EP36: How Vouch is Helping VC-Backed Startups (with Travis Hedge)

In this episode, Nick spoke with Travis Hedge, co-founder of Vouch. Vouch is a digital MGA which helps other startups manage their risk and insurance. They discuss the challenges of measuring the exposure to risk for companies that are growing rapidly and potentially changing over time, where insurance and risk-management might be the last thing on their mind. They dive into the impact of COVID and how Vouch remains close to companies as they mature through various phases of their development. Though the episode seems to end, we added a wait-for-it moment at the end, where Vouch makes their latest announcement…so WAIT FOR IT!

 

Watch here:

Connect:
Travis Hedge (LinkedIn) – https://www.linkedin.com/in/travishedge/
Vouch (Homepage) – https://www.vouch.us/

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Transcript

Nick
And we're live. This is the Coverager Podcast. My name is Nick Lamparelli. I am in podcasting headquarters in Naples, Florida. And today we're gonna be talking about small business and small business insurance and Insurtech and FinTech and a whole bunch of stuff. My guest is Travis Hedge. Travis. Welcome.

Travis H
Thanks, Nick. Happy to be here.

Nick
Happy Happy to have you. It's gonna be awesome. Travis, I start every episode by allowing the guests a little elevator pitch. So who is Travis Hedge? What do you do? Tell us why tell us why it's important.

Travis H
Yeah. So thanks for having me. I'm one of the co founders of Vouch Insurance. And Vouch is an insurer for the technology industry. So we focus solely on venture backed technology companies today we serve seed and series a stage companies with the business insurance that they need to grow. So whether it be the D&O that's required by the investor joining the board, the general liability required by their landlord, although that's a rapidly changing topic, we'll talk more about today or the E&O, in cyber required by their customers, because we're the underwriter and we control really the full value chain that enables us to do you know, provide that insurance in less than 10 minutes, active same day. It's all really uniquely tailored to the needs of venture backed technology companies.

Nick
Yep. fantastic. Those that have followed my podcasting career know that, Travis, this is old hat for him. So he's, he's been on before, we will travail some paths that we did before. But I think we're gonna get into some new territory as well, and really getting some of the technical details when it comes to their specific business model and how they have thought about it from launch to where they're going now. And maybe where they see themselves in the future. So I would be remiss, Travis, you did bring up small business and how things have changed for them. Now, you have a vantage point, you see a lot of small businesses, especially like you said, the ones that are sort of venture backed, which means these are companies that kind of thrive in functioning in area where, where losses are kind of expected, you know, that they're, they're experimenting and working on a lot of stuff. So you wouldn't necessarily describe a lot of these companies as having a cushion of cash to kind of make it through things. The pandemic must have hurt. But can you from what you've seen with your insureds and your policyholders and the small businesses that you get to interact with on a day to day basis? How, how did they weather it?

Travis H
So I'll start with there's actually, I think, a really important difference between venture backed startups and your typical small business. And I actually think one of the reasons Vouch exists is that in insurance today, they get lumped together in a lot of ways. And so you know, the general liability product that a venture backed technology company is buying is the same one that a small business on Main Street is going to buy today. And the challenge with that is, you know, there have fundamentally different risk exposures, your typical startup might be, you know, working in, WeWorks for a distributed team that does most of their interactions on slack and zoom versus having maybe a physical storefront. Right. And so I think those are some of the really important differences between the category that we're really narrowly focused on, and small businesses more broadly. Now, we've had it really interesting, I would say, like perspective into both because a lot of our customers also serve small businesses that have been directly impacted by things. And so when I go back to March, when you know, crisis, first hit, we are in the lockdown. Look, step one was really looking inward and making sure that we're taking care of our team and that, you know, folks are okay, at the same time, you know, what is the impact that this is going to have on our business? And so, we looked at, you know, we went through our entire customer base and tried to analyze, okay, well, who, you know, who might be impacted by this? How should we respond, we did issue a 20% COVID, premium refund proactively in q2, they ended up I think, becoming requirements certain states eventually, but what we saw was, frankly, we should have ever done the crystal ball business because I think the companies that we expected to maybe struggle through this that perhaps served the restaurant industry, or, you know, had a you know, they serve small businesses. You know, what's been really cool to see is how quickly those companies have actually responded in a lot of ways thriving like companies that come back to us and said, Hey, we need new COis because we sign all these new deals with this new product we rolled out in the last six weeks. That's really cool to see. Because I've also seen the other side of it. You know, Nick, last time you and I talked about the fact that my my dad runs a small independent insurance agency in Columbus, Ohio, and they work with a lot of small businesses and frankly, some of the most stressful conversations I had back in March and April were, talking to them about the struggles that they were facing that their clients were facing every day. And you know that that had a major impact. And now I think, you know, a lot of our customers are fortunate and that their their venture back, they do have a maybe a little bit of extra cushion, you know, versus maybe a more bootstrapped company. But you know, that the the runway doesn't last forever. And so I think a lot of companies had to get really creative in terms of how do we extend that runway, perhaps pivot our business, others have had huge tailwind, quite frankly. And so some of the things that we're seeing, for instance, I think a really great example of this is, you know, we have one client company called Neighbor out of Utah. So they're backed by Andreessen Horowitz. They're a platform, think of them as almost like an Airbnb for storage. Right, so they let you open up your garage and turn it into a storage unit for your neighborhood. Well, a couple months ago, they launched a new service for to let offices in San Francisco, turn themselves into storage units, because at the same time, every week, we have we have customers reaching out to us saying, Hey, we're closing our office moving all of our furniture into a storage unit, can you help us make sure that our coverage reflects that? And so it's been really interesting to see kind of both sides of that coin, how companies are responding internally? And how a lot of our clients are, you know, nimble enough to be able to provide solutions for this unique moment in time.

