Positioning Your Startup for Sustainable Growth

Speaker 1: Welcome to the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your employees all the information they need to be successful at their jobs. Now, let’s get started with the show.

Chad Franzen: Chad Franzen here, co-host of the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your staff everything they need to be successful at their job. Past guests include David Allen of Getting Things Done, and Michael Gerber of the E-Myth, and many more.

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Chad Franzen: Rafi Benzaquen recently joined Lula as the Head of Growth. Lula is an early stage Intertech startup, building infrastructure for insurance in the modern economy. Prior to Lula, Rafi spent two years building and scaling Alto Pharmacy’s Last Mile Division. He spent five years working in various strategy and operational roles at Uber, and two years at Deloitte Consulting. Rafi, thanks so much for joining me today. How are you?

Rafi Benzaquen: I’m doing great. Thanks for having me today, Chad. Excited to be here.

Chad Franzen: So how long have you been at Alto?

Rafi Benzaquen: So I spent, like mentioned, about two years at Alto Pharmacy, and then about a month ago [crosstalk 00:02:08] I switched roles to Lula. So joined in the beginning of December, and I think I’m starting my fifth week this week.

Chad Franzen: Okay. What attracted you to Lula?

Rafi Benzaquen: Yeah. Lula, what attracted me is their mission, which is essentially, life happens in episodes, and insurance should as well. So if you think about someone typically getting insurance, they might get a six-month or an annual policy, but if you look at the modern-day age, things happen in much smaller timeframes.

Rafi Benzaquen: So for example, you might rent a vehicle for seven days, which could be an episode. You might get an Airbnb for three days, which might be an episode. You might order a pair of shoes from Nike and they’re being shipped, and out of the warehouse before they get to your home, they’re kind of with FedEx or UPS for two days, and that could be an episode.

Rafi Benzaquen: And if you look across a number of different industries and verticals, there are all these instances of episodes happening. And so Lula’s vision is, “Let’s break up insurance into episodes,” and they really want to become the Stripe for insurance, where in a checkout or page of an eCommerce side, or any kind of insurance-related transaction, they could kind of sit in the middle between carriers, and an end-user, and help someone acquire episodic insurance.

Chad Franzen: So take me through it. Let’s say I want to get an Airbnb, and I’m interested in insurance. What’s kind of the process for that?

Rafi Benzaquen: Yeah. So we’re actually not in the Airbnb space today.

Chad Franzen: Oh, okay.

Rafi Benzaquen: I think that’s more of my thinking, but right now, we play in the trucking space or in the car rental space. Trucking is a really great area because if you think about a typical owner operator, they might own five to 10 trucks, maybe up to 20. Those trucks are usually only used for 20 days out of the month. So four or five days a week, which means about 220 days out of 365 days in a year.

Rafi Benzaquen: So our approach in the trucking space is to go to owner operators and say, “Only pay for insurance on the episodes that you’re actually using the vehicle for. So that might be a four-day haul, Monday to Thursday, or four-day or five-day haul, Monday to Friday. Buy insurance by the day to help save you money, as opposed to buying a policy for the full 365 days a year.”

Rafi Benzaquen: And so an owner operator could go on our portal, literally, right? “I’m driving this VIN from point A to B. I’m going to be on the road for three days, 50 bucks a day, $150.” And we’ve been able to really show that you could save quite a bit of money.

Chad Franzen: So you have quite a background in operations. Can you give me kind of your overall philosophy in terms of operations?

Rafi Benzaquen: Yeah, sure. So as you mentioned, I started off my career in Deloitte Consulting doing various strategy and operational projects, then moved on to Uber and Alto Pharmacy, and in pretty deep, heavy operational roles. And I think my philosophy in terms of transforming operations, whether you’re trying to drive down your cost or improve your customer experience, or try to find product market fit, is really twofold.

Rafi Benzaquen: Number one, which is a value that I learned that I learned at Alto is go down to the N equals one. And what I mean by that is take a process that you want to transform and go find individual transactions. So at Alto, we were trying to reduce our FedEx delivery costs. Our core operating model was to deliver prescription drugs via courier. And there were outlier examples where we’d be shipping with FedEx. It would have been much more expensive than using a courier.

