Wednesday, September 11, 2019

“Newsletter: Pickleball and Alt-Protein, Our Startup Showcase and the Bees Knees (Well, Feet)! - The Spoon” plus 1 more

“Newsletter: Pickleball and Alt-Protein, Our Startup Showcase and the Bees Knees (Well, Feet)! - The Spoon” plus 1 more


Newsletter: Pickleball and Alt-Protein, Our Startup Showcase and the Bees Knees (Well, Feet)! - The Spoon

Posted: 10 Sep 2019 09:00 AM PDT

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I took up the game of pickleball recently. It's a lot of fun, and being the spry 40-something that I am, I was feeling pretty confident during my first match against a team of septugenarians.

Until they proceeded to destroy me.

My glaring ageism was a mistake that I won't repeat. Just because someone is decades older than you, doesn't mean you can count them out. If anything, you should be more wary of challenging them.

With apologies to my colleague, Catherine Lamb, for stepping on her Future Food newsletter a little bit here, lately I've wondered if the alternative meat startups will run into the same issue with their entrenched, corporate elders.

Beyond Meat and a band of young upstarts like Impossible Foods and Rebellyous are leading the charge for a new generation of plant-based proteins that taste and look like animal meat. Beyond's stellar IPO and Burger King's initial success with the Impossible Whopper have certainly put plant-based meat over into the mainstream.

But the olds are waking up and fighting back. Traditional meat companies left and right are rolling out their own plant-based meat products:

That doesn't even include the companies that are dipping their toes into plant-based meat with blended meat+veggie products like Perdue's Chicken Plus and Tyson's Raised & Rooted.

If that weren't enough, Catherine was at the Good Food Conference last week where year-over-year growth in plant-protein was the big theme, and the stage was filled with speakers from big name companies like JBS, Perdue, and ADM.

Will these established players be able to flex their big budgets, existing supply chains and marketing muscle to squeeze out the up-and comers? At this point, both Beyond and Impossible aren't exactly young pups, and each has been doing a good job so far of making their brand stick. But have they built enough loyalty and enough of a "moat" around their product to protect themselves from the olds? It seems to me they have, but I live in a bit of a food tech bubble, so it's hard to gauge what everyday people outside the industry will want.

If we are truly in a plant-based protein revolution (and we at The Spoon definitely believe we are), then we are at the very earliest stages. Over the next year we'll see if the startup software-style iterating process taken by Beyond and Impossible is enough to keep their products ahead of the incumbents, or if the incumbents will be able to show why they've been around for such a long time.

Game on.

SKS Startup Showcase
OMG, you guys! Our flagship Smart Kitchen Summit: North America {SKS} is mere weeks away! (You did get your tickets, right?) It's already on track to be our biggest event ever and that includes our Startup Showcase.

Each year we invite a handful of cutting-edge companies to come up on-stage and show the world what they are working on. This year's crop of candidates did not disappoint and we have pulled together a fantastic lineup that we are pleased to announce today.

To give you a preview, the finalists include a 3D food printer that creates food personalized just for you, video backsplashes that teach you how to cook, a stylish connected blender and a home chocolate making machine–as Bill Hader's Stefon on SNL would say, this show has everything.

Now you just have to make sure you're there to see the future of food tech before everyone else does. Use code THESPOON25 to get 25% off your tickets to SKS. Reserve yours now before they're all sold out!

Bees as a Pesticide Delivery Service
I can't say the words "the bees" without thinking of Nicholas Cage in The Wicker Man. Memes notwithstanding, bees play a really important part in the food we eat by pollinating crops!

As if all the pollinating wasn't enough work from those worker bees, Bee Vectoring Technologies (BVT) is giving them a new job–pesticide applicator. BVT's system starts with a tray of fungicidal powder set outside commercial beehives. Bees pick up the powder when they walk across it as they exit the hive and release it when they shake the pollen off a flowering plant.

The company's fungicide to fight botrytis (that grey moldy fuzz that appears on fruit like strawberries) just got EPA approval last week. With this go-ahead from the EPA, BVT can unleash those bees on commercial crops.

That is something definitely buzz-worthy.

