You are the engagement manager of a strategy consulting team that was just hired to serve Your Life is Worth It, an life insurance company based in Destin, Florida (you are very excited to be able to travel to the Gulf Coast to meet with your client). Your Life is Worth It has brought revolutionary, non-traditional underwriting to this once stagnant industry. In the process, the company has helped millions of millennials (and other consumers) protect their families' financial futures. However, the company has recently faced challenges as it prepares to undertake a Series F round of venture capital fundraising in 2021. While revenues continue to increase, numerous leading venture capitalists, including investors in prior rounds, have expressed reservations about the Series F round. The company's founder and CEO is counting on you to "save" the Series F which is of enormous importance to the company's investors and team members. Without this additional fundraising, Your Life is Worth It will be unable to continue writing new life insurance policies and likely will be placed into receivership by the bankruptcy courts.

Henrietta "Harrie" Smith is the founder and CEO of Your Life is Worth It. She started the company in Washington, DC in 2012 after she was quoted what she considered an astronomical premium amount for term life insurance. The firm is now licensed to write life insurance in all 50 US states. Seeking more light in her life, lower taxes, and more affordable employee salaries, Harrie moved the company to Destin in 2015.

The company's early rounds of funding were from angel investors. Later rounds also included venture capital funds, including the venture arms of numerous Wall Street banks and some of Silicon Valley's most successful VC shops.

Your Life is Worth It's business model is quite simple and builds on the success of simple, digital insurance offerings (think Lemonade) in other subsectors of the insurance industry. Consumers can get an account on the company's website or app and answer a series of questions about their interests and activities. The answers to these seemingly innocuous questions are plugged into an algorithm to determine each applicant's RL ("risk-loving") score. Scores range from 1 (totally risk averse) to 100 (totally risk loving). Each applicant's RL score is combined with the applicants age, sex, tobacco history, and answers to five health questions. A premium quote is generated in less than one minute, and the entire process can be completed in less than 20 minutes.

As an example, a non-smoking millennial applicant who was very risk averse and answered "no" to the five health questions would pay just $19 per month for a $1 million 20-year term life policy. A risk-loving applicant of the same age, sex, and tobacco history and with the same answers to the health questions would pay $159 per month for the same policy. Your Life is Worth It's premia are significantly below those of traditional life insurers for risk averse individuals and far above those of traditional life insures for risk loving individuals. In this way, the company self-selects its clients. To date, this strategy has been very successful as the leading cause of death in young people is accidents.

Your Life is Worth It primarily markets its services through social media and internet search ads. The company also markets itself during television programs (live and on demand) geared towards millennials and Gen Z. To date, all of INSURED's growth has been organic. It has not engaged in any M&A.

Your Life is Worth It's secret sauce is the RL algorithm. Before an applicant begins the application for Your Life is Worth It, the applicant must acknowledge a truthful warning that lying on the application constitutes insurance fraud and carries serious criminal and civil penalties. The alogrithm has been carefully reviewed and refined and is both highly effective and clearly legal under all relevant regulations.

While Your Life is Worth It's revenues have far exceeded its actual cash expenses in each of the last 7 years, state insurance regulations require that the company maintain reserves for each policy outstanding to ensure that the company will be able to pay all subsequent claims. Even though Your Life is Worth It receives monthly premia throughout the term of the policy (the company only sells term life insurance) all of the reserves related to a policy must be booked as expenses is the quarter in which the reserves are set aside. The reserves are kept in an escrow account and can be invested in Treasury bonds and only earn negligible interest which is approximately equal to the rate of inflation. The company cannot utilize the reserves except to pay out death benefits which are always paid from reserves. To date, the company has paid few death benefits given the relatively small number of

policies written and the relative youth of most of the company's customers. (Death benefits explain why net cumulative reserves is not always exactly equal to the prior year's cumulative reserves plus the new reserves in the current year.)

Below, you can find data on revenues, actual cash expenses, new reserves in the given year, and total cumulative reserves for the last five fiscal years:

2015

Revenues: $31 million

Actual Cash Expenses: $28 million

New Reserves: $10 million

Total Cumulative Reserves: $21 million

Net Profit: -$7 million

2016

Revenues: $68 million

Actual Cash Expenses: $63 million

New Reserves: $13 million

Total Cumulative Reserves: $33 million

Net Profit: -$8 million

2017

Revenues: $110 million

Actual Cash Expenses: $98 million

New Reserves: $17 million

Total Cumulative Reserves: $49 million

Net Profit: -$5 million

2018

Revenues: $156 million

Actual Cash Expenses: $142 million

New Reserves: $19 million

Total Cumulative Reserves: $66 million

Net Profit: -$5 million

2019

Revenues: $226 million

Actual Cash Expenses: $208 million

New Reserves: $28 million

Total Cumulative Reserves: $91 million

Net Profit: -$10 million

In speaking with Harrie, you are amazed at how well the company understand its clients and their experiences and challenges in finding fairly priced and convenient life insurance.

