January 31, 2024 • 49 mins
In this episode, you will learn:
- Why you should do 50 customer interviews before building your product.
- Why Joe recommends only building software code that is differentiating.
- How less code & less employees translates into faster speed to market.
- Which company became a Unicorn with only 13 employees.
- Why Columbus is an excellent place to build a tech company.
- Where to buy Joe’s book “Serverless as a Game Changer”
Joe Emison is the Co-founder and CTO of Branch, a personal lines insurance company that is a unicorn startup company headquartered in Columbus, Ohio and one of GlassDoor’s Best Places to work in 2022 and 2023. He is also the author of one of the Top 50 books on Amazon for cloud computing entitled “Serverless as a Game Changer: How to Get the Most Out of the Cloud”.
Before Branch, Joe built five other companies as a technical co-founder, across many industries, including consumer electronics, local government, big data analysis, and commercial real estate. Joe graduated with degrees in English and Mathematics from Williams College and has a law degree from Yale Law School.
Joe has a unique perspective on building software based startups. A big part of his philosophy is that he buys most of his software components and he only builds software code for what’s differentiating.
He believes that the most effective technology leaders are the ones that are able to really focus and minimize what code they're writing into just the necessary parts. I encourage you to purchase his book and listen to this episode to learn more!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 3 (00:08):
Welcome to the Smart Money Ventures podcast, where we
highlight active leaders in theglobal ecosystem of venture
capital, entrepreneurship andinnovation.
We give you access to insightsfrom successful investors and
entrepreneurs that most peoplejust can't get access to, and
the only reason they take ourcalls is because we've been in
the trenches with them fordecades.
My name is JD Davidson and I'myour host for this episode of
(00:28):
the Smart Money Ventures podcast, and today we have a very
special guest who I have greatrespect for.
Joe Emerson is the co-founderand CTO of Branch, a personal
lines insurance company that's aunicorn company, headquartered
in Columbus, ohio, and is one ofthe glass doors best places to
work in 2022 and 23.
He's also the author of one ofthe top 50 books on Amazon for
(00:50):
cloud computing, entitledServerless as a Game Changer how
to Get the Most Out of theCloud.
For Branch, joe built five othercompanies as a technical
co-founder across manyindustries, including Consumer
Electronics, local Government,big Data Analysis and Commercial
Real Estate.
Joe graduated with degrees inEnglish and Mathematics from
Williams College and has a lawdegree from Yale Law School.
(01:12):
Welcome, joe, and thanks forjoining us today.
Thanks for having me To kickoff the program.
Let's start with the story ofhow branch insurance got started
.
What was kind of the aha momentthat triggered the decision to
say let's start this company.
Speaker 2 (01:25):
The aha moment came from my co-founder, and one of
the things that I havediscovered over the past 25
years is that my specialty isreally in how to build things
very efficiently, effectivelyand sustainably.
I tend to work best as a numbertwo, a sort of a CTO, almost
(01:45):
COO, with a CEO.
In this case, my co-foundercame to me and said I've worked
in insurance all my life.
I see a huge hole in the market, which is that the largest
segment of the market inpersonal lines insurance.
The people who buy home andauto insurance, usually as a
(02:06):
bundle, are very poorly served.
It's really hard to buy, it'sreally hard to shop, and then
they retain for 30 years.
They have lots of specificneeds and nobody has really
built, nobody wants thesecustomers, no one is really
optimizing for their overallexperience, and so I thought it
(02:27):
was a great idea.
He's a wonderful guy and I haddone a number of joint ventures
with him, and so I said I canhelp build that very effectively
and very efficiently.
Speaker 3 (02:40):
That's awesome, because what I like about that
is a lot of times you seestartups get started from we
have this cool technology, let'sgo see if there's an
application for it.
I like the fact that there wasan existing problem that was
well known by an industryinsider and said let's go build
the technology to solve it.
Speaker 2 (02:56):
I have built multiple companies that were look at
this cool technology, let's seewho we can sell it to, and those
are very frustrating,especially in the product market
fit aspects of them.
Speaker 3 (03:10):
It's a product in search of the problem in the
market to solve, whereas theother way is a pull through
demand.
Speaker 2 (03:18):
I will just say, ironically, it's a lot easier to
get the.
Here's a cool, uniquetechnology, here's all the
applications.
It's a lot easier to get thatfunded than it is.
We really understand thisproblem and this customer base
and we're going to buildsomething, but we're just going
to be really good and reallyspecific at building it.
That's much harder to raisemoney for.
Speaker 3 (03:41):
Absolutely All right.
So you got you and yourco-founder.
You decided to move forward.
Talk about the initial skeletonbuilding.
How did you pick the first fivepeople?
What was your launch?
What did that look like?
How much did you raise?
Did you put your own money in?
Speaker 2 (03:55):
Yeah, so we raised a seed round and actually the size
of the seed round got largerbecause we brought in rocket
mortgage.
Every time you put together around or any financing, it has
its own life and its story, andso we had a vision of what we
(04:15):
were going to do, which is buildout for one state and just get
live and prove that we could dothat.
But it became clear that weneeded to show more, and this
was in.
We were raising this round in2018.
So it became clear that weneeded to raise more money and
show more in a given time period, and so we closed the round in
(04:39):
May of 2018, and then only myco-founder and I were the first
employees, and we brought onseveral contractors.
So our first five team memberswere one insurance expert who
was brought on to help build allof these insurance programs,
because there's a tremendousamount you have to do from a
regulatory standpoint.
(04:59):
And then the other people onthe team were software
developers, because we hadidentified what we needed to
build, and a big part of myphilosophy is that I buy
absolutely everything and onlybuild what's differentiating.
But this core how do youdifferentiate for the bundled
home and auto customer requiredthat we build a number of things
that no one had tried to build.
(05:19):
Nobody, and nobody still has away to kind of buy a bundle
other than branch Everyone else.
You have to buy themindividually, and so it's very
painful.
Speaker 3 (05:30):
Yeah, what I like about what I'm seeing in your
business and some others is thatyou're identifying really
inefficient industries thatdon't have a good end user
experience and taking some ofthe sort of tried and true
software methodologies of let'sfocus on the customer experience
and work backwards.
Talk a little bit about thatphilosophy.
Speaker 2 (05:50):
Yeah, I learned a tremendous amount about this
when I spent 12 weeks in RedwoodCity in Silicon Valley and I
have always been the personwho's wanted to build, build,
build as quickly as possible.
And in that incubator I did doa little building, but largely
what we were forced to do was dointerviews and interviews and
(06:10):
interviews.
And what was amazing was Iwould, we would reach a point, I
would say, okay, I really wantto build this, and I would start
building and we would keepdoing interviews and I would
realize that what I was buildingwasn't going to be helpful.
And so I eventually was trainedover a significant you know,
over those 12 weeks and thesubsequent months, that just
keep doing interviews and keephoning in and you and if you do
(06:35):
this enough, you you get to apoint where the level of
certainty is incredibly high.
You, the thing in your head isbeing reinforced by most of the
interviews you're doing.
And actually in that product webuilt it and the first version
we released, which was withinthree months of starting, had
product market fit immediately.
(06:56):
We just we knew exactly whatpeople wanted and we put it out
and people were able to use itin production immediately.
I'd never done that before, andso in this case I mean selling
insurance is a little simpler inthat you're buying a financial
product.
That's a commodity.
But we had a very clear visionon you should be able to put in
your name and address, get aprice and click buy.
(07:17):
That was always.
The vision was name and addressreview by, and we built that
and lots of people had comebefore us and had wanted to do
that but had not had the fullrange of expertise that we had
had.
So a huge amount of what wewere doing initially with our
initial employees wasunderstanding how do you do that
?
You have to change theinsurance product, you have to
(07:38):
file the right things with theregulators, you have to use data
in the correct way, et cetera.
Speaker 3 (07:45):
So you're really streamlining what's the quote
that describes branch insurance.
You're streamlining the wayinsurance is purchased and
processed.
Speaker 2 (07:52):
Yes, yeah, it's bundled home and auto insurance,
the way it was always meant tobe.
Speaker 3 (07:58):
The way it was always meant to be, and there's a
community aspect to that too.
You're getting back to thepurpose of what insurance was
when it was first started.
Talk a little bit about that.
Speaker 2 (08:06):
Yes, a lot of people have very negative views of
their insurance company for awhole bunch of reasons, and I
think a large part of that isthe insurance industry's fault,
with things like vanishingdeductible or there's a pitch in
a lot of insurance plays whichis you shouldn't have to pay
(08:29):
anything and you should just geta lot from your insurance.
The reality is, the beginning ofinsurance was a bunch of
farmers sitting, or there arelots of different ships
initially, but in the US, a lotof farmers sitting around a
table who are all neighbors, whoare all actually didn't put any
money in initially, but werejust all committed to.
If somebody's barn burned down,everybody would help them
(08:52):
through money and through labor,bring the barn back up, and so
there was a great, wonderfulcommunity self enforcing aspect
where everybody understood thevalue of insurance and you
didn't have we hear this fromour customers right, you raise
rates because there's highinflation, there's increasing
impact of climate change, andyou raise rates and what you get
(09:15):
are they raise my rates and Ididn't file a claim.
And the goal with our brand isto help people understand that
money didn't go to executives,that money went to replace
someone else's house, to helpsomebody put someone else back
on their feet when they hadsomething bad happen to them.
It's not, and so the idea of Ididn't file a claim therefore X
(09:39):
just really misunderstandseverything.
Also, the deductibles we haveare the same level of
deductibles we had 40 years ago,like a $500 auto deductible
really doesn't make a lot ofsense.
It should be much higher.
But we've been trained and usedto this and so the insurance
companies are a big part of theproblem, but we really.
(10:01):
It would be a lot better ifeverybody understood that
insurance is a communal good.
Speaker 3 (10:08):
Right, absolutely.
Let's talk a little excuse me,sorry about that, I'll cut that
out.
So what we're talking about istransforming an industry and
making it more user friendly,and a lot of what you talk about
in your business and in yourbook is how to build a tech
stack that serves the customerswell, and it's disrupting a lot
(10:29):
of industries.
Mark Andreessen has a quotethat says software is eating the
world, and that was some timeago.
And it's true, because nowwe're seeing this wave of
innovation where the way thatcustomers are acquired and
served and preserved over timeis completely different from the
old line.
Talk a little bit about that.
Speaker 2 (10:47):
Yeah, I think a lot of this.
I fully agree that software iseating the world.
Every company is becoming asoftware company.
The one thing that Andreessendidn't say in that article and
that I think a lot of peopledon't properly draw is the next
step is therefore the mostsuccessful companies will be the
ones that can effectivelydevelop software, and so that's
(11:10):
always the question is how doyou most effectively develop
software?
And so my philosophy has alwaysbeen how do you build on the
shoulders of the giants thathave come before you?
And we have a huge problem intechnology that we have no
continuing education, and so thetypical flow in technology is
somebody that the mostknowledgeable about the current
(11:31):
state of technology people arethose who are in their 20s right
, are just coming out of college.
They they've just learned itand they're learning all the new
things.
