Case Study Of A Dotcom, Part 2 Our final look at the trials and tribulations of SimplyHealth.com

Two weeks ago, we began our case study of SimplyHealth.com, a health insurance sitetargeted at consumers and small businesses. When we left off,things were going swimmingly for Eric Grossman's company. Tooswimmingly, perhaps? We'd tell you, but then you probablywouldn't read the rest of this article. So keep reading. (Andif you missed the first part, do some backtracking. We can't do everything, youknow.)

April 2000
SimplyHealth is getting set for an April 14 launch, but NASDAQplays a cruel joke on the fledgling dotcom, plummeting 15 percent.And, as if in sync, Georgia's usually balmy April weather takesa downturn on launch day. The outdoor event atop the Chamber ofCommerce building, is, to say the least, weather-challenged."We were saved by a tent, an awesome band and spaceheaters," says Grossman.

On Monday, April 17, another blow. A major new investor pullsout, reeling at the effects of its own stock slide. Grossman,surrounded by disheartened employees, is no longer riding astallion amid the Internet gold rush; he's trudging along in acovered wagon, hauling a heavy load of employee and investorexpectations. "I was so stressed out, all the hair on the backof my head fell out," he says. "We needed a new leadinvestor."

May 2000
SimplyHealth gets its first online enrollee, brightening employeemorale somewhat. "Between April 14 and June 2, [employees]were a little nervous about what was going to happen to thecompany," says Mark Poling, SimplyHealth's vice presidentof technology.

Still, everyone hunkers down, looking to Grossman for a miracle.And along comes June.

June 2000
With money running dry, SimplyHealth.com carries out two coups: 1)receiving $26 million in venture capital from SSM Ventures on June2, and 2) becoming Healtheon/WebMD's exclusive provider ofhealth insurance information and purchase options. Heavy hitterssuch as K. Robert Draughon of WebMD and Jim Witherington of SSMVentures take their places on the SimplyHealth.com board ofdirectors. As if on cue, employee morale and confidence reach anall-time high.

July 2000
Things are coasting along, with orders picking up. Grossman formspartnerships with Ebix, an aggregator of insurance leads; MACOC,the 1 million-member Metropolitan Atlanta Chamber of Commerce; andehealthclaim, an employee health-benefit management ASP, amongothers. Next step: new office space!

August 2000
In true dotcom start-up form, SimplyHealth comes into its own in aposh glass and chrome building in Midtown, one of the city'shottest revitalized areas. With 25,000 square feet of office space,including a rec room with two Foozball tables, a lunchroom and fourconference rooms, "SimplyHealth is poised for growth-we looklike a company," says Grossman.

September 2000
Grossman marries sweetheart Christi Bennett in an antebellummansion and honeymoons in Maui for a week ("all the boss wouldallow me to take," he jokes). On the business front,"[I'm] hunkering down until we can go back to the marketwith a clear path of profitability." Translation: He wants tomake sure the company has a cost-effective business model. Grossmanwatches with interest as other dotcoms go under-and meanwhile formsa partnership with Beverly Hills, California-based SurvivalInsurance Brokerage, which enables consumers to purchase health andservice auto insurance through its Web site. This givesSimplyHealth another outlet to reach consumers.

November 2000
To avoid guilt by association with failing Internet firms, Grossmandrops the ".com" from the official corporate name,leaving it as SimplyHealth Inc. "We want to be viewed as acompany, not a destination," he says.

Grossman looks for ways to diversify the company's revenuestream and focuses on developing more partnerships with suppliers."It's all complementary," he says. "Everythingwe build on the Web site we can leverage to health plans." Thecompany is agency-licensed in all 50 states and offers onlineservices in 35. "We can't just have marching vision; wemust be marching together internally," he says. SimplyHealthforms a global technology partnership with Cap Gemini Ernst &Young.

December 2000
Despite the market downturn and the slide into the abyss by many ofSimplyHealth's Internet counterparts, Grossman says the companyis on track, serving the one out of 10 Americans not covered byhealth insurance, producing an incremental revenue stream andfocusing on a segment of the market that general agencieshaven't been able to effectively service themselves.

Present Day.AndBeyond
"Our revenue stream has been growing constantly at 30 percentper month.exceeding [forecasts]," says Grossman."All signs are positive that we will not need additionalcapital, and we're [expecting] to be profitable in2002."

How can he be so sure? "Every customer grows our revenuestream," says Grossman. "More important, not only are webecoming a business-to-consumer company, but we're developing abusiness-to-business model. How many companies can say they'veraised $30 million since April 2000?"

Author Lathrop, whose article became Grossman's call toarms, predicts that future employee benefits packages may includecommingled health and retirement benefits. "As [the cost of]health benefits goes up, employers will be looking at new ways tosolve the dilemma," says Lathrop, now retired and serving asBooz-Allen & Hamilton's national advisor on managed care."Healthy young workers may opt for a high medical deductiblein favor of more funds for retirement, while older workers withmore health-care needs may select plans with lower retirementbenefits and higher health-care benefits. If this happens,employers will need people like SimplyHealth as a window into thehealth insurance market. Eric is building his business, learningfast and learning what it will take to operate in that world.He'll be first in line." Grossman is ready to lead theparade.

Mickey Goodman, a freelance writer in Atlanta, has writtenfor Atlanta Magazine, Style Magazine, SouthernFlair and other publications.