Policygenius: Jennifer Fitzgerald

Some of the world's biggest industries sell products that we all need...but don't want to think about. That's what drew Jennifer Fitzgerald to insurance: she wanted to help people understand the often bewildering world of protecting themselves in case of emergencies. In 2013, she and her partner Francois de Lame left their stable and lucrative consulting jobs to create Policygenius, an online marketplace for insurance that lets consumers compare rates and learn everything they need to know to make informed decisions about their financial future. At the beginning, Jennifer couldn't convince investors to take a chance on the company, and faced rejection after rejection as she tried to hold on to a handful of customers. But by building a relationship with the financial blogging community—and leaning in to a few well-placed financial technology puns—Policygenius got a foot in the door. By 2020, Jennifer and her team had raised over $100 million, and the company now has more than 30 million users. How I Built This Summit - information and tickets at: http://summit.npr.orgSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:45Guy Raz?

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• 1:30Guy Raz?

  based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?

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• 5:09Guy Raz?

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• 5:23Guy Raz?

  So you only had a six-month runway to test out this idea and make a decision. And either you were going to be able to go after it full-time or I guess you would have to go back to your old job.

• 5:36Speaker 01

  Correct.

• 5:37Guy Raz?

  How did you generate any customers or interest for this?

• 5:40Speaker 01

  Very slowly.

• 5:43Speaker 01

  So before we raised any capital, we were funding this with our own money. And so it was small amounts spent on Google advertising, stupidly spending money on Facebook because neither of us knew how to do any of this, right? I had no idea what I was getting into.

• 6:02Guy Raz?

  And how many people actually bought insurance through you in those first six months?

• 6:07Speaker 01

  God, maybe 20?

• 6:18Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:29Guy Raz?

  I'm Guy Raz, and on the show today, how Jennifer Fitzgerald dreamed up a new way to sell insurance and created PolicyGenius, an insurance marketplace that now has 30 million customers.

• 6:47Guy Raz?

  Content marketing is not new. One of the classic examples is the Michelin Guide. As far back as 1900, when you'd buy their tires, they would hand you a guide they'd written, full of suggestions for restaurants and inns to stop at during your journey. In these days, just as many people associate Michelin with restaurants and hotels as they do with tires. But the idea of creating content around your brand as a must-do really took off in the past few years, as social media became a primary marketing tool. And so today, it seems like every business, from law firms, to venture capital groups,

• 7:28Guy Raz?

  to food brands, have a content strategy or are trying to develop one. For example, go to hubspot.com, a company that sells sales and marketing software, and you might think you've landed on a business school website. You can find all kinds of articles on how to build a brand, templates to create infographics, tips on marketing. Same with Glossier's website, Into the Gloss. It's basically an online beauty magazine that shows you how to properly exfoliate or dye your hair crazy colors. And with both of these examples, of course, you are eventually led to products. For HubSpot, it's customer relations management software.

• 8:12Guy Raz?

  And for Glossier, skincare products and cosmetics. And it's one of the reasons why these brands often appear high up in search engine results when you type in "marketing" or "beauty tips." Brands like these have created so much content-- articles, guidebooks, templates, usually for free-- because they know it's a way to get you into the door and to differentiate what they do from their competitors.

• 8:40Guy Raz?

  And this is precisely how PolicyGenius was able to become one of the biggest insurance brokers on the internet. About a decade ago, when Jennifer Fitzgerald and Francois Delam came up with the idea to sell insurance online, they knew that they first had to convince people, or rather, their millennial target audience, why they needed insurance at all. And they did this by writing articles, lots and lots of articles, detailed explanatory posts on how life insurance works, or why you need it, or the different types. In fact, when they just started out with a very tight budget, one of their earliest

• 9:22Guy Raz?

  hires was a blogger, not a sales rep, not a marketing lead, but a blogger, someone to write articles about insurance on their website. And for nearly a year, those articles were read by almost no one. But over time, that content strategy would pay off as the articles started to appear on search engines. When Jennifer and Francois initially tried to convince investors that people would want to buy insurance the same way they buy airline tickets on sites like Expedia and Kayak, there was very little interest. But today, nearly a decade on, Jennifer is widely considered to be a pioneer in the

• 10:05Guy Raz?

  burgeoning sector now known as insuretech, insurance technology. She's one of the very few insuretech female founders who've raised more than $100 million. But selling insurance was not in her life plan. Jennifer really aspired to be the US Secretary of State, or at the very least, a US ambassador. She was born in the Philippines, where her parents met. Her dad was stationed there with the Air Force, but eventually moved the family to the US.

• 10:37Speaker 01

  My dad got stationed in Ohio. That was my mother's first time out of the Philippines, was Dayton, Ohio, in the middle of winter. So it could not have been a bigger shock for her. To this day, and no disrespect to Ohio, but she just has the worst memories of Ohio.

• 10:54Guy Raz?

  And you grew up kind of like every couple of years, every two years, going to a different place?

• 11:00Speaker 01

  That is correct. So we lived in Ohio for two or three years, then moved to Biloxi, Mississippi. We all crammed into a tiny trailer in Biloxi, Mississippi, because there was not family housing on Keesler Air Force Base. Stayed there for a little bit, then moved to Albuquerque, New Mexico. My brother was born there, and then we moved to San Antonio, Texas. Where actually there was a decent amount of stability. So we were in San Antonio for probably seven years.

• 11:32Guy Raz?

  See, you were basically a military kid for most of your childhood?

• 11:36Speaker 01

  Till I was 14. So my dad hit 20 years when I was 14 and retired right after my freshman year in high school. He took a civilian job in Bluefield, West Virginia, which is a small town on the border of West Virginia and Virginia. And so at 14, the entire family moved from San Antonio, a big urban city-

• 12:02Guy Raz?

  Yep.

• 12:02Speaker 01

  -to West Virginia.

• 12:04Guy Raz?

  Wow.

• 12:05Speaker 01

  So you're about three hours, three, three and a half hours from a major city, which is Charlotte.

• 12:13Guy Raz?

  Yeah, I'm looking at it on the map. You're right in the Appalachians.

• 12:15Speaker 01

  Oh, yeah. It, I mean, it is beautiful country. We were up in the East River Mountains. I highly recommend anybody who loves like the fall foliage to, to take a drive through that part of the country during the fall because it's spectacular. But it is pretty rural and pretty remote from any major, like, so if you want to take a flight, you're either traveling to Charleston, West Virginia, or Charlotte, North Carolina.

• 12:40Guy Raz?

  So, all right, so you grew up in this, I mean, you, you, you do high school in this tiny town in, in Appalachia, on the border of West Virginia and Virginia. And I imagine that this was not, like, you were kind of waiting to just graduate and then- Leaf, is that fair to say?

• 13:00Speaker 01

  Oh, yeah. Now, no, yeah, no disrespect to the region. I had a wonderful time in high school there. I've made some great friends and really enjoyed my time there. But I've always been a bit ambitious and looking ahead to what's next and was counting down the days to when I could go off to college and onto bigger, bigger scene.

• 13:22Guy Raz?

  And were you, when you were in high school, would you sort of imagine that one day you were going to be, what, if you did imagine that?

• 13:32Speaker 01

  I, in high school and through most of college, what I was envisioning myself was along the lines of Secretary of State, Secretary General of the UN.

• 13:44Guy Raz?

  So just a couple of, you know, some, some small ambitions there.

• 13:47Speaker 01

  Yeah, very, I was a very Tracy Flick-ish in high school.

• 13:53Guy Raz?

  So armed with this ambition to run the State Department or maybe the United Nations or maybe both, you know, different times.

• 14:01Speaker 01

  Who knows?

• 14:02Guy Raz?

  Who knows? You decide to go to college and presumably, did you study like political science or something like that?

• 14:10Speaker 01

  I did. I had a double major in political science and international affairs.

• 14:15Guy Raz?

  And you went to college in Florida?

• 14:16Speaker 01

  I did.

• 14:17Guy Raz?

  All right, so you're in college and you're clearly, it sounds like you're heading towards the policy, that kind of policy world and, and, you know, maybe law school or something. But, but you were not looking at like entrepreneurship or business or finance. That was not on your radar at all?

