EP 167 – InsurTech Sustainability – Gordon Tay, Matthias de Ferrieres, and Nicolas Faquet – How Do I Create Long-Term Value?

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Michael Waitze worked in Global Finance for more than 20 years, employed by firms like Citigroup, Morgan Stanley and Goldman Sachs, primarily in Tokyo.  Michael lived and worked in Tokyo from February 1990 until December 2011.  Michael always maintained a particular focus on how technology could be used to make businesses more efficient and to drive P/L growth. Michael is a leader in the digital media space, building one of the biggest and fastest-growing podcast listener bases in the region.  His AsiaTechPodcast.com show has listeners in more than 130 countries and his company, Michael Waitze Media produces some of Asia’s most popular podcasts.

In Asia-Pacific since 2000, Dr. Matthias de Ferrieres, leaves AXA as their Regional CMO in 2014 to create Stark Group that delivers disruptive, customer centric yet easy to operate digital insurance-based solutions. Over the course of 2 years, he sells 2 profitable B2C focused platforms to insurance incumbents. In 2017, he launches My-insurer, a CRM platform dedicated to Financial Advisors. In 2019, he deploys Wellnex an Healthtech that provides affordable Healthcare and Fitness Services to all Singaporean. In early 2020, he merges both solutions to lead the first and unique ecosystem dedicated to Financial Advisors that reduces significantly operational cost and help collect smart and compliant data while offering value added services to their leads and clients. Matthias holds a Ph.D. in Entrepreneurial economics and a MBA from Chicago Booth.

Guest
Gordon Tay

Gordon is the Co-founder of Surer, a cloud-based insurtech platform with a digital ecosystem of intermediaries and insurers. Prior to co-founding Surer, Gordon has over 10 years of business building experience at 2 unicorns, PropertyGuru and Carousell. He specialises in product marketing, monetisation and business growth strategies with multiple successes building programs for companies from the ground-up. As Co-founder of Surer, Gordon drives the company's product development and marketing efforts.

Essec MBA, Actuary, 25 years of insurance experience in Asia and Europe, mainly in Motor and Health insurance, with AXA Singapore, AXA France, AIG Europe. A founding member of DirectAsia in 2009 as Group COO in charge of product, pricing, claims, call center, reinsurance and Hong Kong CEO. Sold DirectAsia to Hiscox for 55MUSD in March 2014. Started Roojai in December 2014.

In partnership with InsureTech Connect (ITC) Asia, we recorded a podcast panel with Gordon Tay, the Co-founder of Surer, Matthias De Ferrieres the founder and CEO of Wellnex, and Nicolas Faquet, the founder and CEO of Roojai. 2021 has been a record year for InsurTech, however, we have seen very little evidence of profitability yet. What are the challenges when starting an InsurTech startup and how important is sustainability in a VC world?

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Find the transcript of our panel conversation below.

Michael Waitze 0:01
Okay everybody we’re on. Hi, this is Michael Waitze and welcome back to a special version of the Asia InsurTech Podcast. Today we are hosting a panel discussion in partnership with InsureTech Connect Asia, which is occurring in Singapore on June 7 to June 9. We are joined by Gordon Tay, Matthias De Ferrieres, and Nicolas Faquet. I did the best I could with everybody’s name. Gentleman, it’s great to have you on the show. How is everybody doing today? It’s great to have everybody here. Look Gordon, let’s start with you. But can we get like a quick sort of 60 to 90 second introduction before we jump into the main conversation?

Gordon Tay 0:40
Yeah, sure. Happy to be back on AIP as well. Gordon here, co-founder of Surer. We are a cloud based InsurTech platform with a digital ecosystem of intermediaries and insurance. So essentially, we provide tech solutions to help orchestrate the network in the industry to enable intermediaries to close deals with greater speed and efficiency. And to allow insurers to distribute their products better.

Michael Waitze 1:05
Super. Matthias do you want to go next?

