Benji Markoff, Founder Shield CEO
It's Episode One of The Enlightened Agent, our new podcast. We kick things off with Benji Markoff, the CEO of Founder Shield.
Innovate, stay curious, make insurance fun—these are a few of the tenets Markoff and his team aim to bring to their work. He talks about his journey into the industry—he started as a customer—and his willingness to deal with failures on the path to eventual success.
Season 1, Episode 1
Benji Markoff: The ability to actually enhance and empower our clients is incredibly unique in the financial services space. I don't think that there are a lot of other industries in this space that are providing this type and this level of value.
Dean Gemmell: Hi everyone, and welcome to this podcast. I am Dean Gemmell, and I'm joined for this conversation by Jason Keck, the CEO of Broker Buddha. Jason, let's start with the obvious question. Why do you want to do a podcast called The Enlightened Agent?
Jason Keck: Hey, Dean. Thanks. I'm excited to be here to tell you about this crazy new idea we have. Yes, we are doing a podcast. The reason we're doing it is because I came into the insurance industry almost four years ago from the technology space, knowing very little about insurance or insurance agents. Frankly, I was amazed by some of the stories I heard, the people I met, and the experiences I've had.
For me, this is really about telling the stories of some of these fantastic clients that we have and the people who operate in the insurance industry who don't get enough attention. There's a lot of perspective in the tech world that insurance agents should be replaced by technology, but those in the insurance space know that's just not an option. They add too much value, and, in many ways, they're heroes. I decided to start this podcast to tell the stories of those agents, and I'm excited to do our first one with you today.
DG: Well, that's good. I think we've justified another podcast in the podcast universe there. I think this one makes sense. Let's go to our very first guest. We are joined by Benji Markoff, the CEO of Founder Shield. Benji, looking at you, I don't see that you're cut from the central casting for CEO of an insurance agency. Give me a little backstory. How did you get involved? How did you find your way to your current firm and your position there?
BM: Well, Dean, I'll take that as a compliment.
DG: Oh yeah, it was meant that way.
BM: I haven't picked up a student in quite a while. How I got here, in similar ways, is how Jason got here. In a way, it's the way a lot of insurance people get into insurance, which is you just fall down a dark hole and you wind up in insurance. For me, before this, I was working in venture and technology. I was 22, working at an early-stage venture-backed tech company in New York. We had just raised an institutional round of capital, and we had to get insurance. Because I was the low man on the totem pole at the company, because I knew nothing - I still probably don't know that much, but I know a little bit more now - I was given the task of getting D&O and general liability insurance for our new office.
Coming from a position of not knowing anything about insurance, I went the route of - what would a millennial do to get insurance, which is to go online and find a solution there. Lo and behold, I was pretty surprised by the fact that the entire commercial insurance space is incredibly antiquated and archaic, with very little online presence or any focus on UI/UX, as it relates to kind of enhancing that customer experience. Secondary to that, I couldn't really find any useful information as it related to emerging tech businesses and what type of insurances they needed.
Long story short, after arguing back and forth with a handful of different insurance brokers, telling them that I didn't have a fax machine, them telling me that's not possible, me telling them that's antiquated technology that no one uses anymore. Eventually, we ended up getting insurance, and as the company I was at was winding down, the idea kept popping up into my head that this was an opportunity to really disrupt an industry. As I was learning more about the insurance space, the industry is like a cornerstone of business. Commercial insurance impacts every single business in the world. Secondary to that, my biggest passion is related to sales. So I found that selling insurance is, in a lot of ways, a unique selling position because you're selling something that people already need to get or are required to get, whether from institutional investors, from different contracts that they might have, etc.
I was putting myself in this position where I didn't necessarily have to sell this idea of insurance and the opportunity to purchase it. It was more focused on why you should buy insurance from me and my company, versus another company. From there, we really started focusing on our lowest hanging fruits, which were high-growth venture-backed businesses, because that was the space that I was operating. Number two was to put a lot of focus on technology: creating a much more seamless and intuitive process and experience around purchasing and managing insurance. That was the tenet we believed in when we first started and launched Founder Shield.
DG: Is your target customer still that, or has it expanded a bit?
