Posted on: 12/06/2017

Matt Miller of Embroker - A Better Way for Startups to Get Insurance

Matt Miller

Founder & CEO - Embroker


Podcast Summary

Matt Miller of Embroker comes by to discuss his companies efforts to automate insurance for startups. Embroker is an online service that lets startups fill out an online form and get quotes for all kinds of insurance. Kruze Consulting is a large channel partner and a big believer in Embroker's mission of making it easier for startups to get insurance.

Podcast Transcript

Scott Orn:

Welcome to Founders and Friends Podcast with Scott Orn at Kruze Consulting and my very special guest today is Matt Miller from Embroker. Welcome Matt.

Matt Miller:

Thanks for having me Scott.

Scott Orn:

Embroker is a big Kruze Consulting partner. One of the things we do for our clients is set them up with insurance and guess who we call when our start ups need insurance? We call Matt. You want to take a quick second and tell us kind of how you had the crazy idea for Embroker and why it's working so well?

Matt Miller:

Yeah, absolutely. My path to founding the company a little bit different I guess than many entrepreneurial stories but I was actually an investor before founding the company. I spent six years in private equity with Bain Capital and then Hellman & Friedman.

Scott Orn:

I didn't know that.

Matt Miller:

Yeah. I was actually on the board of a large insurance broker before I invested in the company.

Scott Orn:

That's amazing. So you like saw how everything worked and you're like, "Hmm."

Matt Miller:

Yeah, I saw how it worked at a board level, which I realize now is a little bit different than how it actually works but I knew enough to be dangerous I suppose and it was actually when a friend of mind reached out and wanted to buy insurance for his company and I was on the board of one of the largest insurance brokers in the world and so I figured that it wouldn't be a challenge and I tried to get the process started and found that it was kind of a disaster. And I thought, "There's got to be an easier way to do this."

Scott Orn:

And there was never, it was like a super broker centric world. You had to ... Kind of the old school founders who are on their third company, when I first have this conversation about insurance with them they'd be like, "Do you know a good broker? Who's your broker?" Because it's like there's one person in the world who's going to know more than everybody else. It turns out our, just like everything, payroll, benefits, all this stuff, we prefer self-service, we prefer using the web, we prefer doing as much as possible through forms and automation as possible. Vanessa met your team and that's why we started using you guys.

Matt Miller:

Yeah, it's funny, I think somebody mentioned to be there's a good heuristic for whether you should start a business in an industry and if it's an industry where somebody says, "I have a guy," as his solution to a problem then it's probably a pretty good role for technology but I think that being said we do obviously provide a lot of technology and self-service and automation but we also do have people and experts and advice that help people when they need it. But we try to apply that type of expertise when it's necessary, not to fill out paperwork.

Scott Orn:

Yeah. Tell me, maybe paint the picture for our audience. We go to the Embroker site. You guys by the way have some great infographics and great marketing material that we actually, people know this. We actually give it out to our clients when they're onboarding. We tell them, "This is the site you should go to. Here's the infographics that explain what you need," but maybe tell our audience what's happening as you push through the Embroker site and what's happening on the backend.

Matt Miller:

Yeah, sure. Most of the companies that will come to the site, it's pretty easy to onboard themselves. Enter some basic information about the company, what type of business it is, and then there will be, depending on whether it's a business that already has insurance and is just looking for a better more digital way to manage those policies or if it's a company looking to buy insurance for the first time, there will be a little bit of a different experience. And so companies that have different insurance policies that they want a better way to keep track of, they upload that and we digitize it and give them some tools to understand whether their coverages are correct and whether they're paying the right amount or if it's a company that's looking to buy coverage for the first time we'll lead them through a self-serve process that basically allows them to enter the varied information that we need on our end to go take that information and work with a number of different insurance carriers to provide policies to that company.

Scott Orn:

That's really interesting. I always knew about the buying process and uploading your information. I didn't know you guys had a bunch of tools that, is it like a benchmarking stuff? That's pretty interesting because you guys probably see a crazy number of policies and have a really good feel for the market.

