to donations. And I know you learned a lot like some things that worked quite well, some things that didn't work quite like well, and that was the predecessor to now the for-profit company Betterfly. Can you talk to me about what you learned in those period, maybe one thing that was really successful that you were able to take to Betterfly, and maybe one thing that wasn't working quite right that caused you to change your thinking and led you to where you are now?
Speaker 2:Yeah. So maybe let's let me share some things that are maybe not not out there as common as the story that I always tell. So there was a lot of learnings before Better Fly. Right in terms of how can we scale and build something that creates impact beyond, at that moment, my wildest dreams. Right, and at the beginning, the obvious way to do this was to build a nonprofit. Right, let's build a nonprofit that people put money in it and we just connect, giving back to being active and healthy, and we can get into two pockets of donation interest right, people that want to promote health and well-being and others who want to promote nutrition. Right, I learned that that was not as scalable as, because at the beginning, people really love to donate, but then up until a certain point right, it doesn't move more than that. Then you continue to have to continue to win.
Speaker 2:Right, and I actually before Burn to Give. Right, I actually founded a nonprofit called Yayo Fund, which was also in the microfinance space. Right, which was a complete nonprofit. The company was amazing. It did really well, but then it was very difficult to scale and I had to close it down because, you know, we were dependent on donations.
Speaker 2:Right, and I learned I don't know if the hard way, because it was part of the process that you know, building a for-profit for impact was the way to go, a company that you know was for-profit but had embedded impact in its business model, structure, you know, et cetera. And then I learned about B Corps right, you know, I hadn't heard about them which was basically for-profit companies that have a fiduciary duty to have financial returns but at the same time they also have social and environmental returns as part of their structure, right. And and I started going that route, and that's where Burn to Give became Burn to Give, from the idea of a nonprofit to Burn to Give LLC. And then Better Fly, you know, pvc and building a business model, that impact purpose was the main driver. But in a for profit, for impact, right, and it's always that what's the driver? Is it the profit or the impact? Right, and you know, deciding how to do that. And we structure Betterfly that way, right? So at the beginning it was just a certified B Corp for those you know listening to the podcast basically a certification that you have to comply with certain if you want ESG requirements to make that happen. For me that was not enough and what we decided to do is take it a step further and we structured the company as a public benefit corporation in Delaware, right, but basically, besides the certification, where you know we could walk out any year if we wanted to do that we basically embedded a legal or fiduciary duty to have a social and environmental return together with our fiduciary duty as a financial return right, and that's how the company got structured. If you will and it was not obvious at all at that moment in Latin America I mean, we were the first ones to do that Everyone, or 99% of people, especially from the financial world, were like why are you doing that?
Speaker 2:You know people are going to think you're a nonprofit. You should not structure the company that way. And, if you ask me, we'll talk about later this was probably one of the, or probably the most relevant decision that we made that has allowed us to do what we do. Because when you would purpose an impact at the center again in a model that has to grow, that has to be scalable, that it has to be profitable, you attract a certain type of talent, you attract a certain type of clients, you attract a certain type of everything around you, right, it just starts moving at a different pace, and I think that's the power of purpose.
Speaker 1:Yeah, we've got a couple examples in the portfolio that have really integrated these components together and it's quite central to your business model. So let's stick with the impact side. Can you talk about how that works at Butterfly and kind of how the impact piece of it hits directly? I know there's a couple of different aspects and then we'll get more to the for-profit piece here in a sec.
Speaker 2:Yeah, so Butterfly is very unique in that way because, first and foremost, impact is embedded in our business model period. So part of our gross profit is charitable donations. So let's say we, you know, we'll explain the go-to market. Or the business model. Let's say a company gets BetterFly for their employees and they pay, you know, $10 per employee per month. Part of those $10 goes towards nonprofits, right? So it's a charitable donation that get triggered the more our users or members improve their well-being, right. So that's the first part, right?
