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Three insurance industry startups cultivate their culture from the ground up.

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Culture: Startups NEW BEST S REVIEW May 2016 SmithBEGINN Three insurance industry startups cultivate their culture from the ground up. by Kate Jennifer Fitzgerald and Francois de Lame
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Culture: Startups NEW BEST S REVIEW May 2016 SmithBEGINN Three insurance industry startups cultivate their culture from the ground up. by Kate Jennifer Fitzgerald and Francois de Lame used a whiteboard to lay out their vision of corporate culture when they launched PolicyGenius, a digital broker. Ross Buchmueller wrote out statements of his mission, vision and values prior to founding PURE, a high net worth personal lines carrier. And Daniel Kate Smith is a senior associate editor. She can be reached at Schreiber and Shai Wininger laid out their ideals for Lemonade, a peer-to-peer insurer, in a 40-slide culture deck. Startups are in a unique position to create their culture from the ground up. And it s not a task they take lightly. This is something that we ve given a lot of thought to, said Schreiber, a corporate attorney turned tech entrepreneur. We tried to distill some of 68 Best s Review May 2016 reprint Copyright 2016 by A.M. Best Company, Inc. All Rights Reserved. Reprinted with Permission. ING our own experiences, what worked and what didn t, and what kind of people we are, and what makes us tick. From relaxed dress codes to office pingpong tables to unlimited vacation, insurance entrepreneurs are shaking up the status quo and proving success doesn t require a suit and tie. Best s Review sat down with Lemonade, PolicyGenius and PURE three young insurance companies at different stages of development to discuss their philosophies and strategies for building a winning environment. Startups Content: Turning Point 70 Circle of Trust 72 Daily Reminders 74 Best s Review May 2016 reprint 69 Culture: Startups Turning Lemonade looks to disrupt insurance with help from industry insiders seeking a change. Point by Kate Smith A WORKING ENVIRONMENT: Daniel Schreiber (left) and Shai Wininger, co-founders of Lemonade, in their startup s airy office in lower Manhattan. Photographs by Kim Bjorheim Daniel Schreiber and Shai Wininger were purposefully candid in recruiting talent to their latest startup, Lemonade. Their goal with Lemonade, a peer-to-peer personal lines carrier, was to reconceptualize insurance. And to do that, they needed a specific type of employee an insurance professional having a midlife crisis. I actually put midlife crisis in the job description, Schreiber said. That always got a chuckle, but I meant it seriously. Somebody who is gainfully employed and happy in a large insurance company is probably not right for us. They had to be asking themselves questions like: What am I doing with my life? Is this what I want to do for the rest of my life? Lemonade needed insiders who were willing to approach insurance as outsiders. There s an inherent contradiction in trying to find people who are at once insiders to an industry and at the same time outsiders to it, Schreiber said. It s profoundly difficult, perhaps even impossible, to reconceptualize an industry when you have spent your entire life in it. It s not a coincidence that Shai and I don t come from insurance. Schreiber and Wininger are veteran tech entrepreneurs who saw insurance as a sector ripe for disruption. It s a vast industry with a universally consumed product and a need for change. When we came across that triumvirate a huge 70 Best s Review May 2016 reprint universal product, untouched by innovation and crying out for innovation those things together suggested there was an opportunity here, and there was something very meaningful we could do here, said Schreiber, the chief executive officer. Their solution was to build a peer-to-peer personal lines carrier that has the leanness and flexibility of a tech company. Lemonade, whose first products are set to launch this quarter, based its business model on the earliest foundations of insurance people helping people. Their idea has attracted both talent and dollars. Ty Sagalow, AIG s former president of product development, joined Lemonade as chief insurance officer; Robert Giurlando (previously chief underwriting officer at Ace) is its chief underwriting officer; James Hageman (former senior vice president of claims at Ace) is the chief claims officer; and Ron Topping (who was the head of financial planning and analysis for one of AIG s business units) is the chief financial officer. Lemonade also is backed by some of the biggest names in venture capital. In December it received $13 million in a funding round led by Aleph and Sequoia Capital, whose track record includes early investments in Apple, Cisco, Google, Yahoo and YouTube. It is very unusual for a company to receive $13 million in an initial round of funding, but it is rarer still to find such accomplished founders tackling such a sizable