[MUSIC] >> Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or in the front lines building it. In each episode, we'll speak with a visionary founder who's building a new category or reimagining an existing one. We'll learn about the problem they solve, how their technology works, and unpack their vision for the future. I'm your host, Brett Stapper, CEO of Frontlines Media. Now, let's dive right into today's episode. [MUSIC] >> Hey everyone, and welcome back to Category Visionaries. Today, we're speaking with Sergey, CEO and co-founder of Koop Insurance, an insurance technology company that's raised 7 million in funding. Sergey, how's it going today? >> Going pretty good, how are you? >> I'm doing great, and I'm super excited for this conversation. Let's go ahead and just kick off with a quick summary of who you are, and just a bit more about your background. >> Absolutely, so I represent Koop Insurance. That's the company that I started with my co-founders back in 2021, and we're building the world's one and only preventive insurance company for the tech sector. Just a few words about that. So, traditionally, insurance works by looking back, and for tech companies, it's a problem, because when you try to build new products, services, there is no historical data by what you try to do. So, it's either hard to find insurance, or it's really expensive. So, we figured that, hey, if we can actually help tech companies implement certain risk controls, or show compliance with certain standards, they can help them get insured. That's exactly what we started doing, and now we provide insurance with preventive risk controls and compliance, and that's how we plan to conquer the tech sector and solve a lot of problems there. So, we're based in New York, and almost 20 full-time employees at this point. So, pre-series A-stage company. >> Hey, gets back to the founding of the company. What were those early days like, and what was the a-ha for you? What was it about this company, this problem, this industry that made you say, yeah, that's it. Let's go spend the next, what, three, five, 10, 15, 20 years of your life building? >> Yeah, well, there were actually three a-ha moments. We originally started with a different product and a different vision. So, our first product was a data sharing API for the autonomous vehicles base, and we came from the background and we said, hey, autonomous vehicles are going to be the future, but the data that's coming from them is so new that there has to be somebody that will standardize that data, and we wanted to become that company. And one of the use cases that we had was actually insurance. And when we went out and talked to insurance companies, we realized that there was zero chance we would sell to them because they had no idea to ingest the data. They didn't even know which data to take in the first place. So, our a-ha moment there was like, oh, we can become an insurance company into this ourselves. And that's what we decided to do. And once we became the insurance company and started focusing AVs with fear that, look, what we're trying to do for AVs is that it could be the same problem applies to the robotic space. And if you actually look, not just the robotics, but the whole tech sector in general, it's the similar pain points that we can solve. And then we decided to expand our focus, our problem set, and landed on the current integration that we have. So that was the second a-ha moment. I'm pretty sure it's the third a-ha moment, but so far we had two. And yeah, it was not trivial, but I think with each iteration, we expanded the problem set and as a result, expanded the market. So yeah, got there through trial and error. And did you know much about the insurance space when you started digging in here, or was this all a whole new world for you to learn? I personally knew enough to be dangerous. I worked on things related to insurance, but I was not an underwriter myself. And then when we started the company, we dug so deep that we were able to pretty much do everything we needed to build a successful product and successful company. And we also complemented that with hiring, fighting, and hiring the right people that joined our team early on. And I can tell you that at the end of the day, insurance comes down to at the technical level to frequency and severity of accidents, and figuring out the way how to manage that. And when it comes to underwriting, it's all about the rules that you put in place, so you either accept or decline a risk. Like the fundamentals are very straightforward, but this whole industry is just so big and so complex that it looks very intimidating from the outside. Once you dig in, it's actually pretty straightforward. So yeah, we're new enough to be dangerous, and here we are. What's the craziest fact about the insurance industry that you've learned, or just a crazy fact that you've learned about the space? Ooh, good question. So this was my blog to me as well. Actually, if you look at the top performing insurance companies, they make more money than top performing hedge funds. Really? And people think that hedge funds are like the masters of the universe that they make all the money. But if you look at top 10 hedge funds for the last year, I think they return like 15, 17% or so. And that was about the market, you know? But there are insurance syndicates that return 25 to 30% on a yearly basis. That's double that. And a lot of people don't know that because insurance is not sexy. A hedge funds are sexy. Insurance is not. But there is a ton of money that's made there. So if I meet someone who's a hedge fund, just think, loser. I mean someone that insurance, I believe, here. While if you do that, I would appreciate it. Now, talk to us about the first maybe like six months of the company. What were those first six months like? Very inspiring. So we started our company in Pittsburgh and Pennsylvania. And for the first year and three months, we were actually bootstrapped. So we got to the first customer without any external funding. It was myself and my co-founders. And then we raised the money once we passed the first iteration. And it was very inspiring because you have this mentality of us against the world. And we were in the industry that it was so big and so dominated by the legacy players that it was us against them was even more