The following interview is a conversation we had with Jaclyn Chen, CEO of Benepass, on our podcast Category Visionaries. You can view the full episode here: $14 Million Raised to Build the Future of Employee Benefits Management
Brett
Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or on the frontlines building it. In each episode, we’ll speak with a visionary Founder who’s building a new category or reimagining an existing one. We’ll learn about the problem they solve, how their technology works, and unpack their vision for the future. I’m your host, Brett Stapper, CEO of Front Lines Media. Now let’s dive right into today’s episode. Hey, everyone, and thanks for listening. Today I’m speaking with Jaclyn Chen, CEO and Co-Founder of Benepass, an employee benefits platform that’s raised more than 14 million in funding. Jaclyn, thanks for chatting with me today.
Jaclyn Chen
Thanks for having me on. I’m excited to be here.
Brett
Yeah. So before we begin talking about what you’re building, let’s start with a quick summary of who you are and a bit more about your background.
Jaclyn Chen
Sure. My name is Jaclyn. Growing up, I am the only child of Chinese immigrants. We moved to the United States when I was four years old, and I spent most of my life growing up Indiana. I went to college at Penn in Philly, and my career out of college was in finance. I like to call it a recovering investment banker and late stage private equity investor. But my ambition personally was always to start something of my own. So after graduating from business school, I launched Benapass with my two co-founders. And that’s what brings me here.
Brett
Very cool. And just to understand what makes you tick as an entrepreneur and as a Founder, what book would you say has had the greatest impact on you?
Jaclyn Chen
I love the book called Give and Take by Adam Grant, and it talks about people who are givers and takers, as the title would suggest. And in fact, most people are somewhere in the middle, depending on the situation. And as an entrepreneur with an early stage startup, that not enough people have heard of yet. I fashion myself as a giver. I’m listening intensely to people’s problems and trying to give myself in that situation, my very best problem solving skills. And that’s what gets kind of our early evangelists and early customers. And I think that’s what being an entrepreneur is and starting something of your own is that you have a vision of where you see the world going that’s different than where it is today. And you kind of want to give that vision and give your effort and energy and hearts to that.
Jaclyn Chen
And so I love thinking about interacting with people and thinking, like, what can I do to make their lives easier and be a giver in the situation?
Brett
Nice. That’s amazing. Well, let’s talk about what you’re doing now as an entrepreneur. So to dive into Venepass, what problem do you solve and how does the solution work?
Jaclyn Chen
Venopass helps companies reimagine how they take care of their people. And what I mean by that is benefits historically been a very company driven process. You work at a company, they tell you what your benefits are and if you’re lucky, there might be a lot of individual things on offer and you can use a few of them for the betterment of your personal wellbeing and your family’s wellbeing. But most of the time, and as was certainly my co-founders experience working in the corporate world, the things that your company offers aren’t the things that you would pick for yourself. So what we’re doing is turning that model around. And our product enables companies to let their employees choose what fits best for them without taking on the admin load of what limitless choices means.
Jaclyn Chen
For example, our most popular benefit we offer today is called a lifestyle spending account. For some people, taking care of your well being might mean a gym membership or a Peloton subscription. For others, it could mean a national park pass or a meditation app or getting pet insurance for, you know, your extended family and or getting a house cleaner doing a special activity with your kids. In all those instances, our clients companies are setting general guidelines. For example, use these funds for your well being. But it’s broadly defined to enable the power of choice to the individual. And practically speaking, employees on Benepass get a better pass, Visa card and access to the mobile app and web portal. They can swipe anywhere. Visa is accepted within the guidelines that are set by their employer. It’s simple, it’s intuitive.
Jaclyn Chen
There’s no points or gimmicks that are related. And we find that our clients celebrate the diversity of their employee base and really respect that individual preferences vary. And so they imply a similar attitude to not just personal well being, but also things like work from home enablement meals, rewards and recognition, professional development, and a long list of other benefits that are being deployed through our platform.
