Last week news broke that cloud-based benefit provider benefitexpress has acquired the broker-centric benefits administration and online enrollment solution, benefitsCONNECT. Benefitexpress CEO Michael Sternklar said benefitsCONNECT CEO and Founder Troy Underwood would stay on for roughly 30 days to help in the transition period. Sternklar says that much of the benefitsCONNECT management team will join the newly merged company. “Scott Evans, the COO of benefitsCONNECT, will report to me and be the man on the ground in California running that product offering for us,” says Sternklar. Benefitexpress will also keep the benefitsCONNECT office in Rancho Cordova, Calif. open.
Also see: “benefitexpress acquires benefitsCONNECT.”
EBA caught up with Underwood to discuss the sale, his role in the newly merged business and his proudest moment in running the company he founded in 2002.
Employee Benefit Adviser: What is your role inside the newly merged firm?
Underwood: I am going to do a transition period where I work with the brokers. We focus on large-group brokers and I will make sure they transition over to the new CEO smoothly. I won't be around long term in benefitsCONNECT or benefitsexpress.
EBA: Where are you moving on to?
Underwood: I will probably, being an entrepreneur, either [work] for another startup benefits agency or something that doesn't compete with the entity. I want to be around to support it as much as humanly possible. But I do have a lot of friends and colleagues in this industry and I will do something in the industry so I will probably start a benefits agency of some sort.
EBA: Will you take the rest of the summer off?
Underwood: Yes. For at least a week or two. Maybe a month or two.
EBA: Do you still have an equity stake in the new entity?
Underwood: I will for a few years and then I will be fully cashed out.
EBA: Is this an exciting time for you? Is it bittersweet? You must be proud that you have built something that someone wanted to buy.
Underwood: Oh, yes. It is bittersweet, but I am very proud of what we as a team have accomplished. I just gave a bonus check to an employee. He and I have worked together for many years. The tears of joy, camaraderie and success speak for themselves.
EBA: Do you think the company you built is in good hands?
Underwood: Yes. That was my goal. To make sure that if I step away, it can still keep running. It’s not about Troy per se, it's about what Troy and the team have built that can continue to grow. And I do hope and feel that it will continue to grow.
It's a wonderful model. We did some things as a small company that are just fantastic. If you take a small group and you have a necessity to deliver we can do things … for example, in the ACA world. In the last year, with a team of maybe less than one-tenth the size of some of the big company teams, we delivered a far superior product compared to anybody in the industry on the Affordable Care Act in terms of compliance reporting, 1094 and 1095 fees, that stuff.
That is going to change a little bit because you don't have a smaller company with an entrepreneurial drive. As you grow and you go upstream, it changes inevitably.
But the sense of accomplishment that we as a team have done as well as we have done and no one else could do at one-tenth the size and one one-hundredth the budget — and I don't know these numbers exactly but I know that other teams in other companies that tried to do what we did with 10 times the number of people couldn't deliver.
And I find that kind of funny as a former Silicon Valley software developer. Sometimes you get the David vs. Goliath thing and we are the David but we certainly beat everyone else in the industry on that subject.
Now, in the ben admin world there are some very significant and successful competitors. Firms have done great. Benefitfocus always had its name out there. There's a lot of them. It’s not just benefitsCONNECT. It will be fun to see them take it to the next level with benefitexpress.
EBA: Do you have a stack of books or movie to catch up on?
Underwood: That's literally what I am going to do. My dad has a boat in San Diego and I have probably started a dozen books in the last few years and I finished one of them so I think I have eleven to finish.
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