Last updated on May 13, 2022 - My Free Marketing newsletter 👀
Here are 3 crazy facts about Daniel Schreiber:
During my trip to Israel, I met some incredible entrepreneurs and CEOs.
Daniel Schreiber is one of those people.
Daniel is the CEO and co-founder of Lemonade, a tech startup blowing the doors off the insurance industry.
These guys are no joke — they secured the largest seed investment EVER from Sequoia Capital (the famous venture capital firm behind Apple, PayPal, Instagram, and more).
In this post, you’ll learn 3 key things:
Listen on iTunes / Apple Podcasts - Listen on Overcast.fm
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In the late 1990s, Daniel was SICK of practicing law.
F calling people “my lord” all the time. Daniel wanted to make the jump from corporate lawyer life to startup life.
The hardest part of starting a business for many people isn’t coming up with the idea...
It’s making the jump from a safe, secure job into the unknown.
This is why some wantrepreneurs never make it.
Daniel ran into similar hesitation:
So what encouraged him to take the risk?
Daniel knew he’d always have his law degree and experience to fall back on. If the startup life didn’t go according to plan, he could go back to law.
He started his first company — a software security business — in 1997 and it was successfully acquired in 2002.
With ups and downs, Daniel managed to help a few more companies grow. Steve Jobs threatened to sue one company Daniel helped grow! 🍎
Listen on iTunes / Apple Podcasts - Listen on Overcast.fm
To follow Daniel’s lead, here are 3 tips to succeed as an entrepreneur in a crowded space:
Daniel shared 2 fascinating viewpoints during our chat:
Daniel’s company, Lemonade decided to attack a TRILLION-dollar industry. 💸💸💸
The average of the companies in the industry is OVER 100 years.
Talk about David vs. Goliath or fighting the 800 lbs gorilla. 🦍
To combat the giants in the insurance industry, Daniel thought it was too challenging to test a minimum viable product. It required more capital.
Daniel and his team took a huge gamble going all-in building a revolutionary product:
We had a pretty strong conviction that it was right and we spoke to smart people who we trusted and we found investors who are willing to gamble on the vision. But we had some sleepless nights over this. We didn't really know.
The hardest part to judge before you launch is making sure your idea works in reality.
By asking consumers how they feel, Daniel believes you’ll get obvious, self-evident feedback you’d already know.
You have to do the hard work upfront. You have to bet the company because you can't test everything.
Daniel and his team felt that with insurance the problems run deep and the only way to solve them was to build their product without testing.
(Plus, with insurance, you can’t sell anything until you have a license, so this makes it a bit harder to test your assumptions).
I don’t necessarily agree with Daniel’s point about avoiding minimum viable product launches, but it’s interesting to hear his point of view.
If I were in Daniel’s position I might have:
Both my strategy and Daniel’s strategy can work — there’s more than one road to success.
You don’t ALWAYS have to follow the traditional and well-trodden path to building a business.
Before Daniel launched Lemonade, he didn’t know what he was going to do.
He started looking for an industry ripe for disruptions and innovation.
After looking at tons of options, including healthcare and other huge industries, he decided to tackle insurance:
I've seen almost no innovation in insurance. Not many sectors that measures in trillions of dollars and have been unchanged in 100 years and are so unloved.
For an entrepreneur, the combination of an unloved industry, a lack of innovation and an endlessly big market is a goldmine.
Think about it, almost everyone pays for some kind of insurance. But have you ever heard anyone say they “love” their insurance company?
Hell no. 👎
Daniel saw this as an opportunity he couldn’t let pass by.
As a trillion dollar market, there’s no shortage of insurance companies. Lemonade faced a ton of competition.
In order to make a dent in the industry, they needed to have a fresh, new approach to insurance. So he started to rethink insurance from the ground up.
In its purest form, insurance is a GREAT thing. It's helping you out in a time of need.
But as an industry it’s so unloved. Daniel began to ask, “Why?”
From the perspective of a traditional insurer, every dollar they can avoid paying you is a dollar of profit.
That makes for a PROFOUND conflict of interest between the insurance company and their customers.
In other words, the more they can avoid paying you, the more money they make, and the more they make their investors happy.
Lemonade set out to create a loveable, trusted insurance brand that doesn't have that conflict of interest at its core.
When you enter a competitive market, you need to have a unique angle.
