The Denim Rivet is insurance vet Gregory Bailey's new podcast program about innovation in the insurance industry. Each episode, he invites startup founders, entrepreneurs, and executives to join him to discuss how the industry is being transformed both from within and without.
For Denim Rivet's second episode, Bailey asked PolicyGenius CEO & co-founder Jennifer Fitzgerald to talk about where the idea for PolicyGenius came from, and how she and co-founder Francois de Lame have worked hard to turn that idea into a new way to sell insurance online.
You can listen to the episode here, or read the full transcript below.
The Denim Rivet
Startup founder interview with Jennifer Fitzgerald
Gregory: Welcome to episode number two of The Denim Rivet. I'm Gregory Bailey. On today's episode I welcome Jennifer Fitzgerald, CEO and co-founder of Brooklyn-based PolicyGenius. Welcome to The Denim Rivet.
Jennifer: Thank you. Thank you for having me.
Gregory: You're very welcome. I'm so honored and privileged to have you on this show. You and I haven't had an opportunity to chat much in terms of background, and I would like to start off by just hearing a little bit about your back story. I know just a little bit about you and the fact that you used to be with McKinsey & Company and I'm interested in kind of taking you back to those pre-PolicyGenius days and getting a little bit more about your back story.
Jennifer: Well, depends on how far you want to go back, Gregory, but you're right. Right before I started PolicyGenius, I was a consultant at McKinsey & Company, so the big management consulting firm. And I was there for five years and I worked exclusively in consumer financial services. So I served a lot of the big insurance companies, retail banks and wealth managers on growth strategy, on marketing projects. That's where I met my co-founder and it's where I did my deep dive into the insurance space and realized the opportunity in the market that a company like PolicyGenius could fill.
Before that, going back even further, is even more of a wandering path. So I spent most of my 20s doing things like being a Peace Corps volunteer and working for the World Bank. I spent a lot of time oversees until I made the transition to the private sector and joined McKinsey.
Gregory: That's very interesting. So you were in the Peace Corps?
Jennifer: I was. In fact, I call it my first startup experience.
Gregory: Where were you located?
Jennifer: I was in Honduras.
Gregory: Okay, and so what types of projects? You call it a startup experience, so tell me about that.
Jennifer: Very much so. So I was an urban and regional planning volunteer and I was assigned to work with a municipal government. It was kind of a state capital in the mountains of Honduras. And my counterpart was the mayor and the municipal council. And day one, they looked at me and they said, "Well, our big problem is we don't have enough revenues. We've got a high rate of poverty, we're a small municipal government and we need money for public works, public service projects, paving roads, things like that."
So I spent a couple of weeks just immersing myself in the municipality, understanding how they charge for public services, how they collected property taxes, things like that. My proposal to them was "You know, listen. We need to move from a paper-based system of records and tax collection to something computerized so you actually know your whole universe of tax payers, who's paying, who's not, so that you guys can better control and collect revenues."
And this was early 2000s that I was over there, so it wasn't a cloud-based thing. We didn't have internet in that part of Honduras. It was just a local network I created, pulled it together on Microsoft Excel and Access. I'm not a programmer but I'm pretty handy around spreadsheets and databases. So yeah, that was my first project. And we created that. I had to teach a lot of the municipal employees how to use spread sheets, how to use the database system I built. It took us about a year to build, implement, do all the data entry to move the paper records to computer records, but after that first year, unveiled it, did a lot of socializing out in the community to advise folks, "Hey, your very first tax bill is coming. Here is what it means. Here is how you pay that." And it was a big success and people got it. They realized that if they pay their taxes they'll see more in terms of investment out in the community.
And the year that we launched it we saw revenues increase by 30-40%, off a small base but still a big deal for a small and cash-strapped developing country government.
Gregory: That's fascinating. So it sounds to me like this whole experience of moving from a paper-based world into a computerized or dare I say digital world, in terms of government. Little bit the insurance industry might learn from that, huh?
