Podcast: Betterfly CEO Eduardo della Maggiora discusses his journey to disrupting the delivery of both physical and financial wellbeing at scale

‍

‍

‍

‍

Show notes

Bios

Bill Cilluffo joined QED as a Special Advisor in the fall of 2014 and became a Partner in 2015. He is currently Head of Early Stage Investments after six years as Head of International, leading QED’s Investment teams in Latin America, Europe and Asia.

Prior to joining QED, Bill spent nearly 20 years at Capital One, spanning several roles and leading several businesses. He spent the first 6 years of his career leading Marketing, product development and credit policy for Capital One’s subprime credit card business; ultimately having overall P&L responsibility, and growing the business to become the most significant player in the market. He moved on to spend 2 years in various new business development roles, spanning the telecom, medical finance and small business finance industries. Bill spent 3 years as Deputy Chief Credit Officer for the bank, playing nearly every role there was to play in the central credit function, after helping build the department from scratch in 2002.

Bill then pivoted his career to general management, leading Capital One’s Canadian, and ultimately International businesses, over the course of 6 years. Profitability of the business grew significantly under Bill’s leadership, through new product and channel introductions, acquisitions, and significant cost take out. During Bill’s last 3 years at Capital One, he led its Co-Brand and Private Label credit card business, building the business nearly from scratch to one of the top few players in the US market, through a series of acquisitions, most notably including leading the acquisition and post-merger integration of HSBC’s US credit card business, which closed in May 2012.

Bill graduated with a BA in economics from the University of Michigan, and competed the SEP program at Stanford GSB.

‍

Bill:

You are listening to the Fintech Thought Leaders podcast from QED Investors, your deep dive into the world of venture capital and financial services with today's digital disruptors. QED is a global 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 Salifo, head of Early Stage Investments at QED Investors. Today on the podcast, I'm thrilled to be joined by Eduardo Dillamajora, founder and CEO of Betterfly. Eduardo, welcome to the podcast.

‍

Eduardo:

Hi, Bill, great to be here.

‍

Bill:

It's great to have you. Hey, we're going to get into Betterfly much more later on in the podcast after we explore some of your own personal journey first, but just to help orient the listeners, I wonder if you can share maybe a 62nd commercial on Betterfly.

‍

Eduardo:

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. We do that in this unique way, integrating these three separate worlds through what we call the Betterfly Effect, which turns habits, daily habits like walking, meditating, saving, investing into positive ways of change. 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 and happy to share later in the podcast details of our business model go-to-market strategy. But a high level, that's what we do.

‍

Bill:

That's awesome. 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 in the world. How many countries are you in right now?

‍

Eduardo:

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 to the US and Europe and above. So yes, eight markets and a little bit over three years since we launched the platform.

‍

Bill:

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 know you started in investment banking and then your life took a couple fun detours, and so I'd love to just start with your banking days and how you got to where you are.

‍

Eduardo:

Sure, sure. So I'm born and raised in Chile. I am 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 JP 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 is a very, 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 would say most of my time working in M&A transactions, capital markets in the insurance and financial services space.

‍

And year 2014, maybe this is where the story starts to take a detour, I decided to change what I was doing. The story of Betterfly is a one-hour story probably, but I'll try to make it short one. 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 player, going to engineering school. And 2014, 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 living the good life in New York, single, 34 years of age, working at JP Morgan. And in one business trip to Chile, we discovered she had this very aggressive form of cancer. That made me rethink, Bill, a little bit what I was doing right? As I mentioned professional success. I started asking myself the question, if I went out in the street and got hit by a bus, how would I measure my life? I started asking myself, would I measure it by my professional success? Would I measure it by the grades of going in school? Would I measure it by the money I had in the bank? I started a very personal reflection process about the meaning of life, literally, right? 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.