Matthias de Ferrieres 1:07
Okay, great. Again, thanks for having me today. Well, I’ve been in the insurance industry as for the past 20 years, 21 years now, being an employee of AXA. Climed the ladder, then left the company in 2015 to set up a couple of startup. I’ve been lucky enough to sell two of those. And today I’m leading one company called Wellnex, which aims at supporting the financial advisor in Singapore and soon in Malaysia to try to provide different services on top of insurance product.

Michael Waitze 1:47
That is super end soon in the future, I believe and we’ll get to this later, I think we’re going to have you on an individual episode on Asia InsurTech Podcast as well. So looking forward to that. And Nicolas, it’s your turn. I feel like we know each other really well. Even though we’ve only met in person, I think for like five minutes one time at an event. But anyway, please go ahead.

Nicolas Faquet 2:05
So thanks for inviting me today. Michael, I’m the founder of Roojai, which is a direct to consumer MGA, operating in the motor and health insurance market in Thailand for about six years now. And we just launched in Indonesia, about a month ago. We do about $40 million US premium per year. And close to break even which not something of an anomaly in this in this world.

Michael Waitze 2:36
So this is a really great segue, I want to talk about this with our Towers Watson global InsurTech investment report that they put out, it was at the end of 2021, or towards the end of 2021. But frankly, not that far away. And one of the things that they said was that there was more money invested in 2021 in InsurTech companies and all of 2018 and 2019 combined. You know, we can throw in 2020. But the COVID year, I think kind of messed everything up. But I want to talk about this idea with all this money flowing into InsurTech. And maybe, Gordon, we can start with you on this, just about how hard it is to build a business. You know, we can use the word sustainable, but I really want to use long-term, as opposed to sustainable and then talk about getting a business to profitability as well, just how hard it is. So Gordon, maybe you can start.

Gordon Tay 3:28
Yeah, so I think like the context here would be InsurTech, right, however, just take it one step backwards. Um, so I’ve met multiple founders, right, especially during Surer’s time in Antler, one of our investors and accelerator. So realize that there are difficulties of running and growing a startup that is not too dissimilar right, from industry to industry. So this includes, you know, basic fundamentals like building meaningful product that sits at the core of the problem you’re trying to solve, and all the way to iterating on your business model, right to achieve that efficient balance between resource effort and then income. So going to the point on sort of sustainability or long term sort of successful for an InsurTech. I think, one key point, and I think this is going to be an ongoing theme in our conversation as well. Is, is around how how your runway can stay at the same pace as that of adoption of tech or digital solution in insurance. Right. So why I say this is that and it’s a lot better now. A lot of folks in the industry, from intermediaries to insurance, there are a lot more open to digitizing their business for the right reason, and not because it’s a buzzword. But it all goes back to that correlation, right, which is the pace of adoption of your solution versus the runway that you have built for yourself. And of course runway would be sort of from fun fundraising, cash injection, or the income that you get from the business itself. Right. So I think the most important thing here is to manage this accordingly, picking areas of the business to be aggressive or prudent in and be very, very deliberate about it. That’s very important in the longer term success of a business. Yeah, especially in InsurTech.

Michael Waitze 5:26
So Matthias I didn’t know this before we got on this call. But you’ve said you’ve built and sold to companies already. Right? And now you’re running another company, too. Can you talk about this issue as well, I mean, Gordon brought up some pretty good points. But I want to get your perspective on this as well. And I’m sure I’ll have some follow up when you’re done.