Brett
Nice. That’s super interesting. As like a business owner, I’ve done a lot with benefits here, try to come up with creative benefits to give employees. And one that we did a while back was rolling out headspace accounts for everyone. We ended up spending a good amount of money on that and then I realized that basically no one was doing it. 20% of people were actually doing it. Everyone finally told me that, all right, well, I’m going to stop wasting money on this then, if you no one wants to use it. But if I instead had a list of options they could have chosen from there, that probably would have been a way better strategy, I guess.
Jaclyn Chen
Yeah, because they can choose something, you know, meditation is not for everyone or, you know, headspace instead of head space that’s also calm or going to the gym. Those are all things, I think, that you as the employer would theoretically love to support.
Brett
And what’s the typical benefit dollar amount per month? What does that look like?
Jaclyn Chen
Yeah, that certainly varies by the company size and your budget. We actually just published a benchmarking guide that sets kind of, like small, medium, and large employers and what they typically offer. We see ranges anywhere from $50 a month to $300 a month. And again, it really depends on how many different types of programs that the company is rolling in. If they’re consolidating a bunch of different types, you might be on the bigger side. If companies are starting small, might be on the smaller side. But we work with we don’t judge the amount, we don’t judge the policy. We’re just there to kind of make your vision happen.
Brett
Got it. Yeah. I guess any amount is a good amount, right? If it’s a benefit.
Jaclyn Chen
We have some clients who even do $15 to $20 for entertainment. So paying for Spotify or paying for Netflix, and that’s the type of thing that really gets employees talking. It doesn’t have to be a big budget, but you can tell your friends that your company pays for your Spotify subscription. That’s pretty cool and unique.
Brett
That has to be probably one of the highest ROI spends that you could have. Paying for employees Spotify accounts cost $10. But it just sounds so cool compared to, like, a headspace account or something like that.
Jaclyn Chen
Yeah, I think for employees, it could be a bunch of different things. But in any event, it’s much higher employee psychological ROI than adding, say, $10 to their paycheck. Yeah, if you add those $10, they’ll forget about it, and it’ll be a de facto raise. It might even be an insulting raise number because it’s so small. But $10 to pay for a subscription? That’s their story there.
Brett
Yeah, that makes sense. What are some of the other creative benefits that you’ve seen companies offer?
Jaclyn Chen
Yeah, this year or over the past few years, there’s been a lot of things that are tied to current events. And so, for example, when the Pandemic first hit, we did a lot of rejiggering benefits to reflect work from home enablement. So buying a monitor or a desk or ergonomic chair. Earlier this year, when the war in Ukraine broke out, we did a lot of charitable donations because employees wanted to just donate to local charities on the ground there. Three months ago, when the Roe versus Wade overturned, decision officially kind of became the law in the US. We had a lot of companies want to offer funds for travel, out of state travel to access medical care. There’s a lot of different things that can be done with our platform.
Jaclyn Chen
And we think of not just current events, but also what are your corporate values? We have one client that is a luxury retailer, and they give their employees, like, kind of cultural funds to go to enjoy the arts, because that’s, like, a big part of their ethos. So we really encourage our clients to think of, like, what are the values that you have as a company, how can you respond quickly to current events and what your employees are going through in the last couple of months? It could be inflation, it could be gas cards or meal cards or things like that are actively impacting their employees on a day to day basis.
Brett
Nice. That’s really interesting. And logistically that just must make everything so much easier for the business, I’m guessing. Right. Like when we’ve done things like with the George Floyd protest in June 2020, we had all employees send us a charity that they wanted us to donate to and then we donated it under their name. And it was such a hassle to logistically execute on that idea of spending like two days managing it and it was such a hassle. It sounds like your platform that would just be almost instant or very streamlined.
Jaclyn Chen
Yeah. Another analogy I like to use is we’re kind of a venmo between the company and the employee. So in that case, let’s say you have a budget. Like every employee can donate $50 to the charity of their choosing. You can program that on our platform and then those $50 are immediately in that employee’s mobile app and in their mobile wallet or on the web platform and they can just use that card number. Every charity has an online donation portal. Everyone knows how to use a credit card and they just swipe that $50 at the charity of their choosing. And then for you as the employer, one, you don’t have to do that paperwork yourself.