That are very excited and verywilling to learn new things.
They then enter the workforce,execute in a certain way that
they've learned, and theyessentially continue to do that
and raise through the ranks andeventually become leadership and
don't actually learn new thingson in any regular way, but
(11:56):
every 18 months there are reallysignificant advancements in
different parts of the stack anddifferent parts of how we do
things in how we developsoftware, and so the people in
leadership in corporationsleading software development
tend to be decades behind whatthe current state of the art of
(12:18):
development is.
But the people who really knowthe state of the art don't have
the experience to understandwhich of those things are
probably ill advised anddangerous and need to wait for
more maturing or probably justbad ideas to begin with.
There's a lot of new technologythat that I look at that I say
I don't want to touch thatbecause I it feels bad to me for
(12:38):
you know whatever articulablereason.
So I think absolutely, the morewe have people focusing on how
do I develop softwareeffectively, how do I learn new
things and that is largely thisfocus of the book is is how can
you think philosophically to getyou that edge without spending
every minute of every day justresearch, researching things?
Speaker 3 (13:01):
Absolutely so.
I'm enjoying the book and Ireally enjoyed your talk where
we connected at Bourbon andBooks, but what I'm hearing is
that not only is the book bothfor technical and non-technical
people, it's really almost likewhat I'm getting a flavor of is.
It's almost like how to buildsoftware products using Legos,
as opposed to building theplastic.
Speaker 2 (13:22):
That's perfect.
Speaker 3 (13:23):
That's a good analogy , yes, and I agree that there's
a blend of sort of the oldschool software you know, people
that have been around for awhile and have stubbed their toe
and learned some valuablelessons and the new skills, and
I like the fact that your bookreally encourages the fact that
we need each other but thatthere's always new ways to do it
(13:45):
and we all have to move in animble way.
Is that a fair way to?
Absolutely yeah.
Speaker 2 (13:49):
And to really ask yourself think about this
waterfall of do I need to writeany software?
Can I just use some existingsoftware as a service?
Or if I can't use an existingsoftware as a service, maybe I
could customize it with theirAPI.
But if I can't do that, maybe Icould use a couple services and
glue them together with arelatively small amount of
custom code.
Or maybe I could use librariesor you know whatever it is like.
(14:12):
How do I understand that?
Writing code and maintainingcode is the thing that slows me
down and makes everything worse,and so the less of my custom
code that I've got, the morenimble and the more able I will
be to deliver value.
Speaker 3 (14:27):
You know, it's almost like manufacturing a product,
it's almost like manufacturing acar.
Right, gm and Tesla andMercedes do not manufacture
water pumps.
Yes, for a reason that they'renot in the water pump business,
they're in the car business.
I love the fact that you'recomponentizing the building out
(14:49):
of software products and youdon't have to build it all.
Speaker 2 (14:50):
Yeah, absolutely, and I think you know for people
who've been in the industry fora long time, they're probably
remember trying.
You know, some of the initialefforts to do this
componentization with servicesin, say, 2005 or 2010,.
The network was very unreliableand services were unreliable,
and so this seemed like a badidea.
And there are still veryunreliable services.
(15:13):
So it requires a new level offiltering and skill.
You can't just wildly pick somethings that are advertised out
there, stick them together andhope that they work.
But you know, so, like anything, it requires putting some
effort in putting someintelligence in testing some
things out.
And so we have this problemwhere, if you know a certain way
(15:33):
to do something, you kind ofgive it like 10 seconds.
Oh, I see some problems withthat, I'm not going to, let me
stick to the thing I know, andso that's the hump that everyone
should try to get over, I think.
Speaker 3 (15:45):
Well, and you're advancing something that started
a long time ago.
I mean, obviously, github is acollection you know, code
library of components that youcan use.
But even before that, I was thefinance guy at Organic Online
in San Francisco in 2006.
And the team there we actuallyhosted the beginning of the
(16:05):
Apache server, brian Bailand,brian Bailandorf, with the CTO
of Organic, when I was thefinance guy and he was telling
me when I was interviewing, he'slike, well, you know, we got
this thing back here calledApache, and I'm like, well,
what's that mean?
It's like, well, a bunch ofsoftware programs got together
and patched this thing togetherand I'm like, well, it carries
90% of the whole internet'straffic and it's a code library.
Speaker 2 (16:25):
Yeah, apache is great .
Yeah, that's fantastic.
Speaker 3 (16:29):
It's amazing because it was, to your point, one of
those communal assets where theysaid hey look, you know, let's
build the best of breed, let'screate a infrastructure where we
can approve the code as itcomes up.
And I just, I think that youknow, your book extends that
idea that we don't have to buildand be responsible for QA every
piece, you know, just like acar company doesn't have to
(16:51):
manufacture the water pump.
Yeah, yeah, no-transcript.
I think that's a fascinatingway to look at it, because it
means that leadership intechnology now is less about
writing code and more aboutselecting the right components.
Speaker 2 (17:05):
I think I think the most effective leaders are the
ones that are able to reallyfocus and minimize what code
they're writing into just thenecessary parts.
And I think that where I seesluggishness and inability to
deliver effectively are when acompany has had to break that,
(17:26):
instead of being able to saywe're just gonna have this
expertise and we're gonnaessentially outsource and use
services for the rest, they,instead they have the platform
team, they have the back endteam, they have the front end
team, they have the API team.
And this exists in companiesthat are You're not selling
things to software developers,they're not, they're not
building their own technology.
This is in a very like directto consumer or business to
(17:48):
business products that justdon't require Any of that
internal expertise.
The customers don't care, it'snot, doesn't need to be done any
differently than you could doit on a managed service.
But yet, and as soon as you havethat divided focus in your
organization, you're spending somuch money on it and you're
unable to really to put thecorrect focus on these are the
(18:10):
things that make the move thebusiness forward, and I, when I
go into a company, I've donelots of consulting.
When I'm in a company and I Isee the engineering team do
releases or announce things tothe company.
It's always a red flag to mewhen there's like an all company
meeting and someone from atechnology team stands up and
says and we released blah, blah,blah and nobody in the company
(18:33):
has any idea what that thing isor how it's connected to
anything that anybody else inthe company does.
I mean it, it you know.
It is like we Whatever ourplatform team upgraded
Kubernetes and we change the wayour container allocation works
so that it's 98 more percentmore efficient and like, and
this is amazing and this is howSpotify does it, or something
you know like.
And then there's like that is ahuge disconnect in a company.
(18:57):
That, I think, is a horriblered flag in the vast majority of
cases.
Speaker 3 (19:03):
Technology for technology sake sometimes.
Yeah, you know what'sinteresting about that is a lot
of our audience areentrepreneurs, investors and
aspiring entrepreneurs andinvestors, and what I'm hearing
and what I heard at your talkabout the book thing the other
day, was that you can build acompany with significantly
smaller number of employees,particularly a smaller number of
(19:23):
software engineers, and if youcan lower the cost of launching
new companies, how does thatsort of change the playing field
for start up?
I think it.
Speaker 2 (19:31):
I think it changes it enormously.
I think we are.
There's a.
There's a great guy who is a.
I think it was an analyst forAndreessen Horowitz in 2016, sam
Gersten staying, and he'sworked for Stripe and I can't
remember where he is now, but hewrote.
He wrote a piece which wascalled the death of the 10 X
engineer, and, and he asked thequestion when will we have a
(19:54):
unicorn that has only oneemployee, the one employee
unicorn?
Now, to be fair, instagram gotvery close to that.
I think they were at about 13or so employees when they were
required this is also talkedabout in my book for a billion
dollars, but I think that it hasbecome much, much, much more
likely and possible, especiallyfor solopreneurs.
(20:15):
But again, the problem, goingback to something we talked
about in the beginning is thatyou really need to understand
the problem and build to theproblem, and so I think you're.
In the dev tool space, I thinkthere's probably likely a
significant amount of this andin the, in the JavaScript
(20:35):
ecosystem, one single developerhas built a competitor to node
JS called bun.
That has just I mean, he justdid it himself.
I mean it's the best, mostrecent example of really a
Herculean task but made so muchmore efficient by being one
person.
I often have in my head thisview that one developer, in
(20:57):
general is, is more efficientthan two or three developers.
You have to get to kind of fourfor, like, run time.
You know over time for that tobe to deliver more, and then,
and then beyond that youprobably have to get to, you
know, 12, and then 25, and then50 and then 100.
And so you have these breakpoints where now obviously you
(21:20):
can divide the work up intoseveral different projects.
You don't have thecommunication overhead, but the
coordination and communicationis a really significant piece of
overhead here.
So my, my overall belief is thatif you're in a space where
somebody can develop and reallyunderstands the problem space,
we're going to see a lot more ofthese people who just build,
(21:40):
build a product themselves andjust make that income.
And I think there are dozens ofsoftware developers who have
built up to half a million or amillion dollars a year of ARR on
, probably take some two orthree hours a week to maintain,
and I think we'll see more ofthose.
I think that, though, theunicorn is still going to be
(22:03):
pretty rare in that case, notfor the lack of development, but
for the product market fitissue.
So I wouldn't be surprised,though, to see a company that
was a unicorn, that had onedeveloper and, you know, 10
salespeople and, like you know,three marketing people you know,
and a product person and adesigner.
Right.
Speaker 3 (22:25):
Absolutely Well, and there's.
There's examples of that, whereyou know people put together
products by componentizingthings together into a product,
and they're essentially just avalue edit reseller right,
that's even manufacturer, that'sabsolutely true.
Speaker 2 (22:38):
There are also non programmers who have put
together through kind of no codesolutions, products.
I will say that as a customerof some companies that were
built that way, I will say thetechnical debt that those
companies run into seems to bemassive.
And so the number of ofexamples I've run into, many
(23:01):
examples where really a poortechnical co-founder built an
initial thing, even withcomponents, even with no code,
that that ended up costing thatcompany a lot more than than it
would have otherwise.
But you know, maybe that'sstill the right way to go
because it was low cost to beginwith.
Speaker 3 (23:19):
Right, exactly so.
Technical debt just basicallymeans that you get so far into
it and you have to start overand rebuild.
Speaker 2 (23:26):
Yeah, you, you have.
You have baked into whateveryour existing code base is
certain pain points so that youcan't actually develop the new
things you want withoutimmensely higher cost than if it
were done correctly.
Speaker 3 (23:43):
So it's interesting, what I'm hearing is less code,
less employees, and thatprobably means faster speed to
market.
Speaker 2 (23:50):
Yes, I mean, I do think every company is going to
have this inflection point whereyou need to be resilient to the
loss of individual people andso at those points in time
you're going to need, you know,I think you can go one developer
for a while, or four developers, or twelve developers, but at
some point in time you're goingto need to like double that
(24:11):
amount, or maybe even triplethat amount for redundancies
sake, for, you know, just tomake sure the company runs on
its own and is it doesn't havesingle points of failure.
But I think, for the initialspeed piece and the part of the
company where you're defaultdead and you are trying to make
sure that you know you're you'regetting to some sustainable
(24:33):
point where the income willsupport the expenses, I think
you're willing to take thoserisks of key people and then you
can save a lot of money, Ithink, by by having this
serverless mindset and how youbuild.
