Ten years ago, two kinds of insurtech startups emerged: those aiming to reinvent insurance from the ground up, and those working to enhance it from within. The first group viewed the industry as broken. The second drove change by partnering with existing carriers and MGAs to modernize specific links in the insurance value chain.
A decade later, many of the radical disruptors have disappeared or continue to struggle with profitability. The others—those built with incumbents, not against them—remain and are growing stronger.
I have had a front-row seat for this evolution. After spending my early career guiding enterprise insurance IT strategies, I co-founded an insurtech startup that has now crossed the 10-year mark. Along the way, I have learned innumerable hard lessons—some just in time, others a bit too late.
Understand your motivation and be ready to give it everything
Running a business is inherently risky. Regardless of how brilliant your idea is or how much market research you perform, you will face multiple unknowns. These may include increased competition or changing customer sentiment. For these reasons, aspiring founders must assess their own motivations and risk tolerance to ensure they are up for the task over the long haul.
For me, entrepreneurship was part of my DNA. In my youth, I was rebellious and headstrong. Playing it safe did not hold any appeal. I knew I would be willing to gamble everything once the right opportunity presented itself. Yet I also considered myself a responsible entrepreneur. I earned my degree, post grad finance qualification, got married had three children and chose to be an employee before I became a founder so I could gain industry expertise and provide for my family.
Finally, in my 40s, while working at Hiscox, the stars aligned. I met a colleague and future co-founder who was evangelical about the future of cloud computing. My background in business and technology strategy and system operations gave me insights around how insurance could be run. Together, we saw the opportunity to democratize technology and put it in the hands of every insurance professional. I was certain the market would embrace it. So, I put it all on the line—the house, the cars, everything I owned. And I never looked back.
Find your funding
One of the first questions entrepreneurs face is whether to bootstrap their companies or
Of course, bootstrapping brings multiple potential benefits to founders as well.
Hire your first employees
For as much as my co-founder and I knew about the industry prior to launch, we woefully underestimated the challenge of finding the right employees to join our venture. Some of our earliest hires let us down. It was not their fault, however. Instead, it was because we failed to understand the huge perception gap that exists between how founders view their companies and how employees view them.
As a founder, you have a psychological contract with your business and are vested in every way. You assume every employee will see your startup the same way and jump on board with boundless enthusiasm. When you take off those rose-tinted spectacles, however, you start to see things more clearly. Some employees may share your entrepreneurial drive, but others will not. They may sound vested in an interview, but their job performance will not match up.
Compounding the recruitment problem for us was our decision to bootstrap. With fewer financial resources early on, we had to set salaries at the lower end of the scale. We hoped to attract talent with a grand vision and an options-based package, but as an early-stage company, those options did not offer nearly enough incentive. As a result, we struggled with hiring for far too long.
This hardship taught us two invaluable lessons about attracting talent. One, founders must look at their company through the lens of their employees, and not through their own. Two, unless you connect your startup to a higher purpose, most employees will see your company as just another job.
Define your culture
While you can find a few examples of startups that scaled solely through the founder's hubris, most of those have failed. Scaling a startup successfully requires both the confidence to follow your dream and the humility of understanding that you need to work with others, including your colleagues and customers. Startups that take in other influences outside of the founder's own personality will achieve staying power. The key is to develop a responsive company culture and then compare it to your shadow culture which presents itself through lived experience in the company as well as its ability to morph as other employees join. You effectively then get the real-world feedback from outside the organization.
We built our startup around the core principles of openness and transparency and strived to create a stated culture of meritocracy. In recent years, we have begun sharing powerful customer stories with our employees so they can see the real-world impact they make every day. This approach has delivered results. Three years ago, we had 20 or 30 applicants for each open position. Today, we average 250 applicants per position, all because we became intentional about improving the value proposition of working at our company.
Embrace constant evolution
The past decade saw insurtech evolve from renegade disruption to collaborative innovation. Our company benefitted from the tremendous initial curiosity around insurtech a decade ago, yet simultaneously, we struggled to gain the attraction of large carriers that were understandably more risk averse.
Founders today are entering a far different environment. Insurtech is widely embraced by even the largest carriers and MGAs, and the rise of artificial intelligence has put efficiency and automation on the radar of every executive team. As a result, the future is almost limitless.
In this new era of insurtech, founders who are clear on their company's purpose and view themselves as success enablers for incumbents will find tremendous opportunities. My advice to this next generation: Be brave—but also prepare to be extraordinarily patient. Because despite what you might believe, success seldom happens overnight.