Matt Miller:

Yeah, we do. I mean we find actually most of the companies that join a broker actually have insurance already and they're just looking for a better way to deal with their existing policies and so there is a number of tools that we've built out that make it easier to perform, like sending certificates for example, which is something that is a proof of insurance and oftentimes when you sign a lease or a contract you need to send proof that you're insured to that other party and we've built a self-service way to do that and so we find companies that will switch over to us just because it's easier to manage things like that.

Scott Orn:

Oh, that's fascinating. I always thought it was just about purchasing it but that's really amazing. So that means that's great for your business in the long term because you're probably keeping these customers for many years now. Because wants they're on the Embroker platform there's no real reason to leave. Like you guys are managing a lot of their data for them.

Matt Miller:

Yeah, we try to do a great job of providing service but also tools to help make it easier for them to do anything they need to do. We're aware that people don't necessarily love insurance and so I think we want to make it as efficient for them as possible just to do what they need to do. Do it and make sure they have the right things and then move on and run their business.

Scott Orn:

You know, I think there's, you're right in that people maybe don't love insurance or in our case maybe they don't love taxes or accounting but when you do it well they really really appreciate it. They have a pretty good feeling for how much you're reducing complexity in their life. Do you guys find that? Do you have customers emailing you saying, "Oh my god, you saved me hours and this is amazing?"

Matt Miller:

Yeah, I think it's one of the things that we get a lot, which is always really, it's a great thing to hear when somebody finds out about us and they're like, "I can't believe this hasn't existed before. I've been looking for a tool this because ..." Especially people that have run businesses before, it's like, "I have started or run several businesses and I've always wondered why something like this didn't exist?" It's great to hear that.

Scott Orn:

It's also like an every year thing for the business owner or the start up CEO. The fact that you guys, I'm sure you have basically built some stuff. I've never been through a renewal with Embroker yet but I think Vanessa has but you guys have basically built stuff that makes the renewal process super easy right? Because you're looking at all the data, you're probably getting real time stuff and know exactly what the market's like. You can give them a good feel for the terms and push it through.

Matt Miller:

Yeah, yeah, correct. We make the process as easy as possible for renewals, for securing new coverage. We are constantly looking for new ways to basically find information that we can pull about a company. I think increasingly we'll have different APIs into other systems that companies are using so that we can be not only just make it efficient but ideally we can be proactive and say even provide recommendations around as your business grows. Maybe there's coverage that you should have or haven't even thought about that we can just suggest.

Scott Orn:

That's an awesome example because for a lot of startups they'll do general liability. Maybe you can explain what general liability is quickly but they do general liability to get their landlord happy and then maybe a year later, maybe they're selling to an enterprise and they start thinking about errors and omissions or maybe D & O. Do you guys have those triggers in your system where it prompts them?

Matt Miller:

Yeah, we do. And maybe it would useful if I walk through the basic insurance that most tech companies need. Most companies, the first product that they buy is general liability and that's a policy that protects you from any kind of third party liability arising from damage that could happen at your premises and so somebody slips and falls and gets hurt and most often you need that product when you sign a lease. That's when a lot of companies first get into needing to buy an insurance policy. They also need workers compensation and in California it's mandatory as soon as you start hiring employees that you need to buy workers compensation policies. Those are the very basics but then beyond that oftentimes companies need to buy an errors and omissions policy when they sign a contract. That basically provides coverage in case you screw up and you cause damage to the third party that is the one that was depending on your services. And then directors and officers is also a very common policy that technology companies need to buy when they raise investment usually because it protects both the officers of the company as well as the members of the board for any kind of assertion of financial mismanagement.

Scott Orn:

What stage do you see companies buying D & O because it's all over for us. Some Series A companies are buying, some wait until their Series B. What are you seeing?

Matt Miller:

I'd say most typically it's after the Series A. Even sometimes after the first Series C'd. But usually after the Series A. I think one of the reasons why people delay purchasing actually because it's still a very painful process. More painful than it should be but we try to streamline it as much as possible and are continuing to look for ways to do that. But it is a coverage that every company should have as soon as you do raise capital.