Nick
I guess, given the cross section of startups and companies that you're dealing with, they probably lean very heavily on the tech side of things. And so it does sort of make sense in some ways where there would be this, you know, good because we see it in like traditional insurance, where all of a sudden, legacy insurers who have struggled with tech and with digitization, now sort of have permission to kind of put the throttle down and like get digital fast. And so companies that sort of provide those sort of solutions will be in highly in demand. Very likely. So I'm wondering if they like you saw some of that?

Oh, absolutely. Um, we have a lot of a lot of our customers that are in the sort of remote collaboration space, and a number of new companies that keep coming in that are getting started in to solve those problems, right. Anytime you have economic crisis like this. It's a huge spike in new businesses being created, right? And if you look back to the last recession, you had Uber, Airbnb, Twilio, you name it, all kind of created in response to the crisis. And you look back at the number of billion dollar plus companies created, there's a huge spike around recessions. And so try that long way of saying, I think there's a lot of really interesting stuff happening there right now. And in particular, a lot of the collaboration tools are a really important part of the story. However, I will say that, you know, have a lot of friends that, you know, legacy carriers that that I still talk to quite frequently. And I'm not sure that every company has fully leaned into that yet. I know at least one example of a fortune 100 insurer, that forced everyone to come back into the office recently, because they found it just wasn't working. And so you know, I think maybe that's the piece where I would, I would really, yeah, I think we see it as well. We know, we want to get back to the office and collaborate with our people. In a lot of ways we think about technology as a tool for how do you make humans more effective? And you know, that might look different in a company like Vouch than it does in a fortune 100 insurer.

That's really interesting. And part of your business model as well has to be being nimble, right? Because the companies that you're dealing with, or, you know, pivots are just sort of accepted is it's a common thing. And so the types of small businesses that you're dealing with are small businesses growing rapidly, but also changing on the fly. So I love that I love the concept of when you brought up was that Neighbor or neighborhood?

Travis H
Neighbor Yeah,

Nick
Neighbor. And I'm thinking, how do you handle that exposure? Like, how do you have that conversation like that, you know, the exposures changed? And how do you deal with that, and so you must see that a lot. It talk a little bit about that part of your business model and how you as a company need to stay flexible, you can't have like, you know, ISO forms that last 10 years without necessarily being changed, like you have stuff where policy languages need to be changed, what the exposure is, where it is, like that the covenants and all of that other stuff, talking about that challenge.

Yeah, well, and part of this comes back to conversation, you and I've had Nick around, like, what pieces do you want to own and really innovate around versus what do you need to rely on kind of the industry, what exists today, and you know, out of the gate, but we knew that this rapid change, whether it be growth or kind of pivoting to a new direction, that it would be really important that we were frankly, the most flexible, the most responsive insurer in the market, because that's what our customers demand. And I remember, you know, early days of the company, I'm sure, pretty much everyone can relate to this, you have this grand vision of like, Oh, I'm gonna have a insurance policy that, you know, responds like within the hour. And we can, it can be hyper flexible, what the reality is, that's not how regulations are structured today, we still thought, you know, we operate with reinsurance, at the end of the day, our customers are required to get coverage by their counterparties, their customers, their investors, etc. And they specify the need for a specific kind of insurance that is well known within the market today. So you got to start with, how do we improve upon the things that are required for our customers today. And we do that by making it incredibly simple for them to come in and make changes. So first and foremost is when a customer knows that they need to make a change to their insurance, you make it so that they can come in and do that within 24 hours that they don't have to pay for a COI or an endorsement, that they can come in and make those changes very quickly. And it's active within 24 hours. So that's step one. Step two, though, is that if you think about a lot of the customers we work with, they probably don't realize that their exposures are changing, or that their risk is evolved. That's actually a lot of the value we bring to the table. Yeah, these might be people that are building their first company for the first time I look at my brother's a 20 year old college dropout entrepreneur, his perspective on how to build a company is gonna be very different than my co founder, Sam, who's done it three times, right. So a lot of the value that we can bring to the table is monitoring, for instance, like their headcount on LinkedIn, or their funding activity on Pitchbook, or some of these other things that you can say, Hey, we noticed your headcount tripled in the last six months, like you might want to check this out. And sort of sending them those push notifications. Not in a pushy salesy hey, you need some more insurance way. But a Hey, we're here to help you keep an eye on your risks and make sure that your covered?