Jennifer: It was a... Once I started thinking about it, I saw the parallels in that journey, which I took, I'm aging myself, but probably a dozen years ago in Honduras. And it's the same push that I'm trying to do now with my company, which is moving from analogue and paper and fax and phone-based processes to something that's more modern and in keeping with how consumers deal with their financial services.
How PolicyGenius got its start
Gregory: Outstanding. Well, I appreciate the back story. And then on to McKinsey, and you just walked us through the back drop and the story there. So I'm interested in those early days about when you very first had the thought or the idea about what ended up as PolicyGenius.
Jennifer: Sure. We did studies for clients that looked at where the insurance industry is going over the next 5-10 years, where are the pockets of opportunity, where are the burning platforms that have to be addressed.
A couple of the burning platforms that are probably familiar to your audience is the aging distribution force. The average age of insurance agent is 59. A third of them will be retired by 2018. Today's financial consumer is increasingly digital but insurance is increasingly not digital.
All of these structural shifts that are happening, which when I looked at, looked a lot like the structural shifts that happened in the 80s and 90s with wealth and retirement and gave birth to online brokers like Schwab, and then further down the path, robo-advisors like Wealthfront and Betterment. When I saw those same structural forces at work in the insurance industry, I saw an opportunity for an independent, nimble, tech-focused company to really go in and re-think the customer experience from the customer's point of view, and clean sheet the experience and say, "If we were starting today, what would this look like and what should this look like?"
So that, my co-founder and I, we met at McKinsey. We took a leave of absence for six months to really kick the tires on the idea, launch a few very low-fi betas online to see what the funnel could look like for products like life and disability insurance. We liked those early results so we quit our jobs, raised a small seed around and off we went to build the company.
Gregory: That's wonderful. That's wonderful. I want, in a little bit, to get in to more about your investors and just talk a little bit about that. Paul Arnold, I believe, was one of those early investors in you.
Jennifer: He is. Paul is an old friend from McKinsey days. We started at the same time, met in the company's mini MBA program, which is what they put folks through who haven't gone through an MBA program, because Paul and I both came to McKinsey from law school. And he's now become a pretty successful VC and angel investor in his own right. He's been a great advisor and friend throughout this journey.
Gregory: That's great. That's great. You've mentioned a couple of times that you met your co-founder at McKinsey as well.
Jennifer: Yep, that's right. So my co-founder, Francois de Lame, he was at McKinsey as well. He started off at McKinsey straight out of college, came back after business school. He had worked at a startup in business school on the west coast, was their initial CMO, tried to leave business school to join the company full time but couldn't because of visa issues. So he very much had that startup bug, an entrepreneurial bug for a long time, and saw an opportunity in insurance.
We were working together. I was probably a bit more risk averse than he was in terms of leaving McKinsey and going and building my own company but the more I dug into it the more I realized that this was a problem I couldn't not help solve. So yeah, so we left a little over two years ago to start this company.
Gregory: So your launch date, you had a lot of prep work I'm assuming, but then talk a little bit about your launch, leading up to that market launch and going public with the fact that "Here's our new startup."
Jennifer: Sure. So we left and started building the platform in earnest in fall of 2013. It took us around nine months to build the platform we wanted to launch with. We wanted to launch with multiple products and we wanted to launch with an advice algorithm that basically took the place of the kitchen-table conversation you'd have with an insurance agent. Because the vision is to create the digital version of what a brick and mortar insurance agent does, and so we wanted to have as many of those pieces in place to really test it out in the market.
So that included our insurance checkup, which is the advice piece. That included multiple products. I wanted to have products on that were more complicated and required offline underwriting, which is life and long-term disability, as well as more simple, transactional products that you can buy online with a credit card, which is renters and pet insurance, because I wanted to see what engagement would look like across the different products and then on the back-end what cross sell could look like.