BM: Yeah, it's definitely expanded into other verticals and other arenas. We started out focusing on high-growth venture-backed businesses. From there, we started working in the real estate space and dabbling in health and benefits. What we really like to do as a company, and one of the things we believe strongly in, is focusing on areas of business that are scaling and growing quickly, that are disruptive, but where there's not a lot of education from an insurance underwriting perspective. We feel confident we can corner that market and become industry thought leaders in that space.
Cannabis is a perfect example of this. We launched a brand called AlphaRoute, which focuses exclusively on cannabis companies, both private and public. I think we service more cannabis companies than any other insurance brokerage in the world right now. Crypto is another area which we were long on - probably from seven or eight years ago: really focusing on creating innovative insurance tools and solutions for the crypto industry. The list goes on and on.
Our focus has always been creating innovative insurance products in industries in which there hasn't been much innovation, and number two, focusing on the customer's experience. We like to say that our job is to create an environment in which insurance can be fun, as crazy as that sounds. It's not something that should be fun, but if you can create an experience in which you are engaging with your customer and educating them at the same time. And most importantly, by empowering your customer, you can end up creating a unique, sticky experience for your clients. That's what's really important for us.
JK: I want to hear a story about how you've made insurance fun for one of your clients. What have you done that stands out in your mind that you're allowed to talk about on air?
BM: It's more nuanced than fun in the sense of making them laugh or have a great time. It's more about the empowerment aspect of it. We noticed from really early on, and this is from personal experience of having to buy insurance, that 8, 9, 10 years ago, you were meant to believe that insurance is something that you don't know anything about. Your broker knows everything about it, and they're just going to fearmonger and sell you specific policies on your lack of knowledge. What we really focus on, from an educational component, is not being afraid of speaking the language of our clients.
Explaining to them in terms that they actually understand. A lot of times, they are instructing us, saying, 'Hey, I know you educated me on these four or five different options for solutions. You know, I've done a little bit more research on my own. This is the avenue I'd like to kind of go down.' It's more of a consultative experience in which there's give and take on both sides.
In a lot of ways, we just copied what we saw in other industries, verticals, and other technology companies that we admired. Companies that allow for the empowerment of their users or their buyers help change and shift how the industry is going to look years and years down the road. I think that's something that the public as a whole, whether it's companies or individuals, expect more and more in this day and age.
JK: I think you guys have done two things really well. One is, like Amazon, putting the control in the hands of the buyer. Buyers are the demands, so the better experience you give to them, the more success you're going to have. Then two, the niche focus makes a ton of sense. Whether you're a start-up cracking into a tech industry or an insurance agency cracking into an insurance business, going deep and narrow is an integrated strategy. I love the approach of starting in start-ups and expanding with the AlphaRoute in cannabis and some of the other brands - I think you guys have a real estate brand as well.
BM: At the end of the day, people want to work with people they like. It's human nature. I think insurance is put into a box with accounting, legal and other financial service industries, which are clinically necessary evils. Technology has empowered entrepreneurs to rethink those necessary evils in a way in which you're actually providing a positive experience for your customers. Customers are able to decide, okay, I can go with the necessary evil, or I can get the same product or a better product from someone that I enjoy working with.
DG: There's the fun factor. It's not people jumping out of cakes; it's making it a more positive experience. Let's talk a little bit about your customer experience and how your tech stack fits in with that. What sort of technology are you using to set your agency apart?
BM: First and foremost, my background is not in technology from a technical standpoint. Obviously, I work in technology. Our approach early on was, what technology is out there? How can we adapt that technology to suit our needs and suit our client's needs? So, really early on, we didn't try and go out and recreate the wheel, so to speak. Over time, we realized that the technology that was out there that helped "empower brokers" wasn't really that great to use. As I was looking at the opportunities that were out there, from a technology standpoint, we had to face it and face the music - do we want to be in this business in which we hate the technology that we're using?
Do we want to sit in front of a computer and slowly start to hate ourselves day after day? Or should we take, borrow, recreate, and repurpose technology in a way that we will find enjoyable that our customers will also? What that really came down to, and where we saw the biggest gap, at least early on, was really focusing on the client that's inside of it.