amplified. And we actually kind of all lived together. It was a true startup house. And we worked from Monday to Sunday pretty much all day. And even when you're not working, you're still working because you're thinking about things. And that was very inspiring. That was a lot of fun. And I think that later, really good foundation for our culture, we're trying to be no BS, very flat, just get the thing done and move on. And I would say, yeah, if I were to choose one word, you would be inspiring. Let's talk a little bit about the go-to-market side in marketing. So looking at marketing, what do your website? Awesome. You guys have great branding. It looks cool. Thank you. And the message is clear. What did it take to get to that point? Yeah, what happened behind the scenes to get your branding like this? I'm guessing it wasn't like this from day one. Yeah, well, one thing that we tried to do early on there still trying to do is that when you operate in the insurance space, well, technically in the insurance type space, probably the most important thing, the most important attribute of your brand is trust. People have to trust you. And when you're an early stage company, you know, doing insurance, some people might have second thoughts about this. Well, do you have enough capital? Do you have enough partners or stuff like that? So when we built the tool brand, we wanted to stand out as a brand that you can trust. And what do you typically trust? Well, you either trust a ton of money. Well, I have $100 billion, sure, I'll pay your claim. Or you trust expertise and a specialty. And we do partner with companies that have hundreds of billions of dollars on their balance sheet, but we goes the angle of the expertise and the specialty. So that's why when you go in there, we are specialists. We focus on a certain sector. We serve very specific, we solve very specific problems. And we also built a very specific product. So when you go in there, you can trust that you are in the best hands you can possibly get for this particular sector. And we saw that even the choice of colors that we have should provide that kind of impression. So yeah, trust would be a founding attribute of our brands. And we hope to, of course, double down on that as we grow. So who do you view as the competitors or not? Who may be a better question is if they're not using you, what are they using? Or is there no solution that currently fits for your customers? Yeah. So our competitors come from two places. Well, first of all, we compete with traditional insurance companies. They're traditional insurance companies. They don't partner with anybody. They do errors in themselves and they're pretty big and they have a lot of capital. But they don't necessarily have the specialty, the expertise or the tools to solve a new set of problems that we're trying to solve for the tax sector. Okay. So time to time, you run into them. If they occasionally want to issue the company that you want to ensure. And another group, which is more dangerous, are other interest techs that operate in a space. And I think one thing that's special about Coop is that you can find companies that do startup insurance and say, well, we sure startups, okay. You can find companies that do specific products. For example, oh, we do cyber insurance or we do general liability insurance. But I think at Coop, we are in a unique space because we said, hey, we're going to ensure the tech sector. Tech sector means that we work with companies from startup to enterprise and we also have multiple products to offer. Cyber liability, general liability, technology errors and emissions. And we combine that in one. And our value proposition is actually in something else. I can talk about that later. But in their regard, when you look at us, you're like, okay, this guy is due tech. And we run into people that do startups, run into people that do cyber. And at the end of the day, it's all about the quality of the products and the perception of the value that you get out of it. And I think in the end, we're going to be perceived as the dominant player in that space. And what about your market category then? Maybe not today, but big picture. What do you think that your market category is going to be or what is that market category? So it's the category that exists today. So it's not something new that we're trying to stand up. It's the category of insurance, but we are given a different twist. So it's the insurance that comes with compliance and security in one. And historically, you looked at insurance as something that you do for like five, ten minutes and you forget about it and maybe you've never used that. We want our customers to use insurance on a daily basis. Now, they're not necessarily going to use the policy itself, but the tools that come with the policy when it comes to security and compliance. And in that regard, we're defining the category where I'm redefining what insurance means to tech companies and to early to meet size businesses. And I think we've so far been pretty successful with it. There are other companies who try to do that, but I don't think anybody do it in the way that we do. And I think what we do eventually will capture most of the value. What are you doing to evangelize this new approach to insurance? Because I could have this wrong, but I think insurance dates back to what? Like the 1800s in the UK, Lloyd's of London was like a coffee shop. Like there's an old, old industry. How do you bring change to such an old industry? Yeah, actually 1600s. Coffee shop though, is that right? Yeah, yeah, coffee shop, you're correct. Yeah. So well, I think you have to bring the change. There are two things. Well, first of all, everything starts with a product and a problem with this product is solving. So we figure that when you purchase insurance, you don't purchase just a piece of paper. You also purchase a stream or an array of tasks that you have to perform on a continuous basis. And it spills over into compliance and security, but a lot of people don't think about it. They only think, "Oh, insurance is a piece of paper." So we build a product that takes care of insurance and everything that insurance touches around it. And secondly, the way how we plan to conquer that particular segment is we try to bring that product to market, our product to market, by