League has a new plan to conquer the health insurance industry—its second pivot in four years. The health benefits company raised $62 million in July 2018, but revealed little at the time about its growth plans. Now, the firm is revamping its business model.
In a wide-ranging interview with The Logic, Serbinis discussed League’s pivot from a health benefits plan for small businesses to a digital platform that offers spending accounts and group health benefits for enterprises over 250 employees. He also discussed the company’s new offices in Manila, Dublin and Chicago, as well as when he plans to raise money again.
CEO Michael Serbinis sat down with The Logic to discuss League’s pivot from health benefits plans for small businesses to a digital platform that offers spending accounts and group health benefits to enterprises over 250 employees. The company originally planned to expand internationally in 2015. While it has opened offices in Manila and Dublin—which serve its customers in Canada and the U.S.—the benefits platform isn’t yet selling to businesses based outside North America.
League—which has just under 250 employees—has raised nearly $100 million from high-profile investors, including Power Financial and Ontario Municipal Employees Retirement System Ventures.
It now lists Shopify, Uber and Loblaw among its customers. Smaller businesses—those with under 250 employees—already on the platform still get customer support, but the company has stopped taking new clients of that size. “This idea of a League platform resonates more with a large enterprise than it does with a really small business, which has value proposition but is not as substantial,” Serbinis said.
Serbinis launched League in 2015, a wellness app that functioned like a mash-up of Uber and LinkedIn. At the time, the platform let users browse profiles of nearby healthcare professionals—like personal trainers, masseurs and nutritionists—and book appointments.
In 2017, League was selling mostly to companies with under 50 employees, which, in an interview with Reuters, Serbinis had called “a huge market” for health insurance. The CEO said the firm’s average deal size ranged from $10,000 to $15,000
The company secured its first 10,000-employee and 25,000-employee customers in 2018, which pushed it to start serving enterprise clients. Serbinis said the average deal size with customers grew nearly tenfold to close to $100,000 of annual recurring revenue.
“We’re now going after companies where, I think our average this year will be around half a million dollars, so the largest [deal] can be $10 million to $15 million and multi-year, so that can be upwards of $30 million to $40 million,” said Serbinis.
League has also changed its sales approach to drive its enterprise sales. While independent insurance brokers could sell the League platform at one point, Serbinis said the company has now brought all of its sales in-house.
“Traditional brokers were really accustomed to selling insurance a certain way, and we were selling a vision that was more than that. A vision about transforming your employee experience, about transforming the health of your employees in a really different way,” he said. “Selling a 100,000-employee bank the League platform is not really something a broker could do.”
Serbinis, a serial entrepreneur, had two high-profile exits under his belt by the time he launched League. Kobo, his e-reader startup that competes with Amazon’s Kindle, sold to Rakuten in 2011 for US$315 million. More than a decade prior, he sold DocSpace, a file-sharing company, for US$568 million to Critical Path.
Over the past several years, he has consistently maintained that the company hopes to expand internationally, though it hasn’t always met the timelines he’s laid out.
When League raised its $62-million Series B in July 2018, Serbinis said the money would be used to open offices in San Francisco, London and New York. “In the U.S., League is present in New York and San Francisco,” said Parmida Schahhosseini, an associate at Bateman Group, the public relations firm that represents League.
After its Series B, League also said it would begin operating in Europe in 2019. Four years earlier, the company said it would begin an international expansion in 2015. It’s opened a customer service centre in Manila—which serves its customers in Canada and the U.S.—and an operations centre in Dublin. But the benefits platform isn’t yet selling to businesses based outside North America. “That will likely change later this year, and we’d probably [sell in Europe] out of London, anyways,” Serbinis said. He said League would likely choose Hong Kong if it opened an office serving Asia.
“League currently services enterprises in the U.S. and Canada, and these enterprises’ employees in Europe. League also has established an international office in Manila, which is a strategic operation centre to better service League’s global customer base,” said Schahhosseini.
League first started servicing clients in the U.S. in November 2015, starting with Seattle. It now serves clients in 50 states. In 2017, the company said it had a corporate presence in Chicago; its employees have since been working out of a co-working space. Serbinis told The Logic the firm’s office in the city—led by its U.S. president, Brian Ancell—will open on June 3.
This is the second time League has pivoted. In 2016, the company started offering benefits plans for small businesses. Many of the offerings it sold small companies on remain selling points for larger enterprises, like its flexibility and ease of use. Its product includes spending accounts with set amounts of money that employees can put toward benefits and wellness programs, like gym memberships. It also offers group health insurance that allows companies to customize plans.
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“We are the place that aggregates all the different kinds of providers of insurance or benefits, including retirement benefits, and we integrate to hundreds of providers, across the U.S. and Canada,” said Serbinis. The company has providers like Aetna, RBC Insurance and Great-West Life on its platform. “It’s really a brand new category that didn’t exist before.
The app also lets employees see their 401(k)s, RRSP and health and dental benefits all in one platform. And, it gives customers access to registered nurses via chat through its partnership with Montreal-based Dialogue.
The company’s digital-first focus has attracted the attention of other traditional insurance providers that are fast becoming its competitors. In 2018, Sun Life—which provides insurance to more than three million Canadian employees—launched Lumino Health, which it described as a “first-of-its-kind” digital health network that allows Canadians to search and rate local health providers. It’s not unlike League’s first iteration.
In the face of that competition, Serbinis said his firm may try to raise money in 2020, “if all continues to go well.”