Rafi Benzaquen: And so in this example, we literally pulled a 100 different FedEx orders and went down to that N equals with each one individually from start to finish. What was the customer ordering? What was the drug? What was the day of the week? Where was it going to? How did it end up in FedEx as opposed to courier? And by looking at a 100 different transactions or orders, we identified maybe 10 to 12 reasons why things were slipping out of the courier path and into the FedEx path.

Rafi Benzaquen: So that was kind of from a learning perspective. And then in terms of actually transforming the operation, it was chip away at those 10 or 12 things. There wasn’t one silver bullet that we could wave our magic wand and significantly reduce our cost. It was chip away, execute on each one of those 12 things, one at a time, prioritize based on impact and effort, and then begin to just add value to the organization by tackling and executing against the vision.

Chad Franzen: How often do you do something like that?

Rafi Benzaquen: I think it really depends on the environment that you’re in, but fairly often. I’d say any kind of process that you’re running, or any kind of problem that you’re tackling. It’s a great way to really learn about that process and to learn how to identify it. So typically, at the beginning of a half or a quarter, we’ll make a transformation roadmap and identify three to four different processes or programs that we want to improve. And then for each one of those, we’ll follow that kind of MO of looking at the inefficiencies, going down to the N equals one, creating a roadmap and chipping away at it.

Chad Franzen: Is there a way that you make sure that because that often maybe involves change or a change in process, or even change in behavior, is there a way that you ensure that that change goes smoothly or happens?

Rafi Benzaquen: Yeah, definitely. And I think that’s something that you tend to get better at over time with. Typically, the more functions that a process touches, the deeper change management plan that you really need. But my general approach to stakeholder management and change management is to, number one, involve stakeholders early and often. Let them know that you’re going to be looking at this process, let them know that it may impact them, and really take those stakeholders with you through the journey of the process transformation, because there will be implications to their functions that I, or someone else on my team may not be aware of.

Rafi Benzaquen: And I think getting them bought in, letting them understand why you’re making this change, letting them identify how this is going to impact their function and organization, let them dictate the timelines of how they should be involved, tends to make these kind of transformations more successful.

Chad Franzen: And then was there another part of your philosophy, besides boiling it down to the N equals one?

Rafi Benzaquen: Yeah. I think the second thing that I really believe in is kind of traditional Lean Six Sigma concept. So really bringing in an expert that could facilitate a Kaizen event. And typically, in a Kaizen event, you’ll look at a process, you’ll start with kind of walking the Gemba, which means literally, actually going through that process.

Rafi Benzaquen: So take a warehouse environment, it could be packing boxes. You’ll go and sit at the pack station, you’ll watch the packers, you’ll watch how they’re scanning, what they’re scanning, where they’re moving tape from, or pulling boxes from, how they’re sorting it, et cetera, and really just watch and visualize the current state.

Rafi Benzaquen: I think people that are part of the Kaizen and people that are actually doing the process, then come together in a room, map out the current state challenges, map out what you want the future state to look like and how you’re going to tackle each of those challenges, build out a roadmap and a plan, again, with prioritizing based on impact and effort, and then going out to execute. So it kind of pairs pretty well with that N equals One concept.

Chad Franzen: Sure, sure. As we talked about, you recently came to Lula. How are you moving forward with Lula? Are you still doing operations, or you’re doing other things?

Rafi Benzaquen: Yeah. So my role at Lula is slightly different. I’m the Growth Manager at Lula, and the way I think about growth is really twofold. And I think a lot of people get confused between what sales, marketing, and growth is. So I think it’s worth sharing, but really to me, goal number one of any Growth Manager should be making sure that you have product market fit. And generally, the best way to measure product market fit is through retention.

Rafi Benzaquen: So if you’re acquiring a bunch of users and 80% of them churn within three months, you probably don’t have product market fit. If you start to see churn kind of flat line and stabilize, maybe at 40%, 50% in the six, seven, eight month mark, you probably do have product market fit. So to me, that’s kind of opportunity number one, making sure that you’re talking to your customers, that you’re retaining them, that you’re building with them in mind.

