The Dodo Enters The Pet Insurance Business

Another way to disrupt this market is by selling insurance directly to the end user, like Next Insurance, Lemonade, Hedvig, and others do. Several startups, often working as Managing General Agents (MGAs), have gone to market with great brands to attract end users and grown impressively large businesses. Based on their reported growth and customer ... See more

For now, the venture-backed insurers are consumer-facing insurers, which is important to note because consumer is a much smaller market than selling plans through employers.

The uncertain one: Lemonade thinks the industry doesn’t acquire enough customers online, and that this locks them out of low-premium policies. But Lemonade is also betting that they can convince customers to spend more over time.

The media business has traditionally been built around content. There have been hints of culture driven commerce throughout the years in the NYT blue bag, the New Yorker tote bag, but most of these attempts teetered on the edge of membership and nowhere near the manufacturing of subcultures. We are seeing new media companies begin to work towards t... See more

Also, their discipline of walking away from insurance business when it was badly priced was key to their success.

By verticalizing, digital media companies could tap into more valuable niche audiences. Many of the companies above eschewed ads in favor of subscription or events, which better mined value from their most engaged customers.

The bearish case is that these businesses are very capital intensive to build, as shown by the large and repeated capital raises, and they’ll need to show a large return to justify that capital. That means operating at scale, and also escaping from the DTC markets into the large employer-driven insurance markets, where the incumbents will remain in... See more

Highly venture-backed DTCs largely have two pathways to longevity and success. They can sell to an incumbent, much in the same way that Bonobos and Jet.com have sold to Walmart, or they can try their luck and go public. The incumbents are willing to overlook the less than ideal DTC economics because what they’re buying isn’t a business model, it’s ... See more