Scott Orn:

Yeah. In errors and omissions we see that with companies who are maybe selling to bigger enterprises and those bigger enterprises will come back to them and say, "Hey, I want to buy your software but you need to protect me in case something goes down or you make a huge mistake," and that's usually what gets them asking us about errors and omissions. Is that kind of accurate? Is that what you see?

Matt Miller:

Yeah, that's usually what we see is that it's a lot of, for a software company usually it's when you have a vendor or a customer rather that requires you to have a certain amount of coverage. It's good risk management practice to have that type of coverage and it's interesting I think for startups really the concept of risk management is a funny one because we have so many risks just running a startup in general that it can feel extraneous to need to buy insurance but actually it is, these types of products, even though they're not always the most intuitive they are good products. They do provide good downside protection in certain cases and it's good risk management for every company to have them. It's just unfortunate that the process can be painful sometimes.

Scott Orn:

Yeah. Are there a couple things, you mentioned a couple of times you're like sometimes people don't buy it because it's just too hard. What are some of the fundamental frictions you've taken out? Is it the forms? You obviously thought about this before you even started the company. You were on a board of a giant company. You had to go into this with a game plan of like these are two or three frictions I can really eliminate.

Matt Miller:

Yeah, so it's a really good question and I think part of that, there's certainly an aspect of just digitizing information not only makes it easier in the sense that it's great to have a web application where you can input data rather than a paper form but that's just the start of it. We think about that as the role of data being once you have an ability to collect data on your company and keep it stored and keep it updated, it actually can be used in a lot more of an intelligent way in order to think about, "Okay, here's all the information about my company, my assets, the things that I have. How can I then use that to go intelligently buy coverage for this company?" I think that right now we're at a state where we've built a lot of nice tools to help store and access that information but going forward we're tremendously excited about being able to start using that data to actually deliver better policies and get down to product creation.

Scott Orn:

Yeah, it's a difference between reactive, maybe how founders were five years ago up until even now and being proactive where they're like ... I love the idea that you guys can suggest coverage triggers based on their funding levels or things like that. That's so smart to me because the way it happens right now with us is we are essentially reactive because we don't know if they really want it or not and we don't know if we want to waste their time. Should we bring it up or not? And they don't know about it sometimes if they don't hear it from us so the fact that you guys can proactively message that to them is fantastic.

Matt Miller:

Yeah, I mean our goal is that once you sign up and you give us your information that it's basically we'll tell you what you need to do. I know people don't always want to spend time on it unless necessary and that is the goal of a nice software program. It helps you just run your business more efficiently.

Scott Orn:

Yeah. Like coming from the big company and being an investor, are there any things that really kind of surprise you about the day to day of running a startup? Off mic we were talking about growing company and the workforce and different offices and things like that. What are some of the things that you're like, "Oh my gosh, this is so different from being an investor."

Matt Miller:

Yeah, there's a lot of things. I think that one of the biggest learning experiences for me has been I think coming from a background as a private equity investor I was used to working with people that were certainly the same type of personality, the same type of background, and when there's a homogenous group like that it can be very efficient at doing a certain task but it has, the lack of diversity has other challenges. And now I'm managing a much larger and more diverse workforce with designers and engineers and a sales team and a service team and a product team. It's, everyone has these incredibly different talents and that is what makes innovation possible but it takes awhile to learn about how you develop as a manager to actually say leading diverse teams is an entirely different practice. It's extremely rewarding but it takes awhile to actually get good at it.

Scott Orn:

Yeah, I used to be on the investment side too and I worked at a venture lending fund and I joined Vanessa. For me it's like it's so hard but it's also incredibly fun. Those interpersonal relationships and watching people grow is like what it's all about for me. It doesn't actually really matter what industry or what thing I'm doing, it's just I really enjoy that aspect. I'm sure you do. I can see by the smile on your face. It's like you obviously enjoy that. Because it's easy to sit in a white tower or ivory tower, whatever it's called, and pontificate about being in the insurance industry or the finance industry but when you get into it and you start changing it, like the way you guys are and making it easier for everybody, it's pretty exciting. You got to just wake up every day and be like, "This is awesome."