not selling insurance. So we sell insurance by not selling insurance. And it's very important because a lot of people are so focused on a product that they forget about the problems that they try to solve for their customer. What do I mean by that? When you purchase insurance, you don't purchase insurance because you want insurance. Usually you purchase it because you have to. So we don't sell you insurance. We sell you contractual compliance with your customers, partners, and investors. We don't sell you insurance. We sell you. We're making sure that we're going to keep your cash secure as something goes wrong. We don't sell you insurance. We preserve a cashflow by making you spend less on things like insurance. And we also want you to spend less time on insurance. So you can do other things and let our tool automate a lot of tasks with you. So at the end of the day, I think it'll be funny if you have one of the most successful insurance attacks become successful because they didn't try to sell insurance but try to sell something else and that something else is making your financials better, your productivity battery, and your reputation better, which are the fundamentals, pretty much abandoned business. And I think that's what we're trying to, that's how we're trying to reinvent the segment is that, hey, this is actually not insurance. This is making your company better at the end of the day. This show is brought to you by Frontlines Media, podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you're a founder, you may be thinking, I don't have time to host a podcast. I've got a company to build. Well, that's exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io/podcast. Now, back to today's episode. When you explain it that way, it sounds obvious. So not sell insurance. What are conversations like when you talk with investors? Like, take me back to the first time. Maybe not even investors like advisors. What was it like the first time you told them we're an insurance company that doesn't sell insurance? Do they just think you're out of your mind? Like, did they get it right away? Like, what was that first or those early reactions like? Well, I can tell you that I think it was not just specific to us to be an insurance venture. It's probably applicable to many other verticals as well. But for us, it was hit a miss. And if you talk to a VC, in my view, a VC makes a decision in life to three minutes after talking to you, while talking to you, actually. And if you don't see that the VC that you're talking to is excited in under three minutes, it's most likely to know. VCs have mental models. And if you map that mental model well, it's an instant hit. If you don't map that well, they're going to take time. They're going to think about it. But I think the chance of them saying yes to you is going to be like 5%, maybe less. And the same thing was when it comes to our story, we were very fortunate to find really two great lead investors. And I think when we pitched them, it literally took a few minutes for them to get to get it. And everything else was more like due diligence. So maybe it was specific to us. I don't think it was specific to us to protect, but that was our experience is hit a miss, and you have to kind of plan accordingly for that. In your marketing efforts, have there been any mistakes that you've made or any hard lessons that you've had to learn, or has it just always been a well-running machine? Well, it's a pile of mistakes. But probably the biggest mistake that we made, and maybe sometimes we even continue to make that, that you sell the product. You try to sell the product so much that you forget about the customer. And when I mentioned that we try to sell insurance by not selling insurance, that's exactly what we need to do. You sell the end state of the customer. You don't sell the thing that's going to get them there. It's like, well, why should work with Coop? Well, because if your customers and investors had to be great, then you need to work with Coop. Do you want to extend your right away? Yes, you need to work with Coop. Do you want to preserve your cash and guess something goes wrong? You need to work with Coop. I haven't even mentioned insurance, okay? So that's the biggest mistake that probably made, and probably a lot of other companies make. And then another one is there are traditional channels of trying to bring your product to the market like paid channels, and they're so saturated, so competitive that you can lose a fortune on that. And I think you also want to be cautious about it. There are creative ways how you can find customers and hope customers through great content or through very valuable pieces of information that you can put out on the web and acquire them that way instead of just blowing millions of dollars, like something you should text to and edit times, so yeah, I'll say those two things stand out to me. You know, I was surprised when you said that insurance makes way more money than hedge funds, but now I take it back. I'm not surprised because I'm thinking back to the Super Bowl, who's running all those ads? It's insurance companies. And I always think, wow, how come every insurance company has every A-list select, or you're like, they're just hammering, hammering advertising. So that makes sense. They do have money. Is that intimidating ever to be up against insurance companies like that that just seem to have unlimited budgets to splash around on advertising? Or is it not relevant because you've just gone around them by taking a totally different way of communicating your message and getting your message out there to the world? Yeah. So it's both why it is intimidating. It's because they have the brand name and a lot of times people make decisions based on that. So if you are not a top five business insurance company, then people kind of cut you out, okay? And definitely branding comes from putting a lot of money in that. So that's on one hand. On the other hand, well, our partners are some of the biggest insurance for insurance companies in the world. So Cook works with Middickrie, the biggest insurance company in the world, and with Lloyd Spunden, the oldest insurance marketplace. So we work with that. We hardly rely on their branding, okay? But when we try to compete against legacy carriers, we don't compete with the whole