Yeah, which is crazy, right? Because they're so busy just trying to build a business that it might be something in a traditional, small business that they might think about, like, Oh, hey, you know, we just bought this building, we should probably, you know, schedule it on our insurance policy. But if you're like that busy trying to grow a company, or it's where your headcount is growing at, you know, is doubling like, every six months, or whatever, you're probably just so busy, just trying, just trying to, like keep the fires down, that you forget. Right?

Total. I mean, you've got when you've got 20 new customers sitting in your inbox, what are you gonna do you gonna reply to them? Or you're gonna go change your insurance?

Yeah, I would change my insurance. Yeah,

Travis H
yeah. Right. Right. Yeah.

Nick
So like, that's, that's the tough part. And so now, that kind of gets into the other part of your business model? Because you need to make trade offs in terms of your, you know, your technology, your stack, what are we going to focus on? And so you just brought up like, a couple key points like, Hey, you know, we're, we're keeping track of your employee headcount on LinkedIn. And it's like, that's not something a traditional brokerage or agency does, you sort of have to, you sort of have to build in safeguards and other things that other agencies wouldn't have to because your client companies are evolving so quickly and rapidly and drastically. Talk about how you think about technology like that's, you know, it, obviously, you're an Insurtech, right. So it's like in your DNA, but there's something more like it has to be endemic, and a whole bunch of other stuff. Because if that part goes away, then you become almost like traditional, right? And you sort of lose some of that value add that you were just talking about?

Travis H
Yeah, well, in a lot of ways, for us, it really comes down to technology is a tool to make people more effective. And our first value as a company is to put people first now, technology is a tool to make not only ourselves more effective, but our customers, right, that it's a it's across both sides. And so I look at our customer experience, really comprehensive of the digital onboarding experience, and the customer service human elements that get alongside that. So, you know, we look at our average onboarding times, and obviously, the different kind of drop off we get throughout the funnel, then we want to address those but you know, about half of our customers, everybody can come in and self serve, you know, people bought $15,000 worth of coverage in less than 12 minutes or less. But about half of people still want to jump on a zoom call and have that conversation with an insurance advisor, walk them through the process, help them make those choices. And so, you know, in a lot of ways I look at first and foremost, how do we minimize the amount of time that cognitive load that a founder or a CEO or CFO at a startup has to spend on insurance. So job number one is to make their job easier. Job number two, though, is Also to enable our insurance advisors to not just work with, you know, one company at a time, or 10 companies at a time, but dozens or hundreds of companies at a time, because we're doing a great job of providing with them with the information, the tools that they need to be successful. And I will say that, like the fact that we are so narrowly focused on venture backed businesses means that they're able to go much deeper, I think in that risk conversation, because that's all it's all they do all day. So from a technology perspective, the challenge with that is, each part of our business operates on very different time horizons. You know, we've got, I'm responsible for go to market and vouch, we operate on daily, weekly cadences. It's a it's a very fast, fast pace. Our technology, our ypad was where we got engineering, product design, works in two weeks sprint cycles, and we try to really align upon that. And in a lot of ways, our underwriting team also works in fast returns, but to develop new insurance programs is a six to 18 month process. And so, you know, yes, we are giving you a good example. Yes, we want to provide an amazing claims experience. And we do that through a combination of technology and great people. But one of the biggest impacts that we can make is delivering great coverage that is that the policy actually responds when the customer expects it to. And so you can't just make a change to your claims overnight, you have to make sure that the policy is going to go to effect, 12 months from now, you know, is is doing the right things for the customer. And so that means that you can't operate in silos. And I think one of the biggest changes for us in businesses, when we first launch Vouch for over the last two years, you know, it was a handful of people in a room at first and we're able to, you know, Kelly Roddick, wherever look at each other and make decisions really quickly cross functionally across technology, insurance, go to market. But today now that we're about 55 people sitting across, well, different offices, but frankly, you know, we have 55 different offices today. How do you make sure that those those timelines align with each other and that decisions are made and not decisions are made, but they're also executed against in a really cohesive manner that everyone's aligned. And so as we've grown, we've had to really reorient ourselves around our most important objectives, right and say, cross functionally, these are the people within Vouch, that are focused on growth. And these are the people at Vouch that are focused on our customer experience, etc. Not to say that, you know, we've got the magic formula or anything like that, but that's just what's worked for us.

Nick
Yeah, you also have, given the company clientele that you have, you also have the opportunity to sort of flip, flip the script a little bit, where you could potentially insert or integrate insurance into their workflow, like, you know, something that they can offer or, you know, provide or get into their business model. Has that happened? How do you? How do you think about that, whether it's your clientele, or outside? How do you think about getting your Insurance Solutions into other technology?