Matthias de Ferrieres 5:43
Okay, so again, I’m supposed to be doing controversial guys here. And so I’ve started basically, I left AXA on a package remittance package, and I’ve been lucky enough to have AXA to support me. And to help in creating my first company, I put $80,000 worth of capital, it came from my pocket. And I sent a couple of contracts with AXA, and then with DBS. And that is the way I started, I decided I choose a different journey, not raising money, simply because I believe the KPIs that the investor are using are inappropriate for the insurance piece. Secondly, the pressure that you have to deal with is so high that you do not focus on a business. And we are lucky enough issuer or experts in the industry not to have against you, Nicolas, for me is a great insurer. It should not be spending his time trying to raise money, but rather making his business profitable. And I prefer to spend my energy to make a business sustainable, and profitable rather than wasting my time demonstrating, justifying my concept to investors that don’t understand anything. And if I raise money, once it’s done with them, I will have to explain on and off to a bunch of people that do not get it at the first place. And that’s why you’ve mentioned that a lot of money has been raised, and you look at the results. It’s extremely poor. You don’t see any successful startup, or InsurTechs that made it. Okay, the last point is, yes, I sold two companies so far. A third one would be that in July. The real question is, did I sell a unicorn? The answer is no. I mean, I’m not aiming at scaling up. Doesn’t matter. So making 1, 2, 3, 4 millions, or even 300- 400,000 dollar is enough to me, because I want something to be done that is sustainable, not automatically scalable. I defined myself as an entrepreneur. And as an entrepreneur is as a product builder. Foremost. I’m very bad, and some in this, in this podcast knows that, I’m not a very good manager, I don’t like to build up and scale up to a lot of people under me, I’d rather have the right product and pass it on once it’s done. And I don’t need much money to do that. Alright, so that’s why I didn’t raise money.

Michael Waitze 8:24
Before we started recording, actually, we were joking that I feel like a little bit of a kindred spirit here, right? Because I think I’m actually really good at building product and really terrible at managing large groups of people. Something which I literally have no interest in doing so similar to you. And I agree with you as well. I think there’s a natural tension between the people that are raising the capital or investing the capital, and the people that are taking the investment. And I’m curious, I want to get to Nicolas in a second. But maybe you can talk a little bit about the the KPIs, you say that are inappropriate, if you could maybe give one or two of these that you think are ways that things that are getting measured that really don’t matter. That an investor would want to see but then like somebody who’s running a business just doesn’t care about or cares less about for sure.

Matthias de Ferrieres 9:11
Okay, the first thing is like people today, this is a look at number of members of policyholders or users, rather than the profitability. The first question you have to ask an insurance is, what is value perception versus willingness to pay. And we can see a lot of InsurTech creatives just simply by creating a new website, launching a new product, but the reality is no one cares. Sonsumer don’t want to have it and will not buy it. So they have to find a way to make money out of this. And VC will put pressure on you to say okay, I don’t care about how much money you’re making. What I want is you take market share, and in order to get market share, they are willing to to increase you have huge acquisition costs. To launch products, which are absolutely not profitable, and, and which creates a vicious cycle because you can gain consumer. But if you’re unable to make money out of them, you’re going nowhere. My father always taught me. Okay, first you spend what you get. Alright, and be sure that you are selling with a small profit.

Michael Waitze 10:26
Yeah, basically that was said was run a proper business. Nicolas, I want to come to you, because we haven’t had your opinion on this yet. So, you know, Gordon started this with what some of the challenges were with building a profitable InsurTech business for the long term. You mentioned, you started in Thailand. And you just expanded to Indonesia, if I remember correctly, and you said, you’re pretty close to breaking even right. So but again, I like to say everyone’s an overnight success 10 years later. You haven’t been at this for 10 years, but more than five, can you just kind of run us through what you think some of the challenges are, and then maybe address some of the things that Matthias was saying as well, on the investment side?

