Buying Insurance Agencies Instead of Just Selling Them Software | Gyde on Lightwork

0:00One of the individuals in the audience called it a magic show.

0:02Josh Machiz: Health insurance brokerage is the least glamorous corner of American healthcare. And it's a business where growth has always meant hiring more because someone has to work the phone, chase the paperwork, and know the client. AI is going to get rid of this component of your workflow that you didn't really sign up to be doing to begin with. Guide's entire bet is that AI absorbs the admin part so that brokers can go back to advising. We're seeing six brokers retire for every one that enters. And to my perspective is, hey, instead of looking at like jobs going away, what if we just looked at the actual labor inflows and outflows of this space and focus on the right crisis?

0:36Josh Machiz: Will Johnson spent a decade at Oscar Health launching markets and running its technology business. And he and the team launched Guide in January with$60 million led by Lightspeed. There's not a single person we removed because of AI. Will Johnson, welcome to Lightwork. Well, we're super excited to have you. I feel like I have already talked a lot about Guide and you as a founder from our patient journey mapping whiteboarding session. Great session. Yeah. But I think this will be an amazing time to just for folks to better understand what Guide is, the role that it plays in the ecosystem, but also get to know you as a founder.

1:12For sure.

1:12Josh Machiz: I guess at a high level, maybe for someone who's just never heard of Guide before, has very superficial understanding of the healthcare system, maybe I fall into the bucket. What is Guide? Guide is the first AI native insurance, wealth, and health brokerage. And kind of that sequential order being very intentional in terms of how we think about the evolution of the company. What that means in practice for us is we acquire health insurance agencies, largely that serve the Medicare employee benefits, largely small to medium employers, and individual markets. So these are health insurance markets that some of your listeners might not necessarily be in today because many of them are under the age of 65, not quite Medicare.

1:49and they might be getting coverage through a PEO or they're with a large employer and they're getting their coverage through a large self-insured product through that large employer organization. Regardless of how they're getting their insurance product though, a broker is usually serving them either directly or indirectly. So even in the cases that I just outlined, the head of HR at those organizations is working with a broker, maybe a large brokerage house, the alphabet shops as they're sometimes called, publicly traded, et cetera. What we deal with traditionally are those that maybe don't get that type of service and are kind of trying to navigate this very complicated system themselves.

2:24What I found during my time at Oscar, where I was there for a decade, is the broker really became this entry point to the system. A consumer under the age of 65, somebody that's turning 65 and aging into Medicare, a small to medium employer in Georgia, as an example, is looking for health insurance for themselves or their employees and don't necessarily know where to start. The broker then becomes the entry point to that system. And because in many ways, health insurance is simply financing the healthcare spend that all of us will inevitably have. It makes it a very unique insurance product in that regard.

2:59You talk to that broker a lot. It's not just what's the insurance product I need. It's, hey, look, what's the cost of this medication? What's going on with this claim? Can you help me find my ID card? And so I was seeing this on the ground at Oscar. I was looking and saying, what is the technology that, you know, these essential entry points and kind of guides, hence the name of the business, for this increasingly complicated system are getting to support both their own operations, but by proxy, the consumers or employers they serve. And it wasn't much, you know, so I had been stuck on this for years.

3:31What I did see was a lot of the folks kind of in private equity acquiring health insurance agencies and generating great returns for themselves, their employees, those partners that became a part of that business. But I didn't see a ton of success on the software side of the equation. And frankly, I would actually argue most of the software products from brokers added pain because I'd have to go hire somebody to just go figure out how to use it. When I was towards the tail end of my career at Oscar, I started playing with agents significantly, particularly voice, SMS, toying with some things we were doing on the technology side even.

4:03And it got me conviction that that was the time to go into distribution and finally have a chassis that could transform the way that it worked on a very fundamental level. And so, you know, if you think about any of these business services, whether it's, you know, insurance, Lightspeed Investor, you know, audit, accounting, et cetera, these are all businesses that are very manual and almost like workflow centric in nature. AI, from my perspective, had the opportunity to automate a lot of that and software wasn't going to do it. You know, so I kind of sat on the bench for years saying software is not going to create this, you know, technological and economic unlock that I think we wanted, but maybe most importantly, the unlock for the consumer experience that I think all of us that have joined Guide wanted to achieve.

4:45And so we largely built the company to do two things, just connecting those through lines. One is we said, look, let's go acquire the partners that we work with, with a fairly innovative acquisition model that is highly partner-centric in nature, and then build the market's leading AI platform for those verticals that we serve, insurance, wealth, and health over time to ultimately support their own operations for sure, but also help them grow these businesses. You know, one of the things that you all will see about us in the not so distant future is what we'd call this kind of broker capacity report.

5:18And what you kind of see is over time, there is just a logistical and kind of time-based reality of how many consumers or employers you can conceivably serve as a single broker because the way the business has historically been run. But our perspective, and we're now seeing kind of the fruits of these labors is, you know, if the traditional day is eight hours, like I say that, you know, guide creates the 12-hour workday with eight hours of time. And I think what you're going to see from some of the report that we're going to put out is the natural cap is kind of there and getting worse, right?

5:47Because the more regulatory changes, administrative strain on these agencies that come through, the less consumers they can ultimately serve on a net new basis because all of their time is dedicated to the existing. And so you then get to this weird choice. Do I maintain the white glove customer centric approach I built business on or do I allow the integrity of that to deteriorate and go try to grow the business? Our view is it's not too much to ask for both. And that's what guide is going to provide the partners we're working with today. And we're already seeing that come through.

6:17Josh Machiz: That's so exciting. I think what's typically helpful is also maybe getting some of the framing of like before and after and how guide fits into that, especially as you think about this brokerage layer. for not only a consumer, like how does Guide change things for consumers, but also for these brokerage players as well? So I think the thing that's interesting is if you think about the folks that came, you know, to work at Guide, many of us came, yes, sure, for the commercial opportunity, but I think even, you know, more prominently the mission. A lot of us started our careers in some respects outside of healthcare, but found our way into it.

