It's Episode Two of The Enlightened Agent, and we're joined by a true insurance product innovator—David Carpentier, CEO of Assurely.
It's an interesting conversation about bringing new products to market and solving the coverage challenges that emerging, technology-driven business models create.
Season 1, Episode 2
Dean Gemmell: Hi everyone. I am Dean Gemmell, and I'm joined once again by the CEO of Broker Buddha, Jason Keck. We just wrapped up a really great interview - our second one in this podcast series - with David Carpentier from Assurely. Jason, how do you know David? How did you become an acquaintance of his?
Jason Keck: Yeah, Dave and I met through the New York City insuretech scene, the start-up scene. An ex-broker who cracked into the insuretech world was an early adopter of ours. He's another young, hungry entrepreneur with a background in sports who I found really interesting to talk to and learn from.
DG: We talk to a lot of agencies that sort of carve out a niche for themselves. He's alter-niche, though. He's like the niche before the niche happened.
JK: He is super early, but I think his background in the space means that he's got his finger on the pulse, and he understands where the opportunity is. Like every entrepreneur, not everything he's going to do is going to be exactly right, but he's got the capacity to learn and react. He talked a lot about that in the interview; the pace of learning is really growing, and I think that provided he's got his ear to the ground, he's gonna grow. He's going to evolve, it's going to iterate, and I think he's going to be hugely successful.
DG: He's an interesting guy; it was an interesting conversation. Let's get right to it.
Hi and welcome to The Enlightened Agent podcast, the show that tells the stories of insurance brokers and professionals and tries to make some sense of where this industry is headed. Today I think we have a guest who can help with that. David Carpentier, co-founder, and CEO of Assurely, welcome to the show.
David Carpentier: Thanks for having me, guys.
DG: Yeah. It's great to have you here, David. I know a little bit about you from hockey fights.com. I looked up two things there, but that's not the whole story with you, of course. Give me a little bit of your backstory and what inspired you to start Assurely, which you're a co-founder of.
DC: Got it. Yeah, a Google search finds out that I was really bad at fighting left-handers when I was playing hockey. I grew up in Minnesota. I was able to play hockey through my mid-twenties. What happens when you're a highly-motivated, educated ex-jock that's not good enough at being a jock anymore is that you find some financial products to swing.
I landed in the insurance space. I grew up at a great middle-market insurance broker called USI; I loved it there and had a great experience there. That's where I kicked off my career and grew myself in the insurance space.
DG: What made you want to co-found the firm you're at now? What opportunity did you see in the market that made you want to start Assurely?
DC: I think it's probably a common theme with a lot of folks in my shoes. You get a bite, or you find out what the word or the phrase innovator's dilemma means - especially at a corporate level. Specifically at USI, not to name names, but there are a lot of brilliant humans at USI. A lot of extremely talented folks. When innovation means disrupting your own business model, that is where you get stuck. It becomes an uncomfortable place for somebody like me that was in their early thirties and had seen a little bit of success already. Candidly, I had a little bit of desire to do more.
I'm not saying that what USI, Lockton, or anybody in the brokers was doing was wrong. I just had a sense that there was another way of doing it down the road. I also had the tolerance to say I can take a tenure swing at this.
JK: The innovator's dilemma is real, David. For those who don't know about it, it's this idea that at large companies, the potential for change is just really, really hard. You've got long development cycles, low tolerance for risk. Clearly, these companies have done things really well, and they've done those things well because they've focused on them.
New opportunities are interesting, but they can often be distractions. The risk they have is that they don't go after those, or they don't find a way to go after those, and they lose good people like you. But in a lot of cases, they can weather that, but it doesn't mean there's not an opportunity to go out and go after those new ideas.
Kudos to you for taking the plunge on that and getting the company off the ground.
DC: I appreciate that. To USI's defense, I don't think they lost me. It was a very open conversation. There's the other side of this, where, when certain activities, whether it's sports or some other discipline, if you do things a certain way and you're rewarded for it consistently, changing from that is difficult.
JK: Sure - it worked for you.
