Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 7)

Kyle Nakatsuji: The fortunate thing for us is that car insurance is a $230 billion per year market. The fact that one person who didn’t know us wanted to buy was an indication that lots of people we didn’t know would do the same. So we ended up immediately growing pretty quickly, faster than we would have liked in fact.

We ended up moderating our growth early on, but it was really staying laser-focused as a company on getting that first person to buy the product. Because of the size of the market and the way that we built our distribution, it just started to grow pretty quickly.

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 6)

Sramana Mitra: What did you do by way of financing? This doesn’t sound like something that was self-financed. You probably started with financing.

Kyle Nakatsuji: We did. Right when we were getting started, we raised a seed round of about $2 million. About six months later, we raised another $9.5 million.

Sramana Mitra: Is this part from your previous insurance company funds?

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 5)

Kyle Nakatsuji: The thesis was actually pretty straightforward. In this new breed of insurance company category, almost everybody is focused on one thing, which is trying to find ways to offer people a quality product for less money. Insurance, even if this isn’t necessarily true in every sense, is viewed largely as a commodity by most consumers, at least, personalized car insurance and home insurance to some extent.

We were thinking about car insurance first. This is largely viewed as a commodity by most people, which means if you want to get people’s interests, price is the lever that you really want to attack.

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 4)

Kyle Nakatsuji: We thought what if we went the opposite way, and we happened to find an opportunity to deliver a high-quality product by integrating it with other companies where people would prefer to spend their time.

Now, I was running around looking for all of the distribution opportunities we could partner with as an insurance company. Where were all these places where we could plug insurance in and it would fit seamlessly with some other experience?

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 3)

Kyle Nakatsuji: When we started, we had really no money to invest but we had the ability to invest through the typical vendor payment process. We were making very small investments as an entrepreneur would. We were testing out some of our assumptions on how the model would work and why it would work.

Then once we did that, about six months later, we went to American Family’s Board of Directors and said, “We’d like to make this a regular activity. We’ve done enough experimentation quietly to understand that we’re not really terrible at it. So, why don’t you help us do that?”

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 2)

Sramana Mitra: What year does that bring us up to?

Kyle Nakatsuji: Now, it’s 2012. I’ve finished both of the degree programs and I’m looking for a job. I ended up getting a job as an attorney. I was working at a firm that exclusively did tech startup work. I didn’t think I was going to be a lawyer.

I fell into that through a contact who was great and brought me on even though he probably knew I wasn’t going to last long. I was practicing law for about a year and wasn’t enjoying it as much as I thought I should. I wasn’t all that good at it.

Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 1)

The insurance industry is archaic and offers much room for re-engineering. Kyle discusses how he is going about it.

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born and raised? What kind of background?

Kyle Nakatsuji: I was born in Milwaukee, Wisconsin. I was born and raised in the Midwest. I went to undergrad at a college in Wisconsin and then got a law degree and an MBA at the University of Wisconsin-Madison.

Building a Virtual Company to $20 Million: Rob Cheng, CEO of PC Pitstop (Part 6)

Sramana Mitra: How were you addressing the blacklist issue? How were you detecting if something wasn’t blacklisted but was a problem? How were you figuring that out?

Rob Cheng: What we’re doing is the opposite. We’re creating a white list of everything that’s good. We’re looking for every single good program that we can find that our customers are running. Then if it’s not on that list, we don’t let it execute.