In this episode of "20 Minutes VC," host Harry Stebbings interviews Asaf Wand, the innovative founder and CEO of Hippo, a tech-forward home insurance company offering rapid quotes and raising over $109 million from investors like Felicis Ventures, GGV, and Fifth Wall. Asaf discusses his entrepreneurial journey, from founding Savvy and working at McKinsey to revolutionizing the insurance industry with Hippo, emphasizing the importance of adaptability, data utilization, and customer trust. He also shares insights on fundraising strategies, the value of strategic investors for distribution, and the significance of aligning with investors who share the company's culture and values. Asaf envisions Hippo transforming the insurance landscape by focusing on prevention and risk mitigation, aiming to create a product that homeowners never need to use.
"This is the 20 minutes VC and founders Friday with me, Harry Stebbings. I would love to hear your thoughts and feedback on the show and you can do that on Instagram at H Stepbings 90 96 with two B's."
Harry Stebbings introduces the podcast and his Instagram for feedback.
"And today I could not be happier to welcome Asaf Wand. Asaf is the founder and CEO at Hippo, a new kind of insurance company that provides smart coverage for homeowners with a quote in just 60 seconds."
Harry introduces Asaf Wand and his company, Hippo.
"Are you thinking about life insurance in the new year? If so, you have to check out Ladder. It's the smart and easy way to get term life insurance online."
Harry introduces Ladder, an online life insurance service.
"Using pilot for bookkeeping gives you back the freedom to focus on your business."
Harry presents Pilot, a bookkeeping service for businesses.
"That's where first Republic come in because they are so good when it comes to resources, network and expertise, allowing entrepreneurs to customize a solid foundation for your business across all stages."
Harry mentions the benefits of First Republic Bank for entrepreneurs.
"Yeah, it's an interesting question because the reason I found myself in the world of startups is probably because I'm the worst employee in the world."
Asaf Wand explains that his difficulty working for others led him to start his own ventures.
"So hippo is an interesting thing. So the reason that I'm doing insurance is a. My dad used to be a senior insurance guy."
Asaf discusses his personal connection to the insurance industry through his father.
"I used to work with McKinsey and did a lot of insurance work and thought it's one of the most broken areas I've ever seen in my life."
Asaf's experience at McKinsey showed him the flaws in the insurance industry, sparking his interest in creating Hippo.
"And then when I sold my previous company in 2015, I looked at insurance again, and then all of a sudden all of these three reasons changed."
Asaf Wand reflects on how the landscape of insurance technology changed, allowing him to start Hippo.
"And everybody that I pitched to basically used all of the stuff that flipped later to why is it interesting and why is it in shortec?"
Asaf Wand discusses how investor attitudes towards Insuretech have evolved from skepticism to interest.
"It's an interesting situation now. Can't really talk about the entire fundraising. I can talk more about the fundraising scenario in insurance, which I'm a lot closer and I know a lot more firsthand experience."
Asaf Wand comments on his familiarity with the fundraising environment in the Insuretech sector specifically.## Venture Capital Perception of Company Progress
"However, every company looks one round earlier than it should be."
This quote highlights the gap between VC perceptions and company realities, where companies appear to VCs as if they are prepared for the previous investment round rather than the current one.
"VCs don't really understand insurance. So they don't understand the derisking that was done behind the scenes."
This quote explains that VCs may lack knowledge of the insurance industry, leading to a failure to appreciate the risk management efforts of companies, impacting their investment decisions.
"I'm a bit of a contrarian on this thing."
Asaf expresses his differing opinion on the necessity of having a top VC, suggesting that the perceived advantages may not align with the needs of his company.
"Usually if there is a partner from a top fund, there is a tendency to give overweight to his idea and decision point."
This quote reflects Asaf's concern that the presence of a top VC on the board can disproportionately influence company decisions, regardless of the merit of their ideas.
"I looked a lot on the board composition, on having a diverse set of ideas."
Here, Asaf discusses his approach to creating a board that brings a variety of perspectives and fosters a culture of open-mindedness and adaptability.
"We need someone who is aligned with the culture and what we're building."
This quote highlights the importance of having board members who share the company's values, particularly in supporting a family-friendly work environment.
"We interview the five to ten founders that these guys invested in to basically get a sense."
Asaf explains the process of evaluating a VC's fit with the company by learning from the experiences of other founders who have worked with them.
"It's a lot about that stuff. Plus there's always a leap of faith."
This quote acknowledges that while due diligence is crucial, there is still an element of trust involved in choosing an investor.
"I think when you're doing a fundraising, it needs to be a condensed bleep and have 2030 meetings in that week."
Asaf advises that fundraising should be an intense, short-term effort to create momentum and urgency among potential investors.
"It's good to have discussion with the de players, which the fidelities of the world, the Wellingtons of the world."
This quote suggests that while immediate fundraising should be focused, it is also important to cultivate relationships with major investors who may participate in later rounds.## Creating a Sense of Urgency in Fundraising
"I think a strong board is a very helpful thing. I think what would give you the most power is if your board is saying something like, we don't even need a round because potentially we're profitable and stuff like that."