So that's what we launched with in July of 2014. And pretty soon after launch, we got pretty good press-coverage. A lot of personalities in the personal finance space really liked what we were doing in our approach. So we got a lot of good coverage there, which led to a lot of inbound business. From day one we also had a very strong focus on good content, which also helped drive a lot of inbound business for us.
Since launch and to this date, our number one product in terms of new business has been term life insurance, which I think has surprised some folks who know the industry. You and your audience know that the old motto is "Insurance is sold; it's not bought," and we beg to differ. We say if you make it easy to buy, people are buying this, especially products like life insurance, which consumers know the use case for and why they would need it.
Gregory: Right, right. And any more, term life insurance is kind of like a checking account. It's a...
Gregory: ...very much a consumer driven product.
How to name (and not name) a startup
Gregory: I'm guessing that PolicyGenius was not the first name that popped into mind. Maybe it was. But I'm interested, as a marketing guy and as a former CMO of an insurance company, I'm always interested in the brand. How did you land on PolicyGenius?
Jennifer: I laugh because that was not our original name and I actually have a pretty well-trafficked blog post about how to name your company and the mistakes that we made and eventually how we course corrected.
The big complicating factor in naming a company, which is already pretty difficult, is your online domains and which web property is associated with it. You can come up with a great name but if it's trademarked, if the domain is taken, you've got to kind of go back to the drawing board.
So when we initially named the company, and we were building in stealth, we landed on what in hindsight was a terrible name but we liked at the beginning. It was a pun and a play on words, neither of which is good for a company name, and the domain was available, so it was Know It Owl. So "know it all" but with an owl at the end. We had a cute little mascot.
And so that was our pre-launch name landing page. But pretty quickly after adopting that name, we realized it failed the key test for a name, which is: "If you see it, can you say it? If you hear it, can you spell it? And if you can hear it, can you actually go Google it or search for it online without any problem?" It failed those tests so pretty quickly we had to re-embark on the company naming, branding, going through that.
We had probably a couple weeks where we were having creative brainstorming sessions to come up with names. We developed a pretty structured process about how to vet names, how to test them. We actually tested them online with real consumers with some "See it, say it, hear it, spell it" tests, also testing the emotional associations with the different names we were considering. And the winner ended up being PolicyGenius on all those tests.
Gregory: That's outstanding. A lot of research went into it is what I'm hearing you say.
Jennifer: Yep, a lot of research and a lot of testing.
A focus on making shopping easy and convenient
Gregory: That's great. So let's talk now about PolicyGenius and why it exists. I'm interested in what your mission and vision for the company is and where you're at today.
Jennifer: Sure. Our mission is to make the process of shopping for and getting insurance easy for financial consumers. We're focused squarely on the individual market, which is where we think a big opportunity is. And the vision is to become the online destination of choice for all consumer lines of insurance.
So when people think, "Oh, I need auto insurance or life insurance," they come directly to us because we're the trusted place for unbiased advice, instant quoting and the best customer experience out there. That's been our vision since launch and we're moving as quickly as we can to realize that vision. We saw a huge opportunity to rethink the customer experience, to build the 2.0 version of the brick and mortar insurance agency, and that's what we're doing.
If you look at NPS scores, customer satisfaction scores, insurance is way at the bottom with airlines and cable companies, which is unfortunate just given how important good insurance and good risk management is for families. That's what we've been focused on and everything is informed by the consumer decision journey and making that as seamless as possible.
Gregory: I'm interested to hear you talk about what role PolicyGenius plays in helping transform the insurance industry and in addition, what big value that your customers realize from purchasing through you rather than the traditional means.
Jennifer: One, I think, is convenience and efficiency, right? We make it very easy to do all of the journey in one place. This is a pretty research intensive process for folks. People like to compare quotes. They like to do research with the carriers. They like to make sure that the advice that they're getting is the right advice and unbiased. We bring that all under one roof, make it very easy and transparent, use plain English. We are very, very rigorous about A/B testing tone and messaging in content to make sure that comprehension and credibility is as high as possible for folks encountering the site.
