David 0:00

How did a company that set out to modernize dental benefits end up in a quest to modernize all benefits, or at least all ancillary benefits? We'll find out on this episode of Shift Shapers.

SPEAKER_02 0:14

This is the Shift Shapers Podcast. Connecting benefits advisors with thought leaders and entrepreneurs who are shaping the shifts in the industry. And now, here's your host, David Saltzman.

David 0:27

And to help us answer that question, we've invited Alex Frohmeyer, known to his friends and admirers as Fro, and there are many of both. He's the founder and CEO of Beam Benefits Fro. Welcome to the podcast.

SPEAKER_03 0:40

Thanks for having me on. So glad to be here.

David 0:42

It's our pleasure. So we always like to ask our entrepreneurs, tell us a little bit about your journey, because nobody kind of popped up doing what they're doing. So how do you get to be doing what you're doing?

SPEAKER_03 0:51

I started Beam 10 years ago now. And even though today we are deep in the employee benefits and insurance world, my two co-founders and I have zero background in either of those fields. All three of us are engineers by training. We met in engineering school and we started a small engineering consultancy when we were undergrads, which we parlayed into Beam right after we graduated. And so, you know, our journey has been one where we've been very used to and ultimately got very comfortable with being an outsider to multiple industries for really the entirety of the time we've been in business together.

David 1:30

Well, and being an outsider is not a bad thing because that's where change comes from. You know, it's it's always paradigm pioneers who bring the new paradigms. And if you don't have those folks, you don't get new ideas and new ways of doing business. It's a great jump off to our first question, which is what was broken about dental?

SPEAKER_03 1:46

My sister is a dentist. And when we were starting that first company, the consultancy, she was in dental school at the time. She ended up marrying a classmate, and he comes from a family of dentists. Like all his brothers and his dad are all dentists. And one of my co-founders, his mom, is a dental hygienist. So all of a sudden, you know, we're trying to build a company, we're looking for product ideas, we want to build something that scales, and we were really interested in markets that were untouched by technology or relatively untouched by technology. And so we had all these forces in our lives looking, asking us to look into the dental field, something I had never thought about in my life previous to that. And so we started researching as one might, you know, get on Google and start learning about the field and talking to people that we knew. Some of them came through my sister, of course. And what we learned as we dove deeper into dentistry is that it's a very fragmented and fractured market. Digital infrastructure, especially at that time, hadn't really made its way into the field. A lot's happened since then, thankfully. And what we saw was an industry that was huge, but it was this forgotten little corner of healthcare. And even though there was a lot of interest in healthcare reform at a political level, societal level, and at a technology level, dentistry wasn't really being included in that conversation. So my partners and I were inspired to start Beam to address accessibility and affordability gaps in dental insurance in particular. And that's been, you know, the core of our mission really since we started back in 2012.

David 3:14

You know, it's interesting. One of the common threads among a lot of the entrepreneurs that we speak to is that 10-year-ago time frame. That's right around the time that ACA started getting enacted. And whether you think ACA was a good thing or a bad thing, our opinion is that it did one thing that was really good, and that is that it shook up an industry that badly needed to be shaken up that had been kind of coasting along without a whole lot of innovation, just kind of iterations on a plan, on a plan, on a plan. And, you know, a lot of our folks have come from that time period. So that's interesting to note. So how did you fix it? What did you guys do? How'd you attack the problem?

SPEAKER_03 3:48

We launched Beam to really build the dental insurance product from the ground up. And we started with the first connected toothbrush. The way we wanted to enter the market wasn't originally actually to be an insurance company ourselves, because we didn't know anything about it, right? So we thought the dark art of actuarial science was like an unsolvable thing. And what we knew we could do was build a compelling piece of Internet of Things infrastructure in the form of your common everyday toothbrush, connect it to the internet, and start flowing a whole new piece of data and bringing it online, which is daily dental hygiene. What's the behavior of any given human in terms of their prevention for what otherwise becomes dental disease? And could we use that to better predict claims and risk and then manage that risk on behalf of insurance businesses? So our original business model was manufacture connected toothbrushes at scale, distribute them through leading dental insurance businesses, and then use that data to inform actuarial models, underwriting and retention curves, and help engage everyday Americans in a way that they've never been previously engaged by their dental insurance business. We thought that there was an experience opportunity to really craft gamification, rewards, all centered around this common daily activity, brushing your teeth. And while we were successful in building that product and chasing that mission, what we found is that the companies we wanted to partner with and distribute through weren't ready to build on top of or allow us to build on top of their platforms because they didn't even have the basics of digital infrastructure accomplished across their claims processing systems, underwriting models, and their go-to-market and uh quoting strategies. So we then saw the opportunity to just build all of that for them. And pretty soon we realized we needed to raise some venture capital and really begin chasing an expanded version of our vision as a business, which is it looks like we are going to build an insurance company ourselves from scratch.