Rafi Benzaquen: And then once you have product market fit, I think the second role of a Growth Manager is to identify where are you going to acquire users? And in my experience, if you look at Uber, for example, Uber’s primary growth channel was paid marketing. If you look at Alto Pharmacy, my last company, our primary channel for acquiring users was a Salesforce that built relationships with providers, who then referred patients to us.

Rafi Benzaquen: So similarly, at Lula, I think part two of growth is identifying where are you going to acquire users? And what is the primary channel that you’re going to acquire those users? And that could be paid marketing, it could be a sales team, it could be channel partnerships, et cetera, but really, you want to experiment early on and identify where could you bring users at the lowest possible cost, that long-term will retain at the highest rates?

Chad Franzen: Is that where you are right now, since you just got there, kind of in that experimentation process?

Rafi Benzaquen: Yeah. The company is fairly early. We have about 30 employees and the company’s been around for a year. So I’m actually still kind of primarily focused on phase one, which is what is the product and technology that we’re going to build out to ensure that we have product market fit. I think absolutely, we are focused as an early stage company on growing our revenue and driving our users.

Rafi Benzaquen: So we’re also kind of focused on phase two. It’s hard to totally sequence. You have to parallel path a little bit.

Chad Franzen: When you were doing operations, did you have kind of a systems process, where you had people following certain systems and you documented those, and how did that go for you?

Rafi Benzaquen: Yeah, definitely. So one of the big lessons learned, I think working in operations, especially in early stage startups, is people tend to come and go, and it’s really important to document your processes. So I’m really big into each process should have a standard operating procedure. And within that, you kind of want to formalize what’s the process, who’s doing that process, which function or which role is performing that process? What are the systems and technologies that you’re using?

Rafi Benzaquen: And you really want to revisit that every six months or so, sometimes more or less, depending on how quickly that process is changing. So that way, that department is fully documented. Anyone could come and step into that role and immediately be successful. And I always used to tell my team, if any one of us falls off the face of the earth, someone should be able to come, read through our SOPs, and fairly quickly ramp up, get up to speed and be able to add value to the organization.

Chad Franzen: I have one final question for you. Are there any books or podcasts that you listen to or read, that you have found valuable or enjoyable during your career?

Rafi Benzaquen: Yeah, probably my favorite podcast is the, How I Built This Podcast. I love listening to Guy and hearing him interview entrepreneurs. One of the really common things that you tend to find is there usually are no overnight successes. Most people kind of toil away at their businesses for many years. So I really like learning about that, and different challenges that entrepreneurs are going through.

Rafi Benzaquen: And then the other space that I’m kind of diving into right now is really the crypto world. I was actually listening to a podcast on my way home from work right now, and one of the pieces of advice that they gave was it’s not too late to get into the crypto world right now.

Rafi Benzaquen: And that’s thinking about from an investment perspective, starting to dabble into the coins, but really from a technology perspective, understanding the software behind those cryptos and how they’re going to be used to transform industries and disrupt the user experiences across many different verticals. So I’d highly encourage folks to seek that out, just go out and Google crypto 101. There’s a lot to be learned there.

Chad Franzen: Okay. Hey, we really appreciate your time today, Rafi, and your insights and those suggestions. Thank you so much. I appreciate it. Oh, and how can people find out more information about Lula? I’m sorry about that.

Rafi Benzaquen: Yeah, definitely. So you could go to our website. It’s lula.is, that’s L-U-L-A.is. Anyone could also reach out to me on LinkedIn. We are hiring, we’re looking always for engineers, folks from the insurance world. So feel free to reach out and I’d be happy to chat.

Chad Franzen: Okay, great. Thanks so much, Rafi.

Rafi Benzaquen: My pleasure. Thanks for having me, Chad.

Chad Franzen: So long, everybody.

Speaker 1: Thanks for listening to the Process Breakdown Podcast. Before you go, quick question. Do you want a tool that makes it easy to document processes, procedures, and/or policies for your company, so that your employees have all the information they need to be successful at their job?

Speaker 1: If yes, sign up for a free 14-day trial of SweetProcess. No credit card is required to sign up. Go to sweetprocess.com, sweet like candy, and process like process.com. Go now to sweetprocess.com and sign up for your risk-free 14-day trial.

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