Speaker 3 (24:45):
I completely agree, and so that leads me to sort of.
The next question is why Ohio?
You've built a lot of companiesand you spend a lot of time in
the Carolinas.
You obviously could put thiscompany anywhere because of your
experience and background andsuccess.
I know that you evaluated.
You know 100 or even morecities.
(25:07):
Tell us about that process andwhat hones you in on central
Ohio.
Speaker 2 (25:11):
You know, the overall process was we went.
So we pulled a bunch of datafrom a lot of different sources
and we did a bunch of analysisfor what things we thought were
the most important for to startour company.
So I think if we had had other,if there had been, there are
(25:34):
aspects of an insurance companywhere it's being able to have a
low expense ratio is veryimportant.
So insurance was when it wasstandalone, was based in San
Francisco, was competing againstprogressive in Mayfield Heights
Ohio.
That's immediately you're justat an enormous cost disadvantage
because it's just much cheaperin Mayfield Heights Ohio.
So having some sense of cost ofliving.
(25:58):
Now I will also say that Ithink my analysis generally
applies outside of this type ofbusiness.
But you know, certainly peoplechoose lots of places for
various reasons and I'll justmake this observation and I gave
a talk that's a longer form ofthis called why we chose
Columbus.
If you just Google why we choseColumbus, I think you'll find
(26:18):
us from a conference called MonkTuberfest.
But for all of the venturecapital pundit viewpoint of like
, we're contrarians and we weonly invest in people have crazy
ideas, like.
One of the things that'sabsolutely wild is you say like,
and I'm going to start abusiness in Columbus, and
they're like, don't ever work,so like the contrarian does not
(26:41):
extend to moving or eventhinking that people could be in
a different place and and move.
And so you know, there arethese wild comments that people
have where, like this was moretrue about two years ago, people
would say like, ok, I'm eithergoing to live in Palo Alto or
Austin or Miami, or like, whocares, I might as well kill
(27:03):
myself.
You know, like these are likereally crazy things to say,
given you know where the actualpopulation is dispersed.
But the short answer and andand if I were doing it again is
what I'd look at is I would sayour key criteria were we need to
be in a large enough metro andit needs to be growing.
So I'm a big believer ininvesting things that are
(27:26):
growing, be with things that aregrowing, and obviously not
everything can grow at a, youknow, at a high rate for all the
time.
But if you're at a place that'sjust shrinking, I don't think
that's a good place to be,because it means that the pie is
shrinking.
If you're a place that'sgrowing, there's just surplus
for everyone, right, and so youwant that so large enough metro,
(27:47):
growing metro.
And so you know a lot of metrosaren't growing in the US, the
larger ones.
A low house price to medianincome ratio.
So look at the affordability ofhousing, look at the school
system.
Are there good public schoolsalso, hopefully within the
affordable housing areas?
So there's some metros wherethere's some affordable housing,
(28:09):
but it's not where the, wherethe good schools are.
And then having not havingterrible traffic and a lot of
times this is a feature of howspread out the metro is and so
you have these like very largemetros where it's just the
traffic's just horrendous.
Those were our criteria and youknow, when we look at them and
(28:30):
look at our cutoffs, columbus isreally the only metro that all
of the meat, all of thosecriteria.
But you know you could tweakthe criteria and decide I need a
little less growth or I'm okaywith, like you know, worse
traffic.
Speaker 3 (28:45):
Well, you seem to be on the front of it, a front end
of a trend, you know, becauseJobs Ohio and other economic
development agencies have done atremendous job.
Obviously, everybody knowsabout Intel coming here to build
one of the largest, you know,manufacturing chip manufacturing
plants in the world, but at thesame time that's created a
ripple effect.
So talk about what you thinkthat ripple effect will likely
(29:05):
look like in Central Ohio in thenext five to 10 years.
It is hard.
Speaker 2 (29:10):
It's hard to know because so much of the
investment is on themanufacturing side and on the
talent that is required formanufacturing, and so there's
very good.
Columbus is definitively one ofthe insurance hubs for the US
(29:32):
and certainly also has excellenthealthcare startups, and so I
think that, in terms ofintellectual capital and
intellectual capital investmentand high paying jobs for
knowledge workers, I think thatmore you know, if I think about
competing with the tier onecities, it's actually those more
(29:57):
that I think about than theIntel's, although I think it's
going to be great for this metroarea.
We're going to have, you know,a continued population growth,
and Columbus has this enormousadvantage that it can.
I mean, around Columbus iscornfield, so you know
Columbus's ability to grow outis is massive compared with kind
(30:17):
of any other metro, which a lotof which are, you know, sitting
on large bodies of water thatstop them from growing in one
entire direction, right, so,like Columbus's ability to just
grow is is massive, and so Iwould expect that Columbus sees
the kind of is an early on, anearly version of, like a Phoenix
or a Dallas, in terms of howmuch it's going to grow and the
(30:42):
investment it's going to get,and so I'm excited about that.
I would.
I would love to see moreinvestment in, and more
specialization and even morefields, and so I mean it's
amazing CompuServe being startedhere, I think, in Upper
Ellington.
You know there's no reason whythe proximity to all these data
(31:03):
centers should be excellent fora variety of other uses.
But I'm actually waiting to seethat next.
You know, very knowledge workerfaced industry that that will
grab a hold in Columbus.
Speaker 3 (31:19):
Yep, and I think we will do that.
I think one of the reasons thatI decided to move back from
California was I met the folksat Upstart and they you know San
Francisco headquartered companybacked by Silicon Valley VCs
and I asked them why did you setup your second office outside
of California here?
And it was very clear he saidthat data science talent coming
(31:40):
out of Ohio State and the otherlocal universities and I'm like
that is important and that'ssignificant and I don't think
everybody knows.
Speaker 2 (31:48):
Yeah, I mean there's amazing talent coming out of
Ohio State.
It's really expensive talentwhen we we have effectively
never recruited.
I mean we're cheap, so we'veeffectively never recruited from
Ohio State.
We obviously have a lot of OhioState grads but you're
competing with I mean you knowall of the Silicon Valley,
(32:08):
seattle, you know Washington, etcetera.
Firms are spending millions ofdollars to recruit out of that
talent pool.
So it is a big talent pool.
A lot of them would do want tostay and so I think it is a
great place to be able torecruit.
It's costly to recruit them.
Speaker 3 (32:24):
Absolutely Well what I found in the last few years.
You know kind of networkingaround town and getting to know
all the entrepreneurs.
There's a lot of entrepreneursthat have not yet started their
first company, but they verymuch want to.
What are some of the bestpractices and lessons learned
that you would share with themand advice you would give to
people that are consideringstarting?
Speaker 2 (32:42):
their own?
I think there are.
There are two books that Ithink are fantastic.
One of them is called LeanCustomer Development by Cindy
Alvarez and there's another bookthat sort of its first chapter
is essentially a mini version ofthat book, but I would read
that whole book.
And that that second book iscalled From Impossible to
Inevitable by Jason Lemkin andAaron Ross.
(33:04):
Aaron Ross wrote this bookcalled Predictable Revenue,
which is like sort of the Bibleof how to generate B2B software
as a service revenue when he wasfrom his time at Salesforce.
Those two books, I think,reading those, really
understanding them.
And then the other piece ofadvice is unless you have done
(33:29):
50 customer interviews like youshouldn't be building anything.
You really gotta understandthat problem.
And there is this process whichis in lean customer development
and, by the way, it's calledcustomer development, not
product development, becausethat's the focus.
You really wanna understand thepeople and the problems they
have and the context in whichthey have the problems, and then
(33:49):
you can start proposing thesesolutions.
But the mental model I have islike you go wide on the number
of people that you're gonna talkto and then you narrow down.
Okay, now I've got like my setof people.
Then you're gonna go wide onthe problem set.
You're gonna talk about allsorts of problems.
Then you're gonna narrow down.
Now you're gonna have peopleand problems.
Now you're gonna go wide onpotential solutions like low res
(34:13):
wire frames and just sort ofthrowing things in front of
people and having them talkabout them.
Then you go narrow in terms ofthe number of potential
solutions that you have and youdo this until you get like
here's my one or two personasthat I'm launching with and
here's this one problem I'msolving for and I've verified it
matters.
And when I show up to them withthe, with this example thing
(34:35):
that I want them to use, maybeeven for free or to try it out,
they're actually gonna careenough to do it because it
matters enough in their life.
And so the most common mistake Ifind from beginning
entrepreneurs is whateverthey're focused on in building.
When they show up to getsomeone to use it, no one's
actually gonna care because onthe list of problems it's so far
(34:57):
down that they just don't care.
So the problem is they'll talkto them oh, is this a problem?
Yes, would this solve theproblem?
Yes, but they're never actuallydoing this thing.
That's asking will you actuallycare enough in a given day to
interrupt your schedule to lookat this problem?
The only other major piece ofadvice is I spend 90% of the
(35:19):
time when you know entrepreneursyoung entrepreneurs come to me.
I spend 90% of my time talkingabout go-to-market with them.
And so there is this still, thisbelief that if you build the
better mousetrap, the world willbe the path to your door.
And it's simply not true, andyou know you will have to fight
and claw for every sale that youget.
(35:41):
And if you don't have, if yourbelief is something like well,
it'll be like Uber.
Uber didn't spend any money onadvertising and you know,
somebody just told me about Uberand so people will just tell
people about it.
Like that's not happening, likeyou need to have, you need to
understand.
And again, another reason for itfrom impossible to inevitable.
(36:01):
It does talk a lot about youneed your 10 first customers
that you don't know they're notrelated to you and are not
required to use it and thatthey're the hardest ones to get.
That's what you need.
And when you get 10 regularcustomers, you know and you've
done that work, then you'll geta better sense of okay.
(36:23):
What does the next piece looklike?
But I've helped people startcompanies and giving people
advice where it's taken themeight years to get to 10
customers.
So you know, and they're doingvery well now.
I mean, the ticket price isvery high on the product but it
can take a long time.
Speaker 3 (36:40):
I'm glad that you said that.
You said if you haven't talkedto at least 50 customers, you
really shouldn't be buildingproduct yet.
And it's true because, you know, I've been in the startup world
and studying it for decades andsomewhere along the line of 60%
of the reason companies fail isbecause there aren't enough
customers to buy the productthat they've made and it's like,
(37:01):
well, I mean, you kind of wannasay duh.
But to be fair, I think that weall, all entrepreneurs are
trying to figure out somethingto make it better, faster,
cheaper, and so we do have thetendency to sort of go down the
rabbit trail, fall in love withthe product.
But I think the most importantthing that we can do, as those
of us that have been around fora while, is to help them frame
(37:22):
the questions and help them findthe people to interview and
point them in that direction,Because I you know, even though
they're not yet doing that, it'san easy fix to help them adjust
their sites away from theproduct and towards the customer
.
Speaker 2 (37:36):
Absolutely yep, and you should also know that a lot
of and I think this is talkedabout in the customer
development but a very highpercentage of interviews you set
up, people will know show orthey won't be the right person.
And you have to be honest withyourself.