Matt Miller:

It is. It is. I mean certainly there's no doubt that it's extremely hard. I think all building companies are hard but I think that's what makes it rewarding. In our case we have a lot of the team that comes from insurance backgrounds and have spent a number of years at different insurance companies and that expertise is something we absolutely need to be successful in the industry. It's not stuff that we can just make up but it's really fun to see our team work together and have the realization that if there's something that they don't like the way it's working that we can change it. That's a very different mentality than people come from. It's like, "Aw this sucks. It's worked like this forever. It's super painful. But that's just the way it works." Now we're like, "Okay, let's fix that."

Scott Orn:

I had that exact conversation last night with one of our team members. Like, "Fix it. Put a proposal together and fix it." And it's so empowering. I saw his eyes light up and I could see your eyes lighting up. That's what it's all about. At least for me. It's so much more exciting. And like you guys are really doing it. I don't want to oversell but we really use you guys, we refer our business to you guys. We know you know what you're doing. You make it easy for our clients. You've, whatever your goal was when you started this company I would say you're probably 85% of the way there. You may laugh and maybe your board members are like, "Well the goal is an IPO so we're still ...," but from the product and from the usage basis, I can tell you you're doing a really good job.

Matt Miller:

Well, I really appreciate that although I probably would disagree about the percentage. I think we have a long way to go and actually some of the things that I am excited about are we do think that we can go even further in terms of actually developing insurance products that are better for our clients. Right now we distribute existing insurance products and there are some pain points with those products that we can't really fix because we need to collect a certain amount of information and we need to provide a coverage that somebody else is underwriting and giving to our clients. We do a good job of sorting those but I think that the road for us will be eventually finding ways that we can actually make the process even better.

Scott Orn:

Yeah, that's a really interesting point. You can, you now have enough data, probably especially in the startup market and be like, "Oh, this is an unmet need or that's an unmet need." And maybe, "Everyone's paying too much for general liability," or something like that.

Matt Miller:

That's exactly right. We have enough data, especially with startups that not only can we make it easier for them to get existing products but we think we can create products that are better than anything in the market and just continue to provide value that way.

Scott Orn:

That's, I didn't even think about that. That's why you started the company. That's amazing. Are there any other like, maybe, I don't want to dwell on other peoples misery but any amazing stories of people who weren't covered or cautionary tales basically for the people out there. Why they should get this insurance.

Matt Miller:

Yeah, I mean there's a lot of them. I think that from a startup perspective probably the most relevant is that, I won't name names because it's, I feel I don't want to dwell on it but you can be ... Going back to the fact that there are a lot of risks during a startup and it can feel like buying an insurance policy seems crazy and not relevant but there are things that happen that are very unfair and if you don't have a policy to protect you it can really really be a huge distraction and potentially ruin your company. An obvious one is that if you get sued for something that you didn't actually do, and so it's a completely frivolous lawsuit and somebody makes up an accusation that says you did this thing and if you don't for example and D & O policy that would protect you against that you have to pay law, lawyers fees out of your company's operating budget even though you didn't do anything. That's the type of protection that you need.

Scott Orn:

And the litigator knows that and the litigator smells weakness and so then they press their case a little bit more because they know they can get a settlement because you don't have deep enough pockets to fight it.

Matt Miller:

That's right.

Scott Orn:

I've actually seen that happen a couple of times and it's like, it's so sad because these are terrible lawsuits out there but the company just has to do that cost benefit analysis and just settle even though they're not in the wrong. It's a total bummer. Actually it bums me out. But you're right. If you have that kind of coverage the insurance company gets involved too right because they have a vested interest and they want to minimize the expenses. They're going to look out for you and make sure they help you in that fight.

Matt Miller:

That's exactly right. I mean those policies are things that you hope you never need to use but it is downsize protection and that is the good thing about insurance products is that you buy them and if you don't use them it's probably a good thing and if you do use them it's a good thing you have them.