What is that experience from a client's perspective? You're an insurance company, and traditionally, there wasn't really any client-facing experience. Being a millennial, and a lot of the people in my team being millennials, I understand that people want to have at least some form of interaction online. They want to have some form of automated component to that process. So a lot of the technology early on was really focused on creating an enhanced UI/UX around their client experience - putting as much as possible in front of the client as early as possible to help them self-educate and help them complete applications.
The biggest thing that we tackled really early on was - not coming from insurance - the first time I saw an ACORD form, I looked at it and thought, if I'm now in insurance and can't follow a single thing on here… Maybe that speaks to my ongoing lack of understanding about insurance, but-
JK: You don't need to understand ACORD forms to understand insurance. They're totally unrelated.
BM: How am I as a broker going to give this to a client and say, 'Hey, can you fill this out for me?' Not only is it going to turn them off to it, but they're also going to drag their feet on it. They're probably gonna answer questions incorrectly. Then you take the backend process of repurposing all this data in a way that you can properly and efficiently send it out to the markets. It was really focusing on solving those two sides. How do we create that client experience, that is as 'web 2.0' as possible? And how do we make it so that, on the backend, we can operate efficiently, especially early on when we're working on more volume-based business and smaller premium business?
We really needed to make sure that we were going to be profitable on any account that we were processing. Those two components of technology were the cornerstone. That trickles down into AMS systems and things of that nature.
JK: Do you guys use one? I was going to ask, what are you guys using?
BM: God no. I did a couple of tutorials on different AMS systems. As I said, I looked at myself in the mirror and said, I do not want to be spending my time in the system. They have built incredible legacy businesses, but they're legacy for a reason - they make it very hard to switch off from them in a lot of ways.
For us being a new insurance company, and with the advantage of not having an insurance background or experience, we were able to start from scratch. What are the services or tools that an AMS is providing? What tools do we need as a business to operate efficiently and effectively? Are there other tools out there that are not clinical AMS systems for the insurance business that can do a better job than what they're promising to deliver?
That's when we made the decision to start working with Salesforce and then bringing on Salesforce developers to develop and create a fully customized, AMS-heavy solution on top of Salesforce. We've found it to be a lot more enjoyable to use for our team internally, and more importantly, it's allowed us to operate a lot more efficiently.
DG: Can you imagine an AMS that would actually work for you?
BM: That's a leading question right there. I can, and I think that there are people out there that are working towards that. I'm pretty sure Broker Buddha is on a path towards disrupting that industry. The problem you have, and this is just the problem with legacy technology to begin with, is that a lot of the core components of the AMS technology were built 30, 40 years ago. It's incredibly hard for them to adapt quickly to the ever-changing landscape that is technology. It requires innovation and new blood now, like we did, to be able to take a look at what the core functionality needs to be. Start from zero again and build a better process and system that's sustainable, adaptable, and scalable.
JK: Those systems were built before the cloud existed. The back-office systems weren't designed around external-facing workflows - the customer interfaces and the carrier marketing - that are absolutely required for agencies. The challenge they have is that the systems are old, take a long time to evolve, and have a ton of legacy infrastructure that requires work in order to be able to do those things. I've heard both Applied and Vertafore talking about the evolution of their platforms, it's just not happening fast enough for the agents out there, sadly.
DG: Hey, Benji. Yeah, that's an ongoing thing that I hear when I speak to agents, and I'm relatively new to this business. Talk a little bit about the nuance here. I think older-school agents might hear, oh, technology forward - that changes things. This is a relationship business. I'm not all in, in technology; it's a people business. You've done a little bit of this, but explain to me and the audience a bit more about how technology actually helps strengthen relationships.
BM: Our methodology around the technology, which I think is probably different from a lot of companies in the insurtech space, is we are focusing on building technology to enhance the white glove consultative service that we're providing our clients with.
Unlike other companies that might be focusing exclusively on vanilla SMBs, in which it's rinse and repeat over and over again, where you can automate a significantly larger portion of that business. Because of our clientele and the type of clientele that interests us and that we get excited about working with, we're dealing with a lot of complex risks.
The way I like to describe it is, if you are renting a studio apartment in the city, Lemonade is a great option. If you have a $40 million compound in the Hamptons, Lemonade is not a good option for you. They'll tell you that also! The reason for that is that when you have a $40 million compound, what you need to do from an insurance standpoint is incredibly complex. Not only that, when you're insuring something at that value, you want to be talking with someone. That's why there's online banking and private banking. That's why there's automated technology that allows for financial investment and why there's a separate industry focusing on high net worth individuals and protecting their assets.