industry with such a compelling solution, Sequoia partner Haim Sadger said in a statement. We re betting Lemonade will transform the insurance landscape beyond recognition. Lemonade s New York City offices symbolize how radically different it is from a traditional insurance company. It has a big airy space with vintage furniture and beer on tap. There s a coffee bar and, for a bit of stress relief, a pingpong table. It has what you might expect to find at Google rather than at AIG, in terms of work environment, Schreiber said. Once you enter the space, you enter a different mindset. People walk around in jeans and T-shirts, and pretty quickly, even if you ve worn a suit all of your career, you adjust. The Silicon Valley similarities don t end with the office space. Lemonade uses communication and projecttracking tools that are common in the tech industry but foreign to insurance. It has video conferencing capabilities on every computer, uses Slack for chat-based interactions and employs the Scrum methodology of project management, with daily stand-up meetings to keep folks on the same page. For the first 10 minutes of the day folks stand around, discuss their objectives for the day, Schreiber said. No rank or hierarchy. Everyone just talks about what they re doing. Autonomy and accountability are cornerstones of Lemonade s culture. Before they even founded the company, Schreiber and Wininger compiled a 40-slide It s profoundly difficult, perhaps even impossible, to reconceptualize an industry when you have spent your entire life in it. DOWNTIME: Pingpong break at Lemonade s headquarters. PowerPoint deck outlining the culture they envisioned at Lemonade. Freedom and responsibility are recurring themes in the deck. One of the things we put in the culture deck is that adequate performance gets a generous severance package, Schreiber said. Lemonade whose name was derived from the saying, When life gives your lemons is looking for high performers. That doesn t necessarily mean hard workers, at least not in the conventional sense. I m not at all interested in how many hours people are working, which hours people are working or what location they re working them from, Schreiber said. You re either impactful or you re not. I m much more interested in people s impact and ability to propel us forward than whether they worked on weekends or nights. We do not have a culture of face time and putting in the hours. To that end, the company has several unpolicies. It has a work hour unpolicy, a vacation unpolicy and an expense unpolicy. Employees are able to buy and expense whatever technology devices they need to succeed. They also aren t expected to punch a clock or limit their vacation days. It goes back to this idea that what we re really looking for is people who are impactful, who are excellent, who are responsible and autonomous. And you trust them. You trust them to do the work, Schreiber said. It s a very respectful environment in terms of people s personal time. The flip side of expecting people to be excellent and impactful is being respectful of the fact that people who are excellent and impactful don t have to be in the office all the time. They can have meaningful things outside of work. They can treasure their life-work balance and have hobbies or religious callings or family commitments or other things to which they dedicate themselves. Rather than see that competing with their work, we see that as the reason people have the energy Daniel Schreiber Lemonade to keep doing what they re doing for a long time. It s a marathon, not a sprint. BR Culture: Startups Best s Review May 2016 reprint 71 Culture: Startups Circle breeds success at PolicyGenius. of Trust Collaboration by Kate Smith IN THE MIDDLE: Jennifer Fitzgerald and Francois de Lame, co-founders of PolicyGenius, use a bullpen floor plan to surround themselves with staff. Photograph by Frank Vowinkel Two desks sit in the center of PolicyGenius Brooklyn office. The founders desks, they re called. It s where company co-founders Jennifer Fitzgerald and Francois de Lame work, smack in the middle of the room and flanked by their team. PolicyGenius is a digital broker that offers life, disability, renters and pet insurance. The three-year-old upstart rents office space in a co-working building that overlooks the East River from Brooklyn s Williamsburg neighborhood. With movable glass walls that allow offices to expand along with their tenants, the building is designed for startups. With more than 30 employees, and with hopes of doubling that number over the next year, the company is already outgrowing its location and ready for a private office. So Fitzgerald and de Lame are moving their team to Manhattan. But they are taking something with them their 72 Best s Review May 2016 reprint bullpen floor plan. Even when we move to our bigger space in Manhattan, we want an open plan office, de Lame said. The two of us aren t going to have our own offices. We re going to sit in the middle, with everyone else. Fitzgerald and de Lame designed their work space to reflect the corporate