March 16, 2021 | Go-To-Market

Lively: Showing the Path for Consumer-Obsessed Startups

Costanoa Team

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Costanoa Team

Lively team

The past few years have been infamous for the rise of digitally native, unicorn startups that raised huge amounts of cash before falling back to earth. Today, the digitally native startup lives on but with a better, more strategic way to grow. While still consumer-obsessed, many have learned to follow a more sustainable path to growth. 

Fintech company, Lively, did just that. Founded by two childhood friends, Alex Cyriac and Shobin Uralil, the startup offers modern Health Savings Accounts (HSA) that don’t carry any fees for consumers, are easy to understand, and come with a much wider range of investment options than traditional HSA providers.

”We believe the product and consumer experience should come first,” says Cyriac. “Unlike a lot of companies in our industry, we don’t charge consumers for anything. We make everything simple, and when you reach out to support, you get a response right away… If you Google us, that’s what people talk about.”

In fairness, the company’s path to success is partly due to its presence in the fast-changing healthcare industry. But Lively has also made a number of smart, strategic decisions. As a result, its success offers something of a case study for companies that take the landscape that is given to them, rather than just applying a set of preconceived “best practices” that may not work for their market situation. In particular, the company made three big bets right from the start:

  1. Build an end-to-end, not just a front-end solution.
  2. Invest in marketing early rather than later.
  3. Start in a smaller market segment before moving on to a larger one that exposes more people to the product. 

Let’s look at these in detail:

Building an end-to-end solution

Many startups first try to build a minimum viable product (MVP), putting together a solution using off-the-shelf components in order to quickly come to market. Doing this has the advantage of speed, but it also requires you to rely on the innovations of others to deliver your consumer experience.

Most of Lively’s competition in the traditional HSA industry has done precisely that. Banks and credit unions, which are often focused on other initiatives, use third-party record-keeping software to keep track of customer transactions, including everything from investments to disbursements. These systems make it easy to set up an HSA program, but also drive up costs and limit options for consumers. 

Because Lively knew early on that it wanted to offer a consumer-first product, it took the unusual step of creating its own back-end record-keeping system. While this required an extensive commitment of time and resources, it allowed Lively to reach its goal of controlling the consumer experience from beginning to end. Needless to say, by reducing outside vendor costs, it also allows the company to compete on price, while keeping its services free for consumers and collecting revenue on the back end.

“The record-keeping platform is what keeps it all together,” says Uralil. “But it takes a lot of time to build and maintain, and that’s why most banks and credit unions won’t embark on that endeavor.”

Though time and resource intensive, Lively recognized that building this more robust end-to-end platform would differentiate the company’s offering, setting the stage for long-term success.

Cofounders Alex Cyriac (L) and Shobin Uralil (R). Image credit: Forbes

Investing in marketing earlier rather than later

For many startups, the first marketing hire is a deferred decision, with the founders serving as chief salespeople until the company reaches a certain level of maturity. 

Lively hired a marketing director early on. As a consumer first startup, its founders knew they would eventually rely on search engine marketing (SEM) and search engine optimization (SEO) to build up a customer base. While this is not a novel strategy, it is surprising how few companies managed to do it as more urgent tasks always seem to come up. Lively instead hired a marketing director who was deeply committed to and experienced in content. This enabled the company to improve its organic search rank, ensuring that it would appear at the top of the heap for HSA-related inquiries. 

“If you don’t invest in SEO early on, you never get the benefit of it,” says Uralil. “Our major competitors maybe put out 12 to 13 pieces of content per year. For us, it’s more like 80-100.”

Picking initial market segments wisely 

Do you go after your largest pool of potential customers first—or your most forgiving ones? In the HSA world, probably the most attractive customers are large employers as they can create a significant, captive revenue stream from a single sale. 

However, Lively went in a different direction for a number of reasons. First, they had been inspired by the example of their parents, who were retired and faced rising healthcare costs without the savings to meet them. They also saw that the greatest unmet needs with HSAs were among individuals who were contract employees or not currently employed. While the individual market is smaller, it is an underserved one and would likely be more receptive to their offering. And so, the company initially targeted these consumers by investing heavily in everything from graphic and information design to content and customer service. This approach also led the company to its critical decision to create its own record-keeping system, which has enabled it to keep its customers’ options flexible while staying free.

Today, Lively’s consumer business is growing quickly but is stable enough to allow its leadership to now focus on the employer market. This 1-2 punch may seem like a pivot, but it is intentional. As Lively’s team is moving from selling to individuals to building a direct sales force to sell to employers, it is able to do so successfully because of the foundation of credibility it had already established in the smaller market. This has allowed them to support a new go-to-market motion and move upmarket more efficiently, while their competitors can’t seem to figure out how to move down market in the same cost-effective way, creating a competitive advantage. 

“We now have a very strong consumer offering, and we’ve managed to get the economics to work in a way that none of our competitors have,” says Cyriac, “So, now we’re putting most of our effort into going after the employer market.”

If Lively proves anything, it’s that every road to startup success is different. While plenty of startups have succeeded with quick MVPs, investing in marketing later, and a single-market segment focus, Lively instead took a different path that has led to breakout success. So, when planning your own strategy, take stock of what the business landscape has to offer and ensure that you plan not merely for early wins but for enduring success down the road.


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