A company is usually the most valuable asset that any decision-maker has - more valuable than their house, their five houses, or their yacht. It is incredibly important to them, their livelihood, their shareholders' livelihoods, and their employees' livelihoods. The impact of a company is significantly larger than any single individual purchase. Because of that, the complexities associated with providing the right coverage are unique. A lot of times, there are no two insurance policies that are alike, depending on different industries.
You might have D&O insurance, but D&O insurance for a public cannabis company is different from D & O insurance for a private crypto company. They're both called D&O insurance, but they're incredibly different and unique, and you need someone or a team to help support you and guide you in making those right decisions. If you make the wrong decisions in purchasing insurance, they can be catastrophic to your business.
To be honest, that's one of the reasons why I love the industry that we're in because we can be helpful and influential. Sometimes, even by providing the right advice, we can save certain businesses. I can't tell you the amount of times we've had prospective clients in which they've already had insurance. I'll just take cannabis as an example. This is something we saw a bunch of a couple of years ago. They had different insurance products that specifically excluded all cannabis-related activity. They had a shiny, expensive PDF sheet of paper, and that's about it.
When it comes to technology, the key is - how do you enhance that customer experience? That's the first thing. Because that customer experience - that first interaction - is absolutely critical. There are thousands of insurance brokerages out there, with a baseline of 80, 90%, where they're doing a relatively good job. It's about widening that gap of the extra 10, 15%. How do you create a unique experience in that gap? Technology allows us to have a much stickier process with our clients.
It also enhances our team's ability to market policies more effectively and efficiently. A lot of times, the first quote is the quote that wins. So, if you can build technology that allows you to analyze the data of your client's risk, send it out to markets more efficiently, and provide the markets with more insight effortlessly, you're going to be able to secure better quotes. The other component to it, from a technology standpoint, is it empowers data. If you have the right systems in place, it empowers you and your team to make much smarter decisions that are data-driven.
For me, coming from a technology background, that was innate and standard, but as I soon realized in the insurance space, it wasn't really how most insurance brokerages were operating. Through those different key components, we're able to create a much better experience for our clients, and technology is such an important component of that.
JK: You mentioned coming in and hearing stories from clients who couldn't get the insurance they needed, or they had come off a policy that wasn't addressing the situation of the company. Ultimately, the reason we started this podcast is that those are the kind of stories that I don't think anybody ever hears. I'd be curious to know - you don't have to name names - if there's a particular story that comes to mind that you guys were able to solve something for somebody else, or maybe an account that you won because you guys are doing something different early on.
BM: Yeah, a good example of that is crypto. I got connected with Brian Armstrong and Fred Ehrsam from Coinbase a handful of years ago. Two of my business partners were invested in Coinbase at the time. They gave us an opportunity really early on - this was probably 2013, maybe early 2014 - on helping them with their D&O insurance at the time.
I asked Fred, who was the point person on Coinbase's team, one of the co-founders, 'Hey, you know, I know banks provide insurance or FDIC insurance for their deposits, why don't you guys do that? That seems like it would be a great marketing tool to make people kind of feel a little bit higher level of comfort with your business.'
He said, 'Yeah, we tried it, and everyone said it was impossible.'
I found that in insurance specifically, that word gets thrown around a lot.
JK: It's all to do with the red tape.
BM: I remember when we first started Founder Shield, I called this guy who went to my high school, who I knew was in insurance. I had a couple of questions. I asked him about this stuff, and he said, 'You're making the biggest mistake of your life. You don't know anything about insurance; you've got to work your way up in insurance before you even have an opportunity to really understand it well enough to be able to start your own business in insurance.'
He told me it was impossible too. Maybe this podcast is part of a big fuck you to him. I don't know if I'm allowed to curse on this-
DG: Yeah, sure.
BM: Insurance brokers are people too. We curse, we fuck up. We were looking at this Coinbase deal, and I was talking to the team there. I said that doesn't make sense. Nothing should be impossible. Insurance is incredibly simple at its basic structure, which is: I have a risk, a financial institution (a carrier), if they like that risk, they're going to put money behind it because they will make money on investing, so to speak, in that risk.