• 14:36Speaker 01

  Absolutely not. I don't even think I took a single business or finance course in college. I took economics. It's part of the, you know, social sciences program that I was in, but not a single course in the business school.

• 14:50Guy Raz?

  Okay, so you graduated college and I guess you actually afterwards decided to go into the Peace Corps.

• 14:57Speaker 01

  I did, I did.

• 14:58Guy Raz?

  What was the idea? Like, what was the attraction for you to go to go to the Peace Corps?

• 15:04Speaker 01

  It was part adventure, right? So, just something completely adventurous, extraordinary, getting dropped in another part of the world. So, that was a big piece of it for sure. Part of it was, you know, again, being very ambitious and a total gunner, looking ahead, that the types of jobs that I wanted in the State Department or in the UN required international experience. So, you kind of have a catch 22 of how do you get international experience without having prior international experience? And Peace Corps is a good way to do that. And the third piece was more personal. You know, I was acutely aware of how lucky I was to, having grown up in America, to an American, you know, dad and a mother who eventually became naturalized.

• 15:48Speaker 01

  But my mother grew up in pretty severe poverty in the Philippines. So, I was always acutely aware of just, you know, by luck of the draw, you know, being in a very privileged position and also just wanted to, you know, put in some time in service in the developing world.

• 16:05Guy Raz?

  So, you ended up in Honduras. You're, I'm assuming, 22 years old. And where in Honduras were you?

• 16:15Speaker 01

  So, training in the, on the outskirts of the capital city, Tegucigalpa. And then I was assigned to Santa Barbara, Honduras, which is a department capital city in the, in the west. So, it's up in the mountains, coffee-growing region, probably four hours away from the capital city, three hours away from the largest city on the north coast, which is San Pedro Sula.

• 16:41Guy Raz?

  Wow, so really remote. And what was your assignment? What did you do?

• 16:45Speaker 01

  I had a very atypical assignment in the Peace Corps. So, following my college graduation, I actually did some postgraduate work as part of a Peace Corps prep program. So, I studied urban and regional planning and got assigned to the urban and regional planning sector in Honduras, where volunteers are assigned to and embedded with local municipal governments to work on municipal projects, be it water and sanitation, or public services, or planning, any sorts of assistance that the local governments need. So, I was assigned to the Santa Barbara Municipal Government.

• 17:26Speaker 01

  My counterpart was the mayor of Santa Barbara, and so I worked pretty closely with the mayor and the municipal corporation for two years, working on what eventually became digitizing their property tax records and overall information management in the municipal government.

• 17:44Guy Raz?

  I mean, it doesn't sound like, I think when some people might think of Peace Corps, they might think of like, building houses, or digging trenches, or something, but like, you were basically helping to digitize the property tax system for this town in western Honduras?

• 18:02Speaker 01

  I did, yeah. All of their property tax records, all of their records about who should be paying for water sanitation were just on little paper cardboard files in a filing cabinet. So, they had no way to understand who was overdue, they had no way to send out bills, it was really reactive. So, if somebody came in to pay their property taxes or their water bill, great, otherwise there was no way to collect or enforce that.

• 18:30Guy Raz?

  Were like, the gears starting to turn in your head about business in any way at all, or was it still really very much about policy work that you were interested in?

• 18:41Speaker 01

  A little bit. So, what I ended up doing was creating a very rudimentary software system for the municipal government of Santa Barbara, and had actually talked to a few folks, so there were some consulting firms down there who were working. Working with the US Agency for International Development. They got wind of what we had done in Santa Barbara. We're talking about, you know, how do we replicate this in other municipal governments? And so I was like, huh, I wonder if you can make a business out of this and sell this software to other municipal governments, not just in Honduras, but elsewhere. And I literally had that thought for maybe a month and then put it on a shelf.

• 19:22Speaker 01

  So I think that's where the gear started turning for me about business, but was still very much eyes, you know, set ahead on international development, international policy work.

• 19:33Guy Raz?

  So from what I understand, you spend, you would spend four years total in Honduras. And I know the last two years, you actually got a job at the World Bank. But I guess from what I've read, like, you weren't really into the whole bureaucracy of an organization like the World Bank, right? Because, right, big institutions like that are sometimes bureaucratic.

• 19:56Speaker 01

  They are, after having spent a couple of years on the inside and seeing very mission-driven, very, very smart and passionate people, but you are a gear in a very, very large machine that has inertia and doesn't tend to move very quickly or very, or drive a lot of innovation in the space that you're in. And, you know, I fast forwarded, what would my life look like in five, 10, 15 years if I stayed on this? And it was looking more like, oh, great, I would be a senior portfolio manager of, you know, one or two countries, doing a lot of desk work. And that wasn't for me.

• 20:37Guy Raz?

  So you were, I guess, at this point, like, what, 25, 26 years old?

• 20:42Speaker 01

  Yep.

• 20:43Guy Raz?

  And you decide, hey, better go to law school.

• 20:46Speaker 01

  Basically, as I think most people who go to law school do. What I knew was I was going to do basically a hard reset of my career, right? So moving away from the international policy, international development world, I knew I wanted to do a hard reset and go to the business world after grad school.

• 21:08Guy Raz?

  All right, so you come back to the US, go to law school in New York, and you go and you work at McKinsey, which is the consulting firm, which a lot of business school grads do. What, but they also, I mean, they hire widely, they hire from a wide. Sort of range of industries, which is one of the reasons why they're so successful. What was your, what part of McKinsey were you, were you working in? What did you, what did you do there?

• 21:34Speaker 01

  So I was, my first assignment was with a big insurance company, one of the, one of the top ones in America. And that insurance company was in a lot of trouble because of the financial crisis. So they had a whole bunch of obligations that they couldn't meet, and it was threatening to bring down the entire insurance company. So they brought in McKinsey to help figure out what to do. So that was my very first engagement. So at a big insurance company.

• 22:01Guy Raz?

  Where were you, were you in New York?

• 22:03Speaker 01

  No, I was in, I was not in New York.

• 22:06Guy Raz?

  You can't say where you were, because then we would know the insurance company.

• 22:08Speaker 01

  Then you would know the insurance company.

• 22:09Guy Raz?

  And you signed an NDA that I guess lasts for the rest of your life.

• 22:12Speaker 01

  Correct.

• 22:13Guy Raz?

  Don't these people at McKinsey know that they're messing up my podcast with good stories?

• 22:17Speaker 01

  Suffice it to say, it was a large Fortune 100 insurance company that had life insurance, annuities, asset management, you name it.

• 22:27Guy Raz?

  Man, all right. So you go work for this insurance company. And, and what, what did you start to, I mean, was it interesting to you?

• 22:36Speaker 01

  It was fascinating. One, this was my first real crash course in business, right? And this is a company that's fighting for survival. That was interesting. Two is, this was my first get my hands dirty, like digging into a P and L. We were trying to figure out where they could cut expenses. We were trying to figure out whether they could reprice certain financial instruments in a way that would be compliant and also preserve the business and also do the right thing for customers. So the complexity and the breadth and the depths of the problems that we had to tackle on a daily basis was fascinating and energizing in a way that I had never really experienced before.

• 23:20Guy Raz?

  So you're fully at McKinsey, I think you started there 2008.

• 23:25Speaker 01

  Eight.

• 23:26Guy Raz?

  And so here's, here's a question, and I'm sure you've gotten this question before in, in different ways. And so I'm asking it kind of a delicate way, because it's, this is your life, this is what you do now. But insurance.

• 23:40Guy Raz?

  For those of us who don't know, I have a lot of insurance. Like, you know, I'm doing the responsible thing. I'm insured here, there. I got insured. But it sounds boring to me, right? And I have to imagine that part of you thought it sounded boring at the beginning. But what was it about it that started to fascinate you?

• 23:57Speaker 01

  It does sound boring, but once you start peeling the onion, there are so many interesting pieces to it. So I'll give you a couple of examples. Data science. There's nothing hotter in the tech world or in the business world than quote unquote "big data" and "data science," right? The original quote unquote "data scientists" were actuaries, right? So these were people who were looking at mortality tables, morbidity tables, dating back hundreds of years, right? Because insurance has been around for hundreds of years. And creating models to price that risk appropriately. So that's one piece that's interesting. The second piece that's interesting is the consumer problem, right?

