Forget Everything: The Tagline of The Next Billion Dollar Startup
It takes guts to make a bold statement in public like the headline above. Working in VC, I’m always reading about promising startups, funding rounds, and innovators in the ecosystem. Recently, I came across a startup that made others look like child’s play.
Lemonade is an insurance technology startup with a powerful mission. To paraphrase from their website, Lemonade’s mission is to transform the business model of insurance by injecting technology and transparency into an industry that often lacks both. Seeking outside validation for this gem, I sent their app to a friend who recently moved into a new apartment in NYC. As he put it, “I wasn’t in the market for renters insurance but the experience was too good not to signup.” Feeling the magical element of Lemonade, I started to develop a personal thesis as to why I believe they will be a billion dollar startup.
For those unfamiliar with the term, a cult brand is “a product or service that has an energetic and loyal customer base.” To take it a step further, cult brands are able to turn customers into fanatics that live, eat, and dream about the company and their values.
In this book, Douglas Atkins (Head of Community for Airbnb) details how the world’s biggest brands rally their customers into extreme brand ambassadors. For example, how does Apple convince people to spend 2–3 times the price of a standard Android for an iPhone? Furthermore, why do iPhone users wait on line overnight (in the cold!) to be among the first to own the new device? As Atkins’ research uncovered, the strategy lies within customers believing that the brand is radically different than the competition. Everyone is struggling to fit in with a community of similar peers. To take advantage of this, brands deploy certain tactics to draw customers into a cult-like community. Sticking with Apple as our example, they spent millions of dollars inspiring the world that their products are built for creative people who don’t fit in with the Microsoft community. Better yet, Apple’s products are for people who Think Different, as advertised in their famous commercial campaign. What resulted was a cult of Apple fanatics that live, breathe, and dream about Apple’s vision and products.
Lemonade is on a similar path to developing a cult brand. If you do a quick search on Twitter, you’ll see tweets from customers who are amazed by their product and even write blogs about it. In comparison to Apple, Lemonade markets their product as the complete antithesis of the archaic insurance industry. Just take a look at the headline of their website.
Lemonade controls the story from the moment a user lands on their site. “Forget Everything You Know About Insurance”. People cringe when having to deal with insurance companies. The painful process, out of control premiums, and lack compassion is what the industry has become known for. Instead of Lemonade spending millions on advertising to show they world they are different, they do it in six powerful words. “Instant everything. Killer prices. Big heart.” The narrative is straight forward and upfront, which is also the opposite of the average insurance company. Side note: I haven’t seen any data on this, but I’m will to bet that the call-to-action under the headline has an excellent conversion rate.
While it’s too early to call Lemonade a cult brand, they are definitely on the road to becoming one of the world’s great cult-brands. The best part is that they’re genuine about their claims. It’s not just a marketing ploy, it’s the truth. I’ve certainly become a believer and I’m not even a customer! (they aren’t operating in Israel… yet!)
There are many aspects to focus on when scaling a startup. Onboarding and retaining customers is extremely important to the success of any business. Lemonade’s seamless customer experience is powered by their user-friendly technology and welcome approach to profits.
In line with Lemonade being radically different from the competition, they developed an artificial intelligence bot that onboard’s customers in a matter of minutes, known as Maya. Instead of combing through legal documents containing terms and conditions, pricing, and coverage, Lemonade makes it super simple to know what amount of coverage you’re getting for your money. On top of that, the pricing is extremely attractive. When it comes to filing a claim, customers are directed to “Maya’s cousin”, A.I. Jim. A.I. Jim asks customers a few questions and then prompts the user to take a selfie video describing the incident. Within a few seconds, A.I. Jim views the claim, cross-references it against the policy, runs anti-fraud algorithms on it, and approves or denies it. That’s it. No more waiting for a letter in the mail that could take weeks or months to come. A.I. Jim is taking the insurance world by storm with “his” first world record: approving a claim in under 3 seconds. More on that here and here.
Insurance companies are notorious for lacking compassion. In contrast, Lemonade donates a portion of their profits to worthy causes and charities. Wow. Signing up for painless insurance and giving back to the community? Seems like a no-brainer.
Perhaps the greatest selling point is their team. Lemonade is founded by Daniel Schreiber and Shai Wininger, two seasoned entrepreneurs with decades of operational experience. Daniel had a long career at SanDisk, the company known globally for their leadership in the flash memory space. Daniel then went on to become the President at Powermat, co-managing the business alongside their CEO. Shai founded a handful of startups, including Fiverr.com, the platform that revolutionized the Gig economy. With decades of operational experience, they are uniquely positioned to navigate the competitive landscape and scale up Lemonade.
Lemonade is on track to disrupt the insurance industry and inspire fellow entrepreneurs to tackle similar industries riddled with archaic processes. Armed with a fresh look and strategic execution, Lemonade has created a community that will continue to pave the way for a better, brighter insurance experience. I’m no expert, but I’m pretty sure Lemonade is going to be a billion dollar company.
If you enjoyed this post, give it some love with a green heart (❤❤❤) and send it to a friend. If you hated it, send it to the most irritating person you know.
Hi! I’m Jordan, and I work in VC in Israel. There’s a lot happening in the VC/startup scene and I figured I’d post my observations here. All opinions are my own. Feel free to follow on Twitter: @jordanodinsky.