Long story short, we go to 50 different markets. We got laughed out the door of those 50, so we found the 51st market. We focused on putting a pitch together that was more of a VC pitch than a traditional one; here's your application for insurance. We finally got someone to bite for the first 10 million. We were trying to get up to a billion dollars of coverage.
DG: Pure ballpark.
JK: Go big or go home.
BM: Fast forward three to six months, I was in a room in a Woods of London building with 50 heads of different syndicates. Their average age was probably in the late fifties, early sixties. We spent three days teaching them about crypto. From the core, basic idea of crypto all the way through to where it was in 2013, 2014.
Through that process, which is not a traditional process to get insurance, we were able to get people a little bit more interested. That core policy that we created turned into the baseline insurance product for cyber theft and cyber liability risk for the crypto industry.
JK: Wow. That's legit.
BM: I don't know if people give us as much credit for it now, but you know, we have memories about those types of things. I know it was us.
DG: If I can sign up for those crypto education sessions just let me know, because I could use it. I'm struck by this image that I can't get out of my head of your high school buddy, toiling away at an insurance agency in the strip mall where you're at Lloyd's of London for three days. Hopefully, he's listening. He was a high school bully.
BM: I'm not going to name names, but it's actually funny you say that. He really does have a two-person insurance brokerage in a strip mall in Culver City.
DG: Oh, that's brilliant. Mean-spirited but brilliant. Hey, Benji, let's talk a little bit about what's changed for you and your company as you've gone through this process. What did you suck at early on that you don't now? What did you change?
BM: How much time do you have?
DG: We only have about five minutes left.
BM: The attention span for an insurance podcast can't be more than 30-45 minutes. You can put a link at the bottom with my email address if people want to ask.
DG: We'll show notes so people can follow up.
BM: We sucked at everything early on! There was nothing we didn't suck at! I was talking out of my ass, trying to sell insurance policies that I knew nothing about. I was going from cubicle to cubicle in WeWork offices, at first saying, 'Hey, did you hear about this company, Founder Shield? I hear they offer insurance for start-ups.' They said, 'No, I haven't heard about that.' I said, 'Oh, you should talk to Benji Markoff, the CEO.' Then I would leave. I had their email, and then I would email them afterward, and I was hoping, at the time, maybe they won't put a face to the name.
DG: That is great.
JK: It's a growth hack.
BM: I remember really early on, we had this opportunity to pitch to, it was either HelloFresh or one of those grocery delivery companies. They had offices in North America, but they were based in Germany, maybe. I remember I was pitching to the CFO, and it was going really well. Then he asked me a question about a specific line item in an insurance policy that we were putting together, and I completely gave him the wrong answer.
DG: The 180-degree wrong answer.
JK: Wrong, meaning it was inaccurate, or meaning it wasn't what he wanted to hear?
BM: Both! I'm trying to remember exactly what it was. Then he called me out on it in the meeting, and he said, 'I don't think you know anything about insurance.' I looked at him, and I said, 'You're probably right about that.' The mountain that we had to get over, that hump we had to get over from an educational standpoint, was something we definitely struggled with early on. We benefited from working with companies that knew less about insurance than even we did.
Over time that was a big focus of ours - hiring and bringing in talent that had true expertise in this space who could help guide us as a team in the right direction. Now we're at the forefront, from a knowledge standpoint, in the industries that we focus on. I believe that no one knows more than us about 30 different industries as it relates to risk mitigation and insurance placement.
It's one of those things where you'll never be the one who knows the most about insurance because it's an industry with people who've been in it for 50, 60 years plus. You're just chipping away - it's like one of those jail escape movies where you know, eventually, if you keep chipping away, you're going to get to freedom. You just don't know how thick that wall is, and you have a sharp toothbrush to hack at it.
DG: That should have been your line in the meeting - 'Stick with me. I'll find freedom. I know I don't know what's going on now, but stick with me.'
BM: I was always a believer that you can only really be hard on yourself on the things that you actually have control over. As an entrepreneur, at the end of the day, especially if you're trying to tackle an industry in which you are not an expert early on, all you really have is your hard work, diligent effort, and grit. I knew we were going to outwork everyone. And we figured if we took a long enough time at it, we were going to get through those walls. There's a saying that goes, 'the only people that fail are the people who quit.'