So 2014 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? 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. He's like, 'Where are you going? Goldman Sachs, Morgan Stanley?" I told him, "No, I'm going to Africa." He's like, "What? What are you going to go to Africa?" And the reality at that moment, I just wanted to take six months to do a sabbatical pause and just for six months focus my time in making an impact in other people's lives. Decided to go do a volunteer program. Then the idea was do those six months and then come back to normality and banking or whatever that might be. To your question, that six months sabbatical or that volunteering trip definitely planted the seeds to what later would become Betterfly.

‍

Right before Betterfly, the name of the company was Burn to Give. I'll explain 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. 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 wellbeing were not a big part of my life. I saw that video when I was in Tanzania and Africa of the Ironman Triathlon and something in my gut and my heart was like, what happened to your passion of sports that you had when you were young that the tennis streams? I just signed up for a race, not an Ironman, a small local triathlon.

‍

I connected that, right? As I mentioned, I went to Africa, I discovered malnutrition, and I'll explain why that was one of the seeds for Betterfly. Anyhow, finished those six months, bill moved back to Chile, started training for that local triathlon race. 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, losing those extra pounds of weight. 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? What if we could convert calories of sports into calories of food? What if we could use the power of purpose, the power of helping others to help each person live healthier, happier lives? Let's start with something very simple.

‍

Let's convert calories of sports into calories of food. That's how the company got started under the name Burn to Give, burn calories to give calories. I think in that part of the process, when we first met towards the end of that journey and just to connect it with Betterfly, we spent a couple of years building our platform. At the beginning it was just connecting healthy living with giving back. 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 everything that comes later on was that we discovered one of my views, and this is where the professional background comes in, is that who should be the biggest payer of well-being in society. Our vision was it should be the insurance industry because they have a natural incentive.

‍

Healthier, happier clients, customers, whatever they be, not only are healthier, but they live longer. And if you compare a customer of an insurance company, one that is unhealthy or actually average. 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. So that's where insurance came in and we integrated insurance as the backbone of our business model and Betterfly, what was created was launched as the combination not only of purpose, giving back, healthy living, but also financial services.

‍

Bill:

So fascinating, fascinating story. 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 had ironically spent. Two nights ago I watched the Netflix documentary on the We Are The World Story. So somebody else who was inspired by a very similar thing and took action in a very different way, but had great impact. What was it about that in particular that you saw that was able to ... 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 given back to that cause. What was it about that that moved you so much?

‍

Eduardo:

Yeah, that's a really good question and it's actually not the obvious answer someone might expect. For me, the biggest impact that six month sabbatical had in me was I was coming from New York where you have all the abundance, all the richness, one of the wealthiest cities in the world. I went from that to a place in the world where people had barely enough to eat. Actually some people were dying of malnutrition. I met really happy people and I met people, the volunteer workers I work with, they were intrinsically happy people. What they had in common was that they were dedicating their lives and doing something beyond themselves. I remember going back to Chile, Bill, and when I got back to Chile, everyone was going from banking to Africa. Everyone was like, oh, congratulations. That's incredible. I felt like the person who had been more transformed by that journey was way more myself than the kids I helped in Africa.

‍

What they gave me was way more than what I was able to give them by volunteering for six months in a school. 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. 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 and living better lives? Again, it was not obvious for me up until this day, I'm still in touch with a lot of the folks with whom I volunteered there. That was, for me, the biggest insight that I got and the concept that as human beings, we are designed to give back to help others to live in community.

‍

When you provide anyone anywhere, regardless of religion, what country they're from, the opportunity to help others, human beings do not hesitate to do so. That was the biggest insight. 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. That's how it all started, to be honest. It would never have happened if I hadn't taken that jump, which made no sense at that time. Everyone was like, why are you quitting JP Morgan at this moment when they're promoting you? You're going to be a managing director next year and blah, blah, blah, blah, blah. It was one of those things that changed my life.

‍

Bill:

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. I know you learned a lot, some things that worked quite well, some things that didn't work 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?