6:51You know, for me, I was there for a personal healthcare experience, what brought me to Oscar. And so many of the folks around the table have come from places that have already had kind of this missionary orientation to try to change the experience for consumers across the country within healthcare or financial services. So as a part of that, we kind of lived the challenge or saw it firsthand before we built Guide. And I was not unique in that regard. And so I was spending a lot of time with the broker community at Oscar. And so was my co-founder, Sam, who is the EVP of growth at a large fast-growing Medicare Advantage, FMO, which is a wholesaler.

7:23I can explain that later if that's of interest. But what we saw like on the ground during Q4, so open enrollment, annual enrollment period for the respective audiences, which we're all familiar with, that's how we pick benefits. Yes, the high season. That's right. These folks would literally have to make thousands of calls to their clients. And so we would watch them manually spreadsheet all of this out. Okay. So like who's actually going to experience some disruption based on rate changes, plan exits, whatever that is. Okay. Let's go call all these folks. Hopefully we get them on the phone during that one time we're going to call them.

7:57Then you go through a needs assessment. Some of these folks have like very significant needs. You're on the phone with them for, you know, sometimes hours. And that is the right thing to do to understand their unique issues. And then ultimately you can find a good product to renew them into and then service them after that enrollment. And so I was like, this is just not feasible at a certain scale. And so what we kind of did is said, you know, even in the earliest days, let's just take a super workflow and kind of broker and member experience centric approach from a journey perspective and say, where can AI add value across that journey on either automation basis or experience basis for the consumer?

8:31And so what that means in practice for us is, you know, we're launching kind of the V2, if you will, of our renewal product for this Q4. And what we're doing is kind of taking that workflow and then doing exactly what I just articulated, right? Injecting guides, AI platform through both guide OS, our foundational platform in Gia, which is kind of our agentic assistant, into that process. What that means in practice for the broker is they're no longer having to do a lot of that front-end work. Gia is actually owning a lot of this process on behalf of the broker, doing the outreach herself, finding the needs that are unique to that individual across clinical information, income changes, plan satisfaction, and then scheduling appointments as needed for those that need an actual consultation with their broker to pick or find a new product for that next plan year.

9:21And so instead of the broker going and conducting those thousands of calls, GIA is doing that on behalf of the broker, assessing the need of that specific member, and also giving them a sense for what's changing with their plan. So kind of taking on a lot of that administrative load that previously sat with the broker and their team, and shifting that to a more agentic workflow. And then even automating the booking of the appointment on the broker's behalf. Then not only is that appointment automated, but the context from the needs assessment that Gia is conducting on behalf of that broker is all included in that meeting invite.

9:51So it's not just saving significant time, but on a consumer-centric basis, we're also saying as the broker gets richer, more contextualized information about that particular consumer's needs in advance of the call. So instead of them trying to piece that together and make sure they're preserving a good experience during that one phone call, they have the opportunity to read that in advance and say, yep, I can do my own research. I know exactly what we should be doing for this consumer. That improves the experience for them, the broker. That improves the experience for the consumer, makes them stickier, right?

10:21Better persistency, et cetera. But then the final piece is it's better for the carrier. You know, as much as I think health plans have been very much kind of in the public eye and scrutiny, the reality is the more folks you talk to there, the more you realize they're also just trying to do a good job. And for them, having members switch plans to have a bad experience is not good either. And so if you can help broker, member, and health plan all through GuideOS and GEO, we think we not only can change the experience that many of the consumers in this country are going through, but maybe even have an impact on the system.

10:54And that is what gets us most excited. And I think why we've been able to pull some of the talent that we have into the business. So the insurance brokerage industry is such like a human-centric business. How do you convince businesses that you're the right fit for them? And maybe like even just taking a little bit of a step back, like if you think about, you know, why SaaS didn't work in this business and why AI is right for this and why it's important that you're actually acquiring these businesses versus just giving them software. So what I kind of saw in software was on a best case basis, you know, data organization.

11:31It was kind of like dashboards. It's like largely what was presented. it. And, you know, hilariously, some of our team is from, you know, software private equity as an example. And they kind of said the same thing. Hilariously, our, you know, the individual that's accountable for partner growth, literally in the role, was one of the leads on the agency block business at his prior private equity firm, which was like the leading agency management system with the software for the brokers. So he was like, yep, mostly data organization. There was no real automation of labor. And that is much more, I think, of where like we're trying to take the company.

12:02And so, you know, look, I think, Josh, to your question, this is a highly transacted space. You know, I think the number one most transacted space is like RIA, wealth management, which increasingly we're going to be stepping our foot into, you know, next year. But then shortly after that is brokerage. Because the, you know, profile of the businesses are fairly attractive, recurring revenue, fairly persistent, sticky, and fairly predictable, which I think most of the folks on, you know, that kind of the capital allocator spectrum really like. But for us, that means we're always competing in a deal environment.

12:34Right now, we're doing about a deal a month, and that's a much faster pace than I think we certainly expected. And a lot of that has been, I think, demand generative. And we've seen much more of that demand increase towards really the last six weeks. I think we've had more demand the last six weeks than we had the first six months. And some of that is because of branding. I think some of that is because of the experience we're delivering. We have a perfect NPS score amongst our first kind of partner cohort, which I do think gets out. And that's a combination of both people and tech, right? I mean, we're in these offices shaking hands, et cetera.

13:04And, you know, Josh, to your point around why we're winning then, I think to use a quote from another owner, there's two, there's kind of two core differences. The first is the team is just different. You know, traditionally what I think happens is they'll come into these pitch meetings where they're thinking about, you know, partnership or acquisition, you know, they'll have a series of slide decks and presentations look basically the same. What's your like pitches? I mean, this is obviously someone who's like, maybe like spent 30 years building a business and they've got all these options in front of them.

13:35Why do they choose guide? Well, what's interesting is we have kind of two cohorts of, uh, of agency owners. Some are young. Oh, really? Some are super young. And so some are, you know, mid thirties, huh? They might've been running the companies for a few years, but some are actually on the younger end of the spectrum and some, you know, perhaps have been in the business for a little bit longer. But I think the key reason is team and product. You know, the team slide looks a lot different, as I was just saying, but our perspective is, look, you're going to grow faster with guide than anybody else.

