On the podcast Millennial Money, host Shannah Compton Game, CFP®, MBA, invites personal finance experts and fintech innovators to share their experiences with an audience of young entrepreneurs.
In the episode "How to Thrive in Fin Tech," Shannah interviews PolicyGenius CEO and co-founder Jennifer Fitzgerald to find out how she made the decision to leap from a corporate consulting gig to the crazy hours and high-stakes stress of startup life, and Jennifer shares her tips on how to launch a startup while avoiding some of the most classic mistakes. The two also talk about the current ratio of women to men in fintech, and how that ratio is slowly changing for the better.
Check out the podcast in its entirety on Everyday Finance, or keep reading below for the full transcript. And be sure to subscribe to the Millennial Money podcast for more interviews that are probably almost as good as Jennifer's. (Not that we're biased or anything.)
How to Thrive in Fin Tech
Interview with Jennifer Fitzgerald, CEO PolicyGenius
Shannah: This is Millennial Money. I am Shannah Compton Game and I'm so excited to have with us the CEO of PolicyGenius, Jennifer Fitzgerald. We're going to talk all about this new world of fintech and how you can survive as a woman in the fintech environment. Jennifer thanks so much for joining us.
Jennifer: Thanks for having me on Shannah.
Shannah: Awesome. Maybe just to start off tell us a little bit about your background and what led you to start PolicyGenius.
Jennifer: Sure. So I have been working on PolicyGenius for a couple years now. Before that I was a management consultant at McKinsey & Company. So for those who aren't familiar, McKinsey is a consulting firm that's hired by a lot of the big Fortune 500 companies to do growth projects or strategy projects and advise on C-suite-level problems. I was there for five years. I went there right out of law school beause I quickly decided, in one summer working at a law firm, that that was not for me. So I went right into business at McKinsey and I was there for five years. And when I was there I worked exclusively with consumer financial services companies. So the big banks, big wealth managers, all the big insurance companies, helping them solve everything from call center operations issues to "what's our five year growth strategy?" So that was my trial-by-fire and introduction to the world of financial services.
Shannah: Awesome. So there's this whole bubble now that's popping up, fintech, and there's so many different companies kind of entering this market. So in your opinion, maybe just give me a little bit background of what you know about this fintech environment and what is leading this movement, and what's kind of making this happen now?
Jennifer: Sure. So fintech has been, I like to think of it in terms of waves. So in terms of where you've seen entrepreneurial activity and start up activity, it's kind of come in waves in fintech. The first wave was really around payments. So PayPal was the first big fintech company that we can all think of right in the modern era. So there were a lot of payments companies and a lot of lending companies like Prosper and OnDeck. Then you had companies in the wealth management space, so you've got Betterment and Wealthfront and LearnVest.
And then we are in what I like to think of as the final frontier of fintech, which is insurance. And you're starting to see more new tech companies in insurance. Oscar is a big insurance company here in New York that launched a couple years ago.
So fintech is really heating up and I think I attribute that to a couple of things. One is that success begets success. So when you have a few bigger successes like OnDeck and Lending Club which IPO'd this year. Got Square Cash and then PayPal is the early success that began a lot of PayPal alumni starting their own companies. That's one piece of it.
And the second thing is I think with easier access to venture capital a lot of entrepreneurs are emboldened to take on old intimidating industries where there's maybe a lot of regulation and a lot of barriers to entry but where you see those things it's actually a bigger opportunity behind the moat. So I think that's been encouraging entrepreneurs as well to tackle things like banking and insurance and lending.
Shannah: And personally speaking I'm interested to hear your story because so many of the listeners are entrepreneurs and what I find is the millennial demographic, they're starting businesses right and left and they kind of grew up with this word, "creating your brand," which probably to parents or older generations is still kind of this bizarre phenomenon. So I'd love to hear from you your transition going from McKinsey & Company, kind of a traditional company, into the world of being an entrepreneur and starting your own company. What was that transition like for you?
Jennifer: Yeah, it's certainly not an easy one and it takes a certain amount of courage and craziness to make the jump.
I had learned an industry really, really well at McKinsey so I learned about insurance a lot from end to end. From spending six months in a call center in the midwest to presenting to CEOs and talking to boards about their business concerns. So I really, really went deep on an industry and just knew it inside and out right. So that was kind of one piece of it was comfort around the domain and a familiarity with the problems in an industry. So problems that would excite an entrepreneur.
I think the second big piece of it is I met my co-founder at McKinsey and he had previously worked at a startup, he had more of an entrepreneurial bent and he had always been in search of a good idea with line-of-sight to revenues and a co-founder to work with. So we started working together at McKinsey. We started talking about "oh isn't the insurance industry so bloated and old fashioned and nobody's really tackling this on the startup side. Shouldn't we think about doing it?" And kind of testing ideas and talking like nights and weekends and you know, whenever we get some free time. The momentum kind of built. We took a leave of absence to test some ideas. Because I really wanted to get comfortable with, "Hey I think there's something here. There's a big opportunity and I'm confident enough to leave a job and go after it."