Speaker 2:The second one has to be with, you know, compliant being a B Corp, right, where every year you go through a review of ESG standards, if you will, to comply with that. That, in my view, are the maybe the less relevant of the impact that we have, because that's people can get away with that. That, in my view, are maybe the less relevant of the impact that we have because people can get away with that. Sometimes it's more vanity metrics than anything, to be honest, right. So that's another part of the component.
Speaker 2:The third one I mentioned earlier is we have a fiduciary duty to have a social and environmental return in our bylaws directly as a PBC incorporated company. And last but not least, and this is one of those innovations that we actually launched last year. We actually created, built to take our impact further and align it with our growth. Last year we created a new instrument financial instrument called the social impact stock units, which is basically a sort of employee stock option that we create a small pool and we link that to Betterfly's profitable growth, and these stock options, which have no cost, are distributed to nonprofits the more Betterfly grows, right. So it's a way of aligning even more our financial returns with our social impact and making the planet and society a part of our company and our strategy.
Speaker 1:Oh, very cool, Very cool. Well, let's move to the core business model of BetterFly. Now, at the centerpiece, you're selling employee benefits to employers. I know life insurance is at the centerpiece of this, but it's by no means the only thing you're selling. But you've created an interesting model that links a number of these aspects together in terms of giving positive incentives to consumers. I wonder if you can just walk us through how that works? Sure.
Speaker 2:So, as you correctly mentioned, so we started, you know, 2020, when we launched the first. You know we're a platform company, right? So I'll explain a couple of applications of our platform which you know start from the same technology core, but as an employee benefit subscription right. So we go to a company, let's say a company with a hundred employees, right, and the company gets BetterFly for their employees and basically each employee gets access to a platform, right, and the platform we like to see BetterFly as a three-in-one platform. First you have the protection, then the prevention and then the purpose part of the platform. The protection we started with life insurance, but today you have not only life insurance but you know, cancer cover, critical illness, dental cover, pet insurance, and each of those hundred employees, bill, can choose what coverage they want and what type of coverage they want. So the company just says you know what, I want to invest $10, $15, $20, whatever the amount, and then leaves to each employee the ability to choose which coverage they want. Let's say, you, you know you have kids, right, you might choose life insurance. Then someone who has a pet, maybe life insurance is not relevant, but they want pet insurance, right, and so on and so forth, so we're able to personalize the protection piece for each employee, for them to find meaning and value in each product. The second part is the prevention, or the health and well-being part of the platform. Same thing we're able to personalize world-class well-being tools for each employee. So we have partnerships with Headspace, phaeton and a bunch of Udemy, booz, duolingo and a bunch of physical, mental, financial language apps. Right for each employee to choose, right Depending on the plan that the company chooses. Again, those hundred employees are flexible, they can choose whatever works for them.
Speaker 2:And the third part, which is, I would say, the game changing and what brings engagement you know from single digits that happen in all companies to you know, 70, 80% that we have is our purpose driven engagement engine. And we created this engagement engine, which is basically a game. Right, we use game mechanics to get people active and healthy and living their best lives. And look at it, bill, we're actually launching very, very shortly the next version. But it's sort of like Pokemon Go, a Legend of Zelda, or you know. We have hundreds of levels that you pass one to the other and each level you have different nodes where you get rewards from, you know, amazon gift cards, you get insurance top-ups, you get discounts, and every person again personalizes that journey. So, let's say, you play golf, so throughout that journey you will get golf discounts, you will get videos about golf, you will get things that are personalized.
Speaker 2:Now there's one thing that every player or every user has in common that to advance from one level to the next, you have to make an impact in other people's lives. So you have to give back and make a donation, right. So that's where the purpose comes in and you earn your right to give back. Again, this is all free for the end user, right, Because it's you know, donations that they earn with their good habits, and that's how we connect. You know donations that they earn with their good habits, and that's how we connect. You know personal rewards with rewards for others and gamify, being active and healthy. So that's the value prop of that product, where, again, it's a per employee, per month subscription that companies pay for their employees. And we have today roughly 3,000 clients, corporate clients, from SMBs with 50 employees to the largest multinationals in Latin America, right with tens of thousands of employees using BetterFly. At the same time, we provide HR managers and this is especially valuable for bigger clients aggregated and anonymized data on the insights of their people.