David 5:59

And practice the dark art of actuarial science and all of that good stuff. A little side trip. Why is dental health so important to people? And yet they don't really realize it.

SPEAKER_03 6:14

Probably because there's always been more of a cosmetic lean to dentistry than other parts of healthcare. Now, of course, there are plenty of cosmetic health procedures as well, but dentistry very explicitly so. And I don't think the field has done a phenomenal job of helping consumers understand the elements of the dental field that are absolutely about true health outcomes. There's a lot of ties, for example, between oral health and total body health. Heart disease is informed by, for example, the inflammation you might experience in your gums. But a lot of dentistry is about straighter, whiter, nicer teeth and beautiful smiles that give people confidence and attraction. And that is also relevant. And so uh dentists have, I think, struggled to straddle the line between what am I doing to give someone, you know, visual attraction and confidence? And then what am I doing to actually accomplish like a raw health outcome? But there are really elements of both in dentistry, and I think it's left a dentist a little bit in no man's land historically, which I think has changed pretty dramatically over the past five to eight years in a way that I think benefits the field and consumers' understanding of it.

unknown 7:24

Trevor Burrus, Jr.

David 7:24

Well, and it it's interesting because there, I just read an article last week. There are folks looking into the link between dental health and Alzheimer's. So, you know, it there's all kinds of stuff. And and it is always hard to straddle that line of giving people what they want versus what they need, or in addition to what they need. So when did you start looking at other benefits? Because I know that you guys have like spread your wings a lot from where dental was.

SPEAKER_03 7:48

That's right. We have expanded pretty dramatically from that original core dental mission. So what happened is we started selling our complete ground-up build dental insurance product in 2016. And we were distributing entirely to sell to businesses, small and medium-sized businesses all over the country. We do this now in 42 or 43 states around the US. And the way to get to and find all these great businesses to partner with is through employee benefits brokers. And so we started, of course, meeting brokers and sharing our story and getting them excited about positioning Beam with their clients, especially their clients that were looking for something different and innovative and modern for their dental benefits. And pretty soon and consistently thereafter, the number one piece of feedback we've gotten from our broker partners, which now we, you know, we count in the thousands all over the country, is guys, thank you so much for bringing a breath of fresh air to the dental industry, to dental insurance. But can you please do this for all the other benefits that we're selling? Because all the same problems that you've solved in dentistry exist in vision, in life, in disability, in sub-health, and other emerging benefits categories. Quoting is a pain, case to installation is a pain, retention and renewals is a pain, customer support is a pain, claims processing is a pain. It's all really hard for us to manage. And we would love leverage and infrastructure that you're bringing into just what is a dental point solution today. So we set out on a product expansion journey, really starting years ago. We added a vision insurance product four or five years ago that's been incredibly successful. And more recently, I think our team just got excited about the opportunity to expand our digital infrastructure, that platform, and then be able to attach applications to that platform. We think of an insurance experience as really just an app that sits on top of a unified benefits chassis. And so we expanded that chassis, and now we've been systematically expanding to other ancillary benefits, really to enable and empower our brokers to do more with less. And that's allowing them to expand their books of business because they're spending more time finding their next client instead of worrying about service issues with a short-term disability policy. And that's really Beam's job is to delight small business buyers, empower that end member with a leading experience that's unlike any other in the industry, and then help brokers just do what they do best. And it's not servicing their existing accounts, it's going out and finding customers and clients that they can help navigate benefits with. But you have to deal with all these service and support issues across multiple different lines of coverage, which might imply multiple different carriers as well. And the complexity of healthcare alone, you know, that's going to suck up quite a bit of time. And so Beam's job is to make life easy, as automated as possible, as scalable as possible. And that's a mission that, you know, I don't think, you know, Jeff Bezos always talks about what isn't going to change in the next 10 years? What are customers going to want 10 years from now that they also want today? And his answer to that for Amazon is always lower prices and faster shipping. And that's why Amazon invests the way it does in the infrastructure that they do. And I think we have an answer for our broker partners as well. Brokers will always want to do less work to provide the most exceptional experience they can to their clients. And so we know and can confidently invest in that as beam for the foreseeable future in a way that we know brokers will appreciate. And of course, our end clients and members will as well.

David 12:12

Well, let's talk about that end of the spectrum because we haven't really touched on that. What's the benefit? What's the impact at the employer level?

