Recently, Layr had the opportunity to present at the Southeast’s premier technology startup conference, Venture Atlanta. The process of preparing our presentation resulted in a breakthrough of sorts. Our CEO and my co-founder, Phillip, delivered the best and most passionate pitch on Layr that I’ve ever seen. I’ll save the details surrounding the process that helped elevate Phillip’s performance for another post and instead focus on a specific story from the pitch that a lot of people wanted to know more about; the story of when I fired Phillip.
How We Met
It started in 2010. I was only a few years removed from college and decided that before committing long-term to a “real job” in the “real world” I wanted to take my self-taught web design, development, and Internet marketing skills and try my hand at being an entrepreneur. I co-founded a niche e-commerce company that same year and, within 3 months, it was a growing and profitable business. Then, 18 months later and still steadily growing my co-founder and I committed to getting an office, hiring employees, and beginning to scale more aggressively. So began my journey into the maze that is the business insurance industry.
I started where most people start, especially millennials like myself; by Googling “Insurance for E-Commerce Companies” and assuming there would be a number of providers ready to sell me insurance online. The results were overwhelming and left me with far more questions than answers. I jumped from website to website, forum to forum, news article to news article with each one making me increasingly confused and, frankly, scared. Do I really need all these insurance policies? How can I possibly afford this? What does all this insurance lingo mean? How long is this going to take? Can that really happen if I’m not insured? The list goes on. Most frustrating was the fact that there wasn’t a single company that could sell me the insurance I needed how I wanted to buy it—online.
My next approach was to try locating and contacting business insurance agents in my area which ended up uncovering the equally frustrating process of trying to get one of them on the phone. The handful I was able to reach knew absolutely nothing about online businesses let alone e-commerce companies who carry no inventory, take credit cards directly through a website, and store sensitive customer information in databases on servers located all over the country. Already weeks into the process, I found myself trying to justify the dangerous scenario of continuing to operate my company uninsured. However, I was quickly reminded that getting an office, hiring employees, and scaling were all going to require some form of insurance. That’s when Phillip came to the rescue.
When my working relationship with Phillip first began in 2012, he was an experienced broker at a regional insurance agency who had an interest in working with technology companies. Phillip, being a millennial himself, understood how modern Internet-based businesses operated along with the ever-changing risks they faced. He was able to intelligently design and present a well-rounded insurance program for my company. I was sold. But what followed was my first and only experience going through what can only be described as the painful and expensive traditional and old-fashioned commercial insurance process that 99% of companies are still forced to endure today.
An Ongoing Fight
I quickly learned that finding a broker to sell me business insurance was only half the battle. I was still required to complete multiple paper applications written in a confusing language and filled with questions I didn’t have answers to. I learned that insurance carriers were going to require that I pay the entire year’s premium upfront and that financing the premium into quarterly or monthly payments would require approval by a third-party premium finance company and hefty interest charges. But perhaps most surprising was that the insurance agency Phillip worked for required I pay a $5,000 per year “risk management fee” on top of all the other costs in an attempt to break even on what would be a negative profit account until I had at least doubled in size. And if all of this wasn’t bad enough, I was going to have to repeat it year after year as the insurance policies came up for renewal. To say I misjudged the actual effects of implementing insurance for my seemingly straightforward e-commerce company would be an understatement. Insurance was clearly an ongoing fight with concentrated battles around specific pains like company cash flow impact and yearly insurance audits and renewals.
All Bad Things Must Come to An End
I hung in there 3 years with Phillip. Then, at the end of 2014, I fired him. I couldn’t justify the cash flow-straining payment requirements let alone the extra $5,000 per year in risk management fees and I refused to accept that there wasn’t a better way to purchase and manage commercial insurance. (Spoiler: There still wasn’t.) Truthfully, it wasn’t all bad. I learned a lot from Phillip and he went out of his way to do everything he could to ensure that my company would continue to operate and grow protected. I liked him a lot as a person and knew that he genuinely cared about seeing his clients succeed. He even took me to a few Braves games and I got at least 1 good lunch out of him each year. But at the end of the day, Phillip was handcuffed by the industry he operated in. It wasn’t Phillip’s fault and there was nothing he could do or say that was going to convince me to stick around for another year.