Speaker 2:So let me give you an example with a customer, a big customer we had in Brazil a couple of weeks ago. So we realized their teams okay, you know, we integrate with every single type of wearables fitness app, so we integrate with Whoop, with Aura, with everything right and we saw that their team were sleeping less than average. Number one and number two they were looking at sleeping quizzes. So they were doing a lot of sleeping quizzes, about to learn how to sleep better. So we went to the HR manager and we told them hey, you should bring a sleep coach to your company, right, we don't have a sleep coach, but go get one. I won't say the name of the company, but I'll tell you who they brought. So they brought. It was the wellness week of that company and they had Rafa Nadal, the tennis player, as one of the speakers of the week. They also brought the sleeping coach that week. The sleeping coach had two times the visualizations of Rafa Nadal, right, which is crazy.
Speaker 2:So that's the best example of you know, we give you aggregated data and let data drive your well-being strategy and not what you know the CEO or the HR manager wants to do. Right, and those insights are just growing in usefulness and how targeted they are and how powerful they are with AI right, so we provide a series of well-being tools for HR managers. Right for this to be super seamless, super insightful. So that's one part Super quickly. But the second part of the model right, which we started growing in 2022, we realized that we were creating such an amount of engagement Just short parentheses after WhatsApp and social media, betterfly is the most used app in an employee's phone. Right, that's how engaging the app is. Right, so it's just out of charts engaging. Right.
Speaker 2:So one of our providers, which was the carrier right, because, remember, we built this tech stack that bundles insurance products and non-insurance products and we're able to distribute them with the simplicity of Netflix or Spotify right, so they told us look, why don't we do the same thing you're doing with companies to their employees? Why don't we do it with our clients? So you know, I'll pay you the subscription. And why isn't BetterFly embedded in a life insurance policy? Right, and that's how we started our affinity business model where, basically, betterflight comes as part of a life insurance policy. You know, you buy, you know, and it not only increases the value that a life insurance policy that you never use. Right, it gives you access to benefits, discounts, but it also, you know, rewards you for living healthier, happier, longer lives. Right, because that's of every interest to the life carrier and that one bill in the last 12 months is just growing at an exponential pace. Right, because we're able to connect that carrier with that customer in a very unique way.
Speaker 1:That goes back to a little bit of your. The original core of the idea, right, is you have this life insurance and then you're incenting people to take behaviors that are in their best interest whether it's step tracker or meditation or you name it and how directly sort of that gives them more life insurance coverage, which again works for the life insurance company because they're healthier. I mean, it's just a really interesting self-reinforcing loop that you've built, and just to see how it's broadened so much over the last handful of years is really impressive to watch. I know when you started this business, you had very much a B2C model in mind. You even referenced Netflix, spotify, etc. You're now kind of headlong into a couple different B2B models, whether it's the insurance partnership or the employer model. Why do you find B2B is kind of more the channel that tends to work for this?
Speaker 2:versus a B2C model. Yeah, so at the end of the day, we're a B2B2C right. At the end it's a C that's using it. Right, but it's through a B2B. And the reason for that is that employers and insurers, we believe should be the payers of making society well, healthy and happy, right, they have a financial incentive to do so and they're directly influenced by that. So by doing it this way, going to the end consumer through an employer or through their insurer, makes economic sense and makes the incentives we can include as part of that well-being journey significantly larger. And that's at the core of our model, right? I mean, people know that eating a chocolate cake is not good for them. Or, you know, walking more is better than walking less, right, but why do we not do that? Right, it's because we need incentives, right, to change behavior. And you know, the bigger the incentive, the bigger the behavioral change. And that's where insurers and employers come in. And we believe that the way to shift from protection to prevention and aligning incentives is with these two key partners in society.