• 24:41Speaker 01

  So when you're selling something, it's easier to do it if it's a tangible thing, like a pair of shoes, right? Or a really beautiful cashmere sweater. Or lip gloss that you can see, touch, feel, see it on somebody else. Or something that's fun, right? Like a trip, or an experience, or travel. Insurance is none of those things, right? You can't see it, you can't touch it, you hope to never use it. It's not something that's fun. In fact, it forces you to think about a lot of things that aren't fun at all, such as a house fire.

• 25:13Guy Raz?

  Or death.

• 25:14Speaker 01

  Or death, or getting hit by a bus, right? So how do you sell something that does not check any of the boxes for something that people want to buy, right? So it's an interesting behavioral psychology question. It's an interesting marketing question. It's an interesting consumer insights question. How do you get this product that people should have, and people know that they need to have, but absolutely do everything they can to avoid thinking about it? Get them to think about it and get them to get it, right? And what I tell people is, listen, if you can figure out how to sell insurance to millennial consumers, you could sell anything to anybody, full stop. That's an interesting consumer problem.

• 25:58Speaker 01

  Easier than selling, like, a beautiful pair of Nikes. Like, Nike sell themselves. Everybody wants, you know, the latest shoes, or the coolest jeans that make you look skinny, right? Try selling life insurance.

• 26:08Guy Raz?

  Yeah.

• 26:10Guy Raz?

  All right, so you are working on insurance. What do you-- and by the way, I think at this time, you meet the person who would eventually be your partner and then co-founder, Francois, right?

• 26:22Speaker 01

  Correct. We both met at McKinsey.

• 26:24Guy Raz?

  Got it. All right. So now, you're at McKinsey, and you are kind of really into this industry. And this is what often happens with-- we've had stories like this on the show where people go to Bain or McKinsey or consulting firm, and they learn a lot about a sector. And they start to say, well, you know, I'm with-- I'm spending all this time at all these companies, and I actually think they're not doing X right, or Y right, or they're not focused on Z. And it sounds like you and Francois start to kind of talk about things that could be better, or does it kind of just land in your lap? How do you start to think about, wait a minute, there's something going on here, maybe we can do something?

• 27:08Speaker 01

  Yeah. So, we had-- we started working together on insurance engagements, and this was around 2012. That detail is important because the Affordable Care Act had been passed. All the implementing guidance and what it was going to look like had not been hammered out yet. So, what happened was you had a whole bunch of insurance companies in the life and health space saying, oh, what does this mean that they're now going to be these like state-run and government-run marketplaces? At the time, nobody knew what was going to be on these marketplaces. As it turns out, it was health insurance.

• 27:50Speaker 01

  But back then, there was an open possibility that it could be health insurance and disability insurance and life insurance, right? All of the benefits that you would typically get through your employer. So McKinsey had quickly spun up a practice, as well as a marketplace simulator, to advise these insurance companies around how to now move away from, you know, the brokered model, where you're working with brick-and-mortar brokers who are, you know, putting health insurance and life insurance and disability insurance into companies, or to consumers, and now you're going to be directly consumer-facing on these online, government-run exchanges, right?

• 28:33Speaker 01

  And so we were, we were working on this and started talking about, you know, if these government-run marketplaces, and because they're government-run, it's likely going to be super clunky and not great, why isn't there a private version of this? Right? Why, why is this such a revolutionary thing that these insurance companies now have to be consumer-facing online? That was the initial light bulb that we started talking about, you know, over dinner.

• 29:02Guy Raz?

  And it just so happened that the two of you started to date, right? While you were there?

• 29:06Speaker 01

  Correct.

• 29:07Guy Raz?

  And, and so as you do, you would share ideas with the, you know, the person that you're closest with and, and he, he started to kind of, was, did he have a bunch of ideas? That it just, you know, or did you have a bunch of ideas? How, how did you begin to talk about maybe trying something on your own?

• 29:26Speaker 01

  I did not have a bunch of ideas. So I was probably, I enjoyed McKinsey. I was doing well there and I was probably, I don't know, a year or two away from making partner. I was happy. I was thriving. I, yeah, I was not, I was not dissatisfied, to say the least, and I was wired to do well in an environment like that.

• 29:49Guy Raz?

  So what did Francois, what, what, what happened? Did he, did he say to you, hey, Jennifer, we can do something on our own? Like, how did, how did the idea of even, you know, starting something on your own begin?

• 30:03Speaker 01

  Yeah, it was basically like that. So we were out of town, working at an insurance company. We'd have dinner every night and he'd start talking about, hey, this could be something. We should be thinking about this. I've been doing research. I don't think there's a good alternative to these government exchanges. Seems like there's something we could do in insurance and distribution. And I said, sure, that's great. I don't, I don't know what it means to start a company or why I would leave a, a pretty good gig that I'm happy in. So. Was slowly, you know, as we started getting into it, talking about it, kicking around the idea more.

• 30:48Speaker 01

  I also then got promoted at McKinsey to associate partner, which is the step before partner. And I didn't like that role as much as I did being a manager of the team on the ground and being really in the problem solving piece of it. So that's, I think, the thing that got me started with, huh, do I really want to be, you know, not necessarily a lifer, but a partner at McKinsey and really invest the next several years in that. And we ended up taking a leave of absence from the firm.

• 31:17Guy Raz?

  To work on an idea?

• 31:18Speaker 01

  Correct.

• 31:19Guy Raz?

  And is that what, and is that what you say to them? You say, hey, I want to get leave of absence. We've, we're kind of thinking about our own thing?

• 31:25Speaker 01

  Yep, that's what we said. And the firm was very supportive and said, okay, well, we'll see in six months or not. And so we took six months, worked on an idea, put together a very rudimentary prototype. And we're also, you know, testing, working together outside of McKinsey.

• 31:48Guy Raz?

  But prototype for what? What was the, tell me what the idea was.

• 31:53Speaker 01

  So it was to create an online marketplace that was heavy on advice and education for insurance.

• 32:02Guy Raz?

  Right, but not selling insurance?

• 32:03Speaker 01

  Well, selling it, yes. So you could actually like buy it through us, but it's also marketplace where you could compare, figure out what you need, get advice on insurance, because most people are not experts in life or auto or home or disability insurance.

• 32:19Guy Raz?

  I know this comparison may come up later, but is it fair to say that you were, you were thinking, hey, this could be like Expedia, but for insurance, like, you know, something where you could just go and, you know, find a bunch of different competing policies?

• 32:32Speaker 01

  Correct.

• 32:33Guy Raz?

  And by the way, in 2013, when you started working on this, there was nothing like that out there?

• 32:38Speaker 01

  Not really, no. You had Couple lead generation companies that would put up a landing page, uh, promise you quotes or insurance, but then, you know, uh, sell your contact information to either insurance companies or to insurance agents. You had e-health insurance, uh, that focused on health and now largely just focuses on senior health and Medicare. Nothing that was multi-product, nothing that, uh, was, uh, like full-service end-to-end, right? From figuring out what type of insurance you need to comparing what are the options that are right for you to actually getting the policy in your hands without getting handed

• 33:22Speaker 01

  off to an agent or an insurance company. There was nothing.

• 33:26Guy Raz?

  So what did you guys do during that six-month leave of absence?

• 33:30Speaker 01

  Uh, let's see, we read books like The Lean Startup, or at least I did, because I had no idea what I was getting into. Spoke to other founders and entrepreneurs, uh, to get smart on what we should be thinking about, uh, not from an insurance perspective, but hey, what does it look like during, during the first year or two of, uh, starting a company? Uh, and then building out that first prototype, which was basically a landing page, uh, some educational content. We started with disability insurance because we were like, well, let's start with the absolute hardest product, which is disability insurance. And, uh, then got appointed to be able to sell it on the backend with a handful of disability insurance companies.

• 34:14Speaker 01

  So that first six months to a year was seeing how the thing comes together and getting to a go-no-go decision about do we quit our jobs at McKinsey and, and commit ourselves to this, you know, full-time?

• 34:28Guy Raz?

  What was it that gave you the confidence to, to quit and to, to start your own business?