Nicolas Faquet 11:06
I think Matthias is totally on sports, I mean, the real difficulties is to create a value proposition to the consumer such that the consumer gives you more money than you’re giving him back, which is insurance, because it’s very easy an insurance to grow very quickly by getting customer give you 100 and giving back 150, then, of course, your value proposition to them is fantastic, but not not so much for you, for your company, or your investors. So the word complexity is to create that differential between what they pay when you give back. And that’s what we you know, as much as Matthias has done throu his venture, but as we do as a direct to consumer venture, we do need external funding, because direct to consumer is a lot of marketing is a lot of investment to be able to, to drive it our sales. But we always had in mind that that needed to create that value and to add to portfolio, your overall cost. At the end of the day. It’s you know, you need InsurTech is a big word, but the customer won’t care about the tech. The customer care, am I getting value for money? So then the tech is a mean, it’s not an end in itself. So we need to demonstrate what the tech is doing in order to create that value. Does your tech give you better loss ratio? Because you are able to underwrite better? Does your tech allow you to distribute cheaper? Does your technology to manage more policy provide content than having lower management costs? And or does your technology to return your customer does your customer enjoyed the text and stuff, you can get lifetime value out of them? I think that’s the that’s the issue. And the tech is just a way to enable it. And for us to die. I mean, we’ve been very focused from day one to get all those points down to something which is sustainable. And today, I mean, we closed last year at 104 combined ratio. And you know, when I look at all the big listed InsurTech in the US, none of them is below 150 combined ratio. We’ve been operating for six years, and I say, you know this is this is this is the difference. And I think as much as said this has been driven by by too much money. Too much VCs looking at top line growth without looking at the economic unit economic and the rational of that business to be profitable one day, I think this is changing a finger on the discussion we’re having today. And the market sentiment is going back to a bit more rationality and say, Okay, are you really building a product which the customer wants to pay for? And can you generic margin or sell that product? So So I think again, the key challenge is Yeah, use your tech to deliver the traditional insurance KPI, this idea of racing, and yen, which which matter.

Michael Waitze 13:59
So Gordon and Matthias made two really important points that I want to bring up and then get your opinion on this right. You know, Gordon said something about building a meaningful product and making sure that the products that you build are meaningful, it’s really important. And you know, Mateus went back to what his dad said to him, if you if it costs you $1 to make the product, make sure you get $1.50 or some profit out of it every time you make a sale. And Gordon also mentioned this idea that if you take investment money externally, making the right decision about where to put that money and trying to find a match between how much money you have, and the uptake in your product, and you said a moment ago that if you’re running a DTC business, marketing becomes really important. Right, that logo that’s sitting behind you, that kangaroo. First of all, I love it, but I see it everywhere. I mean, everywhere, even when I’m like walking down Sukhumvit Road, I see ads on the side for Roojai. And and I don’t drive but how do you decide where to put that money. In other words, do you do your own calculations about whether the marketing spend is is paying off? Or whether the product development is paying? How do you decide that?

Nicolas Faquet 15:09
That’s definitely I mean, this is the, the probably our most important job day in day out is where to put the marketing money and is that money makes sense. So the beauty of direct to consumer is you spend a lot of money upfront to acquire a customer. Now, if you good enough into your service delivery to retain that customer over the long run, then you can amortize that cost over a period. And unlike what you do when you use traditional distribution channel, like agent and broker, where you have to pay commission every year, at the same percentage, so there is more risk in going direct to consumer. But in the long run, there is a much cheaper acquisition costs. Today, because I’m sure Matthias will jump on that, today, if I look at my acquisition costs in the last financial year, it’s 16%. Okay, so we’ve already at the point where our acquisition costs on new business manage with the existing renewal customer, and we have on our book, we are able to get down to 16%, which is a competitive advantage against the incumbents, I mean, traditional incumbent will pay 20 to 22% commission every year, to their to their channel to get the product distributed. So we’ve already been able to control that cost to create a competitive advantage by getting six point on them that six point we can invest it into our price positioning, which make our offer more more compelling for the consumer.

Michael Waitze 16:37
So this is for everybody. And I want to start with Gordon on this one, right. But everybody on this call has already talked about incumbents at some point in some way, shape or form. And Nicolas just mentioned that he has an advantage in the cost of customer acquisition. But realize also an MGA right, so a managing general agent, and that means that you get if and tell me where I’m wrong here, but that means you get capacity from other from underwriters, right? That then gives you access to their capacity, which and then you get to decide how to use on your own. It’s a hybrid type of insurance company. But it also means you have to work with them. If you need more capacity, you probably have to go back and ask for more. And I think this is true for everybody in the InsurTech space where, you know, five years ago, there were disruptors. And now it’s more like enabling the insurance business. But Gordon for you as well. All of your clients sit or most of them sit at incumbent insurers? Do you find that like, there is a mismatch in the timing between the stuff that you want to get done and can get done? And the timeframe within which they can decide? And when you’re done with that I want to go to Matthias to get his opinion as well.

