Brian Stricker is the Chief Insurance Officer at Fabric, founded as an insurance agency to help young families establish a financial foundation, and licensed to sell and administer term life and accident insurance products. Brian was interviewed by Andrew Daniels, Founder and Managing Director at InsurTech Ohio.
Brian, you've been an executive at a big company, a medium size company and now an insurtech, what are some of the lessons learned from each?
“One of the real advantages of a large company is its brand. Having often been at this for decades, they’ve become known, and have a very recognizable brand. In addition, they’ve got resources. Whether it's capital, money or people, they've got the ability to bring more to bear on any given problem or initiative, and have so much potential to accomplish what they set out to do.
Because these large companies have been at it for decades, I've also observed that they can also be further away from the customer, often not quite as connected to the people that actually need what they offer. There can be a tendency to be a bit more bureaucratic, with more hoops to jump through to get things done.
Working for Fabric, it's a whole different culture. While the essence of the company is the same at the core, as a small company, it’s more customer focused all the way up to the CEO. Generally, a small, early stage company is closer to the reason why the company was founded to begin with, often some innovative approach focused on a customer problem that needs solving. A larger company may have gotten a little bit away from their original reason for being founded. Also, smaller companies are often much more fast paced just because of the lack of sophisticated systems and processes that can slow them down.
I’ve also found that in smaller companies, because there's so few people and so much to do, people wear a lot of hats. In any given week I could be working on strategy, operations, pricing products, underwriting, etc. As indicated, one challenge with small companies can be resources. Because many are not yet profitable, they may rely on the investment community for a few years, and these funds need to be focused on critical matters to get the company to relevance and profitability. On relevance, startups need to focus a lot of their time, energy and money establishing and developing their brand, since they’re often unrecognizable in the market they’ve entered.
Medium size companies, in my experience, are a blend of both. While that can create disadvantages (not big enough, not nimble enough), I actually think that it can be the optimum size for a company. One company I worked for had between 150-200 people and felt like a bit of a small town. Everybody knew everybody, and we had enough resources as long as we stayed focused and strategic.
All said, while there are advantages to each, it may be that the most productive structure is an insurtech/Greenfield initiative within the resources of a mid- to large company. If it can leverage the benefits of independence, customer-centered innovation and true entrepreneurship while being able to leverage the resources of a large company, that’s a powerful combination.”
Fabric was recently acquired by Western and Southern. How did you get to that point, and how are things going so far?
“Fabric was at that point where it was ready to either become a carrier company or partner with a carrier. As we looked at options, the co-owners of Fabric decided that the best answer for the future growth of the organization was to partner with Western & Southern. Western & Southern was interested in Fabric’s digital & direct to consumer expertise, and so the acquisition was executed in January of 2022; we are now their digital, direct-to-consumer arm.”
What advice would you give other startups as they encounter acquisitions like this?
“The key is stay focused, make sure you're crystal clear on what your mission is and what you're trying to accomplish. If you’re at the point where you’re looking for a partner, focus on alignment. That alignment might be most critical for the future of the company. Potential buyers need to see what you do as strategic and complementary to what they do. It’ll increase the likelihood that they will fuel you with resources. If you can have someone in the acquiring company who is your champion, they can maneuver through all of the hoops and the steps that are in place with a larger, acquiring company.
Try to keep your startup identity, which is what we have been able to do here at Western & Southern. We absolutely love the people of Western & Southern that have acquired us. But again, they've got a way of doing things that have got them here.”
What are your keys to innovation success?
“There are three core components to creating innovation success in my experience. One is the development of a creative solution, a second is that it must solve a customer problem and the third is that it must ultimately be part of a sustainable business model.
Regarding a creative solution, that could be technology, a new product, a special process or even a creative use of data. However, if that's all you are, all you have is an invention. It's something cool, neat and different, but you haven't really found a way to solve problems and monetize it on behalf of the organization.
Think about a Segway. There was nothing like it at the time, but I think one of the reasons why it failed is it really wasn't solving a customer problem. It wasn't going to do something special for people that people really needed.
Lastly, all of that needs to work within a sustainable business model. That means you're generating revenues, and at some point in the future, doing it profitably. Many startups, whether in insurance or otherwise, may be generating the revenues, but they haven't gotten to the point where there’s enough income to create longer term sustainability.”
Can you talk a little bit about the idea that people aren't buying your product but that they're hiring you to do a job?
“This is a concept advanced by Clayton Christensen and his team a few years ago. The idea: if you’re trying to grow your business, don't just keep adding features to your product and hope that people will buy it. Take the time and look at what they’re trying to accomplish, and what job it is that they are hiring your product for. Also look at what other options they’re considering hiring, which may not be in your industry.
He gave a great example of milkshakes in a fast food restaurant; they were looking to sell more. They tried adding more features but nothing was working. So, they decided to sit inside that fast food restaurant for 24 hours and watch people. What they noticed was that they were selling a lot of milkshakes before nine o'clock in the morning, which was counterintuitive to them. So, they asked some of the buyers, ‘Why are you buying a milkshake so early in the morning?’ What they heard was that people were buying milkshakes at that time of morning to help them with the long commute they have in front of them to work. They knew that when they got to work, they would be hungry, and they didn't want to be in that spot. They considered hiring a banana (gone too quickly), a candy bar (wouldn’t keep them filled up) or even a doughnut (too messy). The milkshake did the job because it had a thin straw that made it last longer. This allowed them to drink the milkshake throughout their entire drive. The lesson there is to take the time and observe your customer, see what job they’re hiring your product to do, and that will be a great guide. Also, go outside of your industry when you're looking at the products that you’re competing against.”