5 examples of how self-service revolutionized an industry
And why health insurance is next
Part of existing in a complicated world is exchanging money with people to take care of complicated things for you. There is simply no reasonable way that you could be an expert in everything you need.
Hence why most complex-ish purchases have always involved a middle man of sometimes questionable value.
But what if in the modern information age, there was an alternative. Guided online processes could help the general population navigate complex buying decisions and arrive at their ideal outcome — all without ever leaving the comfort of their own home.
Self-service onboarding refers to a system that enables potential customers to research, set up, purchase and, ultimately, use a product customized to fit their needs.
It’s not without its risks.
Poorly designed products without a human in the middle to gut check what’s going on, can throw users right into brick walls or poorly fitting products.
In a perfect world, self-service onboarding can open up products to entire markets that incumbents have never been able to profitably serve. Here are five companies that got self-service onboarding right and the industries they changed in the process.
TurboTax makes everyone their own accountant.
Taxes weren’t always like this. Not long ago, the idea of placing one’s financial information into the internet (then rumored to be a series of tubes) seemed out of this world. That changed in 1983, when Intuit launched Quicken, the first design-centered tax filing software intentionally catering to novices.
For well over a decade, Intuit fine-tuned its product approach using a “follow me home” program, where employees would loiter in computer stores until a customer bought a copy of Quicken and then asked to follow them home to see how they installed it.
This singular focus on “customer-driven innovation” led them to the most significant development of taxation in the 20th century, the launch of TurboTax online in 1999. More than 4 million copies were sold and roughly 1 in 5 federal tax returns were filed using TurboTax in its first year. For the first time, taxes could be filed by an average person without consultation with an accountant. It changed everything.
The tax preparation industry snowballed — from a $60 million annual industry to the $11 billion behemoth it is today of which Intuit controls a major share due to the popularity and accessibility of TurboTax.
LegalZoom builds a massive business off of projects lawyers didn’t want.
Much like how TurboTax carved its customer base out of the section of the market that incumbent CPAs weren’t interested in (the measly individual tax return), LegalZoom also made its name by serving a segment that existing law firms weren’t interested in — cost-conscious consumers.
Launching in 2001, and targeting people willing to incorporate their business online, LegalZoom built what stands today as a $2 billion business off of contracting work that law firms were happy to lose.
They expanded in 2010, adding a curated network of independent attorneys for more complex legal work, but their bread and butter remains simple business formation and templatized estate planning.
Robinhood makes everyone with a phone a trader.
The youngest company of the bunch — Robinhood launched in a world where retail traders tended to have to pay a commission on each transaction, which made it difficult to profitably transact on trades of a size that a reasonable human being would make.
Typically, you’d be charged between $5 and $10 per trade and need to invest a minimum of $500 to open an account. Robinhood did away with all of that.
With a sleek interface, no trade fees, and no account minimums, suddenly a product made trading both financially accessible and visually simple. And it worked.
Over 15 million people use Robinhood as their primary trading platform, most of whom were not directly trading stocks before the platform made the process as accessible as it is now.
Square helps the little guy accept credit card payments and builds a $30 billion business along the way
Square was conceived by the unlikely duo of a professional glass blower and the (then) CEO of Twitter in 2009. At the time, credit card processing fees could cost small businesses as much as 6% of the gross sale on goods sold — a margin that was simply untenable. Most small businesses were left with the option of losing sales by declining credit cards, or losing money while watching these transaction fees eat their entire margin.
Furthermore, many small businesses or solopreneurs didn’t have the mechanical capability of accepting card payments, even if they wanted to.
Square sought to solve both problems with a simple card reader that would function with any smartphone (offered functionally for free after a rebate) and by significantly cutting processing fees.
Square’s growth was meteoric — scaling to hundreds of millions of dollars in payments processed and tens of thousands of small business merchant partners, all without an internal sales team.
Square leveraged intuitive design to solve an obvious problem for an underserved market in a scalable way.
There were payment processing companies that existed before them and yet, Square built a company with more than 2 million active users by focusing on a segment of the market that the incumbents either couldn’t or wouldn’t serve.
Gusto lets small businesses pay their people
Gusto is a small business payroll processing company started in 2011 by a handful of shoeless Stanford dropouts looking to make it easier for small businesses to keep up with their books and pay their people.
The founding team had watched their immediate family members struggle to keep up with the paperwork necessary to run a small business and felt compelled to make it a little easier.
Their laser-like focus on simplifying and improving the ability of small businesses to run their own payroll, won them hundreds of thousands of clients and even more fans. An entire ecosystem of tech-enabled payroll and HR companies have leapt up in their wake (Rippling, Justworks, Deel, Paylocity, Namely, Square Payroll, etc.).
So, how come this doesn’t exist in health insurance?
The health insurance industry has always been a bit slow. It is intentionally complicated, confusing, and expensive. But is that really an excuse anymore?
We live in a world where people are doing their taxes, forming their businesses, trading stocks, accepting credit cards, and running their payroll all on their own. Why is it that when a small business wants to set up a health insurance plan, they need to drop everything and have several phone calls over the course of weeks with sales reps?
They shouldn’t have to. Health insurance has always been a sales-heavy acquisition process and that has cut a lot of companies out. Even companies earlier on this list (Gusto and other players in the payroll space) have gotten stuck on this antiquated model and struggled to profitably match their core segment with a solution for one of their deepest pain points.
The same old facts remain true in 2023.
Small companies are hard to monetize and, therefore, less of a priority, even as the rates on available plans spiral upwards.
Enter StretchDollar
We’re here to change that. StretchDollar’s platform lets small employers set their own budget and apply it tax-free on a monthly basis to premiums on policies owned by their employees — all in 10 minutes, all without having to stop and talk to a human.
It’s pretty simple. Small businesses want to help their people, we’re here to make that easy.
If you want to learn more about what I’m doing to make health insurance simpler and more affordable for small businesses, check out StretchDollar.com.