Gordon Tay 17:40
Yeah, no good question, right. I think we need to define incumbents better. Right? So I guess in the context of your question, um, you’d be saying insurance companies? They would be like the one of our users as well, right? They leverage the Surer platform. So for me, an incumbent would be someone maybe like bolttech, right, who provides a similar solution to Surer. But a lot bigger with I’m sure a lot longer runway with the amount of money they raise. But going back to the question on timeframe that a startup have versus an incumbent right. I think this is very much related to what I shared at the start about the pace of adoption, versus how big or how long a runway, a startup like Surer has, right? It’s sort of a double edged sword. Right? And I’ll explain this as, as an incumbent or bigger company, definitely you have a longer runway, you have a bigger shot at iterating on your business and your solution to hit the right formula to eventually serve your end customer better, right. But and I’m not generalizing this, but just from experience, the bigger a company is the greater inertia they have to innovate or to iterate. So then, does that eat into this longer runway that you have? That’s the question, right. So the advantage of smaller players like Surer as a startup is yes, we might have a shorter runway, but we have less inertia, to iterate and move fast as well. And that is also partly because you have a lean team. Right? So going back to what Matthias shared earlier as well, right? Like, there are advantages in keeping your team lean. It’s not about like raising money and then throwing it all in a hiring spree. Having more people does not equate to a more efficient business, right? So at the end of the day, you’re really talking about finding the right balance right and where you allocate your resources. And this is very different, right? Depending on sort of the business model that you run, so for Nicolas, Roojai directly to the customer, then I’d say you know, marketing costs would be more One of the big sort of resource, so one of the big cost center for Business, but like for Surer, then that might be a lot different. You’re more a b2b player. So, like, it’s, it’s not, right, right to go out there and say, you know, sweeping statement. Just because you’re you’re burning sort of resources, and you’re publishing out there, and no one sees sort of like the potential of capital income yet doesn’t mean that the company doesn’t know what it’s doing.

Michael Waitze 20:39
Matthias do you want to comment on this timing mismatch as well.

Matthias de Ferrieres 20:43
I’m gonna be very problematic, even answer, okay, I spent 15 years in the incumbent company, I started as an intern under Nicloas leadership, by the way, and I left as a CMO for for, for Asia. So I’ve been through different departments. And, and I’ve seen that there is a huge mismatch between the agenda of startup and the agenda of incumbent. First, the way they’re organized, right, the incumbents, they have a very heavy governance, complicated compliance and deal with a different. Compliance is led by and when I started in 2001, to maybe 2007, actuaries, underwriters were kings, alright, they could decide everything, or nearly everything, even beyond the finance department. Now, it’s compliance that decide everything, you can’t do any things without the approval of compliance, and compliance are made of people that have no clue about the business what is necessary and what is required. They will tell you it’s for No, you can’t do this, you can’t do that. Governance is made of different committees, committees made of different people. Each people have different KPIs have a different interest and agenda. And they will do everything to be sure that their interests are protected and, and filled up. So you will have the ITs that do not want to have a startup coming in, because he says that he can do it himself. You have the claims people that don’t want to have you come with new solutions, product wise, the same, they will tell you that they are capable of doing it, they no need to take an outsource company. So what do we deal with? We deal with the top management’s always excited to shake your hands, see your solutions and say, well, outstanding. Alright, that’s my network today. I know most of the CEOs are in Singapore, and some in Malaysia. This is It’s great. That’s superb. Outstanding. Yeah. Nice. Okay, bring it on. And then as soon as you go to the local event, it’s a nightmare. And it dies, it dies, it dies because of what I’ve said. And so it dies. Because there we are dealing with a very, very different cycle. Over the year, you start the year, you let’s start the year in January, where is all the festivities discussion, and you have to meet with agents and you have to, they don’t have time for you to discuss, okay, then after come Chinese New Year. Again, you can’t discuss with them they are not looking for, for your product, they say no time. So you will need to wait for at least 15 days beyond Chinese New Year, then the window is a bit opens where you can scratch and discuss with them, unfortunately, comes April where most of the bonuses are given. And the guys you were discussing with for a year leaves and goes to the next company. End of June, it’s finished, you can’t talk to them. Because you have the pressure of the government and the management who tells you look, we need to look at the forecast because we have not been able to meet meet our targets. Alright, so you stopped you cannot talk to them anymore.