‍

Eduardo:

So maybe let me share some things that are maybe not out there as common as the story that I always tell. So there was a lot of learnings before Betterfly in terms of how can we scale and build something that creates impact beyond at that moment my wildest dreams. 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, people that want to promote health and wellbeing and others who want to promote nutrition. I learned that that was not as scalable, because at the beginning, people really love to donate, but then up to a certain point, it doesn't move more than that. And you continue to have to do that.

‍

Before Burn to Give, I actually founded a nonprofit called Yayo Fund, which was also in the microfinance space, 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 we were dependent on donations. I learned, I don't know if the hard way, because it was part of the process, that building a for-profit for impact was the way to go. A company that was for-profit, but had embedded impact in its business model structure, et cetera. Then I learned about B Corps. 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. I started going that route.

‍

That's where Burnt To Give became Burn to Give from the idea of a nonprofit to burn, to give LLC, and then Betterfly PVC, and building a business model that Impact Purpose was the main driver, but in a for-profit for impact. It's always that what's the driver? Is it the profit or the impact? And deciding how to do that. We structured Betterfly that way. So at the beginning it was just a certified B Corp for those 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. What we decided to do is take it a step further and we structure the company as a public benefit corporation in Delaware, but basically besides the certification where we could walk out in a year if we wanted to do that. We basically embedded a legal or fiduciary duty to have a social environmental return together with our fiduciary duty as a financial return.

‍

That's how the company got structured, if you will. It was not obvious at all at that moment in Latin America. We were the first ones to do that. Everyone, or ninety-nine percent of people, especially from the financial world, were like, why are you doing that? People are going to think you're a nonprofit. You should not structure the company that way. 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 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, just starts moving at a different pace. I think that's the power of purpose.

‍

Bill:

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 Betterfly and how the impact piece of it hits directly? I know there's a couple different aspects and then we'll get more to the for-profit piece here in a sec.

‍

Eduardo:

So Betterfly is very unique in that way because first and foremost, impact is embedded in our business model. So part of our gross profit is charitable donations. So let's say we will explain the go-to market or the business model. Let's say a company gets Betterfly for their employees and they pay $10 per employee per month. Part of those $10 goes towards nonprofits. So it's a charitable donation that get triggered the more our users or members improve their wellbeing. So that's the first part. The second one has to be with compliant being a B-corp, where every year you go through a review of ESG standards, if you will, to comply 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, but that's another part of the component.

‍

The third one I mentioned earlier is we have a fiduciary duty to have a social environmental return in our bylaws directly as a PVC incorporated company. And last but not least, and this is one of those innovations that we actually launched last year, we actually created, Bill, 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. These stock options, which have no cost, are distributed to nonprofits the more Betterfly grows. 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.

‍

Bill:

Oh, very cool. Very cool. Well, let's move to the core business model of Betterfly now. So 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?

‍

Eduardo:

Sure. So as you correctly mentioned, so we started 2020 when we launched the first. We're a platform company, so I'll explain a couple of applications of our platform, which start from the same technology core, but as an employee benefit subscription. So we go to a company, let's say a company with a hundred employees, and the company gets Betterfly for their employees, and basically each employee gets access to the platform. 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 cancer cover, critical illness, dental cover, pet insurance, and each of those a 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 have kids, you might choose life insurance, then someone who has a pet, maybe life insurance is not relevant, but they want pet insurance 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 wellbeing part of the platform. Same thing. We're able to personalize tools for each employee. So we have partnerships with Headspace, Feton and a bunch of [inaudible 00:20:10] and a bunch of physical, mental financial language apps for each employee to choose depending on the plan that the company chooses. Again, those a hundred employees are flexible, they can choose whatever works for them.

‍

The third part, which is I would say the game-changing and what brings engagement from single digits that happen in all companies to 70, 80% that we have is our purpose-driven engagement engine. We created this engagement engine, which is basically a game. We use game mechanics to get people active and healthy and living their best lives. Look at it, Bill, we're actually launching very shortly the next version, but it's sort of like Pokemon Go, Legend of Zelda or we have hundreds of levels that you pass one to the other. And each level you have different nodes where you get rewards from 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.