culture they ve built at PolicyGenius. The open floor plan eliminates hierarchy and fosters collaboration, they said. Software engineers sit next to marketers who sit beside product designers. And everyone from the two founders to the most junior employee sits with the agents at least once a month to listen in on customer calls. It allows the entire team to see the challenges their colleagues are facing and help find solutions for those problems. We all sit together and coincidentally overhear each team s conversations, Fitzgerald said. That s what gives us spontaneous moments of cross-team collaboration and creativity. That culture of collaboration is what the founders envisioned when they set out to launch PolicyGenius, which aims to reach digitally savvy consumers who would rather buy insurance online than from a local agent. The company offers side-by-side comparisons of products and a trademarked Insurance Checkup, which guides users through a five-minute Q&A to develop a personalized, in-depth review of all their insurance needs based on their financial and family situations. Their concept has earned the faith of investors. Earlier this year PolicyGenius raised $15 million in a new round of funding led by AOL founder Steve Case and his Revolution venture capital fund. Previous investors include MassMutual Ventures and Axa Strategic Ventures. From Day One, Fitzgerald and de Lame have had a clear idea of the culture they wanted to establish. The two met while working as consultants for McKinsey & Company. And when they left, they wanted to take some of the McKinsey core values they admired collaboration, trust in team members, intense focus on problem-solving, and a client-first mentality. But after years of wearing suits and traveling five days a week, they also wanted to create a more relaxed environment. We asked ourselves the question: What type of office do we want to go to every day? Fitzgerald said. We wanted to bring the things that we really liked from our old job at McKinsey which were the values and the Maintaining the culture is something we think about a lot, because it s the most important piece of ensuring success as you scale. Jennifer Fitzgerald PolicyGenius problem-solving but I didn t want to wear a suit every day, and I wanted my dog at the office. I wanted something informal but still rigorous in terms of problem-solving and the impact you deliver for clients. So it really was: Where do I want to spend most of my days? Entrepreneurship is hard, building a company is hard, but the fun part is being able to set those rules. When they were a five-person team squeezed into a three-person office, their culture was easy to establish. They sat around a whiteboard and wrote down their vision, their values and how they wanted to work together. But the company has grown significantly since then, with its user base and life insurance sales increasing, the founders said, by 20% month over month. And as it continues to grow, they added, it will take effort and intent to nurture those initial cultural aspirations. Culture is always evolving, Fitzgerald said. The culture you have at five people is tough to maintain at 500 people. But what we re trying to do is make sure the pillars of the culture scale with the company. Anyone can write up some values and hang them on the wall, de Lame added. But how are the values built into every decision you make in the business, any kind of process you make in the business or any product you build? You need to keep bringing it back to that and reemphasizing the reasons you re there, because that s how you make sure your culture and your core values live throughout the company. By building a solid foundation now, while they re still involved in every hiring decision, Fitzgerald and de Lame hope they are surrounding themselves with a leadership team that shares their vision of corporate culture. Maintaining the culture is something we think about a lot, because it s the most important piece of ensuring success as you scale, Fitzgerald said. So we are bringing in someone very experienced in organizational matters whose job is to focus on people and organizational culture. And we need to make sure the leaders we surround ourselves with also exemplify those core values, because they re the ones who will be hiring the next generation of people and managing the day-to-day teams. So for us, getting the leadership team right is critically important. I won t be able to interview Employee #55. I have to trust the leaders who are building their teams and running the teams on a daily basis. BR Culture: Startups Best s Review May 2016 reprint 73 Culture: Startups Daily Reminders Photograph by Kim Bjorheim SERVING HIGH NET WORTH CLIENTS: PURE founder Ross Buchmueller at the company s White Plains, N.Y., office. PURE keeps its purpose in plain sight. by Kate Smith A broken dish hangs on the wall of PURE s headquarters. The 12th Century Chinese plate once was a prized piece in a private collection. But it lost its value after a gust of wind knocked it off its display stand and sent it crashing to the floor. PURE insured it. In the lobby of PURE s White Plains, N.Y., office stands a large glass sculpture crafted by Czech artist Ivan Mares. The six-figure piece, which also was part of a private collection, had been acquired and installed under the supervision of a curator. Shortly after the installation, the curator noticed a horizontal crack developing in the piece. The flaw left it with no salvage value. 