14:01And here's why. And we can now pretty predictably walk them through why that is. And so I think we've started to do is position ourselves as a category of one, effectively in the space where there's historically been kind of three door or two doors, right? You can keep going, bootstrap yourself or sell out to, you know, a scaled partner and kind of ride off into the sunset. that we're now creating door number three. And I think for us, there's a large cohort of owners that say, hey, I still got gas in the tank, but I need help from a partner to help navigate market disruption, plus a technological paradigm shift that we've never seen.

14:34And I think Guide stands fairly uniquely alone with respect to people and capabilities to go build product and grow businesses. Two, subject matter experts that actually understand and empathize with those owners and know the space. And three, a platform that's actually added value for them and their teams. we were at an agent summit two weeks ago with one of our partners, We Know Medicare. And one of the individuals in the audience called it a magic show.

14:58Josh Machiz: Oh, okay. We're doing the product and literally stood up and was like, you know, to the other brokers in the room, like, just to let you know, you'll never be able to leave We Know Medicare and Guide once you start using the platform, because she's like a super user. And so it's fun to see almost this kind of, you know, in-person activation, post-meeting virality that we're starting to see as a motion. And I think this is why M &A can be so powerful. Our interests are economically aligned. We can show up in person and we can help these businesses grow. And the way that we've structured the company now, we have options for folks to use our technology through some of our partners.

15:29And we can take basically PMPM, what they call overrides in our space for the use of that technology. So it's kind of like a lease motion. And then we also have the opportunity now to purchase because of the way we've bought various companies. Why are you getting these kind of like in-person testimonials? Like what happens after acquisition that people are so thrilled with the product and the team and all of the things that went into it? Well, much like I said earlier, to be fair, the bar for insurance distribution technology is not exactly stratospheric. You know, you have Tomorrowland posters in here.

16:00It's basically the opposite of that. It's yesteryear. It's yesteryear for sure. And so I think on one level, it's like, finally, somebody can help me do my job, you know, is kind of nice to have. But I think the second is, if you think about the motion we have, and I think we've done this very intentionally, we are doing what I would call platform forward M &A. We are really selling the platform as a part of the M &A motion. So for us, this is just enterprise sales. We're selling an enterprise piece of technology, you know, winning deals with seven figure ARs. It's not so different. And so in many respects, we're just an enterprise software business that happens to be acquiring the partner with complete economic alignment between the two entities.

16:41And so I think for us, it gives us a fairly unique construct when we show up in person to these folks to say, look, I'm not just going to sell you this thing and then leave. I'm going to be a real partner to you that shows up literally every week. As soon as I get out of this discussion, I'm talking to an owner who we're in diligence with right now about how we accelerate the deal because it's like, I want to close by Labor Day. what do we need to do? And we're going to have that conversation. And then shortly after that, we're talking to one of our existing partners about the new carrier contract that we just won as a part of the relationship with guides.

17:13So we went to the carrier together. They couldn't get the contract previously. We jointly go to the carrier and we say, this is what we're building. And then we won the contract. And we're talking to these folks literally weekly, like in those conversations. And so we're not the passive partner, which I tell everybody. And I think that's kind of a self-sorting mechanism. We're an active one. And so the thing that I like about that is you can have, you know, what I've told Isaac and Brenton is kind of this T-shaped value creation model. At the fat part of that T, we're deploying GuideOS across every single partner we work with.

17:43First 90 days, they're all running GuideOS. 100 % of those businesses are seeing ARPU improvements after the first 90 to 100 days. Wow. Literally about 1 ,000. But on a vertical operating company and partner level, we're sending teams on site and finding opportunities to benefit and impact those businesses at the unique operating company level. And so we're not completely just the pure forward deployed motion and we're not completely platform. We can be both. And that T-shaped motion, I think, is incredibly powerful because what happens over time is we start seeing things at the vertical level on site, the fat horizontal part of that T-bar, the platform starts to get bigger and bigger and bigger because that feeds into the product.

18:18And so you almost have this like forward deployed product feedback loop that I think is actually the most powerful motion in the market today, which we're delivering. I think that allows us to do, you know, not just a deal a month, but perhaps two deals a month, three deals a month next year. And, you know, I think that's what's going to get us scalability over time.

18:35Josh Machiz: Yeah. I want to get into the M &A machine that you have built because I am honestly so impressed. But I think before that, on this idea that you are doing this sort of like own your distribution AI role at play, I think there has been, you know, culturally some pushback around like private equity style motions in healthcare. For sure. great things. Like, I'm curious what, if you've received any sort of pushback and like why you decided to go down this road. Yeah. Interestingly, not a ton of pushback. And I think it's because the space is transacted in many ways already. And we can kind of come in and be that door number three, the challenger brand, the one that says, hey, we can do things differently.

19:12And yes, we're going to give a great economic outcome to those partners. But what if we could actually take a slightly more missionary approach and say, not only am I going to help your team, but I'm going to help your clients. We're going to help them get better products in a way that you just couldn't before. And, you know, I think if you think about kind of my core business services thesis, at some point I'll probably do some post on this. We can do it together perhaps.

19:34Josh Machiz: Yeah, she whiteboarded it. But many of the business services kind of market, if you will, is architected as a point solution market, right? I go to one entity for one product and that entity, because of capacity, capabilities, ability to hire, what have you, can really just deliver that one product. What we're doing in Guide is slightly different, is we're kind of platformizing, if you will, that formerly point solution market. So we talk about this in tech all the time, right? Going from point solution back to platform and then vice versa. You know, I was doing healthcare technology. I watched this happen.

20:04And we've never been able to do this in business services. Yep. But we will be able to. So the consumer is ready to adopt that? They're not looking to go to different point solutions? I've yet to meet a consumer that's super thrilled about their five to six different entities they need just to manage their insurance and wealth products. and what we're seeing and what I saw early on, which became a key insight for us as a guide, is the health insurance broker was the one they were interacting with all the time. Your PNC agent, as an example, you kind of only are calling if you wreck the car. It's a fairly catastrophic event.