Michael Waitze 23:59
And then it’s summer vacation, and then it’s Christmas and then you’re back.

Matthias de Ferrieres 24:03
It’s planning, is action plan and so on. And then you have a little window first week of October whereby the leftover with some budgets that they didn’t spend because they’ve been squeezed the past months and then 15th of October, it’s the year end where they have to focus on on trying to meet their target disease as a miss and don’t finish. So when your a startup you try to get in, you showcase your product. Again, you don’t have the same calendar or you’re burning money you need to do business. And if you want if your business model is made through incumbents, it will be very difficult because a window you can talk to them. Okay, it’s extremely complicated. Layers of organizations and different different calendar. Right. And if one day you are able to get in, it enables by starting with a POC, the famouse POC where They accept you, but you must be free. And you have to showcase your platform and integrate your platform. And you have to answer again to multiple requirements. You’re going through the procurement, which is a nightmare. And, and you end up not being able to deliver, and then you’re out. So, statistically, believe me, I have a very little experience in insurance only 20 years, only in Asia. But I’ve not seen any single startup InsurTech succeeding in making money with an incumbents. Meaning working with an incumbent that will pay a fair amount of money, or less and less my company, because I sold, I sold the platform is not my startup and I want to do a partnership. No, I’m selling my services to them. If they want to stop working with me, they have to acquire my platform, which is what happens twice.

Michael Waitze 25:57
Nicolas, how do you how do you mitigate these?

Nicolas Faquet 25:59
I mean, I mean, I work with today with four insurer in Thailand. Fifth one in new one in Indonesia. So fifth insurer. We also work very closely with three of the top 10 reinsurer so we’ve got that network of partner. I think the difference between what Matthias was saying and what we do as an MGA, we take care of all the functions, we do the pricing, we issue the policy, we manage the claims. So dependency on the incumbent is a bit less important. Having said that, you know, it does take time, you know, we haven’t been able to launch a new product with somebody in less than six months, when when in house, we are ready in one month or one month and a half. But to me that mismatch is if you’ve not planned, you know how the the industry is, if you’ve done a business plan, where you expect to launch within one month, and now who is an insurer, you know, your business plan is just bad. You need to factor in that it is going to take time, that’s part of the of the model. It’s part of the how the industry operates, and you need to plan for that. But I think it’s more interesting than what Matthias was saying. I think there’s a lot of partnership, which can be done. And that seems that can be delivered when you work with the right people and the right model.

Gordon Tay 27:27
Yeah, no, just want to jump in here. All right. And a related point to what Nicolas just mentioned, on it is the case when we first started when we were working with insurers, or in this case, like incumbents, if you want to call them that, were initial inertia in making decisions. So we had to sort of look back at our business at Surer and how can we sort of provide a solution where the decision making process isn’t that long, doesn’t have to sit all the way up top with the top management? Right? So I think in our last podcast, we spoke a little bit about this, how can we provide a solution that might not be technically too heavy, such that you’ve got to rope in like everyone in the world, in the insurance company, whether they know about whether they know what they’re talking about tech or not be able to sort of allow them to move fast, and then judge the results from there before deciding if they want to take that next bigger step, right, where more decision making needs to come into play, and further integration and things like that. So I think the pace of adoption, from my experience, at least, is increasing. And that’s also because, right, like, it really depends on what kind of solution that you’re proposing to an incumbent and how, how you think about placing yourself in their shoes, being able to, I guess, like a person making a decision, prove that, you know, this is something that could work and then taking that next step, right. Yeah.

