Pain Points = Disruptive Opportunity

To some it looks old and unfashionable, to others it looks like a goldmine.

To some it looks old and unfashionable, to others it looks like a goldmine.

Zenefits is an upstart player in the entrenched and highly complex employee benefits business. It’s a business that has been around for centuries and is dominated by gigantic insurance companies and financial firms, bedeviled by massive government regulation at all levels, and ruled by HR bureaucracy and tradition. With all of that, the employee benefits market sounds like the last place a startup would want to put its attention.

And yet, as this excellent profile of Zenefits points out, it was exactly that hidebound bureaucracy that made the opportunity for Zenefits to exploit.

Illustrating the excellent advice of Box CEO Aaron Levie, Zenefits found a hidebound corner of modern existence and upended it by reinventing the entire process. It’s been a stunningly successful strategy precisely because, while there was plenty of tradition and traction to keep the legacy players in place, it was a system that the customers were more resigned to than attached to. Once a better alternative came along, the old ways began quickly crumbling.

Adding to that pent up yet unrealized demand was the disruption presented by Obamacare, which created all sorts of new paperwork requirements (and headaches) for benefits managers. Zenefits realized that the confusion and additional pain of that disruption created an opening for a new player to gain ground – with so much change happening anyway, the pain of moving to a new benefits system was suddenly relatively less important than the promise of smoother sailing in the future.

A classic example of taking advantage of disruption to create more disruption in an industry ripe for it.

Photo: Wikipedia

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