20:36You're calling your health insurance broker sometimes monthly. So if you go talk to some of even our own businesses today about how often they're interacting with these consumers, eat it regular. The client service load is real. And while some folks saw that as a liability, I saw it more as an opportunity. It's a touch point. That engagement is a commercial opportunity unlike anything we've ever seen. And if you had the back-end data infrastructure and the labor automation to actually act on that, well, what could you be doing over the course of three, four, five years with that business? That is what's become a core kind of foundational principle for us is to say service expansion is core of the company.

21:14It's really about those three pillars, insurance, wealth, and health. You're going to see us pursue those sequentially. Right now, it's largely focused on providing better coverage options through answering supplemental coverage for insurance. You might see some wealth next year.

21:28Josh Machiz: On the M &A machine, you all have acquired seven partners. Could be more by the time this ships, who knows. Yeah, yeah. I mean, it sounds like there's a lot of active motion right now. And that was seven in seven months, which I think that's like private equity style. and startup pace, which is pretty insane. Yeah. Yeah. I'm very curious how you all operate that. What is like sourcing diligence even look like for you all? Yeah. So, I mean, I think that to just, you know, confide in you all a bit here on the show, it's not like I'd done M &A before. Yeah. So I think one is we've hired a great team of folks that have kind of been there, done that from, you know, places like, you know, Avista, an Alpine, you know, Francisco back partners, Cluelick back partners, folks that had kind of come from the space.

22:11And I think, Like, you know, to give credit to both Brent and Isaac, you know, Isaac also came from the domain as well. And so I think you've even got kind of like board level support for the motion that we're running, which I think does provide a lot of help for us as we're getting this going. With that said, we had a team that was unbelievable go-to-market to begin with. And we just said is what if we built an M &A engine that's effectively a high velocity go-to-market machine with an extremely technologically forward product? And that became the motion, which has been seen as kind of very different.

22:41And I think we'll create compounding returns as you start to say, hang on a second, these guys are growing these companies with a market-leading brand and a perfect partner MPS. And wait, wait, you're telling me you're doing that and you're not necessarily like cleaning out the whole team because that's what AI is supposed to do, right? There's not a single person we remove because of AI. If anything, we're hiring in some of these organizations, you know? And so I think when you look at the totality of that as a pitch, right, building a self-sourcing team, we've never done a banked deal yet. All of the deals have been self-sourced.

23:12We fly in person. We're in Michigan. Monday, I was in lovely Michigan. It's tough for, I think, an owner to not at least take a look at it. And so for us, that's kind of how we built the machine is we said, look, what if we did M &A much more like a technology business? Would you go to market? We just happen to be an acquisition. And then AI enabled the entire process. Using AI to identify the best potential prospects and targets for our business that might be missioned and economically aligned with what we're trying to achieve, go through the diligence process, close companies, et cetera, at a speed that is quite difficult, perhaps on a pre-AI basis, and really viewing M &A for us as a product.

23:52You know, it's something I talk about all the time internally. There is a product-led M &A motion that is very much core to our business and core to our AI product pre-partnership. And then we

24:03Josh Machiz: have a transformation motion post-partnership sign. And so if you view the entire company's an AI product, the math gets exciting. And so I think for us, we're most excited about the ability to scale this kind of product-led M &A motion, and most importantly, continue to find partners that are buying into what we're doing, nail that people underwriting piece, and then make sure that they're sharing in some of that upside as well. So for us, we have a cohort of partners that are fully economically aligned and are picking us and oftentimes signing up for seven, eight-year partnerships explicitly because they believe we can help them grow the business.

24:36So we've got to deliver that, which is the real fun. So we're upon renewal season and you guys have this incredible new product with Renewals AI. Talk to us a little bit about that product and how it's going to fix some of the things that are a little broken in the insurance brokerage industry. Totally. And some of this is almost connecting back to the early part of the conversation. This, I think, will be one of the most difficult Q4s that certainly we've seen. You might argue last one was even worse, but this one's not so much better, frankly. What makes this one worse? You've got disruption in almost every market we play in.

25:09You've got premiums skyrocketing for most employers, very well documented. The individual market itself is experiencing the disruption, maybe not as pronounced as last year, but certainly still persisting this year. And while Medicare Advantage, which is a core segment for us, is certainly, I think, getting to a point of stabilization, it's still perhaps not as perfectly rosy as you might have seen five years ago, which gives us the opportunity to really solve challenges in these segments. And part of the reason why you might show up so well is because we're finally presenting solutions to a market that needs it.

25:42So what does that mean in practice? Well, if you, you know, tick your book of business in prior years, similar to what I was articulating where you're calling, you know, a thousand clients, realistically, maybe there's 20 % of those that really need a consultation and a deeper needs assessment, et cetera, because the other 80 are going to stick in the same plan. Well, if you're seeing lots of disruption this year in that book of business, it's not 20 % of the book that's going to have to have a consultation, it might be 50 % of it. And so if you look at the pure time it used to take to manage the book of business previously, it is materially higher now.

26:14And so it's not just that we want to use AI to help the broker's life get better. I think it's an existential risk to not be using it for most. Because the reality, if you just play that forward is the, you know, balance of whatever's over the 20 % that's actually going to move, maybe they're not having the consultation because there's simply not enough time in a fairly constrained AEP period that is fixed. It's not an extended period for you to actually get all of that done. And so for us to be using, you know, our infrastructure to automate the outreach, the needs assessment, to go through the basic plan changes, to automate the scheduling of the appointment, and then servicing that up to the broker, it's going to allow them to not have to make that trade-off I talked about earlier.

26:54You can stay customer-centric and white glove and you can still grow the business. And if you're any good at it, you'll actually be able to solve more of their needs and sell them additional products. And so we're doing that on the back end, you know, with, you know, voice-based welcome calls and, you know, distribution of other insurance products. So really that entire pre and post member journey, everything outside that core consultation, we're taking on a guide.