So it was probably all in a six month process from the moment we started thinking about it and testing the idea to quitting our jobs and starting the company. So some people it's faster, they just dive right in, hand in their notice and they're like okay I'm going to start a company. I'm a little more risk averse by nature so I really wanted to make sure that I believed in the opportunity, I believed in the idea, I believed in my co-founder enough for the two of us to work side by side. So it took us a few months but it just made us that much more comfortable with the direction we were headed.
Shannah: Yeah, and I think that's great advice too. If you could encapsulate your advice, it's really that you tested this before you cut the cord of everything else you were doing in life. Which I think is important beause so many people, not to say it couldn't have worked out if you just took the leap, but it's important to put the toe in the water before you decide to cut off that nice financial stability that you might have had working for a bigger company.
Jennifer: I think so. And you know it's easier to change your mind and take the idea in a different direction when it's just you and your partner working on it, but as soon as you start taking on investors' money and you've got other stakeholders and people you're accountable to, you still do it and companies do it all the time, changing directions and pivoting, but it's just tougher to do.
So I think the more certainty you can have, the more hypotheses you've been able to test before you make the official leap and certainly before you start raising, trying to raise capital, the more comfortable you'll be I think.
Shannah: Exactly. So you've kind of danced around the topic of raising capital and investors and things like that. For the millennials out there listening who are entrepreneurs, who are maybe at various stages in their business development, in your opinion and in what you've experienced, what are the different options for raising capital and getting something off the ground? And maybe how did you guys do it?
Jennifer: Sure. We took a relatively traditional path when you look at tech startups. So what we did is when we left our jobs at McKinsey we tested a very early beta product. It wasn't anything to write home about but enough belief in the opportunity and had done all the research. We tried raising a bit of institutional capital like going to early stage venture capital funds. For any number of reasons they all were like "nope, gonna pass." So that door was closed to us.
So what we did was we went around and basically cobbled together a seed round and we raised about seven hundred and fifty thousand dollars, and just put it together with friends and family, angel investors, we raised some money from some of the partners we worked with at McKinsey, and cobbled it together enough to last us 12 to 16 months to build a small team, build a product and launch. So we did it that way.
And about 18 months after launching we had early success. The business was going in the right direction so we went back out to raise a next round of capital. Series A for folks who are familiar with it. So it was our first big like equity raise. So this time we had better luck thankfully with venture capital firms and institutional investors and earlier this spring we ended up raising a little over five million dollars.
Shannah: Oh awesome. Perfect. So why is it that there are so few women in this fintech environment?
Jennifer: That is a great question and one I think about a lot. I think part of it has to do with the funnel. There are just fewer women in financial services. Depending on where you look at. So sales I think there are going to be fewer women than men. Certainly at the executive levels you're going to see fewer women than men. So just the type of folks who would be familiar with financial services and then think, "Oh hey I'm going to go start my own company"--it's just a smaller pool.
So the first rule of entrepreneurship is people just kind of do what they know. "I know this problem really well so I'm going to go tackle this," and because there are fewer women in financial services you're just going to see fewer women jumping out and saying I'm going to start my own fintech company. There are some of us around but we're certainly not the majority when you look at fintech entrepreneurs.
Shannah: Yeah. I think that's very interesting. I'm a certified financial planner so in my world and being young there, I'm always usually the only female in the room, and if there are other females there's easily a 10, 15, 20 year plus generational gap. And I think it's really interesting because not just in fintech but kind of in the whole financial world as is, as our population ages there's going to be mass people, I hate to use the word, but basically dying off, and a large demographic of people that need to be serviced with the different products and different offerings and just not that many people able to provide for them. We're going to be small fish in a big pond and I think it's just really fascinating. And especially for women there's just such an opportunity I feel. And any piece of this industry that you can get in to really make a mark. You know with financial decisions being made primarily by the women in different households, there's a real kind of need I think for women to create these kind of companies and create products and services and what not to meet those needs.
Jennifer: Absolutely. And you referenced a trend that we saw as well and is one of the reasons why we started our company, and that's a lot of the folks involved in financial services are near retirement age. The average age of an insurance agent in the U.S. is 59. Which means that there's a whole lot of 75-year-olds out there still selling insurance.
Shannah: That is true.
Jennifer: And so we saw most of the work force on insurance is going to be retired in a handful of years, so we saw this huge opportunity to step in and create a digital service provider for insurance. Just because we saw that's where the market was headed. And I totally agree with you. As we look at the demographics of our customers, who typically makes the financial decisions in the family, it's often the women in the family. And what's encouraging to me even though you don't see a lot of female founders in fintech, you're increasingly seeing more.
But I just, I went to a conference a couple weeks ago, FinCon, where a lot of the new media--podcasters, personal finance bloggers--a lot of the new media for personal finance were, and it was majority women. So I think we see a lot of grass roots, at the grass roots level a lot of women. Particularly in the new media space. You're going to see more representation of women which is really encouraging.
Shannah: Yeah that's awesome. So we've kind of danced around it a little bit but tell us a little bit more about what you do at PolicyGenius.
