Steve Lekas is the Co-Founder and CEO of Branch, an insurance company focused on instantly providing bundled home and auto insurance. Steve was interviewed by Ron Rock, Senior Director at JobsOhio, a private nonprofit corporation designed to drive job creation and new capital investment in Ohio through business attraction, retention and expansion efforts.
Steve, what 2022 accomplishments are you and your team celebrating?
“We had several really big things to celebrate in 2022. The first was that we had year-over-year growth of 450%. We achieved our Series C fundraise and unicorn status, raising $147 million. We launched a term life insurance product. We achieved certified B Corp status (one of the few insurers to be designated as such.) We also launched another 16 states and the District of Columbia, onboarded several hundred new Branchers to the team, including a CFO and a new Chief People Officer, and our first independent board director all in the calendar year. There are many other achievements worth celebrating, but those are some of our biggest.”
What has allowed your team to maintain an exceptional culture while scaling the business?
“I can't tell you this was exactly how I expected it to happen. I think it’s a hallmark of starting from scratch. From the beginning, we designed our business around a mission and discussed how Branch is on a mission to make insurance less expensive so more people can be covered. Having that clarity for our employees is aligning. It doesn't leave a lot to the imagination about what's important. Once we laid out the mission, we tried to design a brand that could allow us to make a promise to our members that would ultimately allow us to achieve it.
The end of our brand narrative reads, ‘Branch is getting back to getting each other's back.’ This concept was getting back to how insurance was originally intended to work in this country. Getting each other's back is what we think you should expect of your insurance company. For us, particularly as a manager of a cooperative, it's our members' money. So we're handling their money and it's our job to ensure we collect enough and reapportion it when people most need it. Once we defined the mission and brand, we sought to design a cultural system that enabled our employees to live the mission and the brand. We thought that if we were true to it, our members would experience it. Those combinations have allowed us to select candidates who are aligned with those values and want to make an impact and be empowered to make real change.
We set clear expectations upfront. It implies a lot of humility and a service orientation. So we designed what we call ‘the roots of our tree’ (there are a lot of tree metaphors at Branch). In doing that, the roots have been the guidepost that allows us to create our ideal workplace and stay true to our mission.
Once we designed the cultural infrastructure and circumstances by which our culture could scale, the harder part began: being disciplined about pruning the tree. You can't take everyone. The true oxygen to scaling a cultural definition is to be disciplined about who you let in and moving on from those employees who are misaligned with the company culture. I've been in big and small organizations and led large teams as well. Something that can kill the culture is letting someone stay in the organization when they are clearly misaligned, just because they get results. Then that becomes the impetus for other brand and cultural values getting thrown out the window. It requires tremendous discipline to decide not to operate that way. You're going to ensure the integrity of the culture, and you're also going to believe that brand and culturally aligned people can also get results in the right system design."
How does Branch maintain its innovative spirit, while evolving into a larger insurance company?
“When I talk about building the culture as the company that I always dreamed of working in, my preference is: show me the thing we want to achieve. Give me the mission, show me the vision, and then resource and empower me to do it. So, within the cultural definition at Branch, we ask our employees to stay curious. One of our roots is to ask why. Then we ask them to design a v1 and call the play. Codifying these within the cultural definition itself, we empower employees to consistently find problems to solve for our members. It’s living the brand: “we've got your back.” Part of getting our members' backs is to take on the complexity of insurance for our members. Our employees are empowered and expected to make as much valuable impact as possible. Putting these things together (living the brand, being curious, making an impact on the path to achieving the mission) is like a wheel turning. Once it's moving, it scales quite well.
Additionally, in the early stages of raising money on the coasts, I was frequently asked, ‘why did you choose to start in Ohio?’ I had to break it down to its basics. As an insurance startup, you are attempting to do something no one has done before. If you start in a state that is incredibly inflexible in its regulatory model, it makes it very difficult to iterate. What happens in a startup is that you're building and changing so rapidly that the more information you gain out of each iteration amplifies all of your future outcomes. The benefit compounds very much like investing. Most early investment advice is, ‘the sooner you can start investing, the better.’ The information from rapid iteration works the same way. So, we chose Ohio because, first, it's not exposed to severe natural, catastrophic risk, allowing us to prove our concept with fewer variables. Second, the regulatory environment is iteration-friendly. It's one of the reasons why we have as many or more insurers competing in Ohio than in any other state.
The state was also willing to work to our benefit in that germinating moment to help us stay alive. Because if there's any advice you should receive as a founder, it's, ‘don't run out of money.’ To have a state that cared whether you lived or died made a big difference for us. On the innovation side, we chose to both domicile and launch within Ohio. Choosing to do them in the same place had a lot of benefits. Ohio has been a big part of our founding story. It remains an environment that encourages us and considers things that will not only help us grow but also help us achieve our mission. There are lots of variables that go into a founding story and Ohio has been an important one for us."
Are there expectations for 2023 that you can share with the community?
“We've got some amazing things planned for 2023. I expect this is going to be a pivotal year for Branch. I'm not going to pull back the curtain too much, but I'm excited for you to see it as it happens. A couple of things I will tell you is that we will continue growing the business rapidly. We're still small in a very large market and getting to scale allows us to achieve self-sustainability. That's of key importance to any startup. But it's been our plan since before we launched. This growth gets us to the scale that's necessary to become cash-flow positive.
The second thing is that we'll be launching new products. We’re launching condo and motorcycle insurance and a new way to think about our bundling experience. It will allow our members and our independent agents an insurance experience that continues to wow, but allows more people to move their entire insurance account to Branch in a single transaction. Additionally, we'll continue our national rollout. That enables us to continue creating more embedded partnerships across mortgage, auto, home security and some other industries that we work with in a way that’s unique to Branch because only Branch is instant. We'll also continue growing our independent agency channel, equipping more agents across the country with the seamless Branch tech that helps their customers bundle and save with ease.”
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