That's a big focus for us and so we just make it easy, convenient, do it all in one place. We very rigorously look at engagement on the site, identifying where folks encounter friction, where people kind of leave and don't return or leave and do return, understanding why they're leaving, and then building things to retain them on the site to make their journey easier.
One early insight we had from our life insurance funnel was we saw very good conversion but there's always people that bounce and go elsewhere, right? We dug into why people were bouncing from the site at the point of quoting and it was to do more research on the carriers. They would see quotes from different carriers on the site but they would go off and look for customer reviews of life insurance companies. Well, guess what, there aren't great customer reviews out there. Yelp exists for service related establishments but there's nothing really good out there for life insurance.
And so we said, "Okay, let's create the reviews and the content that folks are looking for. Let's categorize and rate our top ten carriers on the moments of truth that matter for a life insurance customer. Let's integrate that into the quoting experience so that people don't have to leave to try to go on a wild goose chase for this content." We did that. Engagement has been great. People actually click "apply" from these deep dive pages on the carriers. Engagement has been very good.
Those are the kinds of things that we bring to the industry and can actually act quickly on. So from the time we identified the problems to the time we launched these new ratings and evaluations, it was just a couple of weeks. We're able to move quickly and identify pain points that could derail somebody from getting the coverage that they need.
Gregory: You know, what you described and explained to our audience is the fact that in an online world and a digitized world, you can test all of these things. You can adjust. You know exactly how customers and consumers are interacting with your site at all times. In an offline world, it's very difficult to do those things, right?
Jennifer: Absolutely. I think the closest that you can come to offline testing is direct mail and responses, right? But then it takes a lot of money and a lot of time to get a sample size that you need to test the effectiveness of direct mail, whereas in an online world, you can launch test, do split tests or AB tests, and get to the right answer pretty quickly.
Gregory: That's great. That's great. So walk me through briefly. Walk me through how a person finds PolicyGenius and how they would actually use your site.
Jennifer: Sure. Our biggest source of traffic to date has been organic, and that's a couple things. One is people search for a term like "life insurance quotes" or "insurance advice" and we come up pretty highly in search. So a lot of folks come to us organically.
We have a lot of direct traffic, meaning that people hear about us from a podcast or from an article or a blog post and then type in "PolicyGenius" in the browser and come to us directly. We also have just started paid acquisition and some advertising digitally, which also drives inbound.
And then the other big piece of it is content. We publish a lot of great content, not just around insurance but personal finance and the life events that trigger people to think about insurance. We promote and share that a ton. That also drives people to the PolicyGenius site.
How people engage with the site depends on where they are in the, we call it sort of the "shopping continuum." You've got the low intent people who are just thinking about insurance or not even thinking about insurance and just had a baby and just kind of thinking about their finances, and if you go down, and those people would probably come and consume content on our blog, they might do the insurance check-up to get advice.
Those are kind of the low intent entry points for engagement on the site. And as you go further down the shopping intent continuum, the high intent folks who are ready to get quotes, ready to buy, they'll go directly into one of our quoting flows, get quotes, maybe chat with one of our experts over our online chat with questions, and then apply or buy coverage. We think about people on a 2x2 and yeah, going back to consulting frameworks, so we think about them in terms of shopping intent and then we think about them on terms of how detail oriented they are, and we want to make sure we have an experience for each of those quadrants of users.
Gregory: That's great. You know, in the insurance industry, often times companies will do some type of analysis like this but it's centered first on the distributor and that's an interesting dichotomy.
Jennifer: Absolutely, and I remember in some of my McKinsey projects where we'd talk about the customer, and the customer was the agent, which always kind of struck me as backward.