‍

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. 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, because it's donations that they earn with their good habits. That's how we connect 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. We have today roughly 3000 clients, corporate clients from SMBs with 50 employees to the largest multinationals in Latin America with tens of thousand 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.

‍

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, we integrate with every single type of wearables fitness app. So we integrate with Whoop, with Aura, with everything, 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. 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 Rafael 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 Rafael Nadal, which is crazy. So that's the best example of we give you the aggregated data and let data drive your wellbeing strategy and not what the CEO or the HR manager wants to do. Those insights are just growing in usefulness in how targeted they are and how powerful they are with Ai. So we provide a series of wellbeing tools for HR managers for this tool to be super seamless, super insightful. So that's one part. Super quickly, but the second part of the model, 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. That's how engaging the app is. So it's just out of charts engaging.

‍

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. 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 I'll pay you the subscription and why isn't Betterfly embedded in a life insurance policy? That's how we started our affinity business model where basically Betterfly comes as part of a life insurance policy you buy, and it not only increases the value that a life insurance policy that you never use, it gives you access to benefits, discounts, but it also rewards you for living healthier, happier, longer lives because that's of every interest to the life carrier. That one bill in the last 12 months is just growing at an exponential pace because we're able to connect that carrier with that customer in a very unique way.

‍

Bill:

That goes back to a little bit of the original core of the idea 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 that gives them more life insurance coverage, which again works for the life insurance company because they're healthier. 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, et cetera. 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 of the channel that tends to work for this versus a B2C model?

‍

Eduardo:

So at the end of the day, we're a B to B2C, right at the end. It's a C that's using it, right? But it's through a B2B. The reason for that is that employers and insurers, we believe should be the payers of making society well, healthy and happy. 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 wellbeing journey significantly larger. That's at the core of our model. People know that eating a chocolate cake is not good for them, or walking more is better than walking less. But why do we not do that, right? It's because we need incentives to change behavior, and the bigger the incentive, the bigger the behavioral change.

‍

That's where insurers and employers come in. We believe that the way to shift from protection to prevention and aligning incentives is with these two key partners in society. Every year, 60 million people die in the world total roughly, 60 million. So of those 60 million deaths, seventy-five percent of those deaths, 45 million are due to chronic disease, 45 million. Of those 45 million, 80%, eight zero. Okay? So four out of five or eight out of 10 of those deaths have to do with things we do every day, have to do with physical inactivity, smoking, drinking, too much, bad nutrition stress, and it's actually 12 to 14 bad habits. Just 20% have to do with accidents, shark attacks, 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 of health span and everything in between.

‍

The question is why don't we change that? So let's go to the U.S. The U.S., we have $4 trillion that the U.S. Spends in healthcare every year. Ninety-seven percent of that is pills and surgery, just 3% is preventative lifestyle changing. That's where we want to jump in. 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, more performance, so they have an incentive. That's our vision. I think we've talked about this online, and this is where AI today is just there's things we can do today of connecting those two separate actors, insurers with customers.

‍

Remember these two stakeholders, insurers, policy holder, 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.

‍

Bill:

That makes sense. 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 U.S. Someday or how that all plays out. But U.S. 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.

‍

Eduardo:

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. 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. This is a book that was written 10, 15 years ago, and it was research Harvard, but today we can see that in practice. We have ROI with big employees. Healthy, happy, positive thinking employees are 1, 2, 3X 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 passionate about and where I believe in the U.S. Is where it's more evident that that needs to change.

‍

Bill:

Yeah, definitely. Definitely. So look, a minute ago you referenced the world's greatest buzzword, AI, then talked about how that might play a role. I know you're, as with many companies, 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 something you were already down the path on. I wonder if you can just share your early days of the AI journey, as I'm sure every listener is trying to play around with the concept.