company. We actually compete with a specific team. And that team is maybe like two, three, five, maybe max 10 people. And when you put Cook against a team within the legacy insurance company, we would all compete everybody, I think. And of course, they have the support of the brand. But if you strip that out, we would compete every single one. When it comes to the technology, to the data, to underwriting, to how fast we move to the customer service, pretty much everything. And we have successful examples of when we've done this. So I would say, yeah, of course, them having all the money in the world doesn't help us, but when we get down to action, we've been successful with bidding them. And we just need to keep doing this and get more money up to the point that we have as much money as they do. What do you think's been the most important go-to-market decision that you've made to date? Was it that idea that you're not selling insurance? That sounds pretty fundamental. Was it that idea? Was it something else? Like, what really moved the needle in a meaningful way in terms of go-to-market changes? Yeah, sell insurance by not selling insurance. Honestly, it's the ongoing thing. So you have to watch it really, really closely. Even down to when your account executives talk to customers, it propagates all the way down there. I think a really good decision that we made early on is that we decided to go multi-channel from the start. So instead of doubling down on just one channel, how to acquire customers, we have five, six different channels right now, and we built for that. So we built our product knowing that we can have customers come from different ways, whether that's direct, broker, or embedded. And I think that's going to service really well in the future. Probably, I don't know exactly, but there are other companies that tried to do one. Then did work as they started with work. Then they tried to do another. Then they did the cert and the force option. We said, hey, we know that we're going to be multi-channel in the end. So let's just do it from the beginning. How do you choose a new channel? Then how do you test that channel before you decide to add that to the mix of the multi-channel approach? Yeah, well, first of all, you have to do a lot of research and talk to a lot of people. And then once you actually launch into the channel, you start collecting the data. And then the most challenging thing becomes, well, you've collected some data, it's not a lot of data. And if the channel works the way you expected, that's great. But if not, do you keep going or do you shut it down? And that's small data decision versus big data decision. Pretty much data-driven decision versus intuition. And we early on had the intuition. We said, look, we believe that insurance should be sold across all channels. And we should build a product accordingly. And that was our intuition. And then when we started looking, yeah, there are some channels that perform extremely well, some channels that perform not as good. But there is a clear way how we can fix this. And I think in the end, you're going to have a normal distribution. You're going to have each channel doing a portion of your revenue. And one channel is not going to do everything. So it's intuition versus data. And I think as we grow, it's going to be more and more data-driven. And I hope that we're going to keep all the channels off. But if not, then we'll have to cut something. So I will tell. Now, when it comes to companies that inspire you, who comes to mind when I first say that? So companies that inspire me, and I would say Koop as well, are the companies that made it to the CFO stack of tools. So if you were, let's say, a real estate company, and you're at the point where you have somebody dedicated to finance, and then you grow from there, you're going to have a CFO, and then CFO will have to build the stack. OK, and insurance should be a part of the stack. And I think the vision for Koop is to become a default part of that stack. And companies that come to mind would be just to a replacement for payroll, or QuickBooks for finance. Or most recently, there are compliance automation companies, like Vents and Dreda, that started to appear. And I think those are the companies that do inspire me, in terms of how they became a default part of the stack. So we aspire to the same. Yeah, I think Rippling's one of my favorite companies right now. Like Parker Conrad's amazing. I think he went through, yeah, a lot of difficulty is navigated all that very well. And I like the story of he's just back better than ever, which is pretty cool. Yeah, yeah, I agree. Now, let's end here with some big picture questions. So let's talk about the future. Let's paint a picture three to five years from today. What does Koop look like? Well, from our customer's perspective, number one, we are the default part of the finance and compliance and risk management stack for small to meet sized companies in the tech sector, maybe even beyond eventually. And customers love us for insurance, of course, but for everything else that's not insurance. Cashflow, reputation, ease of mind, all those intangible things. And when it comes to the company itself, it's, of course, I think there is a clear way how preventive insurance, our concept can become the dominant on the marketplace. And I do see the path to join the Hodge million error club with a panel of products that we have, and also the panel of tools. So yeah, the future is bright, just all about execution. Amazing. We love the vision, and I've really loved this conversation. It's been a lot of fun. We are up on time, so we're going to have to wrap here. Before we do, if there's any founders that are listening in that want to fall along with your journey or maybe want to work with Koop, where should they go? Sure, LinkedIn, type in Koop Insurance or go to Koop.ai. Amazing. Well, thank you again. Really appreciate it. Thank you. This episode of Category Visionaries is brought to you by Frontline's Media, Silicon Valley's leading podcast production studio. If you're a B2B founder looking for help launching and growing your own podcast, visit frontlines.io/podcast. And for the latest episodes, search for category visionaries on your podcast platform of choice. Thanks for listening, and we'll catch you on the next episode. [MUSIC]
