20VC How To Determine The Risks To Take vs To Pass On, Should Founders Meet Investors When Not Raising & The Most Important NonObvious Role of the CEO with Spike Lipkin, Founder & CEO @ Newfront Insurance

Harry Stebbings interviews Spike Lipkin, the CEO of Newfront Insurance, on "The 20 Minute VC" podcast. Lipkin, a former Blackstone investor and early Opendoor employee, discusses his journey founding Newfront, a technology-enabled insurance brokerage that simplifies the purchasing and management of insurance. Newfront has raised over $100 million from top-tier investors like Founders Fund, Meritech, and the 20 VC fund. Stebbings and Lipkin delve into leadership, the importance of hiring the right talent, and the CEO's evolution with the company's growth. Lipkin emphasizes the significance of a clear vision, mission, and the right investor relationships in scaling operations and maintaining a company's trajectory. They also touch on the strategic decision not to publicly announce funding rounds to avoid premature competition.

• Spike Lipkin is the founder and CEO of Newfront Insurance.
• Newfront Insurance is a modern insurance brokerage that integrates advanced technology with expert risk management.
• The company has raised over $100 million from notable investors such as Founders Fund, Meritech, and the 20 VC fund.
• Spike Lipkin previously worked at Opendoor, contributing to its growth and at Blackstone, where he was involved in building Invitation Homes.
• Acknowledgments were given to Kevin Hartz and Max at Meritech for their question suggestions for the interview.

"And so with that, I'm very, very excited to welcome Spike Lipkin, founder and CEO at Newfront Insurance, the modern insurance brokerage empowering risk management experts with advanced technology to deliver innovative solutions to their clients to dates, has raised over $100 million with newfront from some of the best in the business, including founders Fund, Meritech and of course the newly founded 20 VC fund."

The quote introduces Spike Lipkin and his company, Newfront Insurance, highlighting its success in fundraising and the integration of technology in insurance brokerage.

• Spike Lipkin shares his experience with the inefficiencies of the insurance industry while at Blackstone and Opendoor.
• His frustration with the traditional insurance process led to the founding of Newfront.
• Lipkin's goal was to modernize the insurance industry, making it easier for businesses to purchase and manage insurance.

"And so at some point, I just became obsessed with this idea that insurance was crucial to our society, crucial to our economy, crucial to entrepreneurship, and really understood by no one."

This quote reflects Spike Lipkin's realization of the importance of insurance and the lack of understanding around it, which motivated him to start Newfront.

• Spike Lipkin emphasizes the importance of talent and team building, drawing from his experience at Opendoor.
• He learned the significance of focusing on the most critical problems, even if it means ignoring other issues temporarily.
• The startup environment at Opendoor taught him that as resources and talent increase, previously difficult problems become easier to solve.

"Building a great company is so much about finding great people and having them align with your mission and join you."

Spike Lipkin highlights the key takeaway from Opendoor that the success of a company is heavily dependent on recruiting talented individuals who align with the company's mission.

• Lipkin and his co-founder Gordon believe in solving new problems themselves before delegating to more capable individuals.
• They prefer to be the first to handle a task, establish a process, and then pass it on to someone else to scale and refine.
• This approach ensures that they understand the challenges before handing them off.

"We think of our jobs at Newfront as solving unsolved problems and then finding people more capable than us to run parts of the business."

The quote explains the delegation strategy at Newfront, where the founders initially tackle unsolved problems and then recruit skilled individuals to take over and further develop those areas.

• Lipkin views himself as a work in progress, always learning and adapting his leadership style to the needs of the company.
• He credits his ability to learn from coaches and leaders around him for his development as a CEO.

"It sounds like you maybe also talk to my mom, but I very much view myself as a work in progress who's had the chance to learn from incredible coaches and leaders."

Spike Lipkin humbly acknowledges that his leadership style is continually evolving and that he has benefited from the guidance of mentors and coaches in his career.

• The speaker aspires to a leadership style focused on enabling others to excel.
• Emphasizes the importance of creating an environment that allows people to operate in their "zone of genius."
• Recognizes that team members have specialized knowledge and aims to give them autonomy.

"One of the things they'd say is that the most important quality someone can have is bringing out the best in others. And so I think of my job and the job of any leader, really, as creating the environment for others to do great work across the board."

This quote highlights the speaker's belief that a leader's primary role is to foster an environment that brings out the best in their team members.

• Discusses a specific exercise where execs listed tasks that energize them versus those that drain them.
• The outcome showed little overlap, allowing for tailored job responsibilities.
• Focuses on what makes employees eager to work rather than imposing cultural norms.

"We did this exercise early on where a lot of the execs on my team wrote down a list of things that gave them energy and that they loved doing and felt like they were very good at and things that took energy from them and they didn't enjoy doing and didn't feel like they were particularly good at."

The quote describes an exercise that helped the team understand and leverage individual strengths and preferences to improve job satisfaction and productivity.