Why the "digital consumer" is so important for the industry
Gregory: I'm interested to hear you talk a little bit more about this "digital consumer" and why that's an important topic for all of us to understand in the digital consumer of today.
Jennifer: Sure. The digital consumer is important because that is increasingly how people interact with service providers, how people consume content, how people engage with their communities or in online channels. And it's not just Facebook. It's also how we search for information, it's how we engage information, it's how much time we spend on mobile devices and tablets. What we call the digital consumer is increasingly just the consumer, right?
And I think the other misconception and thing to keep in mind is it's not just the "millennials." It's everybody. 20% of our users on the site are actually boomers, age 50 and up, which makes sense if you think about it, because the boomers were the early adopters of TurboTax and Microsoft Windows and were the first folks who could sign up and pay for an AOL account. So the digital consumers are not just the millennials and under-35 crowd. It's pretty much everybody.
One of our first weeks after launch, I was on our chat and I was chatting with a 90-year-old woman who was looking for a final expense policy. So you increasingly encounter these stories where penetration of iPads and mobile phones and Facebook is penetrating much more deeply in the older segments.
I hesitate to even call it the "digital consumer." We just think of them as consumers.
Gregory: So true and I think that reference point is very valid. You know, I think that the behavior is started with young people because they're early adopters of technology in general, but over time those behaviors bridge across all generations, right? That's what you're referring to.
Jennifer: Absolutely. The children and the teenagers introduce their parents to things like Facebook and Snapchat and Instagram. Those trends take hold maybe younger but spread upward very, very quickly.
The go-to-market strategy for a young startup
Gregory: Right. So I'm interested in your overall, if you have to summarize your go-to-market strategy. You've talked about a little bit of paid, you've talked extensively about content marketing and the great work that you do there. How would you categorize and talk about your go-to-market strategy?
Jennifer: Our go-to-market strategy, because we are still early stage, we've only been out operational for a little over a year, it's still very much focused on experimentation and testing and identifying the high opportunity channels, running tests there to understand what the R.O.I. looks like in that channel and how effectively we think we can scale in that channel, and then really doubling down on those.
A big piece of our go to market strategy from day one and continues to be is our content. We found that pretty early on we could get pretty big lift in terms of search results and inbound traffic on really great content, which we do, I think, better than anybody in the insurance space, so that's a big part of our content marketing strategy.
The other big pillar of our distribution strategy is around partnerships and affiliates. I think advertising is still effective. I think the bigger R.O.I. you see is when you can actually tap in to centers of influence, right? So the personal finance bloggers who get one to two million unique monthly visitors, whose audiences are very engaged--when those personal finance bloggers talk about your company and recommend your company, that is a huge thing in terms of traffic and in terms high quality traffic. We've spent a lot of time reaching out to kind of that grassroots personal finance blogging community, signing up affiliates and developing an affiliate program.
The other piece is around the pay channels, right? What can we do in terms of online advertising? What can we do in terms of things like radio and podcasting and those other pay channels? It's still early days for us there. We've seen some promising results. But at some point, if you're going to scale, you're going to have to have at least one pay channel that's doing pretty well for you.
Gregory: That's great. Great point and great back drop. I appreciate that.
Fundraising and team
Gregory: I want to talk now a little bit about your traction and maybe even a little bit about your fundraising. How are things going that way? I hear you just recently closed on a very successful round?
Jennifer: We did, thank you. We raised, a few months ago, a series A round, for those not in the entrepreneur world, it's kind of the first big venture capital round. We raised a little over $5 million dollars in the spring from a couple institutional venture capital investors and then from the venture arms of a few insurance companies, which is great for us to have those strategics around the table as we think about pushing innovation in the space.
We closed that and that's basically giving us runway to build up a team and really push the pedal on our go-to-market strategy.