This quote emphasizes the strategic advantage of having a board that showcases financial strength, which can create a compelling narrative for potential investors.
"The first term sheet is usually what starts the ball rolling and had a sense of urgency."
This quote highlights the importance of the first term sheet in catalyzing investor interest and creating momentum in the fundraising process.
"You want to get a time and a date to basically get an answer."
The quote underscores the tactic of setting clear deadlines to compel investors to make timely decisions.
"If the money out there, and it's in the right terms, with the right investors, probably you should take it now."
This quote suggests a general agreement with the idea of taking available funding but with the caveat that the terms and investors must be aligned with the company's needs.
"A company is dying when there's no more money in the bank."
This quote underlines the essential role of funding in a company's survival, framing the CEO's responsibility to secure financial resources.
"I think it's timing with regards to the results."
This quote suggests that the decision to accept strategic investment should be based on the company's performance and strategic needs rather than the stage of funding.
"Both of them are very, very unlikely to be the acquisitions for Hippo. Both of them are mostly distribution partners."
The quote clarifies the role of strategic investors like Lennar and Comcast, highlighting their value as distribution partners rather than potential acquirers.
"If you can leapfrog and having faster distribution, then you're positioning yourself way better."
This quote captures the strategic advantage of securing distribution partners to accelerate market reach.
"I think the truly special board members are people that you start to value on a personal level."
This quote highlights the importance of personal connection and trust between board members and the company.
"Understand that do no harm is the number one thing that they should basically adhere to."
The quote emphasizes the principle of non-maleficence as a guiding value for board members.
"It's going to be very rare for an external person to come up with continuous ideas and value on an ongoing basis."
This quote acknowledges the limited but significant role that board members can play in providing intermittent strategic value.
No verbatim quotes provided related to this theme as the transcript was cut off.
(Note: The last theme "Scaling and Growth Considerations" could not be fully developed due to the incomplete transcript provided.)## Marketing Channel Scalability
"Once you know that, a certain channel really, really start to pick up. And then the question is, is it scalable enough?"
This quote emphasizes the discovery of a promising marketing channel and the subsequent question of its scalability.
"So we're not overboarding, because a lot of these channels, they're really really good for a certain scale, but they're not successful when you're scaling up."
This quote addresses the risk of over-investing in a channel that may not perform well at a larger scale, highlighting the importance of prudent scaling.
"You need to have a really high level of integrity to do the blocks in the middle and to check it, and a lot of processes and financial aspects to actually look and monitor them as closely as possible."
The speaker underscores the necessity of integrity and robust processes to monitor and evaluate the performance of marketing channels.
"The standard one, which is Atlas Shrugged by Ayn Rand, which is a classic and everybody and shaped me when I was 14."
Asaf discusses the significant influence of Ayn Rand's "Atlas Shrugged" on his formative years.
"One of them is Pillars of the Earth by Ken Follett. And I like the all historical aspect and looking at the twelveth 13th century, and it's a lot of innovation and a lot of build up plus history and a lot of these things, which I like."
This quote explains Asaf's interest in history and innovation, which he finds in Ken Follett's "Pillars of the Earth."
"The third book that I brought was Robert Einland, Starship Troopers... It's all about leadership and thought and values and things like that, which resonate very, very high with me."
Asaf ties his appreciation for "Starship Troopers" to its themes of leadership and values, which resonate with his personal experiences and background.
"As Israelis, we don't have a lot of respect structures, which is maybe why there's a lot of Israelis working in shooter, because it's a regulated industry and to begin with, we don't have a lot of values to regulated industries."
Asaf discusses the cultural challenges faced by Israelis, such as differing attitudes towards regulations and structures, when adapting to the Bay Area business environment.
"There is a very strong Israeli contingency and group of people in the Bay Area. So just by having that circle of Israeli founders, you can assimilate yourself quite easily."
The quote highlights the supportive role of the Israeli community in the Bay Area in helping new Israeli immigrants assimilate.
"I really like the valley because it's a karmic place. It's accretive, like relationship are accretive. You help everybody and you never know what's going to happen."
Asaf expresses his admiration for the collaborative and mutually supportive business culture of the Bay Area, which aligns with his personal values.
"So it's basically the motto of the unit in the military, which is Udel's wins. Very simple and very straightforward."
The quote reveals Asaf's personal motto, which is derived from his military background and emphasizes a winning attitude.
"I think the cards actually played it right with a balance of naivety, with expertise and stuff like that."
Asaf reflects on the successful combination of naivety and expertise in the early stages of Hippo's journey.
"We didn't pivot. The same processes that we started with is the same company that we have now."
This quote highlights the consistency and stability of Hippo's processes and company direction from inception to present.
"So the next five years for us is to shift the entire perception of what insurance is... insurance is going to move towards prevention, towards risk mitigation, towards bringing customers more value."
Asaf outlines Hippo's vision for transforming the insurance industry by emphasizing prevention and customer value over the traditional insurance model.
"Bizarrely, the best thing I can wish for Hippo is that we're going to have a product that people would just not need to use."
This quote encapsulates the paradoxical goal for Hippo: creating an insurance product that customers ideally never have to use, signifying success in prevention and risk mitigation.