Startup Thought > Why all the hate for Lemonade

Animosity towards the US insurtech over its recent financial struggles only proves how much the insurance industry needs to be disrupted, argues buzzmove and buzzvault CEO Becky Downing.

I have some views on the Lemonade financial statement that has been made public recently. Understandably there has been a lot of criticism, as they look far from healthy. But I look at the situation rather differently from a lot of the comments that you can see here:

The thing to remember is that there are a lot of people who would love to see Lemonade fail.  Particularly incumbents and those associated with incumbents.

There is always a lot of animosity towards young upstart companies that have the audacity to boldly claim that they can do something better, causing havoc in the process. As well as feelings of paranoia in those who have for too long not needed to look over their shoulders. This is particularly true when it comes to a very old and established industry, such as insurance.

We have already had a lot of experience of this kind of ‘old boys club’ resistance in the removals industry. So much so that many incumbents have gone so far as to say they will enjoy seeing us fail.

This is natural – people intrinsically don’t like change, and don’t like to be challenged. But all growth happens outside of your comfort zone – out of pure necessity. And frankly, it is a natural law that if something is broken or failing, some kind of evolutionary change will occur to rectify the situation.

So yes, Lemonade will not continue to survive if they do not substantially improve on those financials. But let’s not forget that they are still relatively new to the market.

Having found product-market fit in a complex industry such as the insurance industry is no small feat. In fact it’s the biggest hurdle to overcome. The startup graveyard is full of companies that never even got close to that point. Proving meaningful demand for a new product comes first – optimising operations and achieving profitability comes second.

Even if Lemonade fails, another company will succeed. It’s the old MySpace to Facebook story.  So what do I think is the key to Lemonade’s success? Personally I think it will all come down to the leadership team.

The difference between winning and losing, the difference between those who do and those who don’t is not talent or any magical formula. It’s character and human spirit.

This is why I truly believe that the new Googles and Apples of the insurance (or any) industry will not come from a couple of insurance companies chucking money at the issue in an attempt to be innovative. That kind of change derives from people who have staked everything on their vision, and who, despite the challenges, setbacks and industry resistance, find a way to make it work.

It boils down to three principles. Only three.

One: Take responsibility.

Two: Take action.

Three: Find a way.

Will the Lemonade leadership team take the bull by horns and take responsibility for turning this financial situation around? Will they continue their attitude of actioning their vision? Or will they blame it on external circumstance and assume the model simply doesn’t work (hint: assume makes an ass of u and me!).

For all of the talk of innovation you find in the insurance industry, you see very little truly admirable action. Finally, but most importantly: through trial and error, measurement, iteration and learning – will they find a way to make it work?

Building new companies is HARD.  If it were easy, everyone would be doing it. Personally I hope that the Lemonade story will be one of hope, perseverance and success.