DC: When you are continuing to grow a top line of a business and private equity sponsors continue to be happy with results, and investors are happy, there's not necessarily a reason to change. So you take the innovator's dilemma; you take what I've now learned of what channel conflict is - not only from a corporate level but also internally. Jay, you tell me, do you battle channel conflict by saying I'm going to make that producer's role easier and maybe diminish their value a little bit? Or do you run into internal agent conflict in your business?
JK: Not from the people we're selling to. In our business, we sell to the executives, the principals of the agencies, and the people who care about efficiencies and client experience. We do run into a little bit of conflict at times with the users. They're saying, 'Oh, what's wrong with what we're doing now? I don't see any reason to change,' - that type of thing. We tend to get through that pretty quickly once they get experienced with the platform. It's not as much, from a channel conflict perspective. Do you? Is that something you're dealing with?
DC: No. We ripped the bandaid off that. In hindsight, when you kick your feet back and talk to some of your old friends in the business, if you're going to go in and sell to one of the big channels, some direct distribution of certain products, the executive story down to high performing producers is a difficult conversation. You're saying, 'Hey, you're bringing in a dollar of revenue, but guess what? We're only going to compensate you, going forward, on 70% of that. The year before, we were compensating you on a hundred percent of that.' They’re like, 'Well, cool. I'm going to go across the street. Over the next 24 months, I'm going to migrate my book across the street.'
Now you have the same thing; it's not just insurance companies that don't want to pay the cost of acquisition to the broker, but even internally. If you start disrupting your internal business development channels, there are problems there. I think what that's created for us, as somebody trying to bring a different model to the market; it has created a little bit of - I don't know what the analogy is, Jason. There's a little more runway because those are real challenges for the incumbents. We don't necessarily have to be perfect to add value. It also gives us a little more of a leash to make some mistakes and correct those before there's full adoption of some of these different operating blocks from the intermediaries.
JK: That's exactly the dilemma. The large companies don't have the tolerance for that, whereas you can get things wrong four days a week, and if you get something right on day five, then you made progress. That's batting only 200 but still making a move.
DC: We had an internal call yesterday. We had a quarterly meeting here in Toronto. One of our data analysts - a young, extremely bright person - he's probably a little more academic-focused than grinder-focused, which is a little unique at an early stage. He popped up, and he said, 'Talk to us about your unique value proposition, because, like a lot of other folks like me, when you're in a room, and you see some of the traditional ways that things are done, you think well, that just doesn't make sense. Why? And his response is, "because."' He challenged us in an awesome way to distill down the value proposition - even internally. I wanted to move on with the meeting, so it was a pain in the ass. My co-founder, a gentleman named Ty Sagalow, who a lot of people know in the industry, he so eloquently put it, then, of course, the pure self-promoter that he is, he pulls out his book. He said, 'Look at page 74 of my book and read the next 14 pages.'
He talks legitimately about some of the challenges: innovation teams, or lack thereof, or what the dynamics are and these large organizations with a focus on the insurance space. Here's a plug for Ty on Amazon - The Making of Lemonade by Ty Sagalow.
DG: It's always good to have a book to plug!
DC: There you go. I want my commission for how many books come through Jason. Jason, maybe you can put this on Instagram and say click on the link. Click through to buy the book.
JK: Yeah, there's the button.
DG: We'll get you a hotlink. You said you're taking a ten-year swing at this. How many years are you into this so far?
DC: It's not calculated other than the fact that I started making money relatively early. I was a single guy. I didn't have a lot of expenses. I had very little debt from school. I haven't owned a car since 2006.
DG: I met you in New York at a meeting, and you bicycled there.
DC: Oh yeah! Of course, I was a Citi Bike fanatic! It also helped me to keep fit.
DG: Yeah, it's helpful for that.
DC: One of my close buds and I always check on the Citi Bike stats. But that guy, he was afraid, would take a Citi Bike for four blocks. So, he would always beat me.
JK: Easy, fun! So David, tell us about Assurely. What is Assurely? You clearly left the mothership and have gone out on your own. Tell us about the company. You talked a bit about the founding story but tell us a bit more.