‍

Eduardo:

Yeah, sure. So for us, it's not doing something new, it's just doing what we do at a significantly greater pace. So the first one, and I'll just mention three because there are so many. The first one is personalization. AI brings the cost to serve and to recommend that end user right at a pace we could not have done so before. 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 virtual circle between living healthier, happier, happier lives. Three years ago, this was a vision and 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 weight.

‍

But not everyone has that financial capacity to do so. What AI is doing for us is allowing us to bring that not even a hundredths of the costs, and with the integrations that we have, with the integrations that we have with end user being able to personalize the experience to help them, him or her, live healthier, happier, happier lives. So that's the first component, and we can do that on a individual level, on a company level. The second one, which I didn't know it was this massive, but three, four weeks ago I was in Davos and it was not me saying this. Insurance will be the most affected industry by AI in the next 12 to 15 months. The reason behind that is because of the feedback loop you can generate, for claims payment and fraud detection and everything around that. When you have the touch points, the cost to serve and to detect fraud is just crazy.

‍

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. 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 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. We wouldn't have been able to do this at the pace that we're doing it today without AI. 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've had cheap capital forever that we all know is not out there anymore.

‍

Look at this. In the world, there's 400 million SMBs, 400 million depending on the study that you look at. 90 to 92 percent of these SMBs do not have any type of employee benefit. So it's a blue ocean. So acquire that customer and then serve that customer in a cost-effective way. It's a blue ocean. So we've been building, last year we built this product-led sales infrastructure where the last month we started to onboard SMBs without human contact and serving them at the same way and providing, and that is just infinite. 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 or opportunities to serve more SMBs, more customers in a way that wouldn't have been possible.

‍

Bill:

Yeah, I love the last example in particular. 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 America.

‍

Eduardo:

Yeah, that is so massive, Bill. Because I mentioned 90, SMBs have been there. The thing is it's too expensive to sell or to serve, and AI is just bringing that down. In an industry like employee benefits, employee benefits, every company needs one. It's a massive category. The 10% that do have the bigger enterprise customers, mid-market, 99.999% do have benefits. So it's such a product that is just so big that the impact there can be massive.

‍

Bill:

Well, let me flip the story a little bit to the Betterfly team. We talked about how your product is so well integrated. 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 really get that flywheel spinning in a different direction, leveraging all the other great, great work that you do.

‍

Eduardo:

Yeah, no, that's a really good question. It's probably the most important one. For us at Betterfly, and I think where purpose is, number one is people. When you have a clear goal of the impact you're creating and you're able to tangibleize that and really make it a part of the strategy when something that is visible, not only in the annual port at the end of the year in some vanity metric, but actually part of the business model, you are able to attract a type of talent that is unavailable in any other way. 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.

‍

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, to change the world, and they are really, really in love with the product we're building with the solution that we're creating. They know it's not going to be easy. There's a lot to do still. But giving them that opportunity and giving them the tools not only to be able to tangibleize the impact, to share the stories with their kids when they go back home after work and the impact that we're creating on a monthly, on a quarterly, on a yearly basis, that is just massive. It's like a fire that never ends. You can ask Mike and the folks who have met the team, it's not just me talking with this passion about the company and our dream and our vision and our mission and everything.

‍

It's probably most of the team. That allows you to move also at a different speed, Bill. We really have a clear end goal in mind and impact being what goes in the middle empowers us to do more and have more endurance at the end of the day. 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, people, business and finance. And purpose, it's not a section because that's at the very top. That's the order. 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. So that's maybe another way to look at it, or at least how we look at it.

‍

Bill:

Yeah, no, 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. It is just so much easier to bring on amazing talent when you can really get behind and align behind the mission. I'd love to shift to a little bit about how you take care of yourself. 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 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 crazy at work. I know you have a family. I know you travel all the time. How do you think about making these pieces fit together, any one of which could easily cause someone to burn out?