SPEAKER_03 12:19

Employers want, especially today, employee benefits have never mattered more than they do right now. I think benefits has been on an upward trajectory for 25 years, going from, especially for small businesses, going from there used to be a pretty big separation between benefits being offered at all in a small business to then some voluntary stuff. And now it's really, you know, expected by employees that there's some health coverage, some dental, some vision, maybe more with any employer, kind of regardless of industry. So employee benefits were already on this upper trajectory. The pandemic really accelerated that trend. And I think what's going on is some of the dollars that were going into offices and office-based amenities that could only be experienced in person are now being reappropriated into benefits that live with the person. So many of the ancillary benefits, for example, that we position and sell at Beam are good examples of this. You know, you can now get a life insurance policy that stays with the person. It doesn't matter if we're a hybrid workforce or if we're in office, it just doesn't matter. And so we're seeing more interest than ever in these products and experiences. What employers want, therefore, if they're going to reappropriate these dollars into benefits, is what helps me attract the talent that I need, retain the great talent that I have, and ultimately keep my team productive, keep them able to do their best work no matter where that is or what we're doing. And similar to the leverage that we're trying to give our broker partners, we're also trying to give a small businesses benefits coordinator, which might be the owner of the business, the CEO, the president, the lone accountant on staff, the lone HR person on staff, whoever that is, we want to give them leverage so they can do what their job is supposed to be doing, which is maybe finding clients or, you know, operating the business, not worrying about something as important but also unimportant in the context of what I should be doing on a Tuesday is dental and life insurance.

David 14:21

Are the majority of the cases that you're seeing coming in from your broker partners being driven on a money purchase kind of basis where there's a pool of funds available to the employees and they can select what they want?

SPEAKER_03 14:32

We're seeing more and more of that sort of defined benefit style buying in both literal and figurative ways, I think. Employers are definitely thinking more three-dimensionally than ever about how they want to invest in benefits and just total rewards across their business. And it's really coming from a viewpoint that I love because it really resonates with how we're building Beam as a company as well, which is a more explicit tie between benefits and other investments in your employees and the culture that you're trying to create or emphasize as a business. And the more explicitly those two things get tied together: culture and benefits, culture and rewards, the more sophisticated the buyer is because they're trying to achieve something more important than checking the box, right? It's very easy to say, well, we have dental insurance here. Check the box. That's different than saying we have an approach to benefits that is intentional, strategic, and it's tied to our company culture. So that's been a really exciting thing we're starting to see happen more often.

David 15:38

Are those employers seeing a lot of appreciation from members? And in addition, are they also seeing any tangible results that they can measure in terms of medical spend?

SPEAKER_03 15:48

Appreciation, yes, but it comes at a cost of the employer. And this is really tricky for small businesses in particular. You have to get good and intentional as a business owner about articulating your benefits and educating to create the appreciation that you hope is true. Employers classically think about these buckets from a people management perspective as pretty separate. I've got payroll over here, I've got benefits over here, I've got you know equity or you know, an ESOP over here, I've got my day-to-day operations over here, and then there's something called culture, and I'm not even sure where that goes, but there's there's this thing called company culture in there somewhere. And so employers often don't draw a ring around all these components and say, this is all really one thing. It's the employee experience. It's really what people experience when they come work for me. And more and more employers are getting sharper and smarter about explicitly teaching and emphasizing and re-emphasizing what the benefits package is at a business, why it's valuable, maybe even like here's what we're spending to be able to offer these benefits, and then asking essentially for appreciation um for the sacrifice that might be made by an employer to be able to do those benefits, or else you're subject to having this, well, of course we have health insurance. Why wouldn't we? Money grows on trees, and I'm sure I can go to any employer and they're gonna have health insurance too. This doesn't just exist at the benefits level, but I think really across the spectrum of the employee experience. And being able to measure increases, which we help with at Beam with some of our digital tools, increases to enrollment levels and employee participation, I think is a really healthy trend that we're seeing more of, and we're helping employers manage, which is, you know, if you don't know, you don't know. People don't enroll in a product that they don't know exists or they don't know what hospital or critical illness coverage even means and why do I need it. Beam's ability and our interest is to help employers clearly explain what these products are, why you might want them, and to help the installation and participation in these benefits. That's step one. And then being able to measure employee happiness outcomes. You might do this through an employer NPS, you might do this through engagement surveys. And then we want to be able to see benefits get rated high in those engagement surveys and really tie out to employee happiness because they're aware of the benefits, they appreciate that they exist, and they're using them usefully in their daily lives.

David 18:34

And that is a great place to leave our conversation for today. Alex Frohmeyer, Fro, if you prefer. Thanks for sharing your wisdom with us today. We appreciate it.

SPEAKER_03 18:43

Thanks for having me, David. Appreciate it.

Announcer 18:45

The Shift Shapers podcast is a production of Shift Shaper strategies and may not be reproduced or quoted in whole or in part without our express written permission. Copyright 2020, all rights reserved.