27:16Josh Machiz: Just to also, again, bring it back to regular human interfacing with a broker or a broker using Renewals AI, what does that look like across GuideOS to GIA with texting mechanism to the voice welcome call? What does that journey even look like? And where do they sit across all of this? If you think about kind of where it starts, initially we'll focus on outreach and needs assessment, right? To say, look, what are the things that might be driving a real need to me with a broker? My clinical status has changed. My income has changed. I've moved and taking these kind of characteristics or representative factors that might be changing with a member or could create a needs-based prereq for having that consultation, we're doing that with GIA.

27:58So GIA is actually taking all that information. Once you then see what the plans look like and those come out publicly, you can have a plan review that's also GIA-led and the schedule of the actual consultation as needed based on their unique circumstances. That then gets ported because we have calendar connectivity with all the brokers that we work with. That meeting gets booked on their calendar and the needs assessment information will actually get ported into a contextualized window within guide OS such that they can see what went on with the needs assessment and that member's specific issues such that when they show up for that consultation, they already have the context.

28:31You know, it's much more about jumping into the issue and problem solving versus problem identification. And so not only are you getting to the answer faster, you're getting a better, richer answer. And then on the back end, look, we'll automate the welcome calls that traditionally a broker would have to go conduct after the enrollment. And then if they need other products, you know, dental vision, fill coverage gaps that might be present given that plans aren't exactly what they used to be. Some of those are getting watered down from a benefits perspective. We can help offer products that help to solve those coverage gaps for members.

29:00And so not only is it something that is, yes, for sure, commercially attractive for the partner, it's the right thing to do for the member to make sure that they are protected and us as a fiduciary of that member, make them aware of things that we see could be potential gaps in their coverage and help to fill those agentically.

29:15Josh Machiz: I know we touched a little bit on private equity role or private equity style motions in healthcare, but I do think even zooming out broadly, there's a lot of concerns around AI and jobs. And this is really helpful to just walk through that process and where these human brokers sit in the loop. But curious if you're seeing any narrative around AI and jobs and how Guide is countering some of this. Very prevalent. There's still not a single conference I go to without it getting brought up. And so I think there's two pieces to it for me. You know, on a very personal level, I don't know how we survive in this particular vertical without it.

29:50You know, I just think it's just a logistical reality that we can't serve the number of folks that we used to be able to. But I would even think about a different question. There's a bunch of narrative out there about broker replacement. We're not seeing any of it. But the thing that I would look at is what the labor force in some of these, what I would call essential or kind of like, you know, country critical business services looks like. We're seeing six brokers retire for every one that enters. And so, you know, the great thing about, you know, how we've hired a guide is I am by no stretch the smartest person in the room, but I can do math, barely at least.

30:22If you're having six folks retire and one enter, but your population is basically staying the same and maybe even living longer. Well, hang on a second. My math says we're going to need a lot more in the cup for us to be able to service this appropriately in a per broker basis. We can't do that today. And so rather than us being kind of doomerism, like, oh, they're taking jobs. Folks, let's take a step back. We don't need to talk. The jobs are exiting the labor market. We have to create more capacity and almost superhuman-like capabilities for the folks that are still in the vertical. And so my perspective is, hey, instead of looking at jobs going away, what if we just looked at the actual labor inflows and outflows of this space and focused on the right crisis?

31:06the right crisis is the advisory infrastructure for this country, for those that are seniors, small to medium businesses, the folks that are, you know, the backbone of these communities will not have the same degree of guidance that they certainly had five, 10 years ago, but also not the richness of that guidance. Because even if they end up getting it, it's going to be super fast. And so our perspective is that's just wrong. We've got to make sure that that, you know, individual that's, you know, 90 years old, if I take my grandparents as an example, you know, Pearl and Ron and Savannah, those individuals need to be getting the same high touch guidance that the large employers are getting from their, you know, highly compensated benefit consultant.

31:46And our perspective is we can bring agentic solutions to that part of the market, you know, consumers plus kind of lower middle market that's getting somewhat neglected in my, from my perspective, and solve this problem that I think is only going to get worse. So forget all the job replacement stuff. We're already seeing labor outflows. We get to solve the crisis step today. And I think AI is the single best bet as a solution for that problem.

32:12Josh Machiz: I think the AI job narrative conversation on a macro level just comes up a lot. I'm curious just broadly if you have any thoughts on high level, like how the labor market or how the shape of work changes across the healthcare industry and maybe specific to brokerage as well. Yeah. I'll talk a little bit about some of the questions I get on M &A first, if that's okay, because a lot of folks say, how are you doing deals this way? How are you winning against some of these private equity peers that have done this for years? And frankly, are good at it. I think we have plenty of respect for those competitors.

32:45The thing that comes up the most, though, is the change management piece. And I think the country is kind of going through this. You know, I was joking with Laura over breakfast. The thing that's interesting for us in our business is we live in this duality where on one level we're like the, you know, maybe a few million of us that are, you know, are on X or tuning into your show talking about the latest model developments. But the other, you know, 315, 318 million Americans that are out there that are maybe not doing that are trying to figure out how this works for them. How's it changing my day to day?

33:17And so a big part of, I think what we're doing is, is actually taking the kind of like change management bull by the horns and saying, let's get in there and be a real partner to help folks use the products correctly and understand it is not a replacement for them is a replacement of some of the legacy workflows that killed their job. And the thing that I think is most exciting for us is we go to like the account managers at some of these companies and you say, hey, is solving these hundred crummy tickets a day inspiring for you? They're like, no, it's not. You have the joy back in their job. 100%.

33:51So what if we were a little more default to optimism and said, you know, in the clinical space and, you know, Bren's an MD, so, you know, he'll appreciate this. One of the kind of running lines is you want to operate at the top of your license. How do we get our clinicians operating at the top of their license. How do we get all of the business services fields operating to the top of their license? Because it sure is not happening today. You know, we've seen it on the ground. It is just not a reality. And so, you know, my perspective is much more about, hey, what if we focused on, you know, workflow replacement versus job replacement?