If you talk to someone who'sjust not the right person, you
can't count that it's not aninterview, it's not.
(37:57):
It's not like 50 interviews,it's like 50 customers.
It might be 150 attemptedinterviews.
It's a lot of work, but youwill save yourself so much in
the long run and really buildingup that skill to like that will
be a useful skill in your go-tomarket.
You will now have all of thesepeople who are real potential
customers as well.
(38:18):
You have to treat themappropriately and not, you know,
not abuse the relationshipwhere you're initially just
asking them questions about it.
Speaker 3 (38:25):
But yeah, Exactly, and that's what I do when I work
with entrepreneurs.
I try to help them identify.
You know, okay, here's whereyou would source a list of those
people and get in touch withthem.
And then, secondly, I also youknow you ask them did they do
customer interviews?
And they're like, oh yeah, wedid, and I also try to help them
frame.
You need to ask them, all thesame six questions and, as an
(38:45):
investor doing due diligence,what I would prefer is if they
would bring a grid that sayshere we talked to these 10
customers, we asked them thesesix questions and 80% of them
said this so show me what youlearned, not just did we talk?
Speaker 2 (38:59):
I think that's fantastic.
I don't know, do you userespondentio at all?
Speaker 3 (39:03):
You know, I've studied that a little bit and
I'm gonna start using it.
Speaker 2 (39:07):
It's great I mean it is you will end up having to pay
about a hundred bucks a person.
But your ability that thatsolves this 150 conversations
for 50 people problem for a lotof customer segments is not
everything.
I mean we once did a commercialreal estate broker product and
(39:28):
that one, like you, justcouldn't get enough tenant rep
brokers doing enough volume.
So we just went to New York andlike went to a bunch of you
know meetups and talk to andfound people that way, cause
like a third of the commercialreal estate value is in New York
, that's in the US, is in NewYork.
But yeah, I totally agree,that's the challenge.
(39:51):
Lately I will say I have gonemore to using there are a lot of
like independent contractors inthe Philippines who you can
give like a profile set andthey'll go find people and then
writing really good cold emailsI find is the.
I mean, if you write a goodcold email like people will
answer them, I will answer goodcold emails.
But I get a lot of emails andmost of them I just delete.
(40:12):
But you know, it's verypossible and often better, I
think, on a very, on a verysmall budget to find people.
But when I've worked withcompanies that had budgets and
when I was working for thisprivate equity firm and trying
to validate things out, I woulduse respondentio all the time
and I would say you know, 99% ofthe people that you get on
(40:35):
there are exactly who you want.
Super helpful.
Speaker 3 (40:39):
And it's really good Cause in the same way that
you're streamlining thedevelopment of products and
companies, you can alsostreamline the process of doing
your customer interviews andhelping entrepreneurs do that.
I think it's something that we,as an ecosystem, can help them
do.
Speaker 2 (40:52):
Absolutely.
Speaker 3 (40:54):
Let's talk a little bit about the ecosystem in the
Heartland.
The ecosystems on the coast areobviously fairly mature, very
well connected, working together, all those types of things.
Talk about what has alreadybeen accomplished in the
Heartland region and what workremains yet to be done.
Speaker 2 (41:13):
I also think of a lot of our world as being national
and international right now, andbranch is a remote company, and
so a lot of the employees areoutside of the Heartland region
as well.
I think that the key things thatreally matter are is there high
speed, you know, affordableinternet that's here, and is
(41:34):
there a community that you canget together with in person?
And so Ben Blanchera has been awonderful human being for
spearheading this community,certainly in Columbus, and so I
think that is one of.
I think that is that's a greatpart of the ecosystem.
(41:56):
There are a founder groups thatget together that are really
great.
They're certainly not the samesize that they are in New York,
la, san Francisco or even Austin, but I think all of the key
elements that we need are here,but I think I do tend to view
(42:19):
the communities that I'm in ofpeople building and people that
I reach out to for advice tendto be more of these kind of what
was formerly known asTwitter-based, you know,
internet-based communities thatend up being very specific to
(42:40):
specific problems that I'mworking on.
Speaker 3 (42:44):
Yeah, I think you're right Building connected
communities and having a seriesof informal events where people
can get together, because that'show you discover co-founders,
that's how you discovercustomers, that's how you
discover investors, and I thinkit's important to build that
both offline, in person, as wellas online.
Speaker 2 (43:02):
Absolutely yeah, no, and I think it's.
I think I would love to be, Iwould love to go to more events
within the local community andthere is an aspect of founder of
a business and then havingthree children that in school,
that impinges on schedule.
But no, it's been wonderfulthat there are all these regular
(43:26):
events and I've reallyappreciated it and I think it's
certainly a lot better thanAsheville and North Carolina,
which I was in.
I do think maybe oneobservation to make there is
that there was a level ofproclialism in Asheville where
the quality of what's beingbuilt and the businesses just
(43:47):
aren't on the same level.
But the businesses being builtin Columbus are national
companies doing it with nationalquality, and so I think that's
the.
There is a real qualitativedifference.
I noticed this sort ofeverywhere in Columbus as well.
Like the schools are better,the construction companies are
better, Like everything is justyou reach a certain size, I
(44:10):
think, or, and you're growing,and then there's a, there's a
demand for a certain qualitythat's met and at a certain size
you just can't achieve it, andso there's just a lot.
There's a lot more that peoplethink is good, but it's actually
quite mediocre.
Speaker 3 (44:24):
Yeah, I think you're right.
I think there's a critical massat which sort of the snowball
gets big enough that it startsbeing self-perpetuating, and
catalysts for that.
Like Ben Blancara, like youknow, revolution with Steve
Craigs.
You know the rise of the restbus tour.
That's what brought me toColumbus.
You know I grew up here but Iwas 30 years in California.
(44:46):
I came back.
It was funny because I went toa pitch fest, competition at
Tech Coast Angels in California.
Two weeks later I came back andwent to the rise of the rest
and what was interesting was thecompanies in Ohio were more
de-risked and had better revenueprofiles than the ones in
California and I thought thatwas fast.
Speaker 2 (45:03):
I mean they'd have to right Right by definition.
Speaker 3 (45:06):
Right by definition.
Speaker 2 (45:08):
As many dreams out here, right.
Speaker 3 (45:11):
Well, and I think that that bodes itself well to
the idea that, you know, there'sso many communities in the
heartland that want to say, well, we want to be the next Silicon
Valley, and I will say, no,actually I don't think you do.
I think you actually have theability to be the best central
Ohio that you can, and you canborrow some of the best
practices that worked out thereand tweak them, but you also
have unique strengths that thecoastal areas don't.
(45:33):
So don't sell yourself short.
Be the best central Ohio thatyou can be, because there's
wonderful things.
Speaker 2 (45:38):
I mean I think you know it's certainly in our
selection criteria.
There just isn't I'm not awareof another metro that is as that
has as mild a climate and hasgreat schools, affordable
housing and it's just like easyto live here.
It's just, it's just a verypleasant.
So I can't imagine a betterplace to raise children than
(45:59):
central Ohio, like I just I justdon't think it exists and I've
lived lots of places in the US.
So you know the the hurdleseems to be that it's not
perceived as cool.
You know there's like abranding problem and and I you
know I think that just happensover time, you know right, right
(46:21):
.
Speaker 3 (46:22):
Well, I think, if we continue to build great
companies like branch and wecontinue to invest in this
ecosystem, over time, that thatwill happen, because people will
begin to see.
You know, I say you don't haveto sell something.
That's great if you just begreat.
Speaker 2 (46:36):
Yeah, I absolutely agree.
Yeah, there's a, there's a showShow.
Don't tell aspect of this thatthat I think we're doing, and so
it may take a while to getfully noticed.
Speaker 3 (46:47):
And that what that lends itself well to company
building also.
Yes, one of the other quotesfrom Mark Andreessen.
He says is be so amazing thatthey can't to grow you, which is
actually Steve Martin, becauseit was like Steve Martin was
just flat out silly but he didit so consistently and he did it
so well.
It was just so amazing.
(47:08):
Like you can't, you can'tignore him.
And when you do great thingslike streamlining insurance and
making it easy for the endcustomer to purchase and use
your products and, moreimportantly perhaps, to
understand them better, thaneventually it will hit that
critical mass.
Now you guys are doing a stateby state rollout.
Yes, kind of what I heard wasthat your initial seed
(47:29):
investment was to prove themodel in a single state and then
, once you hit that milestone,then you go raise the money to
do.
Speaker 2 (47:36):
That's right.
Yeah, yeah, and it is a stateby state.
Speaker 3 (47:42):
So how many are you in right now and what's the
rollout plan?
Speaker 2 (47:45):
So, we're in 36 plus DC right now, but we're not in
California, florida, new York,and so we're growing and
expanding as fast as our lossratio allows us to.
And so we've just been in thishistoric weather events and
(48:06):
historic inflation, and so atthe moment, we're verifying, yes
, we are at the right loss ratioin order to be able to grow and
expand to more states, and ittakes a little while and
insurance to see how that playsout.
You can have an event happenlike your car can be damaged.
You might not file a claim fortwo months.
Speaker 3 (48:28):
Right, yeah, absolutely, absolutely.
Well, as we're approaching theend of our time together today,
I always like to share a coupleof takeaways.
Obviously, tell us where we canget more information about your
book I see it's on Amazon andthen also any parting advice for
entrepreneurs.
Speaker 2 (48:48):
I think that, in addition to all the advice that
I've talked about so far, thereare too many people who judge
success by whether their name'sin a newspaper, some publication
, or how many employees are intheir company or how much money
they've raised, and that's notsuccess and I know that it's at
(49:13):
every point.
I think people really want that.
They want that publicacknowledgement.
But I'll tell you that the mostpeople who've raised lots of
money had large amounts of moneypaid for for their companies.
A lot of them, maybe even allof them, but certainly most of
them would tell you, if youbuilt a company just by yourself
(49:38):
that generated a milliondollars of annual recurring
revenue with not a lot of workand not a lot of internal cost,
that is like the Holy Grail.
That's actually what everyoneis looking for, sort of no
hassle, no HR department, no,just nothing to worry about.
(49:58):
It's just there.
You built it and that's thehappiest that I think anyone can
be.
And I think the more thatpeople understand that as the
core ideal.
And obviously in insurance youcan't do that insurance.
We're shooting for something somuch bigger and really want to.
I mean, we're trying to make achange in a big industry and
that's exciting, that's awonderful mission and it's a
(50:21):
wonderful thing to rally peoplearound.
But I think if you're a pureentrepreneur and you have in
your head, like what's theplatonic ideal today of the best
business I think it's like fiveor fewer employees you make a
business.
It doesn't take you that much.
You build it up over time, itdoesn't take that long and then
(50:42):
it throws off cash for you andit doesn't matter if you're
written about in a newspaperanywhere, it's okay.
People don't read newspapersanymore.
Speaker 3 (50:53):
I completely agree, I think find what you're really
good at and a passion that youwant to pursue and just do that
really well and everything elsewill fall in place?
Speaker 2 (51:01):
Yeah, absolutely.