• 34:34Speaker 01

  So it was...

• 34:37Speaker 01

  One, the market and consumer research that we did. The more we did in terms of understanding the consumer problem, the market size, the competitive landscape, I think the more comfortable we got that there was a big opportunity there, right, that nobody else was paying attention to. That was one. And two, you know, it was, it's all boils down to timing, right? So at the time, I was, yeah, 35. You know, I didn't have kids, didn't have a mortgage, had some savings from my time at McKinsey and said, you know what? It's now or never. From that perspective, I thought, why not? And just, and said, OK, let's do it.

• 35:20Guy Raz?

  When we come back in just a moment, how Jennifer and Francois launched the company with about 20 customers and a name that no one could say. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 35:56Guy Raz?

  Hey, welcome back to How I Built This from NPR. So it's 2013, and Jennifer Fitzgerald and her partner Francois have six months to test out their idea, an idea to build a user-friendly way to compare insurance rates. And right off the bat, they decide to focus on an area that's kind of overlooked in the industry: disability insurance.

• 36:21Speaker 01

  Disability insurance is income protection insurance. So if you were to get sick or suffer an injury and couldn't work, it replaces your paycheck for a defined amount of time.

• 36:32Guy Raz?

  Right.

• 36:33Speaker 01

  Right? So probably the most important type of insurance for, for working individuals to have. Most people are dramatically underinsured here, right?

• 36:41Guy Raz?

  When it comes to disability, most people don't have enough.

• 36:43Speaker 01

  Correct.

• 36:43Guy Raz?

  Yeah.

• 36:44Speaker 01

  Yes.

• 36:44Guy Raz?

  Do, do a lot of people think it's something you get after you're disability?

• 36:47Speaker 01

  A lot of people think confuse it with SSDI, right? So something that the government gives you after you're disabled. And then I think it's terribly named because when you think of disability, you think of something like truly debilitating, right? And in fact, most disability is like, like a back injury or Crohn's disease is a big one, right? Where you can't work full time, but you're not completely debilitated from the condition. So I think that's a misconception as well.

• 37:16Guy Raz?

  And so what were you doing? Were you just finding people like that you knew to and interviewing them about disability insurance? To just kind of understand what you could build?

• 37:28Speaker 01

  Honestly, it was, we had our last engagement at McKinsey was with a big disability insurance company. So I think we suffered from a bit of recency bias. And we said, let's try it out on disability insurance first. We knew we didn't want to do auto insurance because auto is just really competitive to do lots of agents going after that. So we said, let's try disability. We, you know, created a rudimentary website, a rudimentary backend experience and started messing around with online advertising on Google, on social media to see what it would take to get people to, you know,

• 38:10Speaker 01

  into the top of the funnel and pull them through to the funnel to be disability insurance buyers.

• 38:16Guy Raz?

  And did you have a name for the business?

• 38:18Speaker 01

  We did. It was a terrible name. So the first name for the business was Know It Owl.

• 38:25Guy Raz?

  Know It Owl, like know it all, but an owl that would know it all?

• 38:29Speaker 01

  Correct. And you're one of the first people to get it right off the bat.

• 38:33Guy Raz?

  Wow, that's great. I would know it owl. And was an owl your like your logo?

• 38:39Speaker 01

  Yep, it was.

• 38:40Guy Raz?

  And was it, did the owl have glasses?

• 38:42Speaker 01

  He did.

• 38:42Guy Raz?

  Like a wise owl?

• 38:43Speaker 01

  Yes.

• 38:44Guy Raz?

  Like a wise, old owl who knows it all, who can help you with your insurance needs?

• 38:48Speaker 01

  You got it.

• 38:49Guy Raz?

  So you had a website and you had a disability insurance company that you were working with? And you were like their agent, basically?

• 38:57Speaker 01

  We were working with a few disability insurance companies. And we were, yes, appointed to be their, to be an independent agent with them.

• 39:05Guy Raz?

  And how did you approach them? Did you already have relationships with them because of your work at Kinsley?

• 39:09Speaker 01

  With a couple of them, yes. And some we had to approach independently.

• 39:15Guy Raz?

  Was it hard to convince them to let you work, do this? Or were they like, yeah, that sounds fine. Sure, you can sell our insurance and we don't care however, however you want to sell it. That's fine.

• 39:24Speaker 01

  They didn't get it. They just looked at us like we were going to be just another, you know, insurance agency, located in New York City. They kind of didn't care how we got our customers. And so when we tried to explain, no, this is the model. This is different. I think for the most part, we were met with blank stares and saying, okay, I don't care how you guys get the business. But to keep these appointments, you have to write business. So they didn't care how we did it.

• 39:54Guy Raz?

  And how did you, I mean, how did you generate any customers or interest for this?

• 40:00Speaker 01

  Very slowly. So before we raised any capital, we were funding this with our own money. And so it was small amounts spent on Google advertising, stupidly spending money on Facebook because neither of us knew how to do any of this, right? So Francois had some marketing background, like maybe six months more than I did. So we said, okay, you're going to be in charge of marketing. I'll do whatever else. And so just trying to figure out how to drive online traffic, basically via Google and Facebook in those very, very early days.

• 40:39Guy Raz?

  And how many people actually bought insurance through you in those first six months?

• 40:45Speaker 01

  God, maybe.

• 40:47Speaker 01

  Twenty?

• 40:50Speaker 01

  Fifty? Certainly, certainly, uh, no more than twenty to fifty people in those first six months. I'd never sold anything before. Uh, and, uh, we often talk about sales. Sales is the hardest job. And in business school, for example, and for instance, I went to business school, they don't teach you sales. Um, so this was a crash course in, in sales and customer acquisition. Uh, and so, you know, those first, um, a couple dozen buyers was absolutely thrilling. It was a real dopamine rush.

• 41:24Guy Raz?

  And you were just financing this yourself through your savings from your time at McKinsey, right? Okay.

• 41:29Speaker 01

  Correct.

• 41:30Guy Raz?

  Something that I, I read, and I can't remember where, but I think it was something like, one of the insights that you gained at this time, and I always think of Steve Jobs, and I hear of this insight, is that, um, you, you sort of realized that you had to educate customers on something they didn't know that they needed.

• 41:48Speaker 01

  Correct, which is very hard to do.

• 41:50Guy Raz?

  Yeah, how did you, how did you kind of come to that insight? Because people would sit with you and be like, I don't, I don't know, disability insurance? And, you know, like, how, how, how did you do that?

• 42:00Speaker 01

  Uh, it was through a couple of areas. Uh, one is, once we got the first, uh, few visitors to our website, right? Uh, and, uh, we got them far enough down the funnel, but they ultimately didn't buy disability insurance. We reached out to them to say, hey, could we interview you to understand how you found us, first of all? Why, why you're in the market for disability insurance? And why you ultimately didn't buy through us, right? You read content, you got quotes, uh, but you ultimately didn't buy, and we'd love to understand why.

• 42:35Guy Raz?

  So at this point, I, I assume you're thinking, uh, we need to raise money, right? To get this off the ground. And, and did you go out and, and look for money from VCs?

• 42:46Speaker 01

  We did, yeah. We knew we needed to build a team to build this platform and to work with us to build and launch this business. So neither, we did not have between the two of us enough liquid cash to, you know, pay for a head of software engineering, to pay for a head of product design. So we said, great, we've read a dozen TechCrunch articles about companies raising a big seed and series A rounds. How hard could it be?

• 43:14Guy Raz?

  And how much did you think you needed to raise?

• 43:16Speaker 01

  Million dollars.

• 43:17Guy Raz?

  Million dollars, okay. So you're in New York, you've got this kind of this cool idea, let's say the Expedia for insurance. And was that how you were kind of thinking about pitching it to, to potential investors?

• 43:28Speaker 01

  Yes.

• 43:28Guy Raz?

  Okay. And, and you start to set up meetings with, with New York-based VCs?

• 43:34Speaker 01

  We did.

• 43:35Guy Raz?

  How'd they go?