Ugh. Sorry.

I'm going back to the pickleball court.

How a stealthy insurance tech startup bootstrapped its way to a $2.35B acquisition in less than 4 years - GeekWire

Posted: 05 Sep 2019 05:17 PM PDT

Michael Paulus (left) and Michael Rowell co-founded Assurance in early 2016. Less than four years later, they sold the company for $2.35 billion. (Assurance Photo)

It started as conversations between two friends about how to improve the insurance and financial services industries for consumers. That idea turned into a company when Michael Rowell and Michael Paulus made the startup leap in 2016. Less than four years later, Assurance IQ announced it will be acquired by Prudential Financial for a whopping $2.35 billion on Thursday in one of the largest acquisitions in Seattle tech history.

The blockbuster deal appeared to come out of left field, in part because the young startup kept such a low profile. Assurance never raised any outside capital. Instead, the two co-founders bootstrapped the company to profitability and built one of the top "InsurTech" startups that quietly reached unicorn status.

It's an unusual success story in a tech industry saturated with startups that raise gobs of venture capital dollars with a growth-at-all-costs mentality and sometimes never become profitable.

"In Seattle, we're very mission-driven and we look to solve really core problems," Paulus said of the region's tech ecosystem, in an interview with GeekWire on Thursday. "When you're taking on very large, very difficult problems that you have, that's been core to our ability to attract and retain talent. That's certainly also what led us to Prudential and the next chapter in that mission."

The deal is the largest insurance tech exit in history and one of the fastest multi-billion dollar acquisitions, according to Financial Technology Partners. It's also the 23rd-largest M&A deal in Seattle startup history since 2002, according to PitchBook, in the ballpark with other giant acquisitions such as Zulily's $2.4 billion sale to Qurate and Isilon's $2.6 billion sale to EMC.

(Image via Financial Technology Partners)

Assurance sells health, life, Medicare, and auto insurance plans on its platform. The company uses data science and scientists to match prospective customers with custom insurance plans. They can purchase insurance online or connect with an agent. Assurance is the fastest-growing direct-to-consumer insurance platform in history, according to Financial Technology Partners.

The startup will become a wholly-owned subsidiary under Prudential when the deal closes later this year. Beyond the initial $2.35 billion, Prudential agreed to pay an additional $1.15 billion in cash and equity if Assurance meets certain growth objectives.

As part of the deal, Prudential plans will be offered alongside other insurance services on the Assurance platform. Prudential stock was up nearly 3 percent following the announcement.

All 120 Assurance employees, most of whom have equity in the company, will stay on post-acquisition. In the next few months, Assurance will move from Bellevue, Wash. across Lake Washington to an office in Seattle with room to grow aggressively.

"We really debated where would be best to build the company," Paulus said, remarking on the company's initial days. "Ultimately, when we looked at the technical talent and a lot of the unique aspects of the Seattle tech ecosystem, we made the decision to build it here. … I do think that that decision played a key role in the success we have today."

Rowell has shepherded startups through acquisitions before. Fidelity Life acquired eFinancial in 2009 when Rowell was serving as CEO of that company. He retained his position until leaving in 2016 to launch Assurance.

Before co-founding Assurance, Paulus was a partner at Andreessen Horowitz and president of a wealth management analytics company.

Read our Q&A with the two founders below. The interview was edited for clarity and brevity. 

GeekWire: Thanks for chatting with us today. Can you talk about how Assurance got started?

Rowell: We both come from tech backgrounds — Mike Paulus more from a wealth management tech background and myself from an insurance tech background. Mike and I met years ago, were introduced, became good friends and we just kept talking about what we felt was wrong with not just insurance, but the financial space in general.

We got really passionate about this idea of building a platform that, through a series of data science models, would control the entire consumer experience — that was one key piece of it. We also fell into this unique position — where while we were tech guys, we understood the value of having a real, live expert available to help a consumer during the transaction and we respected the fact that they added value within the process on these products. A lot of our thinking behind the company before we were getting started was really, how do you connect these things?