Speaker 3 (51:03):
That's awesome.
Well, this has been great, Joe.
I really appreciate you makingthe time today.
Thanks for joining us.
Speaker 2 (51:07):
I'm happy to do it.
Thanks a lot.
Speaker 3 (51:10):
That's it for this episode of the Smart Money
Ventures podcast.
Thank you for joining us.
Our guest has been Joe Emerson,co-founder and CTO of Unicorn
Company Branch Insurance andauthor of the book Serverless as
a Game Changer how to Get theMost Out of the Cloud, which you
can purchase on Amazon.
Thank you for joining us and wehope to see you again on the
next episode of the Smart MoneyVentures podcast.
Welcome to the Smart Money Ventures podcast, where we
highlight active leaders in theglobal ecosystem of venture
capital, entrepreneurship andinnovation.
We give you access to insightsfrom successful investors and
entrepreneurs that most peoplejust can't get access to, and
the only reason they take ourcalls is because we've been in
the trenches with them fordecades.
My name is JD Davidson and I'myour host for this episode of
(00:28):
the Smart Money Ventures podcast, and today we have a very
special guest who I have greatrespect for.
Joe Emerson is the co-founderand CTO of Branch, a personal
lines insurance company that's aunicorn company, headquartered
in Columbus, ohio, and is one ofthe glass doors best places to
work in 2022 and 23.
He's also the author of one ofthe top 50 books on Amazon for
(00:50):
cloud computing, entitledServerless as a Game Changer how
to Get the Most Out of theCloud.
For Branch, joe built five othercompanies as a technical
co-founder across manyindustries, including Consumer
Electronics, local Government,big Data Analysis and Commercial
Real Estate.
Joe graduated with degrees inEnglish and Mathematics from
Williams College and has a lawdegree from Yale Law School.
(01:12):
Welcome, joe, and thanks forjoining us today.
Thanks for having me To kickoff the program.
Let's start with the story ofhow branch insurance got started
.
What was kind of the aha momentthat triggered the decision to
say let's start this company.
Speaker 2 (01:25):
The aha moment came from my co-founder, and one of
the things that I havediscovered over the past 25
years is that my specialty isreally in how to build things
very efficiently, effectivelyand sustainably.
I tend to work best as a numbertwo, a sort of a CTO, almost
(01:45):
COO, with a CEO.
In this case, my co-foundercame to me and said I've worked
in insurance all my life.
I see a huge hole in the market, which is that the largest
segment of the market inpersonal lines insurance.
The people who buy home andauto insurance, usually as a
(02:06):
bundle, are very poorly served.
It's really hard to buy, it'sreally hard to shop, and then
they retain for 30 years.
They have lots of specificneeds and nobody has really
built, nobody wants thesecustomers, no one is really
optimizing for their overallexperience, and so I thought it
(02:27):
was a great idea.
He's a wonderful guy and I haddone a number of joint ventures
with him, and so I said I canhelp build that very effectively
and very efficiently.
Speaker 3 (02:40):
That's awesome, because what I like about that
is a lot of times you seestartups get started from we
have this cool technology, let'sgo see if there's an
application for it.
I like the fact that there wasan existing problem that was
well known by an industryinsider and said let's go build
the technology to solve it.
Speaker 2 (02:56):
I have built multiple companies that were look at
this cool technology, let's seewho we can sell it to, and those
are very frustrating,especially in the product market
fit aspects of them.
Speaker 3 (03:10):
It's a product in search of the problem in the
market to solve, whereas theother way is a pull through
demand.
Speaker 2 (03:18):
I will just say, ironically, it's a lot easier to
get the.
Here's a cool, uniquetechnology, here's all the
applications.
It's a lot easier to get thatfunded than it is.
We really understand thisproblem and this customer base
and we're going to buildsomething, but we're just going
to be really good and reallyspecific at building it.
That's much harder to raisemoney for.
Speaker 3 (03:41):
Absolutely All right.
So you got you and yourco-founder.
You decided to move forward.
Talk about the initial skeletonbuilding.
How did you pick the first fivepeople?
What was your launch?
What did that look like?
How much did you raise?
Did you put your own money in?
Speaker 2 (03:55):
Yeah, so we raised a seed round and actually the size
of the seed round got largerbecause we brought in rocket
mortgage.
Every time you put together around or any financing, it has
its own life and its story, andso we had a vision of what we
(04:15):
were going to do, which is buildout for one state and just get
live and prove that we could dothat.
But it became clear that weneeded to show more, and this
was in.
We were raising this round in2018.
So it became clear that weneeded to raise more money and
show more in a given time period, and so we closed the round in
(04:39):
May of 2018, and then only myco-founder and I were the first
employees, and we brought onseveral contractors.
So our first five team memberswere one insurance expert who
was brought on to help build allof these insurance programs,
because there's a tremendousamount you have to do from a
regulatory standpoint.
(04:59):
And then the other people onthe team were software
developers, because we hadidentified what we needed to
build, and a big part of myphilosophy is that I buy
absolutely everything and onlybuild what's differentiating.
But this core how do youdifferentiate for the bundled
home and auto customer requiredthat we build a number of things
that no one had tried to build.
(05:19):
Nobody, and nobody still has away to kind of buy a bundle
other than branch Everyone else.
You have to buy themindividually, and so it's very
painful.
Speaker 3 (05:30):
Yeah, what I like about what I'm seeing in your
business and some others is thatyou're identifying really
inefficient industries thatdon't have a good end user
experience and taking some ofthe sort of tried and true
software methodologies of let'sfocus on the customer experience
and work backwards.
Talk a little bit about thatphilosophy.
Speaker 2 (05:50):
Yeah, I learned a tremendous amount about this
when I spent 12 weeks in RedwoodCity in Silicon Valley and I
have always been the personwho's wanted to build, build,
build as quickly as possible.
And in that incubator I did doa little building, but largely
what we were forced to do was dointerviews and interviews and
(06:10):
interviews.
And what was amazing was Iwould, we would reach a point, I
would say, okay, I really wantto build this, and I would start
building and we would keepdoing interviews and I would
realize that what I was buildingwasn't going to be helpful.
And so I eventually was trainedover a significant you know,
over those 12 weeks and thesubsequent months, that just
keep doing interviews and keephoning in and you and if you do
(06:35):
this enough, you you get to apoint where the level of
certainty is incredibly high.
You, the thing in your head isbeing reinforced by most of the
interviews you're doing.
And actually in that product webuilt it and the first version
we released, which was withinthree months of starting, had
product market fit immediately.
(06:56):
We just we knew exactly whatpeople wanted and we put it out
and people were able to use itin production immediately.
I'd never done that before, andso in this case I mean selling
insurance is a little simpler inthat you're buying a financial
product.
That's a commodity.
But we had a very clear visionon you should be able to put in
your name and address, get aprice and click buy.
(07:17):
That was always.
The vision was name and addressreview by, and we built that
and lots of people had comebefore us and had wanted to do
that but had not had the fullrange of expertise that we had
had.
So a huge amount of what wewere doing initially with our
initial employees wasunderstanding how do you do that
?
You have to change theinsurance product, you have to
(07:38):
file the right things with theregulators, you have to use data
in the correct way, et cetera.
Speaker 3 (07:45):
So you're really streamlining what's the quote
that describes branch insurance.
You're streamlining the wayinsurance is purchased and
processed.
Speaker 2 (07:52):
Yes, yeah, it's bundled home and auto insurance,
the way it was always meant tobe.
Speaker 3 (07:58):
The way it was always meant to be, and there's a
community aspect to that too.
You're getting back to thepurpose of what insurance was
when it was first started.
Talk a little bit about that.
Speaker 2 (08:06):
Yes, a lot of people have very negative views of
their insurance company for awhole bunch of reasons, and I
think a large part of that isthe insurance industry's fault,
with things like vanishingdeductible or there's a pitch in
a lot of insurance plays whichis you shouldn't have to pay
(08:29):
anything and you should just geta lot from your insurance.
The reality is, the beginning ofinsurance was a bunch of
farmers sitting, or there arelots of different ships
initially, but in the US, a lotof farmers sitting around a
table who are all neighbors, whoare all actually didn't put any
money in initially, but werejust all committed to.
If somebody's barn burned down,everybody would help them
(08:52):
through money and through labor,bring the barn back up, and so
there was a great, wonderfulcommunity self enforcing aspect
where everybody understood thevalue of insurance and you
didn't have we hear this fromour customers right, you raise
rates because there's highinflation, there's increasing
impact of climate change, andyou raise rates and what you get
(09:15):
are they raise my rates and Ididn't file a claim.
And the goal with our brand isto help people understand that
money didn't go to executives,that money went to replace
someone else's house, to helpsomebody put someone else back
on their feet when they hadsomething bad happen to them.
It's not, and so the idea of Ididn't file a claim therefore X
(09:39):
just really misunderstandseverything.
Also, the deductibles we haveare the same level of
deductibles we had 40 years ago,like a $500 auto deductible
really doesn't make a lot ofsense.
It should be much higher.
But we've been trained and usedto this and so the insurance
companies are a big part of theproblem, but we really.
(10:01):
It would be a lot better ifeverybody understood that
insurance is a communal good.
Speaker 3 (10:08):
Right, absolutely.
Let's talk a little excuse me,sorry about that, I'll cut that
out.
So what we're talking about istransforming an industry and
making it more user friendly,and a lot of what you talk about
in your business and in yourbook is how to build a tech
stack that serves the customerswell, and it's disrupting a lot
(10:29):
of industries.
Mark Andreessen has a quotethat says software is eating the
world, and that was some timeago.
And it's true, because nowwe're seeing this wave of
innovation where the way thatcustomers are acquired and
served and preserved over timeis completely different from the
old line.
Talk a little bit about that.
Speaker 2 (10:47):
Yeah, I think a lot of this.
I fully agree that software iseating the world.
Every company is becoming asoftware company.
The one thing that Andreessendidn't say in that article and
that I think a lot of peopledon't properly draw is the next
step is therefore the mostsuccessful companies will be the
ones that can effectivelydevelop software, and so that's
(11:10):
always the question is how doyou most effectively develop
software?
And so my philosophy has alwaysbeen how do you build on the
shoulders of the giants thathave come before you?
And we have a huge problem intechnology that we have no
continuing education, and so thetypical flow in technology is
somebody that the mostknowledgeable about the current
(11:31):
state of technology people arethose who are in their 20s right
, are just coming out of college.
They they've just learned itand they're learning all the new
things.
That are very excited and verywilling to learn new things.
They then enter the workforce,execute in a certain way that
they've learned, and theyessentially continue to do that
and raise through the ranks andeventually become leadership and
don't actually learn new thingson in any regular way, but
(11:56):
every 18 months there are reallysignificant advancements in
different parts of the stack anddifferent parts of how we do
things in how we developsoftware, and so the people in
leadership in corporationsleading software development
tend to be decades behind whatthe current state of the art of
(12:18):
development is.
But the people who really knowthe state of the art don't have
the experience to understandwhich of those things are
probably ill advised anddangerous and need to wait for
more maturing or probably justbad ideas to begin with.