The Commercial Insurance Industry…
- Refuses to adopt widely available technology that would make insurance carriers and brokers more efficient and their processes less painful resulting in lower insurance premiums for the small business consumer.
- Has generally failed to change the way it does business for the better part of a century.
- Avoids investing in the creation of new technology that would allow them to provide the 25 million small businesses in America with the insurance products they need in the manner they want to buy them.
An Idea Is Born
The way Phillip describes it, me firing him was the wakeup call that drove him to figure out a better way. He had been investing time for 3 years in a company that the agency he worked for lost money on with the hopes that my account would one day move into the black and become a profitable client. But I pulled the rug out before that turnaround could come. While I wasn’t the only one to fire Phillip for the litany of reasons painfully recollected earlier, I must have been the straw that broke the camel’s back. A year later Phillip had created the model for what is now Layr.
A Perfectly Timed Reunion
While Phillip was busy assembling the formula to change the commercial insurance industry for the better, I began to move away from my day to day role at the company I had started, now, more than 5 years ago. I had overcome a multitude of challenges, learned some difficult lessons, and grown as both a person and a business owner. I realized the importance of work-life balance and witnessed the impacts of self-employment on my family and relationships. Most importantly, I learned that while I loved being an entrepreneur and couldn’t imagine doing anything else, I was ready for a new challenge. A bigger challenge. As cliché as it might sound, I wanted to solve a widespread problem that I could be passionate about attacking because I had personally lived it. What was a better problem to solve than the very one Phillip was also determined to solve?
A few months into testing the MVP of his new insurance-buying model with the ugliest SquareSpace website I’ve ever seen and a Google Form, Phillip contacted me out of the blue. I like to think he was looking for a second chance with the one who got away. But much to Phillip’s surprise, I had exited my first company entirely and was floating aimlessly trying to figure out what to do next. What transpired next was a courtship that included things like early morning rendezvousing for crash courses in the complexities and legal requirements surrounding selling insurance and showing me how the carriers providing insurance still employ the widespread use of the fax machine. I walked Phillip through pages of search marketing data and researched ways to most efficiently develop the technology needed to bring his modern business insurance platform vision to life. We had never worked together in this manner but we quickly realized how effectively we complimented each other.
I saw a CEO in Phillip instantly. I knew he had what it took to ensure his vision became a reality and I believed in the vision. But I also knew that he was going to need someone to help execute the tasks required to make it a reality. Helping turn a vision into reality is something I am ideally suited for and it’s where I find the most fulfillment. I knew I had found my next challenge before Phillip officially popped the question and asked me to become his co-founder so when he did, I gleefully accepted.
18 Months Later
Approaching the 2-year anniversary of when I began working on Layr, I can reflect proudly on what we’ve been able to create and how our customers have benefited as a result.
- The first version of our 100% online business insurance platform was built and deployed in less than 6 months.
- Our online certificate of insurance generator and our online policy transfer feature were released in February of 2017.
- We have contracts with over 10 global A-rated insurance carriers providing us with access to 95% of the small business insurance products being sold.
- We launched a pre-underwritten, instant issue, $250 per year flat rate cyber liability insurance policy providing $100,000 in coverage making it easier and more affordable for companies to get the data breach protection they need.
- Our current customers are saving up to 35% on their insurance premiums as a result of how efficient our process is for the insurance carriers who provide coverage.
In the end, I guess Phillip did get a second chance with the one who got away and I can honestly say I’ve never been so excited or so passionate about what I get to work on every day. Obtaining and putting in place the right insurance coverage is a critical piece of running any business yet so many companies fail to get this task done. It’s going to take time, but as the Layr model takes hold and the industry takes notice, more and more businesses will discover that the painful, expensive, and old-fashioned way of buying insurance isn’t so painful, expensive, or old-fashioned anymore.