• 43:36Speaker 01

  All knows. I think we pitched every early-stage venture capital firm in New York and got all knows. I think some of the feedback early on was actually helpful. I think our initial pitch was far too McKinsey in that it was heavy on data, heavy on research. I think our pitch deck might have been the only pitch deck in the history of pitch decks to have footnotes on every page about where the data came from, as well as a 30-page backup appendix in case you wanted to know more about the data.

• 44:15Speaker 01

  And so I think one of the early folks that we pitched was like, guys, drop the McKinsey stuff and you have to tell a story, right? You're not going to have a lot of time to really capture the attention and excitement of a potential early-stage investor. So, you know, ditch the footnotes, ditch the 30-page backpocket appendix and, you know, focus on a really compelling story. And that was great feedback. So we went back to the drawing board, redid our whole pitch and still got nowhere. Still got a bunch of no's.

• 44:48Guy Raz?

  And, and what was the, like, why? I mean, it sounds like a really great idea, of course, from 2021 perspective, but even 2004-

• 44:56Guy Raz?

  Like Expedia kayak, people are using that. I mean, I have to imagine there were already marketplaces, there were marketplaces for insurance.

• 45:04Speaker 01

  But nobody, nobody did startups in insurance. When we were pitching, there was Zenefits, which was on the employer benefit side. There was, I believe, Oscar, was then, maybe a year after us.

• 45:20Guy Raz?

  Which focused on healthcare.

• 45:21Speaker 01

  Right, that was kind of it. And so we were pitching, you know, the associates at venture firms are the ones who take these initial meetings, right? Your average associate or junior partner is like 25 or 26, right? And we would often get asked, is insurance a big enough market? I don't have life insurance. Why does anybody care? Right? I can't tell you how many times I heard that from a 25-year-old venture associate, say, I don't have life insurance. Is this, is this even a market need? Right? Or, I don't have Homer's insurance, or, you know, I don't have disability insurance.

• 45:59Guy Raz?

  Well, but that's, actually, you know what? I'm not defending that in any way because it's sort of short-sighted, but most people get life insurance once they have children, right? I have to imagine. So, so if you're 25, you aren't thinking, I didn't have life insurance when I was 25. This is not something a 25-year-old thinks about. So I understand that question.

• 46:23Speaker 01

  Yeah, but as an investor, you've got to remove yourself from like what you use day to day as a 25-year-old in New York City to think about the broader market opportunity. And at one point, I got so frustrated with this question from a, you know, probably 26-year-old venture associate who said, I don't have life insurance. Is this a big enough need? And I think I snapped back, well, you also probably don't use tampons either, and that's a big market.

• 46:50Guy Raz?

  Yeah. Cosmetics too, right?

• 46:52Speaker 01

  Cosmetics.

• 46:53Guy Raz?

  Multi-billion dollar market, yeah. So, and was that dispiriting? I mean, you guys had, you know, you had significant experience. You had a law degree from Columbia. You had worked at McKinsey and Francois was a business school graduate at McKinsey. I mean, Was it dispiriting to hear, basically to get no VCs?

• 47:10Speaker 01

  Oh, totally. Yeah. And, you know, you're talking to two insecure overachievers. And to get door after door shut in your face, it was discouraging, especially when you have been reading, you know, TechCrunch, right, which is the highlight reels. So you don't see the failure stories. You see the success stories in TechCrunch. And so we were looking at each other going, God, what are we doing wrong that everybody else seems to be doing right?

• 47:37Guy Raz?

  How long did you go through that period of trying to get VC money?

• 47:41Speaker 01

  Six months.

• 47:42Guy Raz?

  Six months?

• 47:43Speaker 01

  Yeah.

• 47:43Guy Raz?

  Wow. So, I mean, that's like six months of rejection. That's, that's hard for anybody. Did you ever ask yourselves, hey, is this maybe a sign that we're not on the right track? Did you ever think that? Or did you just think they're all wrong?

• 47:59Speaker 01

  Mostly thought they're all wrong. They don't get it. But, you know, in your darker moments, we would think, God, what are we, are we missing something? Is this a sign from the world that this is not the right thing to work on? Because the other, the other piece of feedback that we got, so again, people didn't understand the market or the opportunity insurance. And two, they looked at two McKinsey people and said, well, what do McKinsey people know how to do? Neither of you is technical. Neither of you is a software engineer. You're proposing that you're going to build a tech company. You've got zero experience doing that. And early stage investors bet on the team and they really didn't have a lot of confidence in us as the founding team of a tech company.

• 48:41Guy Raz?

  Did anybody ask you about your personal relationship? Or does that not happen?

• 48:45Speaker 01

  People asked, for sure. And it was also, I think, a reason for some of the early no's too. It seemed risky.

• 48:53Guy Raz?

  Yeah, because it's, I guess the risk would be from an investor's perspective, if you guys split up.

• 48:57Speaker 01

  Right. If we split up, the business could split. If one of us is problematic, if we're still together, but the investors want to fire one of us, that's harder because we're in a personal relationship. So I get it. It's a very complicated dynamics, especially in the first few years of a company, which are so basically one or zero, right, in terms of, you know, life or death of the business.

• 49:20Guy Raz?

  So when you say that six month period was dispiriting, at the same time,

• 49:28Guy Raz?

  You had to still move forward and try to continue to sell disability insurance on the website.

• 49:33Speaker 01

  Mm-hmm.

• 49:34Guy Raz?

  And how was that going?

• 49:35Speaker 01

  It was round the clock. So we would man the website, man the phones, and then try to pitch in the late afternoons, evenings. We had a few people working with us as independent contractors that we were paying for while we were trying to figure out the funding situation.

• 49:55Guy Raz?

  After going to all these VCs and just basically getting turned down, I have to imagine at a certain point, you need to raise money if you're going to make this work. What did you do? I mean, you needed to raise money. Where'd you go?

• 50:09Speaker 01

  Eventually, we said, you know what? If these early-stage venture capital firms don't believe in us, let's talk to people who do believe in us. And so we ended up raising a purely angel investor round from friends, family, and some McKinsey partners.

• 50:29Guy Raz?

  Wow. How many people?

• 50:31Speaker 01

  Probably 50.

• 50:33Guy Raz?

  50 people. How much did you raise?

• 50:35Speaker 01

  $735,000.

• 50:37Guy Raz?

  From 50 investors? Now, we should put that in the context. That's like $10,000 check here, $10,000 check there.

• 50:44Speaker 01

  Yep.

• 50:45Guy Raz?

  I mean, it sounds-- and it's a lot. And for a lot of people, for most people, $10,000 is an insanely insane amount of money. But it also, having 50 small investors is, first of all, to just-- to get 50 small investors, you've got to talk to 250 people.

• 51:02Speaker 01

  Mm-hmm.

• 51:03Guy Raz?

  And then you've got 50 people who want to email you all the time.

• 51:06Speaker 01

  Yeah. Thankfully, they were pretty well behaved. We manage expectations about updates. But yeah, we raised-- so we fell short of our million-dollar target. We raised $735,000. And we said, you know what? That's enough. Let's see how far we can stretch this.

• 51:24Guy Raz?

  When we come back in just a moment, how Jennifer and Francois took that $735,000, launched their website full of helpful tips and articles for their customers, and found out nobody was reading it. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 52:07Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So after her initial six-month test run of Know It Owl, Jennifer Fitzgerald and her partner Francois had a handful of customers and had just raised $735,000. And with that money, they could now officially launch the company while rolling out a whole suite of products.

• 52:31Speaker 01

  So we decided to launch with disability insurance, life insurance, and pet insurance. And at the last minute, we were also able to put a renters insurance offering on there. So we launched with life, disability, renters, and pet.

• 52:47Guy Raz?

  And getting the insurers on, because these are presumably big insurers, was it hard? Or again, were they just like, fine, we don't care how you sell it, as long as you sell it?

• 52:57Speaker 01

  So the life and disability insurers were mostly like, fine, I don't care how you guys get your customers. Just get some customers and write some business. On the pet insurance side, that was more establishing direct partnerships with the pet insurance companies. We then had to get access to their rate filings for their products. And then, I think, yeah, Francois and Microsoft Excel and a spreadsheet built the first comparative raider and pricing engine for pet insurance, working through all the data and the pet file, the rate filings that we got from the pet insurance companies.

• 53:36Guy Raz?