Yeah, it's great question. So first of all, we want to meet our customers at those moments, where insurance is in need these sort of milestone moments in a business and to date that is, you know, largely focused on our partnership with Silicon Valley Bank, Y Combinator that are there at this sort of the funding moment, or the hiring moment, and really integrating ourselves within their workflows, whether those be their technology environment, where we want to be a button, you know, within their experience, or, you know, within their sales teams that are working with customers every day. Want to make sure that when insurance is in need Vouch is top of mind. From a technology perspective, though, you know, and especially when I look at the opportunity that we have to work with our clients, this is where I get really excited, because we've talked about this, like, yeah, insurance is one important part of the equation. But I think, you know, the rule of thumb in the industry is like roughly 30% of business risk is insurable. The other 70% I think, is incredibly important. We talked about this a few minutes ago, I use the analogy of startups are kind of like the teenage drivers of the insurance market, you've got a really wide spectrum of sophistication. Everyone's just trying to get to a to b, but like, they're going to do it in very different ways. And so you might have the I mentioned earlier, you get the college dropout, maybe that is brilliant, has a great idea. But that's very high beta, right? It's, it's either gonna work out really well or it's not, you've got meanwhile, you've got maybe the experienced operator that's been around the block a couple times that knows how important it is to invest in things like HR, legal, etc, out of the gate. And so we look at the world is okay, well, first, you know, we want from a risk perspective, we obviously want to ensure the more sophisticated founders that are doing things the right way. And there's a bunch of really interesting research out there around this topic. And how do we provide the tools so that that first time founder can do things the right way, and that we can take them up the learning curve from a, you know, a teenage driver to a more experienced driver as quickly as possible. And you know, I look at I'll use the analogy of Root Insurance who was really fortunate to work with that team back in the early days, where they use the mobile phone, as, you know, sensors on your driving ability? Well, we we want to use the tools that founders use every day to build a business as sensors on the business to help coach them on risk, and, you know, making the foundational investments to help them scale successfully. And so the first Well, first, you know, SMB customers can integrate Vouch with their bank account, so that we can help you know, advise them on risk as they scale. I think the one to get to your point around our clients and start to work with partnership we recently announced I'm really excited about is with a company called Athena that does anti harassment training in slack in a really modern way. It's not like the 90s style video, you know, that that you're forced to watch. It's a really modern solution. And we're making that free for Vouch customers that have less than 15 employees. And it's 20% off as you scale. Now, the assumption, the question I get from insurance folks all the time is Oh, so that's for your EPLI policy, right? I have no, actually, that's true, whether you have general liability without D&O, EPLI, because investing in your people is a super predictor for risk management being pervasive across the company. And you know, there's one ingredient that matters more than anything at a startup, it's your people. And so we want that, you know, we want to really encourage our companies to invest in that.

Yeah. Aside from Silicon Valley Bank and Y Combinator, do you have any access to, you know, other accelerators or incubators or other places where startups, specifically venture backed ones are hitting those milestones?

Yeah, so we're really fortunate to have over 200 referral partners across the country that we work with us with so whether that be 500-startups, you know, here in the Bay Area, or Capital Factory down in Texas, the way we show up is yes, we have a perk for their portfolio companies. Our entry level coverage starts at $200 a year versus you know, the $350 that's, that's the cheapest we've seen in the market. But I think what's way more interesting is all the content, events and tools that we provide for those communities. So a lot of these, whether it's myself or one of my colleagues, we're part of their slack group so that when founders have a question about what tool to use, or about insurance, we're they're talking to them in slack about it in real time in the communities that they're that we're all a part of. You know, we work with venture firms like, Well, I haven't asked him for approval to mention his name. So I'll hold off. But we work with a lot of venture firms around, you know, making sure that the D&O, they require within their portfolio is is successfully implemented. So they include us sort of at that term sheet phase. Yeah, so I think embedding ourselves within the communities, it's a huge part of what we do.

So is it more likely than not that for a lot of your client companies that you are on their Slack channel?

I don't know. I if I, if I were to maybe add up all the different, like slack communities we're a part of Yeah, there's probably a decent, decent chance that I mean, that's, you could pick one of us.

Yeah, I mean, that's phenomenal. Like, that's, they're, they're probably working in slack on, you know, day to day, all the time. And so for someone to just be able to notify someone at Vouch and say, Hey, I have an insurance question. Like, I've never heard of that. Before. You know, usually it's you got to go to the portal or pick up a phone or something like that. And yeah, that's, that's meeting them where they're where they are.

It's really interesting. So yeah, you can Zoom, Chat, however you want engage with us. We do have a phone line. Although I'll be honest, I think we get more calls on the phone line of people pitching us services than from our customers.

Yeah, of course, of course. How do you how do you approach b2b marketing, you know, and for other startups in the area, like any tips that you that you have or you've learned?

Travis H
Yeah, well, I would say first and foremost, I'm really fortunate to have an awesome partner in marketing, Kai Hansen, he came from more of a consumer FinTech background. And so brought a really an interesting perspective to the table. And frankly, we spent a long time looking for Kai and so

Nick
specifically him?

well looking for the right person. So yeah, for a long time, I was kind of doing it off the side of my desk, and there were some really embarrassing assets we produced as a result.

Travis H
We do like a hall of shame someday

Nick
photoshop's not your your primary piece of software????