DC: We were trying to bring a new model to the insurance industry. People oftentimes ask, are we a broker, are we an MGA, etc.? The answer is yes, but at its core, we build new or adjust existing insurance products for changing industries. Using the last 12 months as a case study, the world's changing, and the acceleration of change is not going backwards.
When the world changes, customers change. The way people do business changes, and, inherently, from an insurance perspective, risks change. The insurance industry needs to adjust to those risks and adjust those risks fast.
JK: So you're building insurance products? Building and distributing insurance products?
DC: It's not just the insurance itself. The customers also changed. Once we do that, our goal (we're at about 80% distribution this way now) is partnering with non-native or non-insurance native third parties and embedding ourselves into that. There's a lot of work and talk about embedded insurance out there now - embedded financial services. Plaid really made that a fad with the VCs. It's the same concept, whether you are a broker managing private equity portfolios. It's a concept of finding an entry point with better economics, serving a better value proposition for the stakeholders, and allowing you to analyze, distribute, and transfer risk more efficiently.
JK: Awesome. Your first product is called TigerMark, correct?
DC: It is. We're really excited about it.
JK: What is TigerMark? Who needs it? Who's buying it? What can you tell us about TigerMark?
DC: I might have to tell you about a story behind the name, too. TigerMark is a DNL-based insurance product specifically built for companies that are leveraging the internet and/or technology to raise capital. It fits a very unique position in the insurance industry. There's the Jobs Act that was released through the Barack Obama administration. March 15th is a very important day. It's really enabled companies to raise capital in a different way. Part of that, and I'm considering that I'm speaking to insurance folks here, is the concept that it allows for general solicitation in the private markets.
It has created this gray area between traditional private companies and traditionally public companies. It's welcome to a whole, but it goes back to Assurely's thesis that industries are changing. Insurance products need to adjust to those changes, and the private security space and the capital-raising space are changing. They're changing fast. There's a lot of software coming into the industry that is allowing for different business models and folks to operate differently. We have just simply changed an insurance product to adjust for those risks.
JK: Can you give me an example? This is about being able to publicly go out and say, 'Hey, I'm raising money.' Who's buying TigerMark? Who's the buyer? Do I need TigerMark? Do investors need TigerMark? Do consumers need it? Who's the buyer in the situation?
DC: The end buyer, the policyholder, is the company raising capital. Let's use Broker Buddha as a potential example. Jay, you have this great idea that you are going to digitize some analog workflows for the insurance intermediary space. It's a fantastic, critical value proposition for you. Full disclosure, everybody, I'm a buyer - a Broker Buddha legit customer.
You say we need to get somewhere between half a million bucks and a million dollars to get off the ground and get a use case in. Instead of going to VCs or friends and family, we're going to go and create a webpage. We're going to create all of our offering documentation and start marketing it to any person in the United States over the age of 18.
That can be venture capital firms, family offices, a broke-ass college kid that is really passionate about Jason's haircut and wants to throw $150 in. Whether you're raising your pre-seed, today's regulations allow for unaccredited investors to participate up to a million dollars in section 1907 if you take inflation into account. Starting March 15th, it will allow for that to happen up to $5 million raises. The next layer is Regulation A, which today allows for $50 million raises. Same way. It's like a mini IPO, which will be changing up to 75 million.
JK: Why do I need insurance for that?
DC: You need directors and officers insurance, bud. You certainly need external investors onto your cap table. If you have a board, the same value proposition for directors and officers. The main difference is that, when you generally solicit, when you have five or ten closely-held investors on your cap table, it's a much different risk profile than when you have 100, 200, 4,000 investors on your cap table. This is where the difference between public and private companies comes in.
JK: I'm at risk of some crazy kid who decided to throw 500 bucks into my half a million dollar round. He decides to sue me because he doesn't know what he's talking about - who cares? It doesn't matter why. He's just decided.
DC: He can send you a text message. He sends one of your officers an email, saying, 'Hey, I'm pissed, for whatever reason.'
JK: I don't want to deal with that. I need to be protected from that. Okay. I got it. Awesome.
DG: I love stories like yours, David, and I love guys who are doing things like taking a ten-year swing at something, or however many years it is. Tell us a little bit about something you think your agency does better now than when you first started.