For Lemonade this means:
When you think about your business, how can you focus the conversation so you ALWAYS come out on top?
Try to think about where your competitors fall short and when you can really shine. This is what you pitch to potential customers.
Check out more lessons on making it BIG in an ultra-competitive market.
Here is Daniel Schreiber, the CEO of lemonade. Which is an insurance company aiming to disrupt the trillion dollar industry.
You will learn the journey of a law person who becomes the CEO of a software company with remarkable ideas.
How avoiding Minimum Viable Product route was a risky thing and how it payed off.
The simple way to scale in a crowded market. (Hint: Tell a different story)
His law degree helped him as a cushion if anything went wrong. And the moment he dived in, the experiences kept adding and he was pushing himself harder than before.
Being at Sandisk till 2010, the second biggest company to Apple helped him in learning a lot. Since he and his team weren’t competing with apple. Sandisk had different vision. Catering to the lower priced gadgets which comprises of large chunk of consumers to whom Apple wasn’t catering.
Technology has the power to bring out massive change. However many few companies have been able to do that. And he intended to bring out a wave of new ideas, vision and change in the insurance sector.
Insurance sector isn’t a loved in general. The consumers are unhappy and they love to apply for false claim. Above all there hasn’t been any good disruption in the sector for more than 100 years.
There is a great opportunity here. If you can bring something to the table which is better, more human and tell a story which connects then people would respond positively.
It is obligatory to say, insurance company isn’t for the faint of heart. There are risk involved. For example, you couldn’t go for the MVP because the consumers would say positive response to our questions. The real test happened when we launched after a 13 months preparation time.
The Business Model
Taking a flat fee is unheard of in an insurance company, his company does that. Giving claim in blazingly fast time, in many cases immediately is something many company shy away from, they do that.
And the most humanizing part of their business is to give any disposable income left from unclaimed amount to charity. Doing this has separated them from other competitors. The consumers know that their money will be claimed or given to charity - they are happy and want to associate with them.
Part of the approach is to take the hardest route. For example, they applied for a licence from New York because they knew once they get it then the process for other states would be easy.
One of the biggest challenge was hiring people. Because when your company is new, the consumers look at the history of employees. The great minds they brought to the table had to have an appetite for risk because they are disrupting the industry, unsure about future and lot to learn.
There are obvious challenges in the industry like startups replicating the idea. Or the big insurance companies trying to overshadow us by spending huge money on advertising and other things.
But they are determined because the response has been overwhelming. Starting from securing the largest seed investment EVER from Sequoia Capital to increasing clients every quarter, they are happy.
Which industry do you see as stagnant? What disruption could you imagine? Go wild.
Couldn't comment on the main Podcast page anymore so doing it here: I absolutely love your podcasts. Both the topics, the people you bring on and the way you interact with them.
One practical thing that would make me love them even more: I download each episode, but the filename is always just the interviewee's name, so I need to change the filename, copy/paste the title and add "NK" to know in my list of podcasts which ones are yours and what they're about, as the names alone don't tell me anything. I'm sure you have international organizational reasons for naming them like this, but a girl can try 🙂
The MVP argument is an interesting one. I suppose it depends what you call 'minimum viable product'. So many companies use minimum viable product and then expect rapid growth. With that growth comes the necessity for development of infrastructure and customer expectations of product development. Suddenly the minimum viable product is no longer viable. Minimum viable product is all very good but it must allow for your desired growth.
Favorite boy band - B2K
Not the most interesting talk, I'd say mostly because of the industry, but definitely a down-to-earth and realistic discussion.
I checked their website and you can clearly feel the younger demographic that they're going for. Noah, you can probably check their blog if you haven't, looks pretty neat. Seeing Dan Ariely as part of the "behavioral" team was something that surprised me. I guess it's just about traction or time until it will become bigger.
Also surprised at how many people from Israel are hired in the team, I suppose the Jewish power is real. Nice to see that, especially since I'm also out of the US and have the idea that it's pretty much a US filled market.
One thing I noticed while reading the blog post, it seemed like too much of the content was pushed toward the end. I'm no expert in structuring a blog post, I'm just starting out with my own, but I for one would've probably liked your personal opinion at the end, but might be just me, who's listened to too much Tim Ferriss.
Overall nice read and lemonade seems like a great business, Mr. Daniel seems to know how to run a company efficiently.
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