Travis H
We did these direct mail experiments in Utah one. So if any Utah founders have a direct mail piece from us, I'd love to see it. I'm the so anyways, long story short, the the our marketing strategy, it's twofold. I think there's the awareness component. And then obviously, there's the Direct acquisition component. And for us, word of mouth, that awareness component is absolutely critical. And that's where one of the biggest things that we found is that once we reach a tipping point in a given market, and that can be defined by geography, or that can be defined by a startup vertical, like enterprise software, or FinTech, once we reach sort of 5% plus market share, the word of mouth starts taking care of itself and so on, you know, the How did you hear about a section in our application? More and more, we're seeing another founder, or my favorite one was, is I don't know I'm a startup in Utah, I just need to use Vouch, which was really cool. Now, there's obviously a lot of work that goes behind that. Yeah, you have to deliver an amazing experience. You have to show up in I think the venue's, the forums, where these conversations are happening. So being a part of, you know, whether it be sponsoring different events, or what we really like to do is host things to really give people an opportunity to come together. So I host, a monthly fin tech founder Roundtable, we're going to do more and more things like that for founder communities. We're, you know, hosting a risk webinar series with our friends at SVB. So there's a lot of different things that we can do like that, really at the top of the funnel. But the other thing is, you know, I think from a we really like to, well, two things I'll add on from a sort of direct acquisition perspective, it's most important that we're finding people when that moment of insurance, that insurance is in need. And that might be 5% of companies at any given point in time, maybe. And so, you know, understanding what tools, who are they talking to, around that fundraising moment, and really focusing our acquisition efforts, they're super important for us. I think that lesson is got to be pretty broadly applicable for anybody, in b2b marketing, to find them in that moment in need. The second thing is, is we take you know, we have a relatively small market, there's like 30,000 companies in the US that make up our market. And so we're able to get pretty granular around account based marketing and identifying in advance, you know, who are the companies in a given space that we really need to prioritize? And how do we, what commonalities do they have? And how do we get in front of them?

Nick
Must be amazing to see your research CRM, because yeah, it's 30,000. But it's, it's rolling, right? Yeah. Like it's, I mean, new companies are starting all the time. So you have to constantly have your finger on the pulse for me to add this to our database. And who are they? And what are they doing?

Yeah, it's it's ongoing. One, and a lot of it is, we can't predict the future. Like, if we were we'd be, you know, I don't know if this is the business we'd be in necessarily, but like, the, a lot of the best founders come, you know, relatively consistently from a lot of the same places. And so there's, there's two components to this one, yes, partnering with the Y Combinator's of the world gives us, you know, amazing exposure to the next generation of companies. At thesame time I actually think it's very important to look beyond where the industry has traditionally played, particularly in a moment like this, where, you know, we've seen emerging markets, you know, I'm biased towards Columbus, Ohio, given I grew up there, but you've also got places like Utah, our first launch market, Austin, Texas, obviously comes up quite a bit. There are markets across the country that have been building amazing technology communities for the last 10/20 years, this moment, time has only accelerated that. And I think, you know, opportunities for underrepresented founders to build companies and overcome those barriers to entry is really powerful. And so that's why we partnered with Transparent Collective to, you know, help facilitate the pathways to building startups for underserved communities. And so, well suffice to say, focus matters and taking a very data driven approach to where to find the best company matters. And I think just philosophically, you know, we're really passionate about lowering the barrier to entry for entrepreneurship to everybody.

Yeah. So, which is interesting, because I think that's a good segue to my next question, because it's probably been over a year since we talked. And I remember asking you like, Hey, you, you're you're dealing with a clientile that's very volatile, meaning that they purposely, you have companies that are going for moonshots, they're dealing in, like, high generally taking high risk bets, to try to get significant market share and all of that, and, and encouraged to do that by the VC community. Like, they don't want 10% return, you know, they need a thousand percent return, they only need they need a few of those to kind of hit because they're expecting the others to kind of fail on that. So we talked about that. And I remember at the time, you, you said, Well, you know, it's still early days, you know, and so we haven't had to worry about them. And a lot of a lot of your portfolio has stuck around with you for time, which means that you must be thinking about the future. Right? And so, you know, these companies are going to grow and sort of mature with you And I think we also had that conversation too. Like, what if they mature and they feel like, Oh, you know, we need to be with one of the big brokers, because that's what big companies do. And you know, we probably still haven't hit that time moment. But I'm wondering, you're in a unique opportunity. Like there, you're positioning yourself as a trusted adviser using technology, and providing a unique and distinctive set of advice for their niche, hitting them at that moment, but knowing, hey, you're VC backed, and you're going through this progression, you're going to need this, you're going to need this and what about this, and we'll be here for you, as you pivot and do this all all this other stuff. So as you mature, as you grow with these companies, how do you see Vouch? Do you see Vouch as continuing to be the trusted advisor and sort of bringing in other solution sets, which is almost hinted on, as you know, hey, we we scan the marketplace, we've seen a lot of startups, this work, you know this, a lot of successful ones do this? And a lot of the unsuccessful ones do this other stuff? Or do you see yourself laser beaming in and saying, no, it's going to be like insurance risk management type of thing, because that's, that's not going to go away, the risk is always going to be that this external uncertainty. If you've got if you have a crystal ball, let's pretend like you, you can't predict the future. How do you see Vouch kind of navigating those two elements of adding more in to provide more services or laser beaming in more?

