The @Zenefits Fiasco - an alternative view
It’s been a while since I have written a personal blog, but felt that I needed to express myself when I saw the Washington Post piece on Zenefits:
What the turmoil at Zenefits reveals about Silicon Valley’s big problem with health care
First and foremost, if you haven't followed the news, Zenefits got hit over the head for not obtaining licenses in individual states to resell insurance. Bad bad bad! I am in no way condoning meeting quotas on growth and bypassing regulations, but I also wanted to put a different perspective on this topic.
My main question: is it Silicon Valley’s problem with health care or the health care incumbents and regulators problem with Silicon Valley (and beyond)?
Many many entrepreneurs are trying to change health care around the world and given the speed of change in this highly regulated industry the choices are to work within the system (marginal) or outside of the system (disruptive).
Let’s take this apart logically:
Impact to patients?
The health insurance industry in US is complex, complicated and very difficult to navigate for individuals consumers, but in this case for small and medium size businesses partially driven by regulations and small regional / state “oligopolies” (not to mention the recent M&A activities with the big insurers). Zenefits brought to the table an easy(ish) way to navigate, choose and manage employee benefits, but they consciously (or not) decided to work outside of the system. I am curious to understand what was the impact to the ultimate consumer of the brokered services: us the healthcare consumers? My bet is NONE (but do let me know if my hypothesis is flawed). The impact was to the regulators who could not collect the licensing fees, the impact was to other competing brokerages/brokers who most likely lost the transactional fees and invested in the licensing and finally to the insurers themselves since it brought maybe more transparency to the process as well potentially less revenue.
Free is good enough for me
Whether you are a believer in the FREEmium model or not is irrelevant. In many products, it just simply works. People want to see, feel, get personal & personalized value out of the “service” and only then pay! In order for a company to do this great, service and value are key to drive the conversion rate.
“The company had previously run into resistance when the state of Utah in 2014 sent a violation letter to the company, alleging that the free software it provided — a key part of its disruptive strategy — amounted to an illegal kickback. “
I will not debate the legalities of this but to me maybe, just maybe the regulations are not keeping up with new business model?
Keep on changing the healthcare consumer experience!
I want to be very clear here, laws exist for a reason: - whether they move and adjust quick enough is a whole different discussion. I command Zenefits on quick response and being committed to fixing the issue, but I also want to urge the innovators in this complex healthcare ecosystem to do what is right for the healthcare consumers, patients and their caregivers. Drive with passion, enthusiasm and the ultimate goal of happier and healthier lives for 7B people on this planet!