‍

Eduardo:

Yeah, that's a really good question. I think something we've talked a bunch in the past with the QED group and other founders in the portfolio where I think, so taking care of yourself for all entrepreneurs and founders listening to this is priority number one. If you're not well, it's very difficult to have the endurance to build a company that lasts and have the ambition to make big things. So to your question, Bill, so sleep, nutrition, exercise, mindfulness, all of these things, connection with your family are relevant. There's not a formula because we're all at different points of our lives needing more of this or that you can be a founder and maybe don't have a family and maybe you like to exercise, maybe mindfulness is your thing, but you need to do what you know you need to do to recharge.

‍

This is like being a top class athlete. To win the race, you need to train hard, recharge, train hard, recharge. The recharge component is very individual, but it needs to be there because or else you will be able to 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. Building a company is not a sprint, it's not even a marathon. It's a freaking Ironman 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. So first you have to love what you do. That maybe is obvious because you shouldn't be building a company just for ... you have to really find why you're doing what you're doing. And number two, you have to take care of yourself. 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 love sports and I love exercising, but exercise probably has a bigger impact in your mental health than in your physical health. So that's a major one for me. And choosing what battles to do, Bill, because I get a lot of people that ask, okay, but how can you train for an Ironman? You have two kids, you're going to be a dad or a third one, then you have ... But I have to exclude other things in my life that you have to choose, because if you do, I do believe also, and this is maybe a personal, if you really want to be world-class at anything, be it an athlete, be it an entrepreneur, you have to go all in. And to go all in, you cannot be doing 10 things at the same time.

‍

Maybe it's your building a company, 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 in my personal journey, at least for me, priorities are Betterfly, my family and doing what I love outside, which is sports, which is part of what gives me the energy to continue building Betterfly. Again, that might mean in my case at least working 100 hour weeks, but I have to incorporate recharging during the weeks. Some weeks might be 100, 120, others might be 20 hours. That's why for me, you have to get to know yourself, but recharge, recover. It has to be at the center or else this does not work.

‍

Look, you enjoy the process more. That's the other thing. As a leader, you have to be with energy. You have to have your energy right. If you're tired every morning, if you don't have ... 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. There's no way you can build momentum if you're fatigue, if you're tired. If you're sleepy, it's very difficult to do I think.

‍

Bill:

I think your lessons there are useful to almost anybody, but in particular in this industry where people 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 love the approach there. Well, look, Eduardo, it's been amazing having you on. We could probably keep talking all day, but I know we've got all of these other goals of family work and exercise to go do. I'd love to finish up with a question that I ask just about everybody that comes on. Hopefully we've got a number of aspiring entrepreneurs who are listening to this podcast. What's one piece of advice that you'd give to an aspiring entrepreneur?

‍

Eduardo:

That's a good one. I think probably the most relevant, do something that you are ... Again, maybe this sounds cliche, but that you love and that you are uniquely qualified to do. I think there's a quote from someone, something that looks like work for others and is play for you. You have to really enjoy what you do because this is an endurance sport. Building a company is an endurance sport. It's not a year, it's not two years. It's 10 years in the making. If you don't really love what you do, you won't have the endurance and the stamina to go very long. So probably the loving what you do is more relevant than uniquely qualified. You have to have the skills, but that will help you be determined. The successful companies are those led by people who are very, very determined, who are willing to walk over brick walls to make it happen.

‍

The only way for that to happen is that doing something you are really passionate about. So my advice would be for those starting at the initial journeys, are you really, really in love with what you're doing? As crazy as it sounds, 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. Look, you've seen me, right? We've known each other for almost four, three years. Three years. I don't know. I'm enjoying Betterfly more and more every day. It's not easier. It gets complex every market we open, but it's part of the journey. I really 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 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 great towards what you do.

‍

Bill:

Yeah. I love it. 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.

‍

Eduardo:

Thanks, Bill. Great conversation and looking forward to seeing you in person soon.

‍

Bill:

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 QEDinvestors.com and be sure to also follow QED on Twitter and LinkedIn at QEDinvestors. Thanks for listening.

‍