I think the reality is it has to be a little bit of both. So to your point, I think, no, it's kind of funny, like you, when we were designing a lot of user journey stuff, it's a co series A Series B, there's this kind of trajectory. Well, no one follows the same linear path, like it's all over the place. And so some of the I think signals that really matter and in terms of really a, that signals that a company is kind of shifting gears into that next phase of their business is going to be when they hire for certain roles. So that's their CFO, or GC, a CFO. And that's typically when the insurance buyer changes from being the founder to someone that they've empowered with that decision. And so what matters to that individual is very different than what matters to the founder, right? To the founder, it was okay, I'm really busy. Well, founders are different, right? I don't want to stereotype everybody following the one but

no, but that makes sense. Yeah, they're they they're juggling a lot, headcount is doubling every six months, and, you know, COVID, and they got to kind of they got to survive, they got to keep it in survival mode where as. making that a position, that person is fully responsible for insurance and will get hired, I mean, will get fired if they make bad insurance decisions?

Travis H
Yeah, and let's be like, the reality is that person, you know, once they come in and prove their value to the company shortly, so they're going to revisit things like insurance, a bookkeeper, you know, that's going to happen, it's important that we know when those people join the company, we've had, you know, some of our fastest growing clients have added, like two layers to the organization in the nine months since they bought the policy, right. So, that's one of those things, that's just important for us to stay in touch with our customers around, and I think, really focus on how do you help that new person be successful in their role. And, you know, part of that is the sort of educational value that we can provide around insurance. A part of that is being a truly true risk management partner. With tools like Athena and some of the things that will help you be announcing over the next few months, to both, I think, broaden our reach in terms of impact across the organization, and just obviously, provide more value. And then, you know, I think the, the, at the end of the day price, and you know, quality of coverage is going to drive a lot of the decision, yes, the ease of experience really matters, we found that CFOs that have been a part of a startup before and gone through the insurance process, really don't like the renewal experience and filling out PDFs again. And so, you know, being able to point to the simplicity is helpful, but ultimately, to our conversation a couple minutes ago, like they need to show value. And oftentimes that takes the form of price savings, or, you know, a better solution. And so, it's not enough for us to just have like a really nice digital experience, and some of these cool tools and partnerships, we've got to have the best coverage in the market too. And that's where, you know, our ability to one really narrowly focus on this market and craft I think, really unique coverage solutions, and to learn really quickly, and, you know, follow follow that with the files and new products and the policies that these companies are going to need as a scale really, really important to to our long term success.

Nick
Yeah. You brought up Root. Alex Tim is an advisor to Vouch and so Root has been incredibly successful. Right, and what they've done in the, in the personal line space, starting with auto telematics, going to homeowners. So I'm wondering like, what that advisorship how how that may have influenced Vouch, and what they've gone through, how they've done things, and how that's kind of filtered down to you in terms of decisions that you you've had to make?

Yeah, so I mean, first of all, Alex is a good friend. And I've been really fortunate to, to know him back, you know, since we worked at Nationwide together, and I was really fortunate to be a part of kind of investing in and helping Root in the early days, but I'd say in terms of the impact that's had on us, and you know, we try to catch up at least once a quarter and kind of get his input on different things that we're doing. And, you know, our businesses have a lot of differences. But they're also, you know, some parallels and a lot of ways, there's things that we do that rhyme with each other, if you will. And I think it's, you know, how we think about the velocity within the organization, and the rate of change being one of the most important things out there, how we think about, you know, capital markets and hiring, I think the mix of technology, talent versus insurance, talent is a super important balance to get right. And I think they've done maybe a better job than anybody else at it. And so, you know, I think getting Alex's perspective on things is always helpful in terms of challenging ourselves to think about things a little bit differently, because I think they've done an amazing job of that. But at the same time, recognizing that, like, we have fundamentally different businesses and challenges that we're solving for sometimes. So again, example, you know, my experience at Root made me think, oh, gosh, like, we've got to be a carrier from day one to really control the value chain, etc. Oh, look, the reality is like, we have 10 different lines of coverage. Our biggest states are California, New York, like those just, and, you know, we're writing high limits. And so the capital required to go do something like that. It's just a fundamental, dynamic. Yeah, yeah. And so we had to, you know, go about things in a different way and become an MGU. And, you know, I think our partnership with both Munich Re and State National Insurance really successful. And, you know, but there are parallels, there are things that we just, you know, fundamentally have to do differently.

Yeah. Let's, let's talk about that. Let's, let's finish off the technical part of the questions with that, because that's interesting. I just recently interviewed Mike Gulla from Hippo, he was the first insurance professional at a tech company, we had to had a whole episode on what's that like? You know, you know, and it's, you know, he, you know, went into, it's weird, you know, coming, he went through the traditional legacy insurance incumbents just like we did. And so here he comes in, there's there are these tech guys basically, trying to do that disruption thing. And, you know, in some ways, he had to kind of set them straight. Like, he can't do that. That's illegal, to...Oh, I never thought about that. So how do you how do you think about that? And I'll kind of I'll kind of let's kind of do it this way. As of right now, are you majority tech, talent or majority insurance talent?

