Unique insights
How do you come up with a good business idea? That’s a million dollar question.
The best business ideas tend to have two things in common. First, they solve a real problem. And second, the people behind the idea hold a unique insight into that problem. Here are four connected examples.
In 1999, Paul Zane Pilzer and his wife found out they were expecting. But their joy turned to panic when they lost their employer-provided health insurance. Paul completed extensive research on the insurance industry. He discovered he could buy an “individual” policy directly from the insurance company for a fraction of the price. Paul founded ExtendHealth to bring lower-cost individual health insurance options to early retirees. ExtendHealth eventually sold to Towers Watson in 2012 for $435 million.
In 2006, Paul started Zane Benefits to bring lower-cost individual health insurance options to employees. Ben Dilts, Tyler King, and I were all part of the early Zane Benefits team. We were using the tax code to allow employers to reimburse employees for their own health insurance policies. In 2008, we were trying to build a new product based on a new regulation. As part of the planning process, we started collaborating on a massive flowchart. The primary flowcharting tool at the time was Microsoft Visio. Because Visio was so expensive, we only had two software licenses. We would each take turns using the licenses to update the flowcharts and print the new versions out. Several times each day, we would hang new copies on the wall and draw on them with markers. It was a mess. It made Ben crazy. Back then, Google Docs was just gaining momentum with online collaboration. Ben saw an opportunity to do something similar with flowcharting software. That summer of 2008, he built the first version of LucidChart. LucidChart recently passed $100 million in annual recurring revenue.
In 2009, Tyler and I were still working together at Zane Benefits. We were starting to partner with insurance agents as a new distribution channel. We wanted to enable them to distribute our solution to small businesses on our behalf. To help the agents, we built several web tools to make them more productive. One tool we built was a customer relationship manager (CRM). The CRM allowed each agent to manage their prospective and current client contact data online. At one point, we started receiving more feature requests for the CRM than we were receiving for our core product offering. Tyler and his brother started Less Annoying CRM later that year. Less Annoying CRM is a completely boostrated company with nearly $3 million in annual recurring revenue.
After Tyler and Ben left, I ended up staying on and leading Zane Benefits until late-2018. The company is now called PeopleKeep. While I was at PeopleKeep, I saw firsthand the challenges people face when they buy their own health insurance. Health insurance is a complex financial product. Our clients’ employees rarely felt confident with their coverage decisions. This year, I started LegUp Health to build a new type of health insurance agency to address this problem.
What did Paul, Ben, Tyler, and I all have in common when we came up with our business ideas? Unique insights into real problems.
Paul discovered an alternative to employer-provided health insurance when he lost his coverage.
Ben felt the limitations of desktop flowcharting software while building unrelated software.
Tyler found an unmet small business productivity need while partnering with insurance agents.
And I saw a painful health insurance experience while leading a company in an adjacent space.
When you gain unique insights, you see real problems. And real problems lead to good business ideas.