• Initially, the speaker was involved in hands-on tasks and setting up systems.
• As the company grew, the focus shifted to recruiting talented individuals and providing them with autonomy.
• The speaker highlights the value of learning from coaches, advisors, and experienced team members.

"Pretty quickly thereafter, my role changed from being scrappy and doing a lot of things myself to recruiting incredible people."

This quote reflects the speaker's transition from a hands-on role to a strategic role focused on talent acquisition and team development.

• Emphasizes the importance of identifying top talent through recommendations.
• Discusses the approach of being transparent about the company's mission and challenges.
• Believes that transparency and a clear mission help attract exceptional candidates.

"And so for us, it's been about mission and transparency, and that's what's led to, I think, recruiting the incredible team we have in place."

The quote underscores the speaker's strategy for hiring exceptional talent by focusing on the company's mission and being open about its challenges.

• Aims to hire people who the team would be excited to work for.
• Shares the experience of hiring a COO who had a significant positive impact on the team and the business.
• The decision to hire externally is driven by the desire to learn from experienced leaders and improve the organization.

"I think we've tried to find people who many of us would be thrilled to work for."

This quote explains the speaker's approach to external hiring, focusing on candidates who can elevate the entire team's capabilities.

• The need for a COO arose when operations became a bottleneck.
• Sought someone with experience in building complex operational organizations.
• The COO, Mike Brown, was introduced by a board member and impressed the team during a challenging operations meeting.
• Hiring the COO was strategic to alleviate operational issues and allow the speaker to focus on other business areas.

"So the timing for us was really around when operations became a crucial bottleneck in the business."

The quote explains the strategic decision to hire a COO based on the company's growth stage and operational challenges.

• Acknowledges that the company outgrew its initial systems.
• Initially, the focus was on business growth rather than perfecting systems.
• Hiring experienced individuals like Mike Brown helped implement best practices and accelerate progress.

"I think we outscaled many of the systems we had in place early on."

This quote recognizes the challenges faced when the company's growth outpaced its operational systems, leading to the need for experienced leadership to improve those systems.

• The speaker identifies the importance of self-analysis in leadership.
• Acknowledges the existence of personal weaknesses and the need to address them.

"When you self analyze, where are you? Like, you know what, this is a struggle, and I"

Although the quote is incomplete, it suggests that the speaker is reflecting on areas of personal difficulty within their leadership role, emphasizing the importance of self-awareness and continuous improvement.

• CEO Spike Lipkin discusses the challenge of transitioning from knowing every detail to empowering others.
• Emphasizes the importance of focusing on new initiatives and allowing executives to operate autonomously.
• Recognizes the difficulty for founders to step back from the minutiae of the business.

"I think one of the challenging things as CEO has been going from knowing every detail in our business and knowing everything that's going on to hiring people who are far better than I am at understanding and leading their teams, and then being okay with not understanding every detail and being okay with not going deep in the weeds."

The quote reflects Spike Lipkin's personal challenge of stepping back from the details to focus on broader company initiatives, trusting his team to manage their respective areas.

• Spike Lipkin attributes motivation to the mission of improving a critical industry.
• Highlights the potential for innovation, job creation, and financial freedom as key motivators.
• Mentions his role in enabling the team to perform by not being a hindrance.

"I think it's the potential to improve a mission critical industry that affects every business. I think it's the potential to make it easier for our clients to innovate and create jobs."

Lipkin explains that the company's mission to innovate and impact the industry motivates the team, suggesting that his role is to facilitate their work.

• The importance of having a clear vision and mission as a guiding north star for the team.
• Discusses the human tendency to overestimate short-term achievements while underestimating long-term impact.
• The significance of setting milestones and a roadmap to achieve a lofty vision.

"I think a vision and mission is really important as a north star for the team. So many decisions at a startup involve ambiguity and gray area, and having a very clearly articulated mission, and having a very clearly articulated vision helps make some of those decisions that are difficult and somewhat gray."

The quote highlights the role of a well-defined vision and mission in guiding decision-making, especially in ambiguous situations common in startups.

• Spike Lipkin talks about taking calculated risks in innovation while avoiding unnecessary risks in core functions.
• Describes hiring experienced leaders to learn from the best and avoid reinventing the wheel.
• Newfront's strategic approach to risk involves focusing on client and broker experience.

"We think a lot about the types of risks we're taking. So at Newfront, we want to take innovation risk on the client experience and the broker experience, but we don't necessarily want to take risk on some of the other core functions in the business."

This quote explains Newfront's approach to risk management, emphasizing innovation in customer experience while minimizing risk in established business areas.

• Spike Lipkin describes a targeted approach to working with a small number of respected investors.
• Discusses the practice of sharing weekly metrics with investors and limiting outside investor meetings to focus on the business.
• Emphasizes building a great business as the primary goal, with the belief that investment will follow.