Matthias de Ferrieres 29:04
Can I challenge them on it? So first Nicolas, your InsurTech you’re providing business to the insurance company, you know? Well, it’s very different from what Gordon was doing. So it’s six months, six months to be able to give business to an insurance company, right is like, I’m gonna give you money and it takes six months for that. It’s, it’s, I find it very stunning. It’s a must, it must be extremely rare. I don’t see something similar in other industry. As for you, Gordon, you say you adoptions, how many partnership did you sign at insurance company level? I mean, not many that distribution, meaning that all the agents because you work for agents. So how many insurance companies did you have you sign a partnership that guarantee or promise or is willing to work with you to say, I’m going to give you my network or I’m going to, which is not a pilot, I’m going to give you my network of agents. And I’m going to give you a small fee if it works.

Gordon Tay 30:13
Yeah, so we’ve got about seven in the past year, and this is product level, right?

Matthias de Ferrieres 30:19
It is product, it is not distribution, because you change your business model, it’s distributed, you don’t get agents, it’s because the way you’ve plugged support, you’re bringing business to the insurance company, there’s nothing to lose, you have nothing to lose. So of course, we signed with you. And in any takes a lot of time still.

Gordon Tay 30:39
Yeah, and this is going back to the point right about like, looking at your business and seeing whether your initial solution, right actually makes sense for the industry. And that’s something that we learn. In the past, we’ve had our own conversations as well. Right, right. How do we tackle this problem about why doesn’t this insurer wanna move fast? Because what is where is the problem where is the blocker in the decision making process and how we can smooth the smoothen that out? So, that is why we are we we then place our emphasis on matching right and the right kind of products we insurance that we are speaking to, to on the intermediaries who are using our platform. Of course, having said that, then there is still I’m sure right, a lot of things that needs to be fixed, it’s it’s still going to be a battle, like with building every single startup right out there and still hustle every day.

Matthias de Ferrieres 31:32
Gordon I see you said extremely well. Because you said the industry needs is that the industry needs is whether the incumbents needs, because industry needs my solutions. They need digitalization, true innovations, okay. And because incumbents are so powerful and looking at the looking at it, they will decide whether or not they will let you in the markets. And otherwise, they will not give you any space for that. And that’s why we have so little InsurTech and those who try to succeed, or I’m making a lot of noise is because they raised a lot of money. They don’t have a business case, they don’t have a right business model. They are not sustainable. They’re not very innovative. But they have so much money raised that they can make some noise The companies that are at a true value proposition but are small, have difficulties to survive because incumbents decide whether or not they want to work with you. And without the incumbent backup, you’re out.

Michael Waitze 32:32
So I think this is a game of attrition at some level. And I also want to make the case just like you did Matthias that, in some cases. And I would say in many cases, the investor community is investing in a business because they believe that someone’s going to invest in the next round, not necessarily that that business is actually going to be built for the long term, nor actually become profitable. We’ve got plenty of examples of this, right? Why does Lemonade go public? Why does Metromile have these problems? And I think part of the point is that because when the investor community invest a ton of money in them, then the incentives are misaligned. Because the only incentive there is to see who’s going to invest next, because it’s the only way these early to middle to kind of late stage investors can take their money out. Yeah. But the longer you can last, and this gets back to what Gordon says about just how long your runway is, and the uptake of your product. I think I look at all businesses as conversion problems, first of all, but second of all, it’s like a Trojan horse, right? Like Gordon said, How can I get in? How can I stay in? How can I make myself necessary? And the more I can do that, they’ll forget that I’m external at some level, and they’ll just think, okay, where’s that Surer guy that I need? Or where’s the Roojai guy that I need to be able to take care of this thing for me, and then you become endemic to their business. And then you’re done. But it takes years of building that. Right? Like we said, this Rooojai has been around officially operating since 2015, that seven years. Typical insurance company has been around for 140 150. So it’s a tiny percentage of that time. This is what I mean, when I say it’s a game of attrition, these big companies. And then I want to get back to one other thing, too, that’s a little bit of a pet peeve of mine, because you all mentioned this, I can talk about having 100 million micro insurance policies out there, and you know who I’m talking about? But that business, that insurance business is never gonna go anywhere. And we know that because we’ve seen people leave that business to go start their own business. Anyway, does anybody want to comment before I let you go just about this mismatch between again, the incentives on the investors and the company builders as well? And does anybody disagree with me on this idea that it’s kind of a game of attrition?