Jaclyn Chen
But two, and this is really important for large employers, there’s still that paper trail and documentation of who said what where, which is obviously really important for kind of reconciliation accounting and for the finance team. So that’s the value that we drive is it’s really easy for employees to choose something that is best for them within the guidelines of the company. But at the end of the day, all that information and admin on the back end is also synced.
Brett
Nice. Wow, I love this product. So cool. And if we talk about the actual market that you’re focusing on right now, is it SMB, mid market enterprise or a mix of all three?
Jaclyn Chen
Today we’re typically working with mid size employers, so we define that as roughly 200 employees, up to 5000 approximately. These are companies that are past the smaller stage. They’re starting to professionalize a lot of their processes and benefits in general. Total compensation is a big component of that. And today roughly there’s about 45,000 companies in the US loan that fit that target size. And these are companies that are also they’re starting to compete with bigger enterprise companies that traditionally have very rich benefits. So what can they offer that is competitive and it’s going to attract the right type of talent without saying, oh well, overnight we can’t onboard the 50 different point solutions that a much larger enterprise company might have access to. So that’s the kind of first mover, if you will, type of employer that we work with.
Jaclyn Chen
But we also know that these paint points exist at large enterprises too. I know because I used to work there and there used to be an internet page with 50 logos of random deals and discounts and things that I knew I had access to. And I knew that the employer was spending a ton of money buying these subscriptions to all those things. But as you even experienced, the utilization rates are typically maybe 1020 percent at best. And so I think it’s something that we’re hopeful that we can bring to large enterprises eventually. The market for employee benefits is absolutely massive. In the US. Alone, there’s 2 million companies that have at least 50 employees. And we think of that as the total addressable market because each and every single one of these companies must provide some type of benefit beyond just salary.
Brett
Makes sense. And when it comes to market categories, how are you thinking about this? Is this a new category that’s being built or is this chipping away and transforming an existing one?
Jaclyn Chen
I’m going to pop out and say a combination of both. As a B to B company, I think you have to think of your market within the confines of a certain budget or line item for companies if you’re going to have customers. And in that case, we’re firmly in the benefits market. That’s a massive line item that companies spend on. It’s typically the second biggest one after salaries in terms of compensation. So in the US loan, 30% of total compensation is spent on benefits and that sums for about $4 trillion. So it’s massive. But also I think of benefit is empowering HR and People teams with financial infrastructure to make their jobs easier and in turn to make their employees lives better. We’re not focused on a certain type of benefit.
Jaclyn Chen
For example, during the pandemic years, the trends were very much on remote work enablement, mental health and even pet insurance because everyone got a dog during the pandemic. But these benefit trends, they come and go. And the common thread through all of them is that the employer, the company is providing funds to the employees to receive a certain product or service within a certain set of guidelines. And that provisioning between the employee and that third party product or service provider with company supervision is really difficult, as you’ve personally experienced. And that’s often why companies choose point solutions because they know that there’s one product or service on offer, they know their employees are getting it and that they can feel good about that.
Jaclyn Chen
But what we’re doing is we’re changing and challenging that mindset that companies can provide choice and flexibility without taking on a significant administrative load when they partner with Beta Pass. And that’s really possible through fintech and through financial infrastructure that makes it possible for us to offer global parity. So a lot of our clients choose us because they have employees in 15 to 20 countries globally. And they need to be able to provide something for everyone that’s locally and culturally aware. That’s cost of living adjusted and having the financial infrastructure really makes that possible because currencies and time zones, those are doubles in the details, but very important details to the employee and user experience. So we think of ourselves as like benefits infrastructure in a way that really hasn’t been challenged since automated payroll was invented.
Brett
Nice, that makes sense. And if we just look at that persona of the HR decision maker, I have to imagine right now that they’re just bombarded with software solutions and new tools and there’s just been a lot of funding has gone to HR tech. How are you breaking through the noise and standing out with these decision makers?
Jaclyn Chen
That is definitely true. And I also think that our buyers seat at the table during the pandemic has become more important than ever because the employee experience and how employees were interacting with the company really fundamentally changed. So for us, we are a solution to get rid of that inbox, if you will. If companies choose to deploy with Bennepass, effectively, they onboard us once and then any other types of point solutions that they may be pitched can be effectively they can give to their employees through our platform. So in one year, let’s say a lot of companies, what they’ll do is they’ll use a lifestyle spending account as the anchor and adjust what’s eligible for it over time.