JK: That's a good one.
DG: That whole story is great.
JK: Benji, along those lines of your growth, and in the spirit of the podcast title, enlightenment is defined as the state of having knowledge or understanding. I wanted to ask you, what special knowledge do you and your team have that sets you apart? What is it that makes you guys enlightened as agents as a company?
BM: It's a loaded question because I think that there are a lot of different things you've noticed over time that make us unique or different. I think our ability to utilize data in a way to target specific industries before they emerge has been incredibly beneficial and helpful for us. A good example of that is the mobility space - the micro-mobility space, specifically: Scooter Share, Last Mile Delivery, things of that nature. We were very early in that industry.
Cannabis is another one. I was at my first cannabis conference in Vegas in 2014. I think there were 500 people at that conference. It's an MJ con, and now I think there are 20,000 or 30,000 people at them. The same thing with crypto and with a lot of other industries. We saw the writing on the wall, and it was based on the data that we were collecting. It suggested that these are the areas that are going to be big and it looked at insurance in general. Insurance is always linked to the game.
What happens is, innovation happens. The second and third layers of innovation happen, and then insurance tackles the first layer of innovation. Our ability to do that was big. The other component of our secret sauce is that we're not afraid to fail. I don't give a fuck about failing. I have tried to empower and encourage our team to fail, and I think that it's important to take risks and take big risks.
I think a lot of times, insurance companies, insurance brokers in general, are in the business of risk mitigation. They might be a little bit more afraid to take those risks, but all those risks have empowered our team to do better and be better.
JK: You guys are a relatively young agency, both in terms of your life and also the average age of the employee. Talent is always a challenge in this space. I would imagine you can attract both young and ambitious people because you guys do that kind of thing. A traditional agency that doesn't take those risks, it's just not as exciting for people who are willing to take those risks.
BM: It's funny you say that because one of my missions, and it's probably something that was a light bulb in my head over the past year when I've been more kind of stuck inside, without the ability to hang around friends and coworkers as much. I've done a big deep dive on trying to understand why the insurance business doesn't attract the same level of talent as other businesses in the financial services space.
I think it's crazy because I think that the innovation that's happening in insurance is incredible. Not only innovation from a technology standpoint but a product innovation perspective as well, I think it's fascinating. The ability to actually enhance and empower our clients is incredibly unique in the financial services space. I don't think that there are a lot of other industries in this space that are providing this type and this level of value.
The third part of it is, being in insurance, you get to understand and get to deep dive into businesses and industries, unlike any other profession. I know more about specific industries than the VCs who are investing in those industries. When you're helping a combo company get insurance, the type of information you need to know to represent them properly to an underwriter is incredibly in-depth. It's empowering. It allows us to have a better understanding or view of innovation across multiple industries, which is unique and fascinating.
JK: That's awesome.
DG: Benji, I've enjoyed every bit of this conversation. Maybe more than I expected to be perfectly honest, but it's been great stuff. I'd like to wrap it up here unless Jason has something else he wants to add. I know you probably have to go off and do another crypto seminar or something, so we'll let you go. Anything else you want to add before we go?
BM: No, but it was a pleasure speaking with both of you. My hope for this podcast, I know this is podcast one, but my hope is that you guys share stories that help enlighten the public as a whole. Help them understand a little bit better the nuances and exciting and innovative aspects of insurance. Even though this industry is 300, 400 years old at this point, in some cases, even older, we're just scratching the surface, from an innovation standpoint, from a talent perspective. I think this is going to be an incredible opportunity. Hopefully, you guys are at the forefront of spreading that gospel.
JK: Yeah, this is podcast numero uno for us. You've been an inspiration for me in taking risks, and I'm optimistic and excited for what we can do with the podcast and the stories we're gonna tell, and the amount of fun we're going to have with it, candidly. I know we have an opportunity to have more fun and entertaining people like yourself in upcoming podcasts. This has been great. I really appreciate you taking the time and being a part of this with us.
BM: Of course. Anything for you guys. Anything for insurance.
DG: Thank you for your time, Benji, and thank you for being a champion of insurance. Take care.
BM: No problem, guys. Take care.
Thursday, March 25, 2021