74 Best s Review May 2016 reprint PURE insured that, too. PURE s office is decorated with remnants of oncevaluable works the company has insured over the past 10 years. The design choice is strategic. We put these things here as a reminder of why we re in business, founder and CEO Ross Buchmueller said. Understanding the company s purpose is central to its corporate culture, Buchmueller said. And that culture has earned recognition for PURE, a policyholder-owned personal lines carrier that serves high net worth clients. Last fall Entrepreneur magazine awarded PURE a spot on its list of the top 25 best corporate cultures. The list recognizes businesses that have successfully instilled a high-performance culture in their workplace. When Buchmueller left AIG Private Client Group to start PURE in 2006, he knew the type of company he wanted to create. And he took all the right steps at least on paper to outline it. He wrote mission statements, value statements and vision statements. And he has thrown them all away. You don t build corporate culture with statements, he found; you build it by giving employees a sense of purpose. We ask everybody to know what we do and how we do it. But what we really want is for them to know why. Why are we here? Buchmueller said. Having a sense of purpose helps employees engage, but it also guides the decisions we make. The company also has six principles it uses as guideposts for its behavior and decision-making. Practice member centricity. Use empathy, creativity and urgency to be exceptional. Do the right thing. Be a team player. Be obsessed with getting better. Have fun. By holding tight to its sense of purpose, as well as its six core principles, PURE has managed to preserve its culture while expanding at a breakneck pace. It has grown by 40% in each of the past eight years and in August was named to Inc. magazine s list of the fastestgrowing private companies. Buchmueller said he expects to add 150 to 200 employees this year to the current base of 400. PURE s core principles play a role in its hiring process. While there is no single type of person who fits into the culture, there is one quality all employees must have empathy. We might have said 10 years ago that empathy was essential in claims. Today we say that empathy is essential everywhere, Buchmueller said. We ve started to realize the power of empathy. If there is one skill that is likely to help an individual in their professional development, it would be emotional intelligence. Potential employees are required to take an emotional intelligence test. No matter how smart or talented they are, candidates with sharp elbows won t make the cut. Having a sense of purpose helps employees engage, but it also guides the decisions we make. If somebody shows signs that they do not have a high emotional intelligence, we will pass on them, Buchmueller said. This is where our principles guide us. It would be easy for us to say, We could benefit from having this person on our team. But we can t hire them, because eventually we would have a group of people who don t care for one another. Or care for PURE s 53,000 members. Service standards are exceptionally high in the high net worth segment, but empathy can also be especially difficult in this niche. Empathy the ability to relate to somebody can be hard when the person is successful, Buchmueller said. It s easy to empathize with somebody who is like you. You have to work much harder on empathy when you re dealing with people who may not be like you. Brett Woodward, managing director of NFP s P&C Private Client Group, said clients appreciate PURE s approach. Their culture is so different in a really good way, Woodward said. Ross Buchmueller PURE They re into the whole EQ [emotional quotient] and how to bring it to clients in every aspect of their dealings. It is about a product and how much you pay, but it s also for them about the experience for their clients. It s a whole different approach. And you can talk it all you want, but they actually demonstrate it. And our clients tell us they demonstrate it. One area of differentiation for PURE is that it has licensed adjusters, rather than call center representatives, handle all first notice of loss calls. While some veteran adjusters may not want to put on a headset and answer the phone, the adjusters at PURE willingly do. That s where understanding of purpose comes in. PURE exists, Buchmueller said, to make its membership smarter, safer and more resilient so they can pursue their passions with greater confidence. The first notice of loss is often where the rubber meets the road. Ou
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