34:22What we're trying to do is say, look, AI is going to get rid of this, you know, component of your workflow that you didn't really sign up to be doing to begin with. And so one of the things I've even started doing, internally and in select settings with agency owners and say, look, here's 10 workflows you got today that really run your company. Some have 100, but 10 really matter. What we're saying is let's go automate seven of them and then preserve the three that add value to your team, your clients, and you as that business owner for you to continue to own. And I think that is much more the thing that gets us most excited is about almost going on the education and thought leadership campaign trail, for lack of a better term and saying, look, folks, this is the single best thing we've ever seen for our industry.

35:05What if we maybe got a little excited about this and asked first, how could this help me and my clients versus say, oh, no, no, let's be all doomerism and say, we don't want this. Because the counter is, if you don't embrace, I think you're hosed, both on a business performance perspective and two, on an industry perspective. And I would argue that you're actually being a poor fiduciary for the client because you're not going to have the time to give them the rich advice that they should be getting.

35:30Josh Machiz: This is really interesting. I feel like it's actually pertinent to current discussions around how, you know, I think there's a lot of tension between the techno elite that, you know, we exist in this bubble and that a lot of the AI narratives that we feel the rest of the country, we assume to feel as excited about AI. I think it's really helpful to hear your insights on, you know, like actually engaging with real people who are on ground doing these like business services who may not be as excited and how you've approached that. I think maybe flipping a little bit to just broadly your position as a CEO, you're building highly verticalized AI in a world where there's a lot of attention on foundation models.

36:08Josh Machiz: What's going to happen between application layer, foundation models, who wins, all of that. How are you thinking about all of that? You know, my perspective is kind of twofold, and I somewhat say that in jest. I think, one, the thing that I think always gave me comfort about M &A is we ultimately own the customer relationship. And so for us, as the models accelerate and give us the opportunity to create more of this kind of platformization, if you will, of business services, I get kind of excited about it. And for us, we're building vertical applications ourselves. Yeah. And so the thing that's exciting is we're both an M &A business, but we're also an application business.

36:44So to me, I kind of say, bring it all on. This sounds great. You know, I think there's lots of perhaps well-merited debate if you're a pure AI application business or you're kind of competing, pseudo competing with the foundation models. I don't necessarily feel that way about us. And in many respects, it's all good. Yeah.

37:01Josh Machiz: I mean, I think at least my sense of anyone building the application layer is, to your point, especially for the industry that you're serving, this is as much a tech problem as well as a change management problem. And like that is never going to be solved by one mega foundation model. And we see it on the ground. You know, I think the reality is, you know, we're going to find out, you know, revenue, persistency, et cetera, from all of the application businesses. I do think it's really tough to do this stuff horizontally in regulated industries with like fairly unique workflows. It is even hard for the best teams at the vertical level to build these things perfectly.

37:35And we've been extremely intentional about saying, where are we going to be world class versus where might there be somebody else that we're going to say they can do that kind of part of the infrastructure for an agency owner. And so I would tell anybody that's like building in the space, please spend the time getting great in a few use cases, especially in places with highly regulated complex industries that matter to the consumer. Like the cost of screwing stuff up is high. So I think for us, a lot of us got into the business because we had a missionary calling. And I think we've taken that same approach with the way we thought about building applications and making sure that they are world class.

38:12Do I think we have the market leading platform in the space? Of course. Do I think that we are extremely intentional about saying where we're going to play versus where we're not? I'll say yes. And I think you've got to do that. And we have a little bit of a luxury because, you know, we are in a slightly more M &A forward motion and, you know, we've been able to accumulate fairly significant economics in a short period of time because of it. But I still think even if you're in the application business, you should be that intentional. You talked a little bit about how so many of these businesses, people are retiring and there's a lack of insurance talent.

38:44As you acquire these businesses, you aren't letting people go and you're talking about adding people. How do you sell people on the vision of Guide and joining Guide to continue to grow the mission? Yeah. I think it's always, it kind of gets back to when I was originally doing the diligence for Guide, which is almost a six-year journey. I mean, the founding vision for the company started in 2019 in Coral Gables after a large broker seminar, And so I think I've been stuck on this for years and I really just kind of unpacked early, what are the things that frustrate the agency owner? I don't have capacity to grow.

39:18I can't get into other services lines because I just simply don't have the time or the capabilities within my existing team. And client service is only getting more difficult. And so what we did is we just built applications that solve those issues. And so we show up and we say, look, this is the growth equation for you as a business. here's what we built to help solve for that. And we're going to do that with you over multiple years. And we're all going to share to some degree in the economic returns. If we're right, most of them say that's a very different pitch. Like let's have another combo.

39:50And so we just kind of started with the challenges of our customer and then built an M &A motion around that kind of core problem set.

39:58Josh Machiz: I want to go back to, you know, you mentioned the mission calling and, you know, you go back to like 2019 Coral Gables. Yeah. Why, you know, and you had built such a great career for yourself at Oscar Health, made it such an impact there. Why dedicate your life to guide or this phase of your career to guide? I think I've always been super excited about transforming distribution because I really saw it as the entry point to these essential systems that like really do impact our lives. You're thinking about insurance, effectively covering your, you know, your downside. Wealth is protecting your upside and your health is protecting your present.

40:37And so I kind of was searching for how you enter those constructs at the very top of the funnel and then can become almost a navigational guide through that for someone's entire life. Distribution to me was the only place where you could do it. Health insurance agencies, I thought, had the degree of engagement interaction that gave you the right to expand those services at a fairly rapid rate. And so for me, I'd kind of been stuck on this for years. And it's sort of just the extension of why I got into this to begin with. I mean, I joined Oscar because of a bad healthcare experience myself, and it's kind of guided my perspective on what I want to do and build with my career, my life.

41:16And I think we've been fortunate enough to have a just incredible team join us for the journey and partners that have given us the real responsibility to partner with them. And I think we take it as such.