Jennifer: Sure. So at PolicyGenius what we're doing is we've built the digital version of a brick-and-mortar insurance agency. So if you think about everything a traditional insurance agent would do which is everything from giving you advice, determining what your needs are, to quoting policies and getting you coverage, that's what we do.
But it's online and it's self-service and we're trying to make the process of shopping for and getting insurance much more painless and much easier. So we've got life insurance, building insurance, pet insurance, renters insurance and we're adding more products over the next couple of months.
In addition we've got a lot of great content. We've got advice tools to help you figure out what you need and don't need. And really trying to fill the gap in the market that we saw. One which is around aging, an insurance agent population that's not reaching most of America. And two a delivery model that people want. More and more people just manage all of their financial lives online, so it makes sense that you should be able to do that for insurance as well.
Shannah: So you've created something very user friendly and easy for somebody to go on there and figure out maybe what they need and apply and things like that in an environment where they're comfortable and there isn't some stodgy sales person sitting across from them.
Shannah: So what would you say is the hardest part about having a start up? I know right. There's too many to name.
Jennifer: There are a lot of hard parts. So it depends on what stage you are. So I think early stages, right, so like the first six months of it it's the anxiety about is this going to work. Am I building the right product? Are people going to want this product? And you may have heard reference to what's called product market fit. I think that's the hardest part and what causes the most anxiety.
And once you get confirmation that it is the right product or maybe you have to change the product and then re-launch and then you're seeing that your product is solving a problem, then the hardest thing is figuring out, all right how do I grow this thing? How do I get it in the hands of more people? Get it in front of the people who will eventually be my customers? There's infinite channels to do it from advertising to content to partnerships. How do I do that in a way that's not going to burn through a ton of cash and where I'm going to make too many mistakes to keep going? So that's probably the toughest part. Especially if you're a first time entrepreneur and you haven't done this before. Then you know that part is really stressful.
And then related to the growth question is growing and building a high performing team. Even if you've managed folks before and hired folks before, which I have, doing it for your own company where you've got to convince them not only of the role but of the company and what you're doing, is really, really tough and time consuming. And it's so mission critical to get the right people on your team. But that's been my big focus for the last couple months and it's a really, really difficult thing to get right.
Shannah: So how would you say you manage the stress or the weight of this all? Do you have any routine or hobbies or anything you like to do to take yourself out of this environment, this high stress environment?
Jennifer: I try to. So I've got a dog who's great. I got her actually right around the time I started the company and left McKinsey, because I wasn't traveling five days a week anymore and could have a dog. So she's been great.
And what's really been helpful for me is having other friends who are entrepreneurs and founders and building a community of people who are in the same spot as I am, facing the same challenges. So I can go to them for advice and also just decompress right. Because sometimes you just want to complain a little bit. And your friends and family will only take so much of it. So it's nice to have a close network of people who can empathize and identify with what you are dealing with on a daily basis. But it is very consuming. It's helpful to have that community of folks that you can turn to. So that's been really helpful for me.
Shannah: So kind of last question wrapping up, what does the next year look like for you and PolicyGenius? So if you could kind of like wave a magic wand and create the most ultimate environment what would that look like? What would you guys be doing?
Jennifer: That's a great question. So in the next year it's really about a couple things for us. One is growth. So I think we've had a lot of big early success. We've had some great success with customers and some nice success in terms of growth. We really want to accelerate that and get the brand out there, get the company out there and just serve a lot more customers much more efficiently.
The other piece is really around expanding the products on our platform. So we've got four insurance types now [life insurance, long-term disability insurance, renters insurance and pet insurance]. We'd really like to add another three to four over the next year because the ultimate vision is to be the online destination of choice for insurance. So when anybody thinks about insurance they'll think about us instead of MetLife and they'll go, "Oh! PolicyGenius, they've got great content and tools and quotes so that's where I'm going to go."
So the next year is really important for us to make some big leaps towards that vision.
Shannah: Awesome. So last parting advice. If there was somebody out there listening who's thinking about making the leap with a product or service or some sort of start up, do you have maybe one or two pearls of wisdom to tell them?
Jennifer: Absolutely. So first thing I think at least in my approach is do your homework. So if you think you have an idea or a good potential product do some research to figure out does it exist, what the landscape looks like. And the best type of research is test it with some potential customers. So you can do a very, very cheap and easy low fidelity mock-up of the product. Get that in front of some perspective users or customers. Test early on to make sure you're on the right track and it'll make you more comfortable to take the leap. So that's the approach that I did and if you're anything like me in terms of your risk profile it's just going to make you much more comfortable to take the leap.
Shannah: Fantastic. Well thank you so much for joining us and sharing your wisdom and I hope everyone goes and checks out PolicyGenius because I think you guys are doing some awesome things and you're certainly doing a lot for the life insurance or insurance market in general I should say which desperately needs a revamp and modernize how things are done. So I more than appreciate it. Love to have you back as a guest again and I just thank you so much for your time.
Jennifer: I'd love to. Thanks so much for having me on Shannah.
Shannah: Awesome. Thanks so much Jennifer.