Speaker 2:Every year, 60 million people die in the world, total, okay, roughly 6-0 million. So of those 60 million deaths, 75% of those deaths 45 million are due to chronic disease. Okay, 45 million Of those 45 million, 80% ate zero, okay. So four out of five or eight out of 10 of those deaths have to do with things we do every day. So, you know, have to do with physical inactivity, smoking, drinking too much, you know, bad nutrition, stress, and it's actually 12 to 14 bad habits, right, and just 20% have to do with accidents, shark attacks. You know all the things. We think it's more. It's a massive number. So there's a lot of things that we can do to change and extend our longevity, our health span and everything in between, and the question is, why don't we change that? Look? So let's go to the US, the US. We have $4 trillion that the US spends in healthcare every year. 97% of that is pills and surgery. Just 3% is preventative, lifestyle changing, and that's where we want to jump in.
Speaker 2:We were building the infrastructure to connect insurers with, and consumers, employers with, also their teams right, because happy, healthy employees also bring more productivity, right, more performance. So they have an incentive, and that's our vision. I think we've talked about this online and this is where AI today is. Just, you know, there's things we can do today of connecting those two separate actors insurers with customers and remember these two stakeholders insurers, policyholder, employer, employee. They have the same incentive. They want healthy, happy people. Who doesn't want to be healthy? Who doesn't have to be happy? So it's a win-win solution where our business model is driven by how we can engage with our members and make them healthier, happier, living longer, which at the end of the day, translates to profitability, both to the carrier and to employers. That's why we believe going through employers and insurers to the end consumer is the way to go that makes sense.
Speaker 1:You know, it's really interesting that you talk about the role of the employer, and I know you're in Latin America and now Spain. Who knows if you'll be in the US someday or how that all plays out. But the US is an interesting model, given how goofy our healthcare system is and how many large employers are effectively self-insured. Really, those incentives between what's good for the employee, what's good for the employer is incredibly tightly linked here. So it's interesting to just process what the future might hold there in such an interesting market.
Speaker 2:A hundred percent, yeah, a hundred percent. There's a book that I recommend. I actually have it here. Look, I wasn't prepared, but it's called the Happiness Advantage and I gave it to all my team recently because it's basically the link between a positive, healthy brain and success company success, corporate success, right, and you know, this is a book that was written 10, 15 years ago and it was researched, you know Harvard, but it wasn't. Today we can see that in practice. I mean, we have ROI. You know, with big employees we're healthy, happy, positive thinking employees are one, two, three X more productive than those who are not. So there's a natural link, and that's, I think, where the world should go. And something I'm very, I'm very passionate about and where I believe in the US is, you know, where it's more evident that that needs to change.
Speaker 1:Yeah, definitely, definitely so. Look, a minute ago you referenced the world's greatest buzzword, ai, and talked about how that might play a role. I know you're, as with many companies, kind of on the journey to figure out where AI tools might add value to the business. I think in your case, it's less of enabling you to do something dramatically different, but improving kind of something you were already down the path on. I wonder if you can just share kind of your early days of the AI journey, as I'm sure every listener is. You know, trying to play around with the concept. Yeah sure.
Speaker 2:So for us, it's not doing something new, it's just doing what we do at a significantly greater pace, right.
Speaker 2:So the first one and I'll just mention three because there's so many right the first one is personalization.