  And was the website still called Know It Owl at that point?

• 53:39Speaker 01

  No, I believe we had now changed our name to PolicyGenius.

• 53:44Guy Raz?

  How did that happen, by the way? Why?

• 53:49Speaker 01

  After pitching Know-it-all and getting a bunch of quizzical looks and then people saying, "What? What does that mean? How do you spell it? Know-it-all?" We realized, oh, boy, this is not going to work. And I quickly did some research on how to name your company and what are the tests that you should subject your potential business name to. And there were some pretty straightforward heuristics, like if you see it, can you say it? If you hear it, can you spell it? Right? Because when you hear it, like on a radio ad or TV, you need to be able to go directly to Google and type it in, right?

• 54:23Guy Raz?

  Yep.

• 54:23Speaker 01

  So puns, plays on words, completely random, made-up words are tough. They don't work, right? Or very common words, like you can't name your company Tree, because if you Google Tree, you know, odds are your little startup's not going to come up. So after getting pretty smart about that, we're like, oh, Know-it-all is absolutely not going to work, because nine times out of 10, people aren't going to get it. They're not going to be able to spell it. So we went back to the drawing board and ultimately landed on Policy Genius.

• 54:53Guy Raz?

  As you guys were starting to put all the pieces together, how were you getting attention? How are you getting anybody to even be aware of what you were offering?

• 55:05Speaker 01

  A few different ways. So, we did not have enough money to do any sort of paid marketing or advertising, because you can quickly spend upwards of $735,000 on digital marketing if you don't know what you're doing and you're not careful. So, what we did in those early days was build relationships with personal finance bloggers to try to get them involved, wear the product, to get them to write about us on their site, and to get them to refer their audience and their readers to us as the recommended place to get insurance. There is a big conference that happens every year called FinCon, where

• 55:50Speaker 01

  all the personal finance bloggers get together. And so, we went to FinCon, put up a booth, had a few Gimmicks. I think it's called FinCon, F I N C O N, right? So Financial Blogging Conference, I think, is what it stands for. We wanted to be clever and eye-catching, so we did a play on fin and shark fins, so dressed up in shark costumes. We had cupcakes at the booth with like shark fins in them. It was kind of dumb, but you know, you need a gimmick to stand out. So we went to FinCon and that was, that was a big unlock for us. And where we got a lot of our initial blogging relationships and initial,

• 56:35Speaker 01

  you know, earned traffic and earned media coverage for the company.

• 56:40Guy Raz?

  One of the things that I think is really interesting about what you do, and I wonder if this was part of the plan from the beginning, is content, right? Like, you could have a website that just offers a bunch of different insurance policies, but if I'm an investor, I would say, well, but 10 companies can replicate that idea. Like, what's going to make yours different? Did you have the idea to create content articles and things like that from the very beginning?

• 57:08Speaker 01

  Yes, and the fifth member of our team was somebody focused exclusively on content.

• 57:15Guy Raz?

  So basically, writing articles about insurance and how you should think about insurance?

• 57:21Speaker 01

  Correct.

• 57:22Guy Raz?

  So the idea would be, what, to get people to come to the site looking for advice? Like, if I'm like, I look at like a spot on my arm, I'm like, am I dying? And I'd look on the computer and I'd go to WebMD, right?

• 57:33Speaker 01

  Right.

• 57:33Guy Raz?

  The idea was you would go, you would just, somebody would do a search? And then they would land on your site and find out information?

• 57:40Speaker 01

  That's right, because insurance, as you probably know, it's a very considered purchase, right? It's not an impulse buy. You don't wake up one morning saying, great, today I'm going to get life insurance and I know exactly what I want, how much I want, and where to go. It's a pretty long decision journey, lots of research involved, because nobody's an expert on insurance, right? Even very financially savvy consumers don't know a lot about insurance. So we knew that a key part of our value proposition and a key part to our success was making sure that we had the right content and the right tools along every step of that journey. Right. So for most consumer purchases, it's not a multi-touch journey.

• 58:23Speaker 01

  Right. You want to buy a pair of shoes like you go, you go to the place where you buy shoes and you pick a pair that you like. If you want to buy flights, you know how to do that because you do it all the time. Right. You go to Expedia, you go to one of the flight aggregators, you look at prices to go from A to B and you pick the cheapest one. Right. People don't know how to buy insurance. People don't know how to shop for insurance. People have no idea what are the different types of life insurance, for example, and what's right for them. So we knew that great content and content that doesn't read like it's written by underwriters was going to be a big part of our success.

• 59:00Guy Raz?

  But that takes time, right?

• 59:02Speaker 01

  It does.

• 59:02Guy Raz?

  Because if you write content, you're not going to hit the top of the search right away. You're not going to dominate.

• 59:07Speaker 01

  Exactly.

• 59:08Guy Raz?

  It's going to take time for that to kind of bubble up. It can take six months or longer.

• 59:12Speaker 01

  It took years. Yeah.

• 59:13Guy Raz?

  Years.

• 59:13Speaker 01

  And insurance on Google is a very, very competitive space. Right?

• 59:18Guy Raz?

  Because they're just buying AdWords and things like that.

• 59:21Speaker 01

  Yeah.

• 59:21Guy Raz?

  The big companies.

• 59:21Speaker 01

  It's one of the most expensive AdWords that you can purchase on Google. The word insurance and insurance related terms can go upwards of forty, fifty, sixty dollars a click.

• 59:33Guy Raz?

  A click?

• 59:34Speaker 01

  Just for a click. A click.

• 59:36Guy Raz?

  Wow.

• 59:36Speaker 01

  And on the organic side, right, you've got all the big insurance companies and we all know them because they spend billions of dollars on advertising a year.

• 59:48Speaker 01

  And you have a lot of other sites that are, you know, vying for organic real estate. So it took us, our content SEO strategy probably took a good two to three years to really start to see results in terms of our traffic and in terms of business results.

• 1:00:04Guy Raz?

  All right, so you have the, you basically have a in-house blogger writing content. But initially, no one's reading that content, right?

• 1:00:13Speaker 01

  Oh, yeah, nobody, nobody's reading the content. I think it was just all so new for all of us, and we were just operating in this fog of war and under a belief that at some point, people would be visiting the site and would be reading it, so.

• 1:00:28Guy Raz?

  Right.

• 1:00:29Speaker 01

  Yeah.

• 1:00:30Guy Raz?

  But I'm trying to understand how you measured whether that was working or not, because you had such a small amount of money to work with, and you're, like, some of that money you're deploying for content. But how, how were you able to measure whether that was actually a good idea, or that, that was a good return on your investment at that, at that point?

• 1:00:46Speaker 01

  We didn't. We operated on the first principles and the belief that this was long-term going to pay off, but that short-term, there was no valid way to measure it, that this was, this was a long-term bet.

• 1:01:00Guy Raz?

  I guess, pretty early on in that first year, you, you, you got kind of a lucky break with some earned media. You got a, an article in the New York Times about, or you were featured in an article in the New York Times about disability insurance. How did that happen? Did you, did you guys contact the reporter, or did, how did you even, yeah, get in there?

• 1:01:19Speaker 01

  We did. Francois, I think, tweeted at the reporter, who was writing a column, I think he was talking on Twitter about writing a column about disability insurance. And I think, I think the story is Francois tweeted at him. He replied, was interested to learn more, because who'd ever heard of a tech company focused on disability insurance for consumers? And it all snowballed from there. He tested the product out, got quotes, and we got featured, and that was, that was our big break. The article went live, and we had, at the time, a tracker that showed how many visits were on the website.

• 1:02:01Speaker 01

  So I think we literally went from, from zero to, to thousands, within an hour of the article hitting the New York Times website. And normally, that looked like 10 people.

• 1:02:13Guy Raz?

  And people started to sign up just to buy insurance?

• 1:02:17Speaker 01

  To buy, to get disability insurance quotes, yes. We had a rudimentary CRM and we saw the requests like just start to fill up.

• 1:02:25Guy Raz?

  So it was not done, it wasn't, the CRM wasn't inputting that stuff automatically for you?

• 1:02:29Speaker 01

  Oh, no. It was manual on the backend.

• 1:02:32Guy Raz?