There's a lot of new technologythat that I look at that I say
I don't want to touch thatbecause I it feels bad to me for
(12:38):
you know whatever articulablereason.
So I think absolutely, the morewe have people focusing on how
do I develop softwareeffectively, how do I learn new
things and that is largely thisfocus of the book is is how can
you think philosophically to getyou that edge without spending
every minute of every day justresearch, researching things?
Speaker 3 (13:01):
Absolutely so.
I'm enjoying the book and Ireally enjoyed your talk where
we connected at Bourbon andBooks, but what I'm hearing is
that not only is the book bothfor technical and non-technical
people, it's really almost likewhat I'm getting a flavor of is.
It's almost like how to buildsoftware products using Legos,
as opposed to building theplastic.
Speaker 2 (13:22):
That's perfect.
Speaker 3 (13:23):
That's a good analogy , yes, and I agree that there's
a blend of sort of the oldschool software you know, people
that have been around for awhile and have stubbed their toe
and learned some valuablelessons and the new skills, and
I like the fact that your bookreally encourages the fact that
we need each other but thatthere's always new ways to do it
(13:45):
and we all have to move in animble way.
Is that a fair way to?
Absolutely yeah.
Speaker 2 (13:49):
And to really ask yourself think about this
waterfall of do I need to writeany software?
Can I just use some existingsoftware as a service?
Or if I can't use an existingsoftware as a service, maybe I
could customize it with theirAPI.
But if I can't do that, maybe Icould use a couple services and
glue them together with arelatively small amount of
custom code.
Or maybe I could use librariesor you know whatever it is like.
(14:12):
How do I understand that?
Writing code and maintainingcode is the thing that slows me
down and makes everything worse,and so the less of my custom
code that I've got, the morenimble and the more able I will
be to deliver value.
Speaker 3 (14:27):
You know, it's almost like manufacturing a product,
it's almost like manufacturing acar.
Right, gm and Tesla andMercedes do not manufacture
water pumps.
Yes, for a reason that they'renot in the water pump business,
they're in the car business.
I love the fact that you'recomponentizing the building out
(14:49):
of software products and youdon't have to build it all.
Speaker 2 (14:50):
Yeah, absolutely, and I think you know for people
who've been in the industry fora long time, they're probably
remember trying.
You know, some of the initialefforts to do this
componentization with servicesin, say, 2005 or 2010,.
The network was very unreliableand services were unreliable,
and so this seemed like a badidea.
And there are still veryunreliable services.
(15:13):
So it requires a new level offiltering and skill.
You can't just wildly pick somethings that are advertised out
there, stick them together andhope that they work.
But you know, so, like anything, it requires putting some
effort in putting someintelligence in testing some
things out.
And so we have this problemwhere, if you know a certain way
(15:33):
to do something, you kind ofgive it like 10 seconds.
Oh, I see some problems withthat, I'm not going to, let me
stick to the thing I know, andso that's the hump that everyone
should try to get over, I think.
Speaker 3 (15:45):
Well, and you're advancing something that started
a long time ago.
I mean, obviously, github is acollection you know, code
library of components that youcan use.
But even before that, I was thefinance guy at Organic Online
in San Francisco in 2006.
And the team there we actuallyhosted the beginning of the
(16:05):
Apache server, brian Bailand,brian Bailandorf, with the CTO
of Organic, when I was thefinance guy and he was telling
me when I was interviewing, he'slike, well, you know, we got
this thing back here calledApache, and I'm like, well,
what's that mean?
It's like, well, a bunch ofsoftware programs got together
and patched this thing togetherand I'm like, well, it carries
90% of the whole internet'straffic and it's a code library.
Speaker 2 (16:25):
Yeah, apache is great .
Yeah, that's fantastic.
Speaker 3 (16:29):
It's amazing because it was, to your point, one of
those communal assets where theysaid hey look, you know, let's
build the best of breed, let'screate a infrastructure where we
can approve the code as itcomes up.
And I just, I think that youknow, your book extends that
idea that we don't have to buildand be responsible for QA every
piece, you know, just like acar company doesn't have to
(16:51):
manufacture the water pump.
Yeah, yeah, no-transcript.
I think that's a fascinatingway to look at it, because it
means that leadership intechnology now is less about
writing code and more aboutselecting the right components.
Speaker 2 (17:05):
I think I think the most effective leaders are the
ones that are able to reallyfocus and minimize what code
they're writing into just thenecessary parts.
And I think that where I seesluggishness and inability to
deliver effectively are when acompany has had to break that,
(17:26):
instead of being able to saywe're just gonna have this
expertise and we're gonnaessentially outsource and use
services for the rest, they,instead they have the platform
team, they have the back endteam, they have the front end
team, they have the API team.
And this exists in companiesthat are You're not selling
things to software developers,they're not, they're not
building their own technology.
This is in a very like directto consumer or business to
(17:48):
business products that justdon't require Any of that
internal expertise.
The customers don't care, it'snot, doesn't need to be done any
differently than you could doit on a managed service.
But yet, and as soon as you havethat divided focus in your
organization, you're spending somuch money on it and you're
unable to really to put thecorrect focus on these are the
(18:10):
things that make the move thebusiness forward, and I, when I
go into a company, I've donelots of consulting.
When I'm in a company and I Isee the engineering team do
releases or announce things tothe company.
It's always a red flag to mewhen there's like an all company
meeting and someone from atechnology team stands up and
says and we released blah, blah,blah and nobody in the company
(18:33):
has any idea what that thing isor how it's connected to
anything that anybody else inthe company does.
I mean it, it you know.
It is like we Whatever ourplatform team upgraded
Kubernetes and we change the wayour container allocation works
so that it's 98 more percentmore efficient and like, and
this is amazing and this is howSpotify does it, or something
you know like.
And then there's like that is ahuge disconnect in a company.
(18:57):
That, I think, is a horriblered flag in the vast majority of
cases.
Speaker 3 (19:03):
Technology for technology sake sometimes.
Yeah, you know what'sinteresting about that is a lot
of our audience areentrepreneurs, investors and
aspiring entrepreneurs andinvestors, and what I'm hearing
and what I heard at your talkabout the book thing the other
day, was that you can build acompany with significantly
smaller number of employees,particularly a smaller number of
(19:23):
software engineers, and if youcan lower the cost of launching
new companies, how does thatsort of change the playing field
for start up?
I think it.
Speaker 2 (19:31):
I think it changes it enormously.
I think we are.
There's a.
There's a great guy who is a.
I think it was an analyst forAndreessen Horowitz in 2016, sam
Gersten staying, and he'sworked for Stripe and I can't
remember where he is now, but hewrote.
He wrote a piece which wascalled the death of the 10 X
engineer, and, and he asked thequestion when will we have a
(19:54):
unicorn that has only oneemployee, the one employee
unicorn?
Now, to be fair, instagram gotvery close to that.
I think they were at about 13or so employees when they were
required this is also talkedabout in my book for a billion
dollars, but I think that it hasbecome much, much, much more
likely and possible, especiallyfor solopreneurs.
(20:15):
But again, the problem, goingback to something we talked
about in the beginning is thatyou really need to understand
the problem and build to theproblem, and so I think you're.
In the dev tool space, I thinkthere's probably likely a
significant amount of this andin the, in the JavaScript
(20:35):
ecosystem, one single developerhas built a competitor to node
JS called bun.
That has just I mean, he justdid it himself.
I mean it's the best, mostrecent example of really a
Herculean task but made so muchmore efficient by being one
person.
I often have in my head thisview that one developer, in
(20:57):
general is, is more efficientthan two or three developers.
You have to get to kind of fourfor, like, run time.
You know over time for that tobe to deliver more, and then,
and then beyond that youprobably have to get to, you
know, 12, and then 25, and then50 and then 100.
And so you have these breakpoints where now obviously you
(21:20):
can divide the work up intoseveral different projects.
You don't have thecommunication overhead, but the
coordination and communicationis a really significant piece of
overhead here.
So my, my overall belief is thatif you're in a space where
somebody can develop and reallyunderstands the problem space,
we're going to see a lot more ofthese people who just build,
(21:40):
build a product themselves andjust make that income.
And I think there are dozens ofsoftware developers who have
built up to half a million or amillion dollars a year of ARR on
, probably take some two orthree hours a week to maintain,
and I think we'll see more ofthose.
I think that, though, theunicorn is still going to be
(22:03):
pretty rare in that case, notfor the lack of development, but
for the product market fitissue.
So I wouldn't be surprised,though, to see a company that
was a unicorn, that had onedeveloper and, you know, 10
salespeople and, like you know,three marketing people you know,
and a product person and adesigner.
Right.
Speaker 3 (22:25):
Absolutely Well, and there's.
There's examples of that, whereyou know people put together
products by componentizingthings together into a product,
and they're essentially just avalue edit reseller right,
that's even manufacturer, that'sabsolutely true.
Speaker 2 (22:38):
There are also non programmers who have put
together through kind of no codesolutions, products.
I will say that as a customerof some companies that were
built that way, I will say thetechnical debt that those
companies run into seems to bemassive.
And so the number of ofexamples I've run into, many
(23:01):
examples where really a poortechnical co-founder built an
initial thing, even withcomponents, even with no code,
that that ended up costing thatcompany a lot more than than it
would have otherwise.
But you know, maybe that'sstill the right way to go
because it was low cost to beginwith.
Speaker 3 (23:19):
Right, exactly so.
Technical debt just basicallymeans that you get so far into
it and you have to start overand rebuild.
Speaker 2 (23:26):
Yeah, you, you have.
You have baked into whateveryour existing code base is
certain pain points so that youcan't actually develop the new
things you want withoutimmensely higher cost than if it
were done correctly.
Speaker 3 (23:43):
So it's interesting, what I'm hearing is less code,
less employees, and thatprobably means faster speed to
market.
Speaker 2 (23:50):
Yes, I mean, I do think every company is going to
have this inflection point whereyou need to be resilient to the
loss of individual people andso at those points in time
you're going to need, you know,I think you can go one developer
for a while, or four developers, or twelve developers, but at
some point in time you're goingto need to like double that
(24:11):
amount, or maybe even triplethat amount for redundancies
sake, for, you know, just tomake sure the company runs on
its own and is it doesn't havesingle points of failure.
But I think, for the initialspeed piece and the part of the
company where you're defaultdead and you are trying to make
sure that you know you're you'regetting to some sustainable
(24:33):
point where the income willsupport the expenses, I think
you're willing to take thoserisks of key people and then you
can save a lot of money, Ithink, by by having this
serverless mindset and how youbuild.
Speaker 3 (24:45):
I completely agree, and so that leads me to sort of.
The next question is why Ohio?
You've built a lot of companiesand you spend a lot of time in
the Carolinas.
You obviously could put thiscompany anywhere because of your
experience and background andsuccess.
I know that you evaluated.
You know 100 or even morecities.
(25:07):
Tell us about that process andwhat hones you in on central
Ohio.
Speaker 2 (25:11):
You know, the overall process was we went.
So we pulled a bunch of datafrom a lot of different sources
and we did a bunch of analysisfor what things we thought were
the most important for to startour company.