IMPORTANT NOTE: Management consultants are often brought in to assist with the strategic due diligence of a company in the lead up to a sale, a significant new investment, and/or an initial public offering. You job in such situations is not to consider if you would personally be a customer of the company's products or services. In many cases, again as is the case here, the demand for the company's products or services has already been proven. Your role is not to question how that demand could possibly exist (which can be difficult if you don't find the offering compelling) but instead to consider the strategic implications of the business model, its sustainability, and how the company's strategy can be enhanced to attain its goals.

Part One (or Less)

Harrie cannot understand why venture capital firms are hesitant to invest in Your Life is Worth It's Series F when the firm's revenues continue to increase year after year (see the data above) and the firm's paper losses are only due to accounting rules. If the company stopped selling new policies today, net profits would continue to positive for many years.

Harrie has shown you the slide deck that she used during the Series F roadshow that she and her team just concluded. During the roadshow, the Your Life is Worth It team met with top venture capitalists across the nation and around the globe. You note that in that presentation, Harrie convincingly lays out a plan for 15X revenue growth over the next decade. She reports to you that when she presented that particular slide investors seemed to get even more concerned, and she cannot understand why.

Harrie assumed that it must be that the investors did not believe her revenue growth plans and/or that they did not think that the plans were aggressive enough so as the roadshow went on Harrie became more emphatic about the company's growth and even suggested that 20X or 30X growth could be possible.

Harrie is open to any and all explanations regarding why the Series F is being met with such fierce resistance.

Please state (using a framework we have often discussed) and structure (using one of the methods we have studied in great depth) the problem that you have been asked to solve and explain how you and your team will analyze this problem in a rigorous manner using the structure you propose.

In addition, please identify the problem-solving pitfall(s) into which Harrie appears to have fallen which have impaired her ability to solve this problem. Please explain why this/these pitfall(s) apply to Harrie in this case. (Hint: We have learned about a series of potential pitfalls earlier in the class.)

Part Two ( or Less)

Next, leveraging the information and especially the data in the case, please explain why you think that venture capitalists might be concerned about investing in Your Life is Worth It particularly if revenues are expected to increase 15X over the next decade even though revenues have been increasing to date. In other words, solve the problem

Please be as specific as possible in answering this question getting as close to the root cause as possible and suggest how Harrie might want to pivot the company's strategy to overcome the objections of investors. You may want to include a slide or two with your answer to this question.

Part Three ()

In order to try and make Your Life is Worth It more attractive to investors, Harrie is separately considering expanding the business into other related fields in which she could leverage the firm's successful proprietary algorithm. For example, Harrie is considering competing with disability insurance companies for younger customers as she believes Your Life is Worth It can better measure risks (particularly for younger professionals) than the incumbents in this industry.

Harrie understands that at Harvard (she is very impressed with your education, by the way) you read a chapter or two as well as some articles regarding how to better understand users and their lived experiences. Using this framework, Harrie has asked you to put together a plan for his team to study these potential clients and develop various services that will best meet their needs. (Hint: You are not expected to come up with more than two or three actual service offerings for these new clients. Instead, you should mostly focus on explaining step-by-step how you would gain a better understanding of these potential clients and how you would develop services to meet their needs. This question is primarily about the process you would undertake to study and learn. It is only secondarily about the substance of the services that Harrie would ultimately offer these potential clients.)

Please be as specific as possible regarding the tools you would use and the guidelines that you would set in this project.

Part 4 ()

While you are home on Saturday afternoon, you received a frantic call from Harrie. She said that she was listening to a podcast and just heard about this innovative concept called the "Power Curve" and how the authors (that work for a competing management consulting firm) are leveraging this concept to changes strategic planning. Harrie is sure that you must know about this "Power Curve" and has numerous questions for you.

First, she would like to understand what the "Power Curve" is and why it is important for companies and industries.

Second, she has heard that Your Life is Worth It's industry is in the third or middle quintile on the "Power Curve". She is wondering what this means and how it is relevant to the company's potential future.

Finally, Harrie understands that there are 10 levers that CEOs can use to move up the "Power Curve." Harrie is very ambitious and never met a financial curve that she would not like to move up. So, she is wondering which of these 10 levers might be relevant to her business. She knows that not all the levers would be relevant to her business which is not public yet and that she has not yet shared with you all of the information required for some of the levers. Nevertheless, Harrie is really hoping that you can suggest two or three levers that she could pull. Please identify the two or three relevant levers of which Harrie should be aware and let her know what she might do to move these levers in the positive direction at Your Life is Worth It.

Part 5 ()

As you seek to manage the various projects (Parts 1-3) for Your Life is Worth It and as your team has ballooned to include 20 consultants and 30 Your Life is Worth It partners, you are beginning to feel overwhelmed. As a seasoned management consultant, you know that a project plan will really help you feel more relaxed and confident.

Please identify the various stages of any good project plan and the key guidelines for and components of each stage in a generic project plan. (Hint: This part of the question is not specific to Your Life is Worth It).

Given that the scope of your work with Your Life is Worth It has already expanded to include studying potential users in new service areas, you are very worried that the project could expand out of control to a point that it is no longer profitable for your firm (this would result in your losing your job). Please identify two strategies that you can utilize to prevent such an expansion in project scope and apply these to the Your Life is Worth It case.