Scott Orn:

Yeah, I would say insurance is the best deal for the exact reason. I remember in a personal side my apartment burned down in 1999 and I had renters insurance and it shaped, I was like 22 years old. And it always shaped the way I thought about insurance because I actually experienced the positive side of insurance. Didn't have to stress about anything. Got everything replaced. And ever since then I've been a huge consumer of life insurance and general liability insurance. We have professional liability insurance because we're a regulated entity so we have a special kind of insurance that even goes beyond what our startups do and we, Vanessa and I spend a lot of money on that because it's the smart thing to do and it totally reduces the stress in your life.

Matt Miller:

Yeah.

Scott Orn:

You probably encounter that all the time. You're like, you hear these stories of people thanking you probably.

Matt Miller:

Yeah, I think sometimes it's funny, I was thinking about this, about how obviously we work with a lot of startup and technology companies but then we work with a lot of companies from other industries that are more experienced purchasers of insurance because it's a big part of if you run a restaurant or a hotel or construction company it's just buying insurance is a thing you deal with all of the time, not just an occasion. I think that the experience that we're providing now is something that for people that are more used to it, that they're almost sometimes more excited about it. Like, "Oh my god, this is amazing because we've dealt with this for so long." Sometimes with technology companies its people's expectations are even higher and that's one of the reason I actually, I love working with technology companies because it's meeting that higher expectation that we want to do rather than meeting peoples already low expectations with the industry. I think the industry can be a really great force for change and we should have high expectations.

Scott Orn:

Yeah. Also I think startup founders are like that. If your client base is startup founders, this is speaking from experience they'll have these crazy expectations we actually like. It drives us to improve and continue improving. But sometimes I'm like, "Hey, just so you know we're like two times better than anybody else and we're also cheaper. Just so you know." Because our business is funny. You're probably like this too. We see our competitors work. We see sometimes how bad it is and we see what they're charging. We have perfect information on our market. You probably have the same thing. You're like, "Wow, why would they put you in this terrible insurance policy," or "You pay what for this insurance policy?" We actually know the market way better than our clients most of the time be we don't let ourselves get fat and lazy. We sit there and go, "Okay, this person is obviously seeing a weakness in our processes. How can we make this better?"

Matt Miller:

That's exactly right. I think at the end of the day we are, we're in a technology business but a service business as well and if somebody has really high expectations like that's a great thing because if you can meet them that means you're doing a good job. It's a challenge but it's something that we enjoy.

Scott Orn:

And those people usually know they're like that. They know their personality and they know if you meet their expectations they're going to tell a lot of people. I'm sure you're the same way. I mean word of mouth is incredibly powerful. We, just because we've had good experiences with you we're now referring you to our 160 clients. That's like really turbocharged word of mouth and I'm sure you're experiencing that all over the place.

Matt Miller:

Yeah, absolutely. Something we aim to always meet is that the, I'm sure many people that are listening are founders of businesses or running a business and it's no different than anything else where the best source of growth is customer referrals always because that's the most, even as a founder myself when somebody refers another service to me it's always the most impactful because there's no hidden agenda. It's something that made somebody's life easier and they're sharing it with you because it made their life easier.

Scott Orn:

Yeah, that's a good, that's a really good feeling. Well, you touched a little bit on the future for Embroker but maybe just kind of give people a taste of what you guys are developing, where things are going and some things to get really excited about.

Matt Miller:

Yeah, no, absolutely. I think we're working on a number of things that are pretty exciting and will be, I think really step change better than what exists right now. In terms of focusing on insurance products and how we can do a continually better job of making them easier to buy, easier to understand and a better value and I think that we will go down the route of trying to actually, especially technology is going to be a big focus of ours next year. I think we're going to spend a lot of time working on how we can better serve technology companies because I think that they are underserved in general by insurance companies and they have specific needs that I think we can do a better job of meeting. One of the ways that we will try to meet them is work with different insurance carriers and work with providers of capital to create brand new products or different versions of existing products that are just easier to buy and easier to underwrite and better value and have those be ultimately in addition to the ease of use of the platform to actually really try to improve the financial products we're selling. And I think that it's a huge opportunity and something that whenever I, sometimes I'm working with a startup company and they'll be going out for D & O insurance or something and we'll take it out to all the carriers and they'll reject it for all these stupid reasons and I get almost angry. I'm like, "This is a good company. Why are you rejecting them?"