So I think if we had had other,if there had been, there are
(25:34):
aspects of an insurance companywhere it's being able to have a
low expense ratio is veryimportant.
So insurance was when it wasstandalone, was based in San
Francisco, was competing againstprogressive in Mayfield Heights
Ohio.
That's immediately you're justat an enormous cost disadvantage
because it's just much cheaperin Mayfield Heights Ohio.
So having some sense of cost ofliving.
(25:58):
Now I will also say that Ithink my analysis generally
applies outside of this type ofbusiness.
But you know, certainly peoplechoose lots of places for
various reasons and I'll justmake this observation and I gave
a talk that's a longer form ofthis called why we chose
Columbus.
If you just Google why we choseColumbus, I think you'll find
(26:18):
us from a conference called MonkTuberfest.
But for all of the venturecapital pundit viewpoint of like
, we're contrarians and we weonly invest in people have crazy
ideas, like.
One of the things that'sabsolutely wild is you say like,
and I'm going to start abusiness in Columbus, and
they're like, don't ever work,so like the contrarian does not
(26:41):
extend to moving or eventhinking that people could be in
a different place and and move.
And so you know, there arethese wild comments that people
have where, like this was moretrue about two years ago, people
would say like, ok, I'm eithergoing to live in Palo Alto or
Austin or Miami, or like, whocares, I might as well kill
(27:03):
myself.
You know, like these are likereally crazy things to say,
given you know where the actualpopulation is dispersed.
But the short answer and andand if I were doing it again is
what I'd look at is I would sayour key criteria were we need to
be in a large enough metro andit needs to be growing.
So I'm a big believer ininvesting things that are
(27:26):
growing, be with things that aregrowing, and obviously not
everything can grow at a, youknow, at a high rate for all the
time.
But if you're at a place that'sjust shrinking, I don't think
that's a good place to be,because it means that the pie is
shrinking.
If you're a place that'sgrowing, there's just surplus
for everyone, right, and so youwant that so large enough metro,
(27:47):
growing metro.
And so you know a lot of metrosaren't growing in the US, the
larger ones.
A low house price to medianincome ratio.
So look at the affordability ofhousing, look at the school
system.
Are there good public schoolsalso, hopefully within the
affordable housing areas?
So there's some metros wherethere's some affordable housing,
(28:09):
but it's not where the, wherethe good schools are.
And then having not havingterrible traffic and a lot of
times this is a feature of howspread out the metro is and so
you have these like very largemetros where it's just the
traffic's just horrendous.
Those were our criteria and youknow, when we look at them and
(28:30):
look at our cutoffs, columbus isreally the only metro that all
of the meat, all of thosecriteria.
But you know you could tweakthe criteria and decide I need a
little less growth or I'm okaywith, like you know, worse
traffic.
Speaker 3 (28:45):
Well, you seem to be on the front of it, a front end
of a trend, you know, becauseJobs Ohio and other economic
development agencies have done atremendous job.
Obviously, everybody knowsabout Intel coming here to build
one of the largest, you know,manufacturing chip manufacturing
plants in the world, but at thesame time that's created a
ripple effect.
So talk about what you thinkthat ripple effect will likely
(29:05):
look like in Central Ohio in thenext five to 10 years.
It is hard.
Speaker 2 (29:10):
It's hard to know because so much of the
investment is on themanufacturing side and on the
talent that is required formanufacturing, and so there's
very good.
Columbus is definitively one ofthe insurance hubs for the US
(29:32):
and certainly also has excellenthealthcare startups, and so I
think that, in terms ofintellectual capital and
intellectual capital investmentand high paying jobs for
knowledge workers, I think thatmore you know, if I think about
competing with the tier onecities, it's actually those more
(29:57):
that I think about than theIntel's, although I think it's
going to be great for this metroarea.
We're going to have, you know,a continued population growth,
and Columbus has this enormousadvantage that it can.
I mean, around Columbus iscornfield, so you know
Columbus's ability to grow outis is massive compared with kind
(30:17):
of any other metro, which a lotof which are, you know, sitting
on large bodies of water thatstop them from growing in one
entire direction, right, so,like Columbus's ability to just
grow is is massive, and so Iwould expect that Columbus sees
the kind of is an early on, anearly version of, like a Phoenix
or a Dallas, in terms of howmuch it's going to grow and the
(30:42):
investment it's going to get,and so I'm excited about that.
I would.
I would love to see moreinvestment in, and more
specialization and even morefields, and so I mean it's
amazing CompuServe being startedhere, I think, in Upper
Ellington.
You know there's no reason whythe proximity to all these data
(31:03):
centers should be excellent fora variety of other uses.
But I'm actually waiting to seethat next.
You know, very knowledge workerfaced industry that that will
grab a hold in Columbus.
Speaker 3 (31:19):
Yep, and I think we will do that.
I think one of the reasons thatI decided to move back from
California was I met the folksat Upstart and they you know San
Francisco headquartered companybacked by Silicon Valley VCs
and I asked them why did you setup your second office outside
of California here?
And it was very clear he saidthat data science talent coming
(31:40):
out of Ohio State and the otherlocal universities and I'm like
that is important and that'ssignificant and I don't think
everybody knows.
Speaker 2 (31:48):
Yeah, I mean there's amazing talent coming out of
Ohio State.
It's really expensive talentwhen we we have effectively
never recruited.
I mean we're cheap, so we'veeffectively never recruited from
Ohio State.
We obviously have a lot of OhioState grads but you're
competing with I mean you knowall of the Silicon Valley,
(32:08):
seattle, you know Washington, etcetera.
Firms are spending millions ofdollars to recruit out of that
talent pool.
So it is a big talent pool.
A lot of them would do want tostay and so I think it is a
great place to be able torecruit.
It's costly to recruit them.
Speaker 3 (32:24):
Absolutely Well what I found in the last few years.
You know kind of networkingaround town and getting to know
all the entrepreneurs.
There's a lot of entrepreneursthat have not yet started their
first company, but they verymuch want to.
What are some of the bestpractices and lessons learned
that you would share with themand advice you would give to
people that are consideringstarting?
Speaker 2 (32:42):
their own?
I think there are.
There are two books that Ithink are fantastic.
One of them is called LeanCustomer Development by Cindy
Alvarez and there's another bookthat sort of its first chapter
is essentially a mini version ofthat book, but I would read
that whole book.
And that that second book iscalled From Impossible to
Inevitable by Jason Lemkin andAaron Ross.
(33:04):
Aaron Ross wrote this bookcalled Predictable Revenue,
which is like sort of the Bibleof how to generate B2B software
as a service revenue when he wasfrom his time at Salesforce.
Those two books, I think,reading those, really
understanding them.
And then the other piece ofadvice is unless you have done
(33:29):
50 customer interviews like youshouldn't be building anything.
You really gotta understandthat problem.
And there is this process whichis in lean customer development
and, by the way, it's calledcustomer development, not
product development, becausethat's the focus.
You really wanna understand thepeople and the problems they
have and the context in whichthey have the problems, and then
(33:49):
you can start proposing thesesolutions.
But the mental model I have islike you go wide on the number
of people that you're gonna talkto and then you narrow down.
Okay, now I've got like my setof people.
Then you're gonna go wide onthe problem set.
You're gonna talk about allsorts of problems.
Then you're gonna narrow down.
Now you're gonna have peopleand problems.
Now you're gonna go wide onpotential solutions like low res
(34:13):
wire frames and just sort ofthrowing things in front of
people and having them talkabout them.
Then you go narrow in terms ofthe number of potential
solutions that you have and youdo this until you get like
here's my one or two personasthat I'm launching with and
here's this one problem I'msolving for and I've verified it
matters.
And when I show up to them withthe, with this example thing
(34:35):
that I want them to use, maybeeven for free or to try it out,
they're actually gonna careenough to do it because it
matters enough in their life.
And so the most common mistake Ifind from beginning
entrepreneurs is whateverthey're focused on in building.
When they show up to getsomeone to use it, no one's
actually gonna care because onthe list of problems it's so far
(34:57):
down that they just don't care.
So the problem is they'll talkto them oh, is this a problem?
Yes, would this solve theproblem?
Yes, but they're never actuallydoing this thing.
That's asking will you actuallycare enough in a given day to
interrupt your schedule to lookat this problem?
The only other major piece ofadvice is I spend 90% of the
(35:19):
time when you know entrepreneursyoung entrepreneurs come to me.
I spend 90% of my time talkingabout go-to-market with them.
And so there is this still, thisbelief that if you build the
better mousetrap, the world willbe the path to your door.
And it's simply not true, andyou know you will have to fight
and claw for every sale that youget.
(35:41):
And if you don't have, if yourbelief is something like well,
it'll be like Uber.
Uber didn't spend any money onadvertising and you know,
somebody just told me about Uberand so people will just tell
people about it.
Like that's not happening, likeyou need to have, you need to
understand.
And again, another reason for itfrom impossible to inevitable.
(36:01):
It does talk a lot about youneed your 10 first customers
that you don't know they're notrelated to you and are not
required to use it and thatthey're the hardest ones to get.
That's what you need.
And when you get 10 regularcustomers, you know and you've
done that work, then you'll geta better sense of okay.
(36:23):
What does the next piece looklike?
But I've helped people startcompanies and giving people
advice where it's taken themeight years to get to 10
customers.
So you know, and they're doingvery well now.
I mean, the ticket price isvery high on the product but it
can take a long time.
Speaker 3 (36:40):
I'm glad that you said that.
You said if you haven't talkedto at least 50 customers, you
really shouldn't be buildingproduct yet.
And it's true because, you know, I've been in the startup world
and studying it for decades andsomewhere along the line of 60%
of the reason companies fail isbecause there aren't enough
customers to buy the productthat they've made and it's like,
(37:01):
well, I mean, you kind of wannasay duh.
But to be fair, I think that weall, all entrepreneurs are
trying to figure out somethingto make it better, faster,
cheaper, and so we do have thetendency to sort of go down the
rabbit trail, fall in love withthe product.
But I think the most importantthing that we can do, as those
of us that have been around fora while, is to help them frame
(37:22):
the questions and help them findthe people to interview and
point them in that direction,Because I you know, even though
they're not yet doing that, it'san easy fix to help them adjust
their sites away from theproduct and towards the customer
.
Speaker 2 (37:36):
Absolutely yep, and you should also know that a lot
of and I think this is talkedabout in the customer
development but a very highpercentage of interviews you set
up, people will know show orthey won't be the right person.
And you have to be honest withyourself.
If you talk to someone who'sjust not the right person, you
can't count that it's not aninterview, it's not.
(37:57):
It's not like 50 interviews,it's like 50 customers.
It might be 150 attemptedinterviews.
It's a lot of work, but youwill save yourself so much in
the long run and really buildingup that skill to like that will
be a useful skill in your go-tomarket.
You will now have all of thesepeople who are real potential
customers as well.
(38:18):
You have to treat themappropriately and not, you know,
not abuse the relationshipwhere you're initially just
asking them questions about it.
Speaker 3 (38:25):
But yeah, Exactly, and that's what I do when I work
with entrepreneurs.