  Just to translate, you and the other people in the office, the three or four people, were typing like user data into the system?

• 1:02:42Speaker 01

  Into the system to get, to generate quotes. Then we put those quotes into a custom PowerPoint presentation for the quote requester.

• 1:02:51Guy Raz?

  How long, how long did it take you to do that?

• 1:02:53Speaker 01

  It took us three weeks to dig out from under the backlog that that New York Times article created.

• 1:03:00Guy Raz?

  Wow. Did it generate significant revenue or not really, not quite?

• 1:03:06Speaker 01

  We generated a decent amount of revenue. Honestly, I think it was a lot of people who were just, you know, in browsing mode. So we also weren't necessarily focused on converting those shoppers. We were just so overwhelmed by the deluge of shoppers and we just wanted to get quotes out. So we didn't, so we didn't disappoint the readers who found us in the New York Times. So we just were, you know, emailing out these PowerPoint quote presentations as fast as we had to get them out for, it was basically an assembly line for three straight weeks to get to everybody who requested quotes from us.

• 1:03:45Guy Raz?

  How long in, in that first year before you, the money started to run out or you realized, we gotta actually try this again. We gotta see if we can raise money?

• 1:03:55Speaker 01

  So we closed that $735,000 round in November of 2013.

• 1:04:03Speaker 01

  And we started raising a series A round of capital in January 2015. So we were able to stretch it.

• 1:04:13Guy Raz?

  A little over a year.

• 1:04:14Speaker 01

  Yeah, a little over a year. I remember going into this next round of fundraising, right? Far more confident than our initial seed round when we just had a very bare bones prototype and an idea and a pitch deck. Cause we now had a team. We now have a functioning online website. We had New York Times coverage. We have revenues. I can point to customers. We didn't have a lot of revenues. We didn't have a lot of customers, but we had some, right? And I went into it thinking, great. We have proven everything that people questioned about us, you know, over a year ago. Right?

• 1:04:57Speaker 01

  And so this should be a more straightforward exercise. That was my mindset going into it. It was not enough for most investors. I think they still said, I don't understand the market. I don't know if this insurance is a big enough opportunity. This is great. Still not enough traction that we'd like to see.

• 1:05:20Guy Raz?

  By the way, how much money were you looking to raise?

• 1:05:22Speaker 01

  We wanted to raise $5 million.

• 1:05:25Guy Raz?

  So what, what was the breakthrough? How did you finally convince somebody to, to write a check?

• 1:05:30Speaker 01

  We found an investor. He operated a small early stage fund out of LA. And he got the thesis. He understood the space. He saw the opportunity. He's an investor who really likes big, messy, old fashioned industries and insurance checks all those boxes. So he got the vision. He got us and, and we got lucky. That was the only term sheet that we got, the only yes that we got from the VCs that we pitched that round. And he's still on our board to this day.

• 1:06:06Guy Raz?

  Wow. All right. So you end up raising, I think, about over $5 million for that, after that Series A. And now you've got some real money, a lot to work with. I imagine you start to see more and more competitors in the space, right? I mean, you start to see other people getting into this space. And how do you, I mean, how did you start to think about differentiating yourself from competitors?

• 1:06:37Speaker 01

  We were still so small that, and it's such a big market, that we weren't overly focused on that, on the competitive side. I think I heard from another founder, maybe some TechCrunch article, that most startups don't die by homicide, they die from natural causes. So we were focused on making sure that we were executing against our own vision, our own strategy, and building the proof points to eventually raise even more capital, right? Because this is an industry where a trillion dollars is spent every year. So we knew that $5 million wasn't going to get us to where we wanted to go to in terms of the vision.

• 1:07:22Guy Raz?

  And were you, I mean, were you basically kind of looking to be that sort of insurance agent, that trusted insurance agent? Because, you know, people who have a relationship with an insurance agent usually trust that agent, right, to work in their best interest. Is that what you were basically trying to be, but in a digital format?

• 1:07:43Speaker 01

  We wanted to be the go-to marketplace and advisor on a digital basis for all financial protection. So it was building trust, it was building the marketplace experience, it was building the brand awareness out there to get consumers to come to us instead of trying to find a brick and mortar agent.

• 1:08:03Guy Raz?

  And how did you start to roll out other products and offerings? Like, how did you begin to think about that at that point?

• 1:08:13Speaker 01

  It took several years before we decided to expand into new products. So when we launched, we had disability insurance, we had life insurance, we had pet insurance, and we had one kind of offering for renters insurance, right? When we launched... Life insurance is where we started to see signals of product market fit. We started to see more consumer traffic to life insurance. We started to see more revenues generated through the product experience for life insurance. So we said, you know what? This is where we're seeing product market fit. Let's focus basically everything we've got on life insurance.

• 1:08:53Guy Raz?

  Can you explain? How big is the life insurance market in the US?

• 1:08:58Speaker 01

  Life insurance, so if you, the insurance industry is split between property and casualty, right? So think home, auto, commercial, and then life accident and health. About $1.2 trillion of premium is written every year in the US on insurance, and it's roughly 50/50. So half is on life accident and health. So call it 600, 500 billion on life accident and health.

• 1:09:23Guy Raz?

  So 500 billion dollars of insurance is taken out a year. People pay that in premiums a year.

• 1:09:31Speaker 01

  Correct, for life accident and health insurance.

• 1:09:33Guy Raz?

  And how much of that is paid out a year?

• 1:09:35Speaker 01

  Well, on the life insurance side, not too, too much, because most, most people don't actually claim on their life insurance policy.

• 1:09:44Guy Raz?

  Oh, because they, because they, they.

• 1:09:46Speaker 01

  Because they live.

• 1:09:47Guy Raz?

  They live. They don't die.

• 1:09:49Speaker 01

  Yeah.

• 1:09:50Guy Raz?

  So it's like, I mean, it's a huge, basically, insurance companies make a huge amount of money off life insurance.

• 1:09:56Speaker 01

  They have much healthier profit margins on life insurance than they do for property casualty insurance, where the claims are far more frequent.

• 1:10:03Guy Raz?

  Right, because there's a fire or something.

• 1:10:06Speaker 01

  Right, you get a car accident, your car gets stolen, correct.

• 1:10:08Guy Raz?

  Wow. So, I mean, here's the other thing about life insurance, right? That's tricky is that, and I think it's why people tend to go with like big insurers, and even then, you never know. Because if you're putting out, if you're, if you're spending, I don't know, several thousand dollars or more a year on life insurance, you have to trust that that life insurance company's going to be around. If you die.

• 1:10:33Speaker 01

  Right, and what I would say is that there's not been any material bankruptcy of any top rated life insurance company in, I don't know, a generation. And there are state guarantee firms that even if a life insurance company were to go out of business, they are required to pay into these state guarantee funds to make sure that any claims would be covered.

• 1:10:55Guy Raz?

  Got it.

• 1:10:56Speaker 01

  So, in terms of where to put your money, life insurance is a pretty safe bet.

• 1:11:02Guy Raz?

  Yeah, I'm wondering about insurance, right? It is a fundamentally unsexy area. It's like financial services is too, but how do you sell something? How did you, you know, how do you sell something that is so, that's not, you know, a pair of Nike sneakers or something? I mean, how much of what you have had to do is to educate the consumer? Spend lots of time just educating consumers about this?

• 1:11:33Speaker 01

  Well, a big part of what we do is educate and link the insurance decision to life events, which is really what it's about, right? So again, life insurance or disability insurance or homeowner's insurance isn't an impulse purchase. It's usually triggered by something happening in your life, right? The biggest trigger for life insurance is having a child. Specifically, what we have found in our consumer research, it's having child number two. Because when people have their first child, they're so overwhelmed with now they're a parent, right? And getting through that initial period with child number one, they actually don't get around to life insurance. It's if and when they have child number two, or if and when child number one is old enough,

• 1:12:16Speaker 01

  that they start to think about life insurance. For homeowner's insurance, it's typically the act of buying a new home. And for disability insurance, it's typically switching jobs. And now you're looking at your benefits of your new job offer compared to your job that you're leaving. So what we have done is figured out what those life events and those triggers are, right? And build kind of an ecosystem of content and advice around that to link that life event with the insurance purchase and get them comfortable with what insurance they need, how much they need, and then to work with us to get it.

