This is a lightly edited version of my introduction to Marble's November 2021 investor update.
I was recently asked the sort of question that you daydream about as a founder, doubly so as an insurtech founder with a B2B product.
During a panel at InsurTech NY's recent Corporate Forum, Adam Blumencranz asked me and a few other founders, “If there was one thing you wish CVCs did better, what is it?”
Faced with the chance to take on this question, maybe The Question, I naturally flubbed the answer. I touched on a few key points, but basically I rambled. So after a few dozen subway rides thinking about what I should have said, I’ve put together a more organized response.
How to Launch Pilots and Influence Founders is more than just a play on the Carnegie title (but it is also absolutely that). It is, I think, a fair framing of the stakes at play, both for Corporate Venture Capital teams, and large insurance institutions generally.
A strong pilot program affords incumbents the ability to influence what actually gets built, on a timeline that is magnitudes faster than what Corp Dev or M&A can achieve.
A well-built and thoughtfully administered pilot program offers an immediate competitive advantage for incumbents. More impactful though, it anchors a virtuous innovation cycle that can keep the big carriers on top.
Pilot programs often catch short shrift in the course of corporate "build-buy-partner" discussions. But the particular advantage of a really great, predictable, and trusted pilot program (sorry if I’m being redundant, but I’m really trying to express the stakes here) does more than just give incumbents a point of view on interesting “innovations.” At its best, a strong pilot program affords incumbents the ability to influence what actually gets built, on a timeline that is magnitudes faster than what Corp Dev or M&A can achieve.
So a year plus into working with insurers and brokers, from scout team to C-suite, do I have any thoughts on what goes into a great pilot program? I mean, yes? That’s the point of this whole thing!
Objectives clearly stated, with discipline to match:
It’s not uncommon to come across innovation or scout teams who are working on a thematic mandate. Claims automation, parametric product development, policyholder engagement (:heart:), etc. — all worthwhile areas of focus, and typically as specific as it gets.
Where the rubber often fails to meet the road is in the “last mile,” or rather, in the conversion of theme to objective. Carrier-side product, IT, and marketing teams need specific guidance on how to translate themes into practice and priorities.
1️⃣ Spend an equal amount of time developing the way you’ll measure the business outcomes of a pilot as you spend coming up with the areas of innovation.
As (the fantastic) Christina Wodtke writes about the OKR framework, “take all that inspirational language and quantify it” — I think this is a great instruction for insurance companies building pilot programs.
Small teams, little intermediation:
Much has been written recently about “MVP bloat,” and I think you can basically copy and paste any of that writing into a commentary on innovation strategies and teams.
And while I think low-code tools will bring “MVP bloat” under control, I’m not sure corporate innovation for insurers is headed in the same direction. More layers of corporate and consultant intermediation appear yearly, and for all of it, I’m not sure the outcomes are getting any better.
2️⃣ How many steps sit between ultimate accountability at the corporate level (C-suite) and the same accountability at the start-up (Founder)? Even more critical, who occupies those intermediating steps?
The respective points of accountability should not be separated by more than 2 reports, and the whole system works best when functional experts, with the ability to generalize, are responsible for execution and intermediation.
Speed, speed(?), speed
On a recent flight (I think maybe it was the flight to ITC?), I read The Reign of Wolf 21. It was very good! And it made me think a lot about timelines and ecosystems.
Turns out it’s pretty much settled ecological fact that wolves are a key part of healthy river ecology. And rivers are, naturally, critical to wolves’ survival. The fact that wolves and rivers are interdependent, while existing across massively different timelines, is sort of wonderful.
So does this apply to incumbents and startups working together? Can you imagine if it didn’t, and I just tricked you into reading about wolves and rivers? Great bit. But yes, it has a lot to do it with.
3️⃣ To stay healthy, the corporate ecosystem needs to encourage growth across multiple timelines.
Startups live, scale, and die quickly. Incumbents, by definition, grow and thrive across decades.
Obviously I’m biased, but I think the prevailing trends in insurance innovation are a bit too accommodating of the rivers, oceans, and top-20 carriers’ timelines. This means that startups will have a hard time sticking around long enough to drive enough impact, iterate, improve, and grow to service more clients.
This is bad for customers, and if something gets bad enough for enough customers, then someone will start to take them. This is existentially bad for the incumbents. And the wolves are dead. And the rivers are drying up.
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This list is of course non-exhaustive and far from expert. It’s more of an attempt to synthesize our experience over the last year of working with fantastic, forward-thinking teams at carriers, both incumbent and insurtech. Ideally it’s helpful (at least in small part) to anyone who wants to innovate in an industry as established and massive as insurance.