I try to help them identify.
You know, okay, here's whereyou would source a list of those
people and get in touch withthem.
And then, secondly, I also youknow you ask them did they do
customer interviews?
And they're like, oh yeah, wedid, and I also try to help them
frame.
You need to ask them, all thesame six questions and, as an
(38:45):
investor doing due diligence,what I would prefer is if they
would bring a grid that sayshere we talked to these 10
customers, we asked them thesesix questions and 80% of them
said this so show me what youlearned, not just did we talk?
Speaker 2 (38:59):
I think that's fantastic.
I don't know, do you userespondentio at all?
Speaker 3 (39:03):
You know, I've studied that a little bit and
I'm gonna start using it.
Speaker 2 (39:07):
It's great I mean it is you will end up having to pay
about a hundred bucks a person.
But your ability that thatsolves this 150 conversations
for 50 people problem for a lotof customer segments is not
everything.
I mean we once did a commercialreal estate broker product and
(39:28):
that one, like you, justcouldn't get enough tenant rep
brokers doing enough volume.
So we just went to New York andlike went to a bunch of you
know meetups and talk to andfound people that way, cause
like a third of the commercialreal estate value is in New York
, that's in the US, is in NewYork.
But yeah, I totally agree,that's the challenge.
(39:51):
Lately I will say I have gonemore to using there are a lot of
like independent contractors inthe Philippines who you can
give like a profile set andthey'll go find people and then
writing really good cold emailsI find is the.
I mean, if you write a goodcold email like people will
answer them, I will answer goodcold emails.
But I get a lot of emails andmost of them I just delete.
(40:12):
But you know, it's verypossible and often better, I
think, on a very, on a verysmall budget to find people.
But when I've worked withcompanies that had budgets and
when I was working for thisprivate equity firm and trying
to validate things out, I woulduse respondentio all the time
and I would say you know, 99% ofthe people that you get on
(40:35):
there are exactly who you want.
Super helpful.
Speaker 3 (40:39):
And it's really good Cause in the same way that
you're streamlining thedevelopment of products and
companies, you can alsostreamline the process of doing
your customer interviews andhelping entrepreneurs do that.
I think it's something that we,as an ecosystem, can help them
do.
Speaker 2 (40:52):
Absolutely.
Speaker 3 (40:54):
Let's talk a little bit about the ecosystem in the
Heartland.
The ecosystems on the coast areobviously fairly mature, very
well connected, working together, all those types of things.
Talk about what has alreadybeen accomplished in the
Heartland region and what workremains yet to be done.
Speaker 2 (41:13):
I also think of a lot of our world as being national
and international right now, andbranch is a remote company, and
so a lot of the employees areoutside of the Heartland region
as well.
I think that the key things thatreally matter are is there high
speed, you know, affordableinternet that's here, and is
(41:34):
there a community that you canget together with in person?
And so Ben Blanchera has been awonderful human being for
spearheading this community,certainly in Columbus, and so I
think that is one of.
I think that is that's a greatpart of the ecosystem.
(41:56):
There are a founder groups thatget together that are really
great.
They're certainly not the samesize that they are in New York,
la, san Francisco or even Austin, but I think all of the key
elements that we need are here,but I think I do tend to view
(42:19):
the communities that I'm in ofpeople building and people that
I reach out to for advice tendto be more of these kind of what
was formerly known asTwitter-based, you know,
internet-based communities thatend up being very specific to
(42:40):
specific problems that I'mworking on.
Speaker 3 (42:44):
Yeah, I think you're right Building connected
communities and having a seriesof informal events where people
can get together, because that'show you discover co-founders,
that's how you discovercustomers, that's how you
discover investors, and I thinkit's important to build that
both offline, in person, as wellas online.
Speaker 2 (43:02):
Absolutely yeah, no, and I think it's.
I think I would love to be, Iwould love to go to more events
within the local community andthere is an aspect of founder of
a business and then havingthree children that in school,
that impinges on schedule.
But no, it's been wonderfulthat there are all these regular
(43:26):
events and I've reallyappreciated it and I think it's
certainly a lot better thanAsheville and North Carolina,
which I was in.
I do think maybe oneobservation to make there is
that there was a level ofproclialism in Asheville where
the quality of what's beingbuilt and the businesses just
(43:47):
aren't on the same level.
But the businesses being builtin Columbus are national
companies doing it with nationalquality, and so I think that's
the.
There is a real qualitativedifference.
I noticed this sort ofeverywhere in Columbus as well.
Like the schools are better,the construction companies are
better, Like everything is justyou reach a certain size, I
(44:10):
think, or, and you're growing,and then there's a, there's a
demand for a certain qualitythat's met and at a certain size
you just can't achieve it, andso there's just a lot.
There's a lot more that peoplethink is good, but it's actually
quite mediocre.
Speaker 3 (44:24):
Yeah, I think you're right.
I think there's a critical massat which sort of the snowball
gets big enough that it startsbeing self-perpetuating, and
catalysts for that.
Like Ben Blancara, like youknow, revolution with Steve
Craigs.
You know the rise of the restbus tour.
That's what brought me toColumbus.
You know I grew up here but Iwas 30 years in California.
(44:46):
I came back.
It was funny because I went toa pitch fest, competition at
Tech Coast Angels in California.
Two weeks later I came back andwent to the rise of the rest
and what was interesting was thecompanies in Ohio were more
de-risked and had better revenueprofiles than the ones in
California and I thought thatwas fast.
Speaker 2 (45:03):
I mean they'd have to right Right by definition.
Speaker 3 (45:06):
Right by definition.
Speaker 2 (45:08):
As many dreams out here, right.
Speaker 3 (45:11):
Well, and I think that that bodes itself well to
the idea that, you know, there'sso many communities in the
heartland that want to say, well, we want to be the next Silicon
Valley, and I will say, no,actually I don't think you do.
I think you actually have theability to be the best central
Ohio that you can, and you canborrow some of the best
practices that worked out thereand tweak them, but you also
have unique strengths that thecoastal areas don't.
(45:33):
So don't sell yourself short.
Be the best central Ohio thatyou can be, because there's
wonderful things.
Speaker 2 (45:38):
I mean I think you know it's certainly in our
selection criteria.
There just isn't I'm not awareof another metro that is as that
has as mild a climate and hasgreat schools, affordable
housing and it's just like easyto live here.
It's just, it's just a verypleasant.
So I can't imagine a betterplace to raise children than
(45:59):
central Ohio, like I just I justdon't think it exists and I've
lived lots of places in the US.
So you know the the hurdleseems to be that it's not
perceived as cool.
You know there's like abranding problem and and I you
know I think that just happensover time, you know right, right
(46:21):
.
Speaker 3 (46:22):
Well, I think, if we continue to build great
companies like branch and wecontinue to invest in this
ecosystem, over time, that thatwill happen, because people will
begin to see.
You know, I say you don't haveto sell something.
That's great if you just begreat.
Speaker 2 (46:36):
Yeah, I absolutely agree.
Yeah, there's a, there's a showShow.
Don't tell aspect of this thatthat I think we're doing, and so
it may take a while to getfully noticed.
Speaker 3 (46:47):
And that what that lends itself well to company
building also.
Yes, one of the other quotesfrom Mark Andreessen.
He says is be so amazing thatthey can't to grow you, which is
actually Steve Martin, becauseit was like Steve Martin was
just flat out silly but he didit so consistently and he did it
so well.
It was just so amazing.
(47:08):
Like you can't, you can'tignore him.
And when you do great thingslike streamlining insurance and
making it easy for the endcustomer to purchase and use
your products and, moreimportantly perhaps, to
understand them better, thaneventually it will hit that
critical mass.
Now you guys are doing a stateby state rollout.
Yes, kind of what I heard wasthat your initial seed
(47:29):
investment was to prove themodel in a single state and then
, once you hit that milestone,then you go raise the money to
do.
Speaker 2 (47:36):
That's right.
Yeah, yeah, and it is a stateby state.
Speaker 3 (47:42):
So how many are you in right now and what's the
rollout plan?
Speaker 2 (47:45):
So, we're in 36 plus DC right now, but we're not in
California, florida, new York,and so we're growing and
expanding as fast as our lossratio allows us to.
And so we've just been in thishistoric weather events and
(48:06):
historic inflation, and so atthe moment, we're verifying, yes
, we are at the right loss ratioin order to be able to grow and
expand to more states, and ittakes a little while and
insurance to see how that playsout.
You can have an event happenlike your car can be damaged.
You might not file a claim fortwo months.
Speaker 3 (48:28):
Right, yeah, absolutely, absolutely.
Well, as we're approaching theend of our time together today,
I always like to share a coupleof takeaways.
Obviously, tell us where we canget more information about your
book I see it's on Amazon andthen also any parting advice for
entrepreneurs.
Speaker 2 (48:48):
I think that, in addition to all the advice that
I've talked about so far, thereare too many people who judge
success by whether their name'sin a newspaper, some publication
, or how many employees are intheir company or how much money
they've raised, and that's notsuccess and I know that it's at
(49:13):
every point.
I think people really want that.
They want that publicacknowledgement.
But I'll tell you that the mostpeople who've raised lots of
money had large amounts of moneypaid for for their companies.
A lot of them, maybe even allof them, but certainly most of
them would tell you, if youbuilt a company just by yourself
(49:38):
that generated a milliondollars of annual recurring
revenue with not a lot of workand not a lot of internal cost,
that is like the Holy Grail.
That's actually what everyoneis looking for, sort of no
hassle, no HR department, no,just nothing to worry about.
(49:58):
It's just there.
You built it and that's thehappiest that I think anyone can
be.
And I think the more thatpeople understand that as the
core ideal.
And obviously in insurance youcan't do that insurance.
We're shooting for something somuch bigger and really want to.
I mean, we're trying to make achange in a big industry and
that's exciting, that's awonderful mission and it's a
(50:21):
wonderful thing to rally peoplearound.
But I think if you're a pureentrepreneur and you have in
your head, like what's theplatonic ideal today of the best
business I think it's like fiveor fewer employees you make a
business.
It doesn't take you that much.
You build it up over time, itdoesn't take that long and then
(50:42):
it throws off cash for you andit doesn't matter if you're
written about in a newspaperanywhere, it's okay.
People don't read newspapersanymore.
Speaker 3 (50:53):
I completely agree, I think find what you're really
good at and a passion that youwant to pursue and just do that
really well and everything elsewill fall in place?
Speaker 2 (51:01):
Yeah, absolutely.
Speaker 3 (51:03):
That's awesome.
Well, this has been great, Joe.
I really appreciate you makingthe time today.
Thanks for joining us.
Speaker 2 (51:07):
I'm happy to do it.
Thanks a lot.
Speaker 3 (51:10):
That's it for this episode of the Smart Money
Ventures podcast.
Thank you for joining us.
Our guest has been Joe Emerson,co-founder and CTO of Unicorn
Company Branch Insurance andauthor of the book Serverless as
a Game Changer how to Get theMost Out of the Cloud, which you
can purchase on Amazon.
Thank you for joining us and wehope to see you again on the
next episode of the Smart MoneyVentures podcast.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!