DC: Everything! That could be applied on a daily basis. The velocity of learning right now is really high. There are a certain couple of milestones that we got through. Our first product, TigerMark, is out in the market right now, talking to carriers, updating it/getting more capacity. Going through this a second time and productizing the process has been-
JK: The process of getting carriers to back it? Which process?
DC: Yeah, running the process. It's very similar to running a process like going and soliciting capital for operating. Not to bring up Ty's name again, but Ty's one of the best in the business. It's fun to watch him learning and saying, 'Hey, if we could do it this way, it would be even better.' We have the opportunity to actually apply that, productize that, and start adding software to it. We started taking analog processes, or things the way that we were successfully doing them, because we were better than the average bear in our old world.
We took some of these things that we did really well and made them better. Going on, trying it a little bit and saying, we fell on our face, or this was a colossal mess. Then saying, okay, let's try it again, and then saying, oh shit, we got that right? Let's automate a little bit of that. What are we doing better? We're learning what we did wrong faster.
DG: Which is harder to do at the place you were at before. You didn't get that opportunity.
DC: Yeah, and it's harder without reps. It was interesting - we ripped the bandaid off right before coronavirus or quarantine set in on directly marketing versus through distribution channels a hundred percent or through, I'm sorry, third parties. That allowed us to get a more intimate understanding of our customers and gain product-market fit way faster. I don't think we have fully established product-market fit, but we're damn close. There are some nuances.
The next release of our product, which I've learned through my engineering team, and Jay, you know, you're an engineer, when we say product, it means the tech, it doesn't mean the insurance. The next release of the product is going to be significant, and I think it's really going to open up a lot of doors for us. So Dean, going back to a long way of answering the question, we're learning way faster. We're learning better, faster on hiring decisions, and on where we spend money with external consultants, what words we do and do not use with our customers - those things.
JK: David, I'm sure it was hard to get your first carrier and investor excited around what you do. Everybody says, 'You've got a great idea; good for you.' This is insurance. People are risk-averse, so some say, 'Maybe it's a good idea, but it's not for me.' How did you get past the initial naysayers, whether it was on the investor side or the carrier side, and really land your first two partners? You can pick an investor or a carrier that's backing the product. What was it that got you over the hump? That first step is a big one for every entrepreneur. Which one would you pick? Which hump would you pick, and how'd you get through it?
DC: Let's take all three pounds and separate them. Let's go through customers/partners. We had a lot of folks when we were talking about this, saying, 'That's cool, that's neat. That's really something that should happen.' It came down to finding that one person. This is not unique to anybody else. They had open office hours - this is obviously pre-quarantine. I'm from Minnesota, and this company happens to be in Minnesota. I just walked into their office.
JK: What type of office? Is this a carrier or an investor?
DC: This is our first distribution partner.
JK: Okay. Got it. So somebody willing to help take you guys to market.
DC: It was interesting because his value proposition was not exactly the value proposition that we were selling. He bought it a little bit. He bought, not what we were selling, and that's back to product-market fit - understanding the value proposition for these intermediaries. What it is for their end customer, etc. When it came to the carriers, Ty's name's-
JK: Hang on, what got him over the line? What was the thing that changed the game?
DC: Reputational risk was a big piece - the external value proposition of insurance. If you think about this, what are we really selling? We're selling emotions, trust, and competence. We're selling the conception of safety. Is that the right word? Perception?
JK & DG: Perception.
DC: Both of those.
DG: We can conceive safety as well. It's exciting.
DC: The confidence is important to see things through. The confidence of vendors, regulators, your customers, internal confidence. The confidence of regulators and generally having that additional layer of perceived safety was what he was looking for. The external confidence and that symbol of confidence was a big piece of the puzzle for him.
JK: What gave him the confidence to work with you? Was it Ty? Was it you? Was it the home connection? What got him over the hump?
DC: I think it was a little bit of just the fact that I walked into his office.
JK: This guy's got balls.
DG: That's the new investor pitch - you just walk in?