And in terms of traction, we've seen pretty good success, particularly on life insurance. Our user base in our life insurance business is probably growing anywhere from 20% to 30% month-over-month. We're hoping to accelerate that with our foray into pay channels, but if you look at overall how we're comparing to growth in insurance, we're pretty happy so far with our traction. It will only improve, in terms of referrals and recommendations, as our brand gets out there because we're still a pretty young company.
Gregory: That's incredible and congratulations on the round and you've got some pretty big names in that round.
Jennifer: Yes, thank you. We've got venture fund of Axa. We've got the venture arms of MassMutual and Transamerica as well. And we were very excited to get those folks in the round, not only because of their savviness as investors but also to help us push things along in the life insurance space, which is where we've seen the earliest traction and which is where we see a big opportunity for us to kind of come on and rethink the experience and then translate those lessons into the other verticals.
Gregory: That's terrific. That's terrific. Talk a little bit about your team. I'm interested in the size of the team or what roles you're looking for today or if you're hiring or not or where you're at.
Jennifer: So we are 19 people right now, which up from five or six people at the beginning of March. We've got a handful of folks on the marketing side, so working on affiliates, three people on the content team, one on the paid and analytics side. We've got a team of four engineers, two designers, engineering design is a big focus for us, and then some folks on the operational side. We've got four licensed agents because we do, even though most of the funnel is digital, there's still a piece that is agent driven. That's the team right now. We are hiring. We are looking for more licensed life insurance agents who want to work with us. We're looking for somebody senior on the growth and acquisition piece of things. Anybody out there listening who wants to talk, please come find me.
Gregory: That's awesome. That's awesome. Congratulations on the growth. Congratulations on the fundraising success. That's incredible.
Jennifer: Thank you.
Gregory: Great story. Great story. On every episode, Jennifer, we have this little finishing segment here that we like to call "The Denim Rivet," hence the name of the show. And this is a segment where I ask three pretty straightforward questions where your answers, I want you to keep in mind, other fellow entrepreneurs that are out there, other start up founders in the insurance space and help them. Help them with your answers, okay?
Gregory: So here's number one. What are your top two or three go-to productivity tools that you can't live without?
Jennifer: Slack is the number one for me and the team. It's basically replaced all internal email and really improved communication. So Slack is the big thing. I think number two, on the engineering side, would be Pivotal Tracker, which is what we use to keep track of our engineering projects. And then finally, on the non-engineering projects, we use Trello, which is kind of the digital kanban board for keeping track of projects and tasks among different parts of the company.
Gregory: Three great tools. Three great tools. I've got experience with a couple of those myself. Number two here is if you could only use of the following, which would you use? Would it be a smart phone, a tablet or a laptop?
Jennifer: I'm going to share my age here. It's going to be a laptop. I still do a lot of things in Excel. I just find email and just working much easier on a laptop. So I'm going to have to go laptop.
Photo: York VISIOn
Gregory: All right, there's still hope for the laptop. That's good. Then number three, what's your favorite quote about startups or innovation?
Jennifer: Let's see. I think it would have be "If it were easy, everybody would be doing it."
Gregory: That's a good one. That's good one. That's a great one. And there is one that I have to ask every guest on our show: Are you wearing denim?
Jennifer: I am.
Gregory: That's great, that's...
Jennifer: Similar to your ethos, as soon as I left corporate America and McKinsey, I vowed to wear jeans almost every day that I could.
Gregory: That's great. That's great. Well, Jennifer, it's been wonderful having you on the show and I'd just like to wrap up and ask you how can people get in touch with you?
Jennifer: They can get in touch with me a couple ways. One is on our website. We've got a contact form. We've got chats. If they want to reach out to us directly, we've got the email address, firstname.lastname@example.org. Inquiries get routed to me. And then finally, our website is www.policygenius.com.
Gregory: That's wonderful. Thank you again so much, Jennifer. It's been wonderful getting to know you on the show today. Thanks for being on The Denim Rivet.
Jennifer: Thank you, Gregory. Thanks for having me.
Photo credit: Patrick Breitenbach