Oh, I don't have to think of the headcount is pretty evenly split actually across functions. It's I mean, engineering, product engineering definitely has the most headcount in the company. But I would say go to market and insurance are pretty equal in terms of balance there. You know, when I go back, I think, as I mentioned earlier, like getting that balance, right, is absolutely critical. And it's like, you know, I think both the number one challenge in our business and the number one differentiator if we get it right, and so, you know, when I think about, in particular, my colleagues on our insurance team, like they're working on projects that aren't going to hit for 6/12 months, right, a lot of the time. And so how do I make sure that there's, they're still plugged into the momentum in the business day to day and that we're all actually part of the same team and not defaulting into these silos? And, you know, I think when I go back to the early days, that business, there is, I think, there, it's super before you think about think about insurance versus go to market versus what have you. Culture is like the number one thing to get right there. If you don't have a culture where people you know, believe that you're showing up with your best intentions every day that they know that you care about each other, care about each other enough to directly challenge each other, and really come to the right answer, and then disagree and commit on a direction. Like those are the foundational building blocks on what industry you're in. And I think it's particularly important when you have cross functional challenges, you know, in a regulated category, like insurance or for other FinTech businesses. Yeah, um, when I go back to the really early days in the business when I was a handful of us, you know, around a whiteboard, at first, I was the insurance person on the team. And, you know, I think I have enough experience in insurance that I know enough to be dangerous, but not enough. Not enough to actually maybe know we're although the boundaries are. And so you know, bringing john in who has 20 plus years of experience doing this, you know, I was able to see Oh, that's what, uh, you know, that's what world class actually looks like. And as we continue to grow the team, you know, it's our jobs to challenge each other's assumptions and push each other to think differently. It's John's job to challenge me to think differently about certain things with our customer relationships, and vice versa, and really the entire team. And so I think, to do that successfully, it comes back to the cultural elements and getting that right first.

Yeah. And I think that might be one of the biggest advantages of an Insurtech. Meaning, you know, a company that has sort of tech as in its DNA, versus an incumbent, because I think I think what you just said, I think translates to the economics of the business. Because as you're because I'm going through the same thing. So I think about this all the time, and I'm with you 100%, with the culture, and I could almost see it translating from like a micro economic sense, I see that, well as it scales, right, as the business scales, we actually won't need like a traditional insurer will need to sort of proportionally grow their insurance path as the business scales, right, but in an Insurtech with like yours worth, let's just say it's a 50/50 split. Technology is picking up a lot of the load, like a lot of that overhead, that an incumbent, let's say underwriter/actuary has to kind of slog through is being handled by a machine. And they can do the value add stuff, and I would even flip it around and just say, because half the team is insurance, the tech also scales nicely, too. So as the business grows, you don't need to bring on as much tech people. And you could sort of do more with less, so to speak, you know, your company's still going to grow, but you can grow the business exponentially more. Whereas I think traditional insurance really suffers from that I think traditional insurance is is there, a lot of the economics sort of break down, they get the they get the benefit of the law of large numbers to work in their favor, but the staffing suffers. So the culture goes down. And you start to get that conflict that exists between the carrier and the policyholders. Because they don't talk to one another, they it's to or the or the carrier and the broker, there's there too many layers, there too many silos, things get slowed down, there's too much friction, in all of the different areas. So the broker, even carrier broker, the broker might be waiting, waiting, waiting, waiting, waiting for something to happen. Whereas Insurtech might have the advantage in that, like your COI type thing might just be instantaneous, like just boom, boom, boom, you got it? Have that have I connected the dots for you on that? Like, I'm sure I'm sure you've all the time?

Travis H
Well, it's, it's, in my mind, this whole thing is about asymmetric bets, like the company is an asymmetric bet, like if it works well, there's, there's, you know, huge upside for everybody involved. And if it doesn't, the downside is understood. It's defined. Same time, you know, that's how we got to think about people that we hire, investments that we make, you know, whether it be in technology or other resources. You know, I think there's this this really big misconception, and it's I don't, you know, learned a lot about this along the way so far around, hey, you've got to go build the perfect mousetrap, you know, build it, they will come. And, and in a lot of ways, you actually really want to solve your problems with people first, and you kind of need to over invest in doing the things that don't scale. It's kind of a startup trope, but like it, I found it to be very true. On You know, in a lot of ways, our technology experience, and our people providing amazing service has been the number one thing we see in user feedback constantly. I think our NPS is like an 86. Last time I looked and and it's Wow, an amazing experience. And wow, you know, Miles/Debbie/David, we're, you know, amazing, amazing and help me through this process. And by doing that, and having, like really creative people that are bought into the mission and care about getting it right, that are grabbing that feedback on the front lines, and feeding it back to the product team and working together to automate all the things that we're doing this sort of human in the loop process to building new solutions, enables you to move a lot more quickly and do a lot more by solving those doing the things that don't scale first, and then using technology to scale it. And it is is super important.