Speaker 2:You know, ai brings the cost to serve and to recommend that end user right At a pace we could not have done so before. Look, and that employee or that end customer that is using BetterFly, we're able to give them the incentives, the rewards, the benefits that are tailored to meet their needs and create this virtuous circle between you know, living healthier, happier, happier lives right. And three years ago this was a vision. You know, and you know, everyone knows that if you have a personal coach, which you have to pay I don't know 400, 500 bucks a month, you will change your habits, you will go to the gym, you will lose, but not everyone has that financial capacity to do so. What AI is doing for us right is allowing us to bring that not even a hundredths of the cost right. And you know, with the integrations that we have, you know, with the touch points that we have, with end user being able to personalize the experience right to help them, him or her, live healthier, happier, happier lives. So that's the first component right, and we can do that on an individual level, on a company level. The second one, which is you know I didn't know it was this massive, but you know I was. You know, three, three, four weeks ago I was in Dallas and it was not me saying this Insurance will be the most affected industry by AI in the next 12 to 15 months, and the reason behind that is because of the feedback loop you can generate for claims payment and fraud detection right and everything around that right. When you have the touch points, the cost to serve and to detect fraud is just crazy. And you know, this is something we started doing. This is actually something in the category that we did not do before and that, thanks to AI, we could start doing, because before we just had life insurance right and life insurance claims are very low, so we don't need to build a smart algorithm. But now that we're doing pet cell phone, critical illness, cancer and the frequency is super high this has allowed us to do a, you know, provide claim settlement, claim processing right, country agnostic, any market, any type of coverage and build an algorithm that learns by itself, again at a fraction of the cost that we wouldn't have been able to do this at the pace that we're doing it today without AI.
Speaker 2:And the third one is serving smaller customers and namely the SMB segment. The cost to sell and the cost to serve was opening a blue ocean for us. That was not available before unless we would have had cheap capital forever that we all know is not out there anymore. And look at this In the world there's 400 million SMBs okay, 400 million, depending on the study that you look at, 90 to 92% of these SMBs do not have any type of employee benefit, right. So it's a, it's a blue ocean. So acquire that customer and a cost and then serve that customer in a cost effective way. It's a blue ocean.
Speaker 2:So we're we've been building. Last year we built, you know, this product led sales infrastructure where the last month we started to onboard SMBs without human contact Right and serving them at the same way. And you know, providing infrastructure, where the last month we started to onboard SMBs without human contact right and serving them at the same way. And you know, providing and that is just infinite right. So those are three examples of things that are possible thanks to AI. The first one is maybe an accelerator. The other two is opening up opportunities to serve more SMBs, more customers, in a way that wouldn't have been possible.
Speaker 1:Yeah, I love the last example in particular. I mean it's funny. I was at Capital One for 20 years and a handful of times over that period was part of these big consulting studies talking about where there's business opportunities, and every single time small businesses was like number one on the list. If they get crappy financial service, they get crappy other service. Nobody's building for them, et cetera. It is really interesting to think about AI as a tool to maybe help people get at one of the most underserved markets. Across almost any lens you can do Back to the combining of business opportunity and impact, enabling small business, especially in emerging markets. You can just see the direct impact that that's going to have given the prominence of employment in Latin.
Speaker 2:America. Yeah, that is so massive, bill. I mean because I mentioned 90, I mean you know SMBs have been there. The thing is it's too expensive to or to sell or to serve right, and AI is just bringing that down right. And in an industry like employee benefits, you know employee benefits, every company needs one and you know employee benefits, every company needs one and you know it's a massive category the 10% that do have right, the bigger enterprise customers, mid-market 99.999% do have benefits. So it's such a product that is just so big that you know the impact there can be massive.
Speaker 1:Well, let me flip the story a little bit to the BetterFly team. You know we talked about how, you know, your product is so well integrated. Right, there's the part that makes money, the part that gives back, the part that's self-reinforcing in the middle, but I've got to also think that your social impact focus really helps you in terms of attracting and retaining and motivating talent at the same time yet another way that it's probably self-reinforcing. I wonder if you can just talk about the talent side of your business and how you're able to, you know, really get that flywheel, you know, spinning in a different direction, leveraging all the other great, great work that you do.