Scott Orn:

Yeah, you're like, I know. You're like, "I know the CEO personally. This is not someone who's going to do weird stuff." Yeah.

Matt Miller:

It's a really good risk. It's like this is crazy that you guys are treating them as if it's bad. Eventually we want to have the ability to take ownership over that process as well and use some of the data that we've collected to make it, actually be able to provide that to our customers.

Scott Orn:

It has a clear similarity to like the peer to peer lending space or things like that where people got sick of banks rejecting really good credits or people not being able to get credit at a reasonable rate that the peer to peer lending industry appeared out of nowhere. It seems like your kind of on that track where you have so much data. You know who's performed and who hasn't over a couple of years or five years or whatever it is. You can start underwriting those kind of stuff. And I think you made a reference to capital sources being out there. There's so much money swirling around the world right now looking for good opportunities that if you have a great idea and you have the dataset that you guys have, I'm sure you can attract that capital.

Matt Miller:

I think so. But I think that we are interested in moving towards that direction but ultimately we do it only from the customer's perspective and working backwards. What is it that our customers want? What are the pain points they have right now? And how are we able to deal with it and if we invest at six months and a bunch of time and resources what would be the single biggest thing that they can change to make it better? And I think if that leads us to creating some of our own products, which it may, I think that would be a good outcome because we can always start from just, "All right, what's the most painful thing we haven't yet figured out," and then working from there.

Scott Orn:

I was going to say, that's definitely part of your roadmap but creating your own products is almost like the icing on the cake for me. You guys have made just the acquisition process so nice and easy and it's, again we send it to our clients and tell them to do it because it just makes everybody's life simpler. And the fact that I didn't even know you have all these tools that are like monitoring stuff and preemptively asking them to maybe re-up or they should be thinking about this policy. Like I said, you probably don't want to hear this but you're like 85% of the way there and even if 100% is getting your own products is great but what you guys have done already is really impressive.

Matt Miller:

I really appreciate that. I think it's something that we, it gives me a lot of gratitude as a founder and the team has worked really hard to get here and every time we work with companies that have a good experience it's fantastic.

Scott Orn:

And one quick thing, you guys actually have already put a lot of resources and time into educating the, for us the startup CEOs but there's other people who run businesses that need insurance. I recommend people go to your website and check out, there's like infographics and things they can read, PDFs that really actually explain things pretty well. Oftentimes we find ourselves just pulling the infographic off your site and sending it to people so they can visualize it. I really recommend people go to your website and check it out.

Matt Miller:

Yeah, that's great. We appreciate that.

Scott Orn:

Yeah. Well Matt, maybe kind of give the quick recap on Embroker. Tell everyone where they can find you and maybe give an email or phone number where people can call if they're interested.

Matt Miller:

Yeah, no, absolutely. You can find us at embroker.com. You can sign up on the platform and start the process to either buy new lines of insurance or if you already have lines of insurance that you just think it would be easier to manage them all digitally and have a platform that helps you with any aspects of renewing or dealing with certificates or anything you need to do you can upload the policies onto the platform and it should be a pretty simple and seamless experience. And if you have any questions just about insurance you can always just reach out to us directly. There's a chat functionality built right into the platform and so that's probably the best way to get in touch. Just log on and start asking some questions and we'll connect you with the right person to help answer them.

Scott Orn:

I love it. Embroker. We recommend it. Kruze Consulting loves it. We send our clients to it. Check it out and Matt Miller, thank you for coming on the podcast. Appreciate it.

Matt Miller:

Scott, I really appreciate it. Thanks for the time.

Scott Orn:

All right man. Thanks.

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