• 1:12:53Guy Raz?

  I think since you've, I mean, I think your latest

• 1:12:59Guy Raz?

  Funding round that was in January of 2020 raised $100 million. And now you are a big player in insurance and selling insurance. Where are you seeing the most growth in from the consumer standpoint? Who are the consumers? Is it mostly millennials who are now having kids and, you know, and are getting older? Like, where are you seeing the biggest growth?

• 1:13:23Speaker 01

  It is absolutely that segment. It is older millennials. So our average customer is 36 years old and in that home buying, having children, married for a few years stage of their life. I think if you look at all the demographic trends in the US market, millennials will be 75% of the workforce, I think, by 2030. So that's where most of the growth in terms of consumer purchasing power and just overall households are going to be millennial. And we say millennial, you know, the oldest millennials are now basically turning 40. So that's who our customer is.

• 1:14:05Guy Raz?

  I mean, when it comes to, you know, from your perspective, you guys get, you basically get a cut, right? I mean, you're an agent, so you get a commission when you sell insurance, like Expedia gets a commission when they sell an airline ticket. But from what I understand, you don't like that analogy anymore, right? You don't like the comparison with Kayak or Expedia?

• 1:14:23Speaker 01

  No, not really, because we believe that it oversimplifies what it is that we actually do. And buying a flight is really apples and oranges with buying insurance in that buying a flight is a high-frequency purchase, meaning that you'll do it probably at least in normal times, not pandemic times, several times a year. It's low stakes in terms of if you get it wrong, no big deal, right? If you end up paying a little bit more than you should have, no big deal, right? And it's something that you know how to do because you do it so often. Buying insurance, it's the exact opposite on every dimension. You don't do it that often. Life insurance, you maybe Buy at most two to three times over your life.

• 1:15:08Speaker 01

  It's not straightforward on how to buy and make that purchasing decision. Are you optimizing for price? How does price work? How does price work across the different flavors of life insurance? Right? How do you choose between Prudential and Lincoln Financial and MetLife? Right? Are there differences among those? You versus Delta, United American, like airlines? You know that they're basically offering the same product. Right? So in every single dimension you can think of, insurance is different than buying a flight. And it's also high stakes. Right? If you get life insurance wrong, that's a pretty high stakes decision. Right? Your family is now faced with the worst case scenario of you, the breadwinner in your

• 1:15:53Speaker 01

  household dies prematurely and it turns out you didn't buy the right life insurance or you didn't buy enough life insurance and you got it wrong. And boy, did you get the worst possible decision wrong. Right? Same thing homeowner's insurance. Right? House floods, whoops, you didn't know that home insurance didn't cover floods. Right? So that's why, you know, we've moved away from the analogy to Kayak or Expedia because this is such a high consideration, high stakes decision that is not like buying flights.

• 1:16:25Guy Raz?

  Jennifer, when you, when you think about where you're headed, I mean, you are offering, you're, you're, you're still a, you're a vendor. Right? I mean, you're selling for your, your third party seller.

• 1:16:40Guy Raz?

  Can you become an insurance company? Can you, can PolicyGenius eventually, is that the idea that eventually you will issue insurance policies?

• 1:16:49Speaker 01

  Eventually, yep. We look at our journey similar to Amazon or Netflix, which started in the third party world, consumer goods in the case of Amazon, content in the case of Netflix. And they eventually moved from third party to first party where they were actually manufacturing the thing that they were providing alongside the third party products that they were offering. That is very much a road that we think about for, for the future for us.

• 1:17:19Guy Raz?

  How complicated is that?

• 1:17:21Speaker 01

  It's actually not that complicated compared to what we've already built. We basically have built everything that we would need but for the balance sheet to actually take on the risk and reserve cash for claims.

• 1:17:33Guy Raz?

  And presumably, this is a highly regulated environment. Aren't there huge regulatory hurdles? Because you're not an insurance company now. You're an insurance agent, presumably. That's who you're classified, right? But becoming an insurance company is a whole different ballgame.

• 1:17:49Speaker 01

  It's a whole different ballgame. We're also subject to 50-state regulations on the distribution and agency side. But everything that we've built, if you think about the capabilities, right? How to acquire customers, how to underwrite customers, how to think about the risk of the customers across the suppliers on our marketplace, how to manage those customers over their lifetime, because those customers are our customers, right? The end policy right now might be with Progressive or MetLife or Prudential, but that customer is with us and is our customer. So we've built the technology to track them, manage their policies over their lifetime. So we've actually built out every single layer that we would need to also be an insurance

• 1:18:32Speaker 01

  company, except for the balance sheet to take on the risk.

• 1:18:37Guy Raz?

  When you think about the journey you've taken and the decision to leave that Foreign Service track and then go into consulting and then leave that and start this and the risks that that entailed and what happened now and where you are, I mean, you guys are growing really fast and presumably you're heading towards profitability.

• 1:19:02Speaker 01

  We are heading towards profitability and we are thinking about what's next for us on the capital markets horizon and maybe going public sooner rather than later.

• 1:19:12Guy Raz?

  Wow.

• 1:19:13Speaker 01

  Yeah.

• 1:19:14Guy Raz?

  So you could have a huge... I mean, I know not everyone's comfortable talking about this, but you could have a huge liquidity event. I mean, you could really... This could be huge. If it's a publicly traded company, who knows? If you were to look forward to where you were 20 years ago, even 15 years ago, and see yourself here now, do you think you would be surprised? Or do you think that you would think, yeah, that makes sense? I'm doing something like that? Yep.

• 1:19:46Speaker 01

  I would be surprised that I would see myself where I am right now, which is an entrepreneur, a founder, and CEO of a company that I built from scratch with my co-founder and early employees. That's now almost 600 employees, is a leader in a massive industry, and is thinking about going public. I would be very surprised, even as ambitious and hardworking as I was, you know, in my late 20s. The outcome of this journey so far would have been a total surprise to me.

• 1:20:23Guy Raz?

  How much of your success do you attribute to how hard you worked? And how much do you think has to do with luck?

• 1:20:31Speaker 01

  That is always the tough question. I think the balance is always more toward luck, to be honest with you. Because I've seen a lot of people who just work so, so, so hard, and, you know, it's the wrong idea, or right idea, wrong time, or you make a couple of bad decisions early on, a few things don't break your way. So for me, it's all around luck and timing. Hard work is table stakes, right? And often, like, if you get really, really lucky, you probably don't need to be as diligent and hardworking. But it's catching breaks and being in the right place, right time, right idea.

• 1:21:12Guy Raz?

  That's Jennifer Fitzgerald, co-founder of Policy Genius. By the way, one thing we didn't mention is that before Policy Genius, Jennifer actually tried her hand at stand-up comedy.

• 1:21:26Speaker 01

  When I was a senior in high school, my parents offered me $300. And the terms of that deal were for me to do something nice for myself, instead of going to my senior prom. Because they just assumed I wasn't going to go. Their reasoning being, "Well, honey, we just thought you wouldn't be able to get a date." Mom and dad, if you ever end up listening to this, I love you. But what the [bleep]?

• 1:21:53Guy Raz?

  In fact, Jennifer says stand-up actually helped her in the early days of pitching to investors. Because the way you tell a story onstage isn't all that different from how you tell it in a boardroom.

• 1:22:11Guy Raz?

  Hey, thanks so much for listening to the show this week. If you're not yet a subscriber, please do subscribe to our podcast. If you want to write to us, our email address is [email protected]. If you want to follow us on Twitter, we're at How I Built This or at Guy Raz. And on Instagram, we're at How I Built This NPR or at Guy dot Raz. This episode was produced by Rachel Faulkner, with music composed by Ramtin Arablouei. It was edited by Jeff Rogers with research help from Derek Gales. Our audio engineer was Gilli Moon. Our production staff also includes Casey Herman, Liz Metzger, Farah Safari, J.C. Howard, James Delahoussaye, Janet Wu-Jiang Lee, Julia Carney, Neva Grant, and Annalise Ober.

• 1:22:56Guy Raz?

  I'm Guy Raz, and you've been listening to How I Built This. This is NPR.

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