Nick
Yeah, you just reminded me of something. Because you brought up scale. So I'm trying Michael Seibel from YC was on invest like the best, and which was a phenomenal podcast, like he really got into the yc thing. And yeah, he talked about that. He talked about that specifically, and he said, companies are just startups are just too quick to scale. It's like, you should just assume you don't have product market fit. And he kind of talked about it from his background as a startup founder. You know, with like, twitch or Justin TV and talked about how he's like, this is what product market fit looks like. And he's like, everybody's looking for like this textbook definition where you're just like, aha, we got product market fit. And it's like, it's really messy, like when you're in it, you don't know you have it. And all of a sudden, like the scaling piece of it becomes absolutely critical, or the company will die. And I think that's like really extremely important, what you just described, because I think one, companies are too quick to want to do it. But second, if even if you're going to scale, I think if you don't recognize the human piece, you specifically mentioned, the insurance professionals and how like, you know, customer service. For instance, if you haven't nailed that down, like, if you're just thinking, well, we're just going to write some code along the way. And that'll just sort of take care of itself. It's like, you sort of need to see it successfully done on the human element and say, Okay, well, that's how it's done. Now, let's figure out how to automate pieces of that. You know, because you may not be able to automate the whole thing. And, like, we what I love what you just said, because I see the opposite. I see, it's, well, it's just customer service, we'll just, and they think the scaling just sort of magically happens. And that's where I think a lot of things fall apart, like the culture breaks down. The promise that you make to your customers, the stakeholders, all of a sudden, it just everything just sort of deteriorates, it's not the same. And yeah, you might be able to pump it full steroids with financing or some other stuff, but it's not the same.

Travis H
And to your point there, Nick, like, even if, if you have unlimited resources, time is finite. And like, you can only do so many things really, really well. Yeah. And I come back to the place we're talking about a quote that came back to me was, you know, AI over the years has basically been defined as whatever is whatever computers can't do yet. Like, it used to be chess, right. And then it used to be something like 10 years from now, we'll think of AI as something entirely different than what we think of it is today. But in a lot of ways, it's like, you go back to the old Steve Jobs, quote of like, the computers like the bicycle for the human mind. That's exactly that's exactly what this is. Now, I think, I think there's a really important, like delineation here that people get tripped up on a lot is that they hear Oh, do the things that don't scale, solve it with humans, and then and then solve it with technology. And they say, Oh, well, like that seems, you know, who's the wizard behind the curtain? Like, where do you draw the line between that and theranos? For instance? Right. And I think I think that's really tricky, and that a lot of founders get caught up in this, fake it till you make it mentality. And I think the the reality is like, the moment that that dissonance starts to disconnect, right, and you have to truly like, you know, it's one thing to solve it through amazing people and customer service, and that human element, it's another to lie to your customers about what's actually going on. And, you know, it's our job as an insurer to these companies to try and help parse those out, who are who are the pretenders? And who's for real? And look, that's a challenge that we're going to be focused on for, I hope, the next couple decades.

Nick
Yeah, that reality distortion field is a real thing. You know, I see people, it's just like, That's not true. And it's like, well, you know, and they kind of start to spin it. And, like, it's kind of true, you know, and like, I don't want our customers to hear that. But anyways, real quick. Since we're getting to the top of the hour, I want to start doing this again, books very important to me, I'm really getting into it again, anything in particular that you found to be influential business or personal life, but of course, business since this is a business. Yes.

Travis H
You know, I keep going back and forth between sci fi and history books recently. And I just I find, what was the book?

Nick
What history topic do you like?

Travis H
Significant figures and moments in history in particular. So I read a book recently called Towers of Gold. And it's about a Elizes...what's his last name? He was like, the, basically the banker that helped build California in the 1800s. His family came over from, you know, he and the Straus family and the Haas family or the same village in Germany. They came over he ultimately started the banks that became Wells Fargo and Bank of America today. And what was really cool about that, for me is to go back and see actually, the parallels to today. Like, you know, at the time, the train had a locomotive had any age or impact on California's economy and the opportunities that that at least for people, and the same thing is happening with technology today. And the institutions that are created and that evolved to respond to that, that technology change. There's just a lot of parallels and I don't know I really get down read stuff like that. And then I finally got around to reading the the foundation series recently from Isaac cast them off which I just I don't know. I think reading sci fi helps you think about you know what, what might be possible with your imagination.

Nick
Yep, I love it. Travis Hedge awesome to talk to you. Thanks for sitting in the hot seat. Best of luck to Vouch.

Travis H
Always a pleasure, Nick. Thanks for having me.

Nick
Yep. For everyone that's listening. Please hit the subscribe button. Not enough of you hitting that button. So hit it and Travis and I will appreciate it as usual. Thank you Travis. Appreciate it.

Travis H
Thanks

Nick
Okay, you thought we left but we're back. So just found out that Travis did the old Faux Pas! Yes, he forgot to make the big announcement that he was looking

Travis H
We got one more thing.

Nick
One more. Yes. So Steve Jobs I mean, Travis Hedge, what's your one more thing?

Travis H
So I'm really excited to announce that Vouch insurance is live in New York as of October 20th. And so, we are proud to serve, you know, New York startups. And that puts us now in 95% of US venture activity. So really excited to be in New York. And, you know, hopefully I'll see everybody there soon.

Nick
Well, New York City supposed to be like the new center of tech startup land, so it's natural that you would go there. So if you're in New York, your startup in New York, look, look for Vouch and so now we get to now we get to segue back out. So Travis, thanks again.

Travis H
Thanks.

Transcribed by https://otter.ai