Speaker 2:Yeah, no, that's a really good question and it's probably the most important one, right, for us at BetterFly. And I think where purpose is, you know, is number one, is people, right. And when you have a clear goal of the impact you're creating and you're able to tangibilize that and, you know, really make it a part of the strategy, you know, and something that is visible not only in the annual report at the end of the year, you know, and some vanity metric, but actually part of the business model, you're able to attract a type of talent that is unavailable in any other way. Right, I mean, and I've said this in our Series A, in our Series B, in our Series C, and it continues to happen now we have people working at BetterFly that if we did not have such a clear strategic focus to creating, we could not have them on board at this time. And not only that, you're able to attract talent and retain talent in a different way, because people come here, as cheesy as it sounds, right to you know, to change the world, right, and they are really, really in love with the product we're building, with the solution that we're creating, and they know it's not going to be easy. Right, there's a lot to do still, but giving them that opportunity and giving them the tools not only to be able to tangibilize the impact, to share their stories with their kids when they go back home after work, and you know the impact that we're creating on a monthly, on a quarterly, on a yearly basis, that is just massive, right, and it's like a fire that never ends.
Speaker 2:And you know, you can ask Mike, and you know the folks who have met the team it's not just me talking with this passion about the company and you know our dream and our vision and you know our mission and everything.
Speaker 2:It's probably most of the team and you know, and that allows you to move also at a different speed, bill, right, we really have a clear end goal in mind and an impact being what goes in the middle, you know, empowers us to do more and have more endurance at the end of the day. And look, we have a board meeting in a couple of days and our board presentations always start with purpose people, then comes business and the last one is finance. So we have these three sections, right People, business and finance and purpose. It's not a section, because that's like at the very top and that's the order, and that's the order is very important because profit financials have to be there, but they're an output of the business and the business is an output of the people and the people are at the center right. So that's maybe another way to look at it, or at least how we look at it.
Speaker 1:Yeah, no. I mean, it's so clear that companies that are just built to add value to people and you do it in a very special way others do it in different ways. You know it's just so much easier to bring on amazing talent. You know when you can really get behind and align behind the mission. I'd love to shift to talk a little bit about how you take care of yourself. You know your entire business is built on the premise that if people take care of themselves, they'll live longer, happier lives. I know lots of entrepreneurs that work, you know, 120 hours a week and don't take care of themselves at all. I know that's not the case for you. I think you underestimated the level of which you are truly an elite, world-class athlete when you were talking about it earlier. But I know you're also working like crazy at work. I know you have a family. I know you travel all the time.
Speaker 2:I mean, how do you think about sort of making these pieces you know fit together and any one of which could easily cause someone to burn out? Yeah, that's a really good question. I think, something you know. We've talked a bunch in the past with the QED group, right, and you know other founders in the portfolio, right, where I think your question, bill.
Speaker 2:So, sleep, nutrition, exercise, you know, mindfulness, all of these things, right, connection with your family are relevant. There's not a formula, because we're all at different points of our lives. You know needing more of this or that, right, you can be a founder, maybe don't have a family, and you know, maybe you like to exercise, maybe mindfulness is your thing, but you need to do what you know you need to do to recharge, and this is like being a top class athlete To win the race, you need to train hard, recharge, train hard, recharge, right, and the recharge component is very individual, right, but it needs to be there, because or else you will be able to, you know, have all-nighters or work hard for one week, two weeks a month, okay, two months but then you'll just burn out and you won't be able to run. You know, building a company is not a sprint. It's not even a marathon. It's a freaking Ironman, right, and maybe an ultra Ironman, an Ultraman, right. It's really really long. So you have to be consistent for a very long, long time.
Speaker 2:So, first, you have to love what you do and that maybe is obvious, because you shouldn't be building a company just for you know. You have to really find why you're doing what you're doing. And, number two, you have to take care of yourself, right, and there are small tips that I think are really relevant, but nutrition plays a big role. Exercise plays probably the most relevant role, and that's not just because I'm, you know, I love sports and I love exercising, but you know, exercise probably has a bigger impact in your mental health than in your physical health. So that's a major one for me. And yeah, and choosing what battles to do, right, bill, because I get a lot of people that ask you know, okay, but how can you train for an Ironman? You know you have two kids, you're going to be a dad or a third one. Then you have better, okay, but I have to exclude other things in my life that you know. You have to choose right, because if you do, I do believe also and this is maybe a personal.