The epiphany that Mike and I had was when we looked at an advisor, whether that was an insurance agent or a financial advisor, we really looked at their role and divided it into three categories. One, of course, would be prospecting for customers and trying to generate business. The other two were really important and what we really focused on how we could solve.

The second piece was this quantitative aspect where if you go to a financial advisor or insurance agent and they're trying to understand your needs, we felt like that role was best served by data science models, machine learning, and AI. Then the third piece of that problem was just the human touch. We felt like the advisor was very important at bringing comfort to a customer, being able to answer their questions.

It really was the genesis of how we would build this platform. You have a series of models that, as the consumer progresses through the process, are really analyzing the consumer and making decisions over what is most likely to satisfy this customer. When a customer transitions to an agent or an advisor, the platform continues to be analyzing that consumer situation and making those quantitative decisions so that the agent could really focus on the soft part of the conversation, making that connection, answering their questions.

The realization that Mike and I had was that by creating a platform like this, it would make the advisor highly productive — meaning they would be able to handle far more transactions than what a typical agent or advisor would be able to do. As a result, it would allow us to address a major challenge within the space — the cost of having an advisor involved. We saw this opportunity for really getting two big benefits: the cost efficiency that's there, but then a higher level of guidance. Naturally, models can process far more points about a consumer than what a human can, and then you also get this consistent output from it. That was really the genesis of the platform. Mike Paulus was living in Silicon Valley and moved up.

(Assurance Photo)

GeekWire: Tell us about the early days of the company and the initial traction.

Paulus: Early on we saw that the model really worked. We were fortunate to be profitable and cash-flow positive from very early on based upon being able to really resonate with customers and then also have a lower cost of delivery for the products.

Rowell: We really spent the first nine to 12 months just building the platform and then starting to run consumers through it and building out the team. We saw how well it performed and then the models just continued to get better and better and better. The exponential growth of the business, it really just took off and has continued to grow.

The thing we realized at the massive numbers we've gotten … was how diverse the various segments of consumers were and the need to put lots of different products and solutions onto the platform. That really drove us to this realization of, we need a big partner. We need a really core partner that shares our mission of, how do we solve the overall financial picture for the consumer? Doing that across so many different segments from different demographics, incomes — the solutions are so different.

We realized late last year that we really needed to pick a partner and because of our early success, we were fortunate to have a lot of parties very interested in being that partner. We took a significant amount of time in flying all over the world, meeting with lots of partners, having lots of them here, and really put tremendous scrutiny on each of those partners.

None met the mark that Prudential did. I know everybody gets excited about the price and that's probably what's driven a lot of the media today. Our main focus in our selection of Prudential was their commitment to the mission and just how we have this shared mission together and this commitment to serving all markets and serving the full financial picture for the consumer.

GeekWire: How did you scale the business so quickly without raising outside capital?

Paulus: In terms of scalability, we targeted a group of more senior, established engineers and that did allow us to build a very scalable platform quickly. Our agent model, where agents can work in all 50 states in an on-demand way, meant that we could really scale that part of the business quickly. As we were thinking about how to design the business and design a system that could really scale to help hundreds of millions of customers and do so globally, we really tried to think through the things that could impede our growth and design systems that could scale rapidly and then continue to improve as they got bigger.

Rowell: When it came to hiring, we really scrutinized every single hire. We looked for absolute superstars and we've had great success attracting those superstar engineers and superstar data scientists. As a result, we just have been able to do far more with far fewer people.

GeekWire: What advice do you have for other founders?

Rowell: It can't be about the money and it never was for Mike and I. We were obsessed with, how are we going to define our careers? Truly for us, today is the beginning. We're finally in a position to accomplish the things that we set out to do. For founders out there, where so many people want to create this company and make this money … you're not going to get there unless you're absolutely obsessed about what your mission is and what problem you're trying to solve. For us, we work seven days week and we're obsessed about the problem constantly. If someone doesn't have that, if they're looking for just purely how do I make money, how do I raise capital, you're just not going to get there.

Paulus: We've been laser-focused on the mission and the customer from day one and we've tried to remove as many distractions from those as possible. That's been key to our success.

Editor's note: This story has been updated to note that both founders come from a tech background.

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