Jaclyn Chen
So the first year it might be replacing, let’s say, a gym membership or a gym reimbursement and they’ll just broaden it to all types of physical health. So you can go to the yoga studio, you can buy a Peloton, you can buy running shoes, what have you. And then the next year they might add mental health as eligible spend or pet insurance or kids activities. So all those vendors that were emailing them and saying in order to deploy us and you’d have to get net new budget, you’d have to set up eligibility fees, you’d have to do all this work, they can effectively greenlight that on our platform and say, hey, employees, this lifestyle spending account that you have, it now covers mental health, or it now covers patrons.
Jaclyn Chen
And that kind of really makes their lives a lot easier and streamlines their offering into one partnership with us, but being able to provide the flexibility, all those other options that their employees might want.
Brett
Interesting. And as you know, taking an idea to market is never easy. What would you say is the biggest challenge that you’ve faced along the way?
Jaclyn Chen
Yeah, it’s been a wild and crazy ride. I think what we’re building is a pretty significant mindset shift for our people, HR buyer and thinking of their benefits as not as a set menu which is traditionally what it’s thought of but fundamentally driven by employee personalization. That’s not an easy mindset shift to do overnight. And so in most instances we do start small. That example of turning a gym reimbursement into a broad wellness diabetes including mental health and family support or turning in office lunch into a broad food program that allows for delivery, groceries and restaurant takeout. And so we typically start small with our clients.
Jaclyn Chen
And then once they hear from employees, while you’re giving me these funds and trusting me to make a personal choice about my well being and what’s best for my family, once they get that feedback that really opens people’s eyes to, oh, it’s not just this one program that we could broaden for employee personalization of flexibility. It’s a lot of other things too. And that’s when we really kind of open their minds to say okay well these are the other things that can be consolidated under Benepass and this is just going to be so much easier for me in the future. And scalable, sustainable as we go to hire more people, potentially expand into more countries. That’s when the real unlock happens.
Brett
And if we zoom out into the future. What does that five year vision look like for you?
Jaclyn Chen
Yeah my long term vision for Beast is to be in every employee wallet and for employees let’s say to show up on their first day of work. They know what their salary compensation is going to be and then the company says here’s the budget we’ve set aside for you this year for you and your family on your well being and for let’s say a fresh grad out of school. They probably don’t need a ton of health insurance. But for financial stability maybe that means student debt repayment and it means maybe they live in a city and it means going to the gym. If they have leftover funds it could be paying for meals out. Then for someone who is mid career maybe has a family, for them it’s probably more fulsome health insurance or coverage.
Jaclyn Chen
It might mean saving for retirement four hundred and one K and then paying for dependent care. I think of all those choices as things that employees should be able to make for themselves and for the companies to be able to treat those dollars somewhat fungibly. Because really, at the end of the day, I think if you ask the typical company those two benefit plans, they would for sure support, they would understand, like, okay, that makes a lot of sense for that person to opt into those benefits. And we want them to be able to take care of themselves and their family in that way. That’s not possible today with the tools that they have and it’s really difficult which means that we kind of are stuck in this point. Solution deluge if you will.
Jaclyn Chen
And so my long term vision is for Venomass to be kind of that central platform that we enable, that super easy, seamless user experience, but on the back end for our admins and our customer, which is that HR and People Operations professional, really making it easy for them to be able to give their employees that choice.
Brett
Nice. Amazing. Well, unfortunately, that’s all we’re going to have time to cover for today before we wrap. If people want to follow along with their journey as you build this company out, where’s the best place for them to go?
Jaclyn Chen
Yeah. Our website is wwwgetbenepass.com. We regularly publish content around employee benefits, customer stories in terms of what our customers are using the platform to do, and then also follow us on LinkedIn as well. So it’s spelled Benepass, and we’re available on all those platforms.
Brett
Amazing. Well, thanks again for your time and look forward and see Execute on this vision.
Jaclyn Chen
Thanks so much, Brett. I appreciate it.
Brett
All right, keep in touch. Bye.
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