Speaker 2:If you really want to be world-class at anything, be it an athlete, be it an entrepreneur, you have to go all in. You cannot be doing 10 things at the same time. Right, and maybe it's your family and building a company. Right, and maybe that's the only two that you have to focus in. That means you will have to exclude partying. That means you will need to, because or else you won't be able to recharge. You won't be able. So.
Speaker 2:So, in my personal journey at least, right, for me, priorities are better fly, my family and doing what I love, you know, which is sports, which is part of what gives me the energy to continue. You know, building Betterfly. And again, that might mean, you know, in my case at least, you know, working 100-hour weeks, but I have to incorporate recharging during the weeks, and some weeks might be 100, 120, others might be 20 hours, right, and that's why, for me, this is you have to get be 20 hours, right, and that's why, for me, this is you have to get to know yourself. Right, but recharge, recover. It has to be at the center, or else this does not work.
Speaker 2:No, and look, you enjoy the process more, and you know, that's the other thing I mean. As a leader, you have to be with energy, you have to have your energy, right. Right, if you're tired every morning, if you don't have the energy, you know, building a company is about momentum as well. Right, the momentum you build every single day, every single week, with your team, with your investors, with your clients, right? And there's no way you can build momentum if you're fatigued, if you're tired, if you're, you know, sleepy. It's very difficult to do, I think.
Speaker 1:You know, I think your lessons there are useful to almost anybody, but in particular in this industry, where people are, I think, are very prone to going absolutely crazy and going all in and you see a lot of burnout and a lot of issues because of it. And how do you find a model for you that's sustainable? I mean, I love the approach there. Well, look, eduardo, it's been amazing having you on. You know we could probably keep talking all day, but I know we've got, you know, all of these other goals of family work and exercise to go. Do you know? I'd love to finish up with a question that I ask you know just about everybody that comes on. Hopefully we've got a number of aspiring entrepreneurs who are listening to this podcast. You know what's one piece of advice that you'd?
Speaker 2:give to an aspiring entrepreneur. Oh, that's a good one, I think, probably the most relevant do something that you were again, maybe this sounds cliche but that you love and that you're uniquely qualified to do. Right, I think there's a quote from someone you know, something that looks like work for others and it's play for you. Right, you have to really enjoy what you do because you need this is an endurance sport, right, building a company is an endurance sport. It's not a year, it's not two years, it's 10 years in the making. Right. And if you don't really love what you do and you won't have the endurance and the you know, the stamina to go very long, right, so probably loving what you do is more relevant than uniquely qualified. Right, you have to have the skills but that will help you very determined, who are willing to walk over brick walls to make it happen. And the only way for that to happen is that you know doing something you're really passionate about. So my advice would be for those starting you know, at the initial journeys, are you really, really in love with what you're doing? And as crazy as it sounds, right, because if you look at it as a job, there's so much you will be able to do so. Enjoy it and you will enjoy it.
Speaker 2:Look, you've seen me right. We've known each other for almost four years three years, I don't know. I'm enjoying BetterFly more and more every day. It's not easier, it gets complex and every market we open, you know. But it's part of the journey and I really you know, love what I do. I've never worked as much in my life as I have right now, but I'm doing it because I really believe in what we're doing and I really enjoy what we're doing right and enjoy working with the people. I do so. At the end of the day, it's that passion and perseverance, or another way to put it, grit right Towards what you do.
Speaker 1:Yeah, I love it. Well, look, thanks so much for joining Eduardo. Well, look, thanks so much for joining Eduardo. It's been great having you on and it's always fantastic to hear the story and get a chance to catch up.
Speaker 2:Thanks, bill, great conversation. I'm looking forward to seeing you in person soon.
Speaker 1:And thanks to all of our listeners and until next time, take care and thanks for listening. This has been the FinTech Thought Leaders podcast your window into the world of venture capital and financial services with today's digital disruptors. Qed is proud to provide the best FinTech advice you can get. To learn more or to read the full show notes from today's episode, check out qedinvestorscom and be sure to also follow QED on Twitter and LinkedIn at QED Investors. Thanks for listening.