Two years ago, Maxwell Health started up with 12 employees and a plan to make benefits enrollment more user-friendly than the mind-numbing, paper-wasting process it typically is.
Now, the Boston-based company has 70 employees and counting in several cities and barely resembles its former self. It aims to be, essentially, the go-to operating system for peoples’ benefits and health information, and it has landed $26.4 million to try to make that happen.
According to CEO Veer Gidwaney, Maxwell doesn’t expect to break even, let alone turn a profit, until next year or 2016. But Gidwaney contends that’s “by choice. That’s because the company—which has created Web-based software that employees and businesses can use to shop for and manage health plans and other benefits without the stacks of forms and the grunt work—is investing heavily up front for a payoff down the road.
Maxwell, for instance, is building up a large sales and services team; it’ll employ more than 100 total workers within the next quarter or so and should double in size over the next year, which Gidwaney says is partly to meet the demand for its services. It’s trying to add more customers, and more partners to its network—companies that sell services or products related to a person’s health—without stretching itself too thin. Simply put, it’s trying to scale.
“[That’s] part of the reason why we’re raising this capital and why this round has come together,” Gidwaney says. “We’re able to invest ahead of the curve, and build up a strong moat—a competitive advantage—and a channel [as in, a group of service providers] that relies on Maxwell to go to market.”
The financing is being led by new investors Adams Street Partners, Cambia Health Solutions, and Schooner Capital along with Brothers Brook (an investment firm founded by Priceline Group chairman and former CEO Jeffery Boyd) and Annox Capital (headed by former Priceline CFO Robert Mylod).
Existing backers Vaizra Investments, Tribeca Venture Partners, Catalyst Health Ventures, Serious Change, and Lerer Hippeau Ventures also contributed. Maxwell has now raised just over $36 million combined since its inception, according to Gidwaney.
Maxwell was founded in November 2012 by Gidwaney and his brother, Vinay, the company’s chief product officer. The two are repeat entrepreneurs; they co-founded and sold support software maker Control-F1 to CA Technologies in 2006.
The concept behind Maxwell is to simplify as much of the enrollment process as possible and make a person’s benefit information easily accessible via an online dashboard or smartphone app. People can use the mobile app, for instance, to find all the information they’d need to check into a doctor’s office, like a virtual insurance card; or to find out and show a pharmacist which drugs are covered under their policy.
Other startups, most notably Zenefits, based in San Francisco, similarly help outsource, automate, and streamline human resources functions. What Maxwell does differently is offer a broader, more personalized service that assists with benefits and directs people to services that can help with overall lifestyle changes after the enrollment process is over.
It provides a “concierge service” of on-demand personal online advisors—typically, registered nurses. During enrollment, they help employees choose between plans, and afterwards, find doctors, schedule appointments, or if necessary look into billing errors. Maxwell also offers a rewards-based program that streams in activity from fitness devices like Fitbit to award points to members for living healthy lifestyles. Companies like Hello Fresh (which delivers healthy meals), Doctor on Demand (telemedicine) and ID Watchdog (identity theft protection) offer their services through Maxwell’s online marketplace.
When Maxwell launched in February 2013, it started directly targeting businesses—specifically small to midsize ones—essentially aiming to be a broker that would make benefits enrollment quicker to do and easier to understand.
Gidwaney says that Maxwell started this way to learn “as fast as possible” what users needed so it could then shift, and pursue a much bigger opportunity. Now, Maxwell forms partnerships with either the insurance carriers themselves, or the “channels” they go through to sell their policies—like brokerage firms and PEOs—which can then offer Maxwell to businesses along with their benefit packages.
That means, like Zenefits, Maxwell is free for businesses and employees. Insurance providers and brokers who partner with Maxwell provide the company with recurring revenue via a typical, monthly software-as-a-service type agreement. The startup also gets a cut from vendors and carriers when their products (like, say, a Hello Fresh meal) are sold through Maxwell’s online marketplace. Gidwaney notes that Maxwell is “completely agnostic” to the benefits and services people choose—meaning, it’s not influencing employees’ or brokers’ decisions.
“That’s ultimately the role of a broker or a PEO or a [third-party administrator], or whoever is your trusted consultant,” he says.
By working with providers and brokers—rather than trying to replace them—Gidwaney says Maxwell has the chance to reach “tens of millions” of Americans.
Still, it’s tough to gauge Maxwell’s trajectory. The company isn’t disclosing many specifics about its growth other than its current size and the fact that its customer base grew by more than “1000 percent” this year. Gidwaney wouldn’t disclose the company’s revenue run rate, the number of customers it has, or what it charges (he was reported in December as saying 40 percent of the top 100 brokerages were either using or in talks with Maxwell, according to TechCrunch). And the competition is sure to only get more fierce.
But as it’s done over the past year or so, Maxwell will continue to evolve, according to Gidwaney.
“I think less about how to outmaneuver the competition, and more about how to serve the consumer extremely well,” he says. “And if we focus our attention there, then we’re going to do what the market needs and ultimately solve the problem. When you do that, good things happen.”