"Our approach has been to work with a small number of investors and take a very targeted approach. We've been lucky that our last three funding rounds have been preemptive, and mostly it's been insiders wanting to lead subsequent rounds."

The quote outlines Newfront's selective and strategic approach to investor relations, focusing on building strong partnerships with a few key investors.

• Discusses optimizing for investors who can help de-risk core business parts.
• Shares the experience of working closely with investor Kevin Hartz to address scaling challenges.
• The focus is on bringing investors who can contribute to solving specific problems in the business.

"We've optimized for finding investors that can help us de risk core parts of our business. So as we were scaling newfront, we wanted to learn from one of the best operators out there."

Lipkin details how Newfront selects investors based on their ability to assist with specific business challenges, ensuring that investor relationships are value-adding.

• Spike Lipkin reflects on the decision not to publicly announce funding rounds.
• Mentions the desire to celebrate business successes over financings.
• Discusses staying under the radar to avoid premature competition and the potential future shift in strategy to build brand presence.

"I heard the founder of Qualtrics speak years ago, and they were a bootstrap business, and he talked about how weird it was that when they first raised money, everyone congratulated him. He pointed out that no one congratulated him when he got his mortgage."

This quote conveys Lipkin's perspective on funding announcements, questioning the celebration of fundraising as a success metric and preferring to focus on actual business achievements.

• Competition has not significantly impacted hiring due to the company's mission and traction.
• Funding is not the sole factor for hiring; the company's mission is a strong draw for potential employees.
• Investor introductions have been beneficial for hiring talented individuals.

We've been lucky in that we've been able to hire people based on our mission and the traction of our business.

This quote emphasizes that the company's mission and its progress have been key factors in attracting talent, rather than relying solely on the prestige of funding.

• Board members should help founders focus on a few key initiatives that will significantly impact the business each quarter.
• Investors offer a broader perspective that can guide founders towards the most critical business aspects.
• Kevin, a board member, exemplifies this role by ensuring continuous progress and focusing on crucial elements.

I think it's helping the founder think through the small set of things each quarter that will move the needle and de risk the business and help the business move forward.

This quote suggests that the most valuable contribution a board member can make is to assist the founder in prioritizing and addressing the few critical actions that will advance the business and reduce risks.

• Acknowledges Kevin's negotiation skills, despite receiving other higher offers.
• Suggests that Kevin, who offered a lower investment, is the actual negotiation expert.

That's very nice of him to say, because when Kevin invested, we had some other offers that were materially higher than his.

By stating this, the speaker humbly deflects praise onto Kevin, suggesting that the real negotiation prowess lies with the investor who managed to secure the deal despite offering less than competitors.

• Recommends "Team of Rivals" by Doris Kearns Goodwin for its inspirational depiction of collaboration among differing perspectives.

Team of rivals by Doris Kearns Goodwin. It's incredibly inspiring how a group of people who didn't see eye to eye work so well together.

The speaker suggests that the book is a valuable read because it showcases how effective teamwork can be achieved even when individuals have conflicting views.

• Advocates for increased opportunities for people from diverse backgrounds in the tech industry.

I think more opportunity for folks from different backgrounds.

This quote highlights the speaker's desire for a more inclusive tech industry that offers opportunities to a broader range of people.

• The nickname "Spike" originates from a childhood trait related to the speaker's hair.
• The real name is Eugene, named after a grandfather.

My real name is Eugene, named after my grandfather. My parents started calling me Spike since I was born because of hair. Was always sticking up.

The quote provides a personal anecdote explaining the origin of the speaker's nickname, which is unrelated to their professional life.

• Angel investors, particularly a group known as "the sharks," have been instrumental in the company's success.
• Michael Obitz's influence on building company culture and team is also highlighted.

So my co founder Gordon's father, was an insurance industry executive, and he pulled together this group of financial services execs who angel invested in our company.

The speaker credits a collective of financial executives, including his co-founder's father, for their significant role in the company's development through both investment and industry insight.

• Anticipates a shift from technology companies selling products to selling services.
• Believes that technology will be used to improve client experiences and industry economics, potentially with different margins than seen in past tech giants.

I think the next set of breakaway companies are going to leverage technology to provide a differentiated client experience.

The speaker predicts that the focus of successful future startups will be on using technology to enhance the service aspect and client experience, rather than just selling technology products.

• Aims to assist numerous businesses in managing risks so they can concentrate on their primary competencies.

Hundreds of thousands of businesses manage risk so that they can focus on what they do best?

This quote outlines the speaker's goal for Newfront to become a key player in risk management, helping a vast number of businesses to thrive by handling an essential aspect of their operations.

• Expresses gratitude for the opportunity to participate in the podcast and looks forward to future endeavors with Newfront.

Thanks Harry. Really enjoyed it.

The quote is a polite and standard closing remark, indicating that the speaker appreciated the conversation and is optimistic about what lies ahead.