Building an Online Travel Company From Barcelona: Guillermo Gaspart, CEO of ByHours (Part 2)

Sramana Mitra: Talk a little bit about what you needed to build. You needed to build some software that would allow hotels to manage this process as well as users to make bookings in this mode because none of the OTAs would allow users to even do this at the moment.

Guillermo Gaspart: Exactly. We needed to build the software just to put it in the hotels and at the same time, build the website just to offer and sell to the users.

Building an Online Travel Company From Barcelona: Guillermo Gaspart, CEO of ByHours (Part 1)

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European startups are fast gaining maturity. ByHours is a venture-funded company growing steadily and expanding globally. Read on for a wonderful story.

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?

Guillermo Gaspart: I was born here in Barcelona, Spain 40 years ago and am married with three kids. I’m the fourth generation of a hotel family business from Spain. My great grandfather was one of the founders of the first hotel groups here in Spain.

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.