Nicolas Faquet 34:47
I think you’re right, but I will say that was probably more conjuncture, one that’s necessarily structural another on run. I think there was there’s been a battle I think for the last three years. Favourising this, this type of things, but as everything bubble will stop, and everybody will be back to basic and if you look at the last Roots result, they are only focusing on profitability now, they’ve got no growth in q1 and they go back to basic, how do I improve my loss ratio? And how do I create long term value. So I think in the long run, the profitable business will succeed, they will be the one highly valued. And of course, in time you can have opportunity which has been taken by some lose by others. And but we are here to build business which are sustainable as this topic of today for the next 20-30 years. And there is no shortcut in that.

Michael Waitze 35:50
Exactly. Gordon, do you want to give a final comment? And I’ll go to Matthias.

Gordon Tay 35:54
No. So like my take is that there’s there’s no right or wrong answer, right? Like unless we drill down into like specific businesses, right. But at the end of the day, and I’m not sure if you’d like to hear this, but like it’s about, at the end of the day finding the right balance for your business, right? Where you want to invest your resources in, it shouldn’t be taken as a bad word, right, that you’re raising funds, because that goes your resources. And it is only a bad word, if you’re growing your vanity metric. Something that investors want to see, but does not do anything for your business. And it just helps you with storytelling. But if you have a good plan on where you want to place these resources, and at the end of the day, as a founder, you have to be honest with yourself, right? Are you sort of growing the matrix that is important for your business? That’s, that’s the most important thing, right? It’s not so much about let’s look at the next round. Let’s look at what story we can tell. Right? It’s about building a business .

Matthias de Ferrieres 36:59
I’m glad to hear that Gordon, because he’s the one on LinkedIn every single morning. You know, so is that what I see, in this event like InsureTech connect on the podcast we are we are recording today. I mean, it seems to sell extremely well to to publish your a new unicorn, which are empty shell. New, I raised 15 million and for nothing and, and I think, again, it takes an attitude, it takes a character, it takes a profile to raise money. You need it is it’s far to be an entrepreneur that is able to raise money in someone that is able to speak, to tell a story. And to being able to be extremely positive. Rather than being pragmatic and very emotional driven. I would have loved to have VCs that focused on advising you and helping you from an investment standpoint is bringing you some resource. The right resource when you’re missing is a resource, preparing you to sell, putting you in touch with the right the future people that will monitor you to sell. Okay, and put some money of course, but money is not all. It seems that it’s missing. Every time that I had some and I had some some decisions you should we put some we want to invest in your company. Will it last one month or two meetings after you understand why I am silly. But it’s sad because I think VCs will be much more successful. I think startup would be much more successful. See if we we could turn down Okay, on all these communications, this overflown and over positiveness that as you say, got an irrelevance, your business has to be profitable, because there is a right value proposition because customer likes you and choose you and stay with you and is willing to pay a price that is technically and commercially sustainable.

Michael Waitze 39:10
I just want to make I want to make two points before I let all of you go. First of all, this podcast in particular, I think is very clear about not cheerleading, there’s plenty of press and tech out there that does clearly this is not what we do at all. We want to tell the stories of people that are trying to build things and I don’t think anybody else would have this particular conversation and allow this level of, of back and forth if all we were doing was cheerleading. We spent a lot of time actually talking about this idea that raising money is not the end goal and then celebrations of of capital raising are silly celebrations of building businesses are actually really important. And this is one of the things that we talked about in a focus on a lot of we call out companies that do this. Because we think it’s obvious that over time the companies that build real businesses will sustain and the ones that kind of cheerlead around their capital raising won’t be around. Anyway, I want to thank everybody for doing this today. I also want to thank ITC Asia which takes place on June 7 to June 9 in Singapore. If you’ve not purchased a ticket yet, use the Asia InsurTech Podcast discount code “AIP” you can get 20% off and I want to thank Gordon Tay, Matthias De Ferrieres and Nicolas Faquet for coming on and doing this today. You were all awesome.

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