4 Kick Ass Rules for Insurtech Startups

Yesterday I found myself in Des Moines, Iowa at the Global Insurance Accelerator to meet with six #insurtech (insurance technology) startups. I volunteered to mentor these teams for the same reason I am writing this post at 6:43 am on a Tuesday -- new insurtech ideas are exciting. But as I sat with the six companies, I found myself repeating the same advice.  

Here's what I have learned from five years in the trenches of an insurtech startup:  

1.  Be careful about selling to carriers first. 

I think I actually stated rule one more bluntly during my meetings, something like, "You will die on the vine if you need a large carrier contract for your first sale."  Insurance carriers have no incentive to innovate (it's a classic innovator's dilemma).  An insurance carrier's mandate is literally to avoid risk.  Why would a company trying to avoid risk sign a six-figure contract with a company six months old?  Logically, it just doesn't make sense.  

And yet, I found myself trying to get just such a contract for the first four years of my company's life.  I know better now.  I hope the entrepreneurs I talked to will learn from my mistakes.  Which leads directly to rule two...

2.  Find a smaller insurance customer.  

If you follow rule one, then it is important to find a better first customer.  Instead of trying to land the six or seven-figure contract with Giant Insurance Conglomerate Company, where can you start landing smaller customers at a higher volume?  Instead of trying to hit homeruns, where can you hit singles and doubles on a regular basis?  

ClaimKit's new product, RiskGenius, is a perfect example.  At first I tried to go after the carriers because I knew they have messy policies and they don't really know what's in them across various departments.  But after a year of "sales," I started talking to my insurance broker friends.  "Do you have any problems reviewing policies?" I would casually ask.  And then my friend Megan and Travis and Erik all told me about reviewing insurance policies on nights and weekends.  Bingo!  

Where can you find smaller customers that also have the same pain as the insurance carrier?  Often times, you can look at the parties connected to your dream carrier customer to find an alternate customer. 

3.  Make your insurtech company a monopoly.

I feel like I am a broken record at this point, but I stand by Peter Thiel's awesome advice in Zero to One:  

Make a product that is ten times better than your competition.

Being ten times better creates a temporary monopoly.  Too often, insurtech startups simply want to bring a hot, new technology to the insurance industry and they think that is enough.  It's not.  

If insurance companies wanted to buy analytics, then they would all just buy IBM's Watson.  If insurance companies want to just buy social media ads, they would just hire the largest advertisement agency out there.  If you have an insurtech idea, you have to ask yourself, how am I ten times better than the existing technology solution?  How are my analytics ten times better than Watson; how are my social media ads ten times better than a typical ad agency?  

This part is really, really hard.  It requires a lot of thinking and a lot of conversations and a lot of domain expertise.  Most of the time, this advice gets skipped.  If you are having trouble landing an insurance technology contract, you should think about your technology and your customer segment.  

4.  Your #insurtech deck can be a lot better.  

This is the easiest rule to follow:  hire a graphic designer and never let them go.  Make sure that graphic designer becomes intimately familiar with your business.  Let them design your pitch deck based on the following rules: 

• One picture per slide
• One sentence per slide 
• Font 40 points or bigger  

Your pitch deck should be no more than 10-15 slides.  And, you should follow Guy Kawasaki's slide deck outline.  

That's what I have learned in the trenches of an insurtech company.  What about you?  What have you learned?