41:27Josh Machiz: Yeah. One of the things you might've heard me talk about in, you know, prior appearances is, you know, my grandparents being a big influence on me, they were small business owners in Savannah, Georgia for, you know, decades. And you really appreciate that these businesses are like children in the family for many of these owners. And so with any deal we do, we take it as a responsibility kind of both ways. Like we have a real oath to deliver for that partner and vice versa. And so I think for us, I liked that combination of being able to achieve the more missionary angle that I think kind of wakes me up in the morning.

41:59And I think our team feels the same way with emotion that I think can be extremely economically attractive for those that give us the opportunity to work with them and the team members that ultimately, I've got to go recruit and make sure that I'm delivering for every day as well. And then can't leave folks in this office. You know, and I think it's important to us to deliver for all three of those stakeholders.

42:20Josh Machiz: You all have put so much care into this business. Like you can very clearly tell that and you interact with every part of this ecosystem with such intention and care. I think that is, you know, something you mentioned with a lot of these small businesses. Have you assembled a team around you to focus on the space? Because this is not just traditional enterprise SaaS playbook, right? This is a very different model. How have you decided who to bring on for all of this? Yeah, it's very different. You asked me the question earlier about M &A. M &A is hard. Yeah. Well, my follow up question was going to be like, I think a lot of the industry is very hyped on this idea of an AI roll up.

42:57Josh Machiz: And I was going to ask, like, what do you think people underrate with the AI roll up vision? So I think it was like two days. One is doing deals is not a walk in the park. When I first got into this, you know, had a few conversations from introductions or otherwise with, you know, banks, advisors in the space, some agency owners. I don't think I can use the vernacular that they used on this show because it's like maybe R-rated. But the gist was you have no shot at acquiring anybody because the space is so transacted that like you're never going to win any deals. And I would tell anybody that thinks they're just going to like walk into a market and start getting business owners to just sell them the companies to say, hang on a second, are you really able to add value against the current peer set?

43:42Can you really deliver a great experience for that owner partner? And are you going to fight religiously to help them grow the business and take care of those teams? Because if you're not, you shouldn't be in the business. Go build software. Because I do think it is very difficult to compete against the existing peer set, which doesn't suck, to be clear. Like the folks that do this well, do it very well. You talked earlier about kind of private equity velocity. There's a reason why you said private equity velocity. They do it with velocity. They're good at this. So like one is like, remember they don't suck.

44:12And then two, you've got to really deliver for that partner and be ready to sign up, to take care of them as if they were your own employees because they are. And I think those two things are like very important as we think about, you know, the M &A motion and what you should be ready for. The second is change management's not easy. You know, you've got to do it with those partners, not to those partners. And I think that's like a big component of it. So those are the difficult elements. In terms of how we construct the team to kind of, you know, fight those, which is your original question. We built a team that both comes from venture-backed technology organizations, you know, in healthcare and financial services, places like Oscar, places like Stripe.

44:48And then we built a team that has private equity experience doing the, you know, M &A change management-like exercises that you'd see a world-class private equity firm. And so I would say you do need to appreciate and also have enough kind of self-awareness to say there's a reason these folks are really good at specific functions and domains. And rather than saying, we're just going to go tear up that thing that works, maybe, you know, go talk to those folks and try to hire them. And if you can't hire them, maybe you really don't have something that's that attractive to begin with. And so, you know, I think for us, we've had the opportunity and are quite grateful for the opportunity to have recruited folks that come from those walks of life on both sides and now are able to say on the front end, can you build the market's leading M &A machine that does so in a way that is owner-centric?

45:33And then can you also build a technology platform on the back end that transform these companies operationally and economically in a way that doesn't blow up their teams? Because that was the other thing that I heard quite frequently. I talked to 100 agency owners plus that had sold their companies before I started Guide.

45:48Josh Machiz: Yeah. 99 of them, literal number. That's not just a, really not a guy. One was neutral. 99 was super pessimistic on the prior experience, largely for three reasons. One, the resources they promised before the sale didn't exist or they weren't really there. You know, two, their teams largely got nuked. You know, it was like, move everything to shared services. Teams are gone. That was it. Like that was all the arbitrage. And then three, I think they lost their sense of cultural alignment to the partner. And so for us, you know, I mean, Laura and I talk about this, you know, pretty frequently and same with our head of people.

46:25We really want cultural alignment across the entire organization. And I don't ever want a partner that says, you know, guide is not thinking about my experience or not caring about me and my people. It's just not the business we're building. And so I think we've kind of on the M &A and partner experience side try to back solve for those three as well. Technology, we started with their problems. For M &A, we started with what sucked about the prior processes that some of these folks had gone through. And we said, you know, what if we took those core problem sets across the pillars that we're solving for?

46:58You know, high velocity M &A that's highly A9 enabled, technological solutions to their core challenges that are largely agentically deployed. And then the third is a partner experience that had been pretty crummy previously. If we could just nail those three, you probably got something. That's what it feels like we're now building a guide. And we're doing so in a way that's fairly brand forward. I mean, I think you guys have, you know, maybe seen some of the other, I hate the term roll-up, but I'm going to use it here. You know this, but I never use the term roll-up internally because that's not what we're building.

47:32You know, we're building a transformation company. It's not a roll-up business. But in any event, we don't see a ton of brand investment, I think, from some of our peer set, which is fine. That's a decision they made. What we said is we want to be the opposite and build a real brand for this business because we are not just a holding company. We are not just an acquisition vehicle. We want to be a challenger and a transformation agent, no pun intended, for this industry. And to do so, we've got to unite our partners around a common brand, mission, and value set that drives the business. And we've made investments accordingly.

48:05Josh Machiz: You talk a lot about pulling people from very different backgrounds. You're writing an entirely new playbook. Do you feel like of the people that you've brought on, is there a common trait? Or, you know, these are very people coming from PE, coming from healthcare, coming from tech. Like, what do you look for in people you bring into guide? Well, a lot of us have worked together before. So there might be one common trend, which is just like, I had your cell phone. You know, I think there's probably three. The first is just extraordinary work ethic. And I think for us, you know, we were talking about this, you know, before we got started on the show, many of us have young kids.