DC: That could backfire. We've seen it go the other way. We office out of a house in central Austin now. If somebody walked in the door here, it's Texas; people have guns here. You never know what's going to happen. But I think that he appreciated that. In general, something we got right was that we weren't out there just to sell a financial service. There were a lot of features that we put into the product that satisfied the advancement of the core industry. These went from adding capital raising features to intimately understanding this marketplace, the ecosystem, and the players, and then building product features to support that.
A couple of examples are that we have guaranteed pricing before a company raises and our pricing adjusts based on how much they raise. That can happen in insurance, in analogs, and analytical. That was an important piece of the puzzle for them, and it's a core feature of our product. The external TigerMark symbol, where they can click on a button and submit a claim, and we're not afraid to put that externally. These little features help us from a risk mitigation perspective. They're pieces of the puzzle that they just haven't seen in the insurance world. He didn't care about insurance, but he says, you understand what we're trying to do, and you built features. It was a holistic value proposition that was important.
JK: Cool. What about on the carrier side? You don't want to go into detail there?
DC: Yeah, there are so many answers. There are aligned incentives in the way that we're underwriting. When you properly align incentives, and understand the carrier's challenges around distribution and risk management, you can very eloquently point at those challenges and then work with them around those solutions. I'm being vague because I'm being vague. When I was a broker, there weren't necessarily aligned incentives. My incentive was: do not get fired by my customer.
As an MGA, and in the way that we're underwriting, we're creating partnerships in an agency in the industry that we're operating in, has very clear, aligned incentives with everybody involved.
DG: Yeah. The last question, David, before we finish with Jason's sign-off, is, what's next for your company? Do you have more products in the loop coming out? Is there a focus on TigerMark for now, but more products on the way?
DC: We're actively building other products. We have two products out to market. They're not necessarily MGA-based products, but they're the way we want to distribute and for the industries we want to operate in. The biggest piece is building supply. Building supply, building that inventory side of stuff, and then start putting some really strong analytics over the top of it, where decisions and ultimately marketplace orchestration can be applied.
When you build a marketplace, and whether brokers and agents want to think of it that way or not, we are a marketplace. We are a two-sided marketplace connecting supply and demand. To build that from scratch, it's almost like building two companies at the same time. It's a matter of going both sides and building it lock-step with each other. The demand has been there. Supply's a big piece of the puzzle. There are folks like Jason out there that are making that easier for us.
We very much want to leverage other insurtechs and partner with other insurtechs that are doing that. Ultimately, there's stuff that Jason's doing that he's gonna do better than us. We are happy to pay other folks and vendors to do stuff outside of our core strategy.
JK: The winning strategy is to focus. Do what you do well, and partner with the people who do their things well.
DC: In the near term, it's supply, building up supply, and cashing in on some of those partnerships that we spent a lot of time building on the distribution side. A marketplace orchestration will build over the top of both of them.
JK: Awesome. We appreciate you coming on a call with us. I want to wrap up with an important question that I like to ask everybody, which is tied to our brand and the Buddha here, which gets a lot of love. Enlightenment is defined as the state of having knowledge or understanding. As an enlightened agent, I wanted to ask you what special knowledge do you or your team have that sets you apart? What makes you guys enlightened? It's okay to talk about yourself. This is one of those excuses where you can build yourself up here.
DC: It's interesting because when it comes to our team, I’m the schlub! We have founders, founding members, key executives, or people that have raised over $700 million of VC capital in the insurtech space with a couple of exits.
DG: You're going to have to leave, then, David. We're going to bring in-
DC: I'm the only person that had capacity on our team. They're all busy working!
DG: Good, good. Well, it seems to me you're doing it right then.
DC: I think that just not being afraid to be wrong. When I first left the corporate space, there was that romantic appeal to innovation and start-up space. Everything was software, and there were algorithms running around. The good old grinding, figuring it out on the fly, is something that we're comfortable with. We're comfortable with it to a level that it really goes fast once we start figuring it out.
DG: That's great, David. I've enjoyed this. I love talking to entrepreneurs like yourself and people who are looking at things in a new way. I really appreciate your time. If there's anything else you want to add before we go, that's great. Here at Broker Buddha, they look forward to working with you. I definitely look forward to seeing where your company goes.
DC: Thanks, guys. This was fun. I appreciate you asking me to come on.