48:41And so I think it's both extraordinary work ethic, but extraordinary, this is number two, empathy. Because the reality is we all have personal circumstances we're going through at any given time where we've got to both have a lot of trust in that individual to say, hey, I know you got me, I got you, take care of what you've got to take care of. And like, we'll get this done for our team and our partners. And, you know, too, I actually think it might make us a better team overall because it enables a degree of focus that perhaps you wouldn't have if you had infinite hours in the day. That's not the case with all of our team members.

49:10So you've got to have a ton of just kind of pure horsepower on a work ethic basis, but also extraordinary empathy. And then the third is what I would call the right balance of commercial orientation and missionary alignment, which is another way of saying, look, we're in this business to build a generational company. You can't do that without economics. So for the avoidance of doubt, we're building an unbelievable revenue and operating margin generative machine. Full stop. But the second piece of this is you can't do that at the expense of the consumer. We all came here because this business matters.

49:48Something like Laura and I talk about all the time. Because the cost of not executing this, I think, is really dire. Who is coming in to solve the six to one problem I just described? The loser is the consumer. And so if we're all economics and no, you know, satisfaction, NPS, whatever metric you want to use, the excitement factor for this thing deteriorates. But if we're really right on this thing and you build a generational company with a absolutely, you know, rave reviewing consumer base or client base, that's what creates a recruiting flywheel for the company. And I think that's what we're going to see.

50:28You know, in some of our welcome calls, we had ridiculously good, you know, NPS scores from, you know, Gia's voice calls. And so I think what you're seeing is extraordinarily excited owners and clients, they're pretty fired up about the experience that they're getting. That's not going to be everybody, right? I mean, I think you're going to see an adoption curve that looks not so dissimilar to any other prior technological, you know, paradigm shift that we've had, if not maybe slightly accelerated. But if we look at the early proof points, I think it's time to go do more.

50:56Josh Machiz: Right before we started talking, you mentioned that a lot of you have young children now. Yeah. Lots of founders saying, no kids until Series B. That's right. Yeah, or even single until Series B. Or single until Series B. And you mentioned a little bit how your mini-me has changed your mindset as a founder. It's the best. What is that like? There is nothing more rewarding and fulfilling than fatherhood. I stand by this. It is just an incredible experience in every stretch. Makes the bad days less bad, makes the good days even better. The thing I would say, too, is I, and this is a little bit of a contrarian take, I think it makes you a better founder, particularly in this business.

51:38Josh Machiz: Yeah, why this business? If you think about the journey that all of us are on at the stage of our lives, because many of us are kind of in a similar kind of stage in life, age bracket, et cetera, as I am. You've got maybe your grandparents, if they're still around, they're at the tail end of their life, and you're dealing with those end-of-life issues, which are very challenging. And I think you see that firsthand, you know, either dealing with it yourself or watching your parents go through it. It is very difficult. You're also, in some cases, navigating the end of their wealth journey for many of these folks, right?

52:08Where does that wealth get transitioned? Have they even been managing it? What's going on? How do we deal with their long-term care spend? You find these things get really interconnected at the end of their life. your parents might be aging into Medicare for the first time and they might be calling you and saying hey I used to have this employer problem now I gotta get into Medicare like what do I do you're like oh man this is why we built the company you yourself are finally starting to ask yourself much more intimate and oftentimes acutely driven health care questions you know hopefully you had a you know very simple process with your birth if you didn't that's a whole host of things that you're not thinking about from a coverage perspective that you weren't before And then finally, you start thinking, do I need a will?

52:44Do I have a life insurance policy? Did I get that through my employer? Do I need additional coverage? These are all questions that we're now asking ourselves at once. And it is simply a representation of the questions that our partner agencies get every day. I'm sure some of them laugh at us and kind of say, yeah, well, welcome to my day job. And so I think in some ways for our business, it makes us better because we are thinking about these challenges as the user, which is really exciting. And then I think the final piece is there is a degree of camaraderie. You know, I think that you get as a team from those are all going through certain life changes together.

53:22You know, we have an internal Slack, you know, group. It's just random kid pics. It's just us sending hilarious pictures of our kids. And I think it brings the team together in a way that you can't quite represent, you You know, you can call it the 996 culture, you can call it the single to series B culture. You know, for us, I would just call it the, you know, family while building generational companies culture is what gets me excited. And, you know, I think everybody should go have more kids. It's a great, it's a beautiful gift. And I think you can do both. I think you can do both.

53:52Josh Machiz: I mean, it all ties back to like when you talk about number two, empathy being such a core skill. And I think in a world where there are a lot of people who are treating these as very technological problems, but we are realizing that these are not just pure tech problems. People and lives are at stake. Totally. And I would even argue, you know, what AI in some ways has done is kind of regress some technological challenges to a mean, right? And so what that does, if you're starting to kind of narrow the band in some areas, the relative proportion of differentiation actually starts to shift towards the human.

54:26And so the real question is, how do you enable that human to be truly world-class, top decile, whatever you want to call it, that is a slightly more exciting challenge and problem that I think is emerging because as technology continues to accelerate, you're going to see more parity in some instances. Well, then things start to progress to the humans. And so, you know, for me, I'm very much bullish on humans in many respects, whether that's in the sense of procreation and having more kids, you know, or ultimately helping to be a better guide for consumers and employers, most consequential insurance, wealth, and health questions.

54:59And that's what we're doing again.

55:01Josh Machiz: Yeah. I think this is such an exciting vision. I guess last question for you. We have a new guide to look forward to. Anything else on the docket that you're excited about in the guide world? Maybe more deals. We'll see. I think we're going to do both of these really exciting. I think for us, the thing that gets me most excited is about what we could accomplish together. I think it's been a great start. You know, we're about a year in, but this is the tip of the iceberg. And so for us, this is the very start of a journey. And, you know, I think that our best days are actually ahead of us. Yeah.

55:31Josh Machiz: Hopefully we'll be back in a couple months. The whiteboard. With the whiteboard. Bring out the whiteboard. Bring out the whiteboard and the guide red markers and we'll have a great, great episode. Well, thank you so much for joining us on Lightwork. Sure. Thanks, guys.

55:51Thank you.