[Raised $3million] Ep.132 - The First 100 with Nikolaus Suhr, the co-founder of Kasko

Nikolaus Suhr, the co-founder of Kasko, an insurance technology company founded in 2015,  offers "InsurTech as a Service"; it specializes in working with large insurers to design, distribute, and run digital insurance products for any distribution channel. Kasko has now raised $3 million since its 2015 inception.

Where to find Nikolaus Suhr:

• Website: KASKO
• LinkedIn (5) Nikolaus Sühr | LinkedIn

Where to find Hadi Radwan:

• Newsletter: Principles Friday | Hadi Radwan | Substack
• LinkedIn: Hadi Radwan | LinkedIn

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Transcript

Let's do it. Broadcasting from around the world. You're listening to the first 100. A podcast on how founders acquired their first 100 paying customers. Here's your host, Hadi Rodwan. Good to have you on the show, Nick. How are you doing today? How are you? I'm very good. Thank you so much for having me. Thank you for jumping and sharing your story. So for our listeners, Nick Suhr is the co-founder of Casco, which is an insure tech as a service, specializing in helping insurers design, distribute and run digital insurance products for any distribution channel. And you've raised today three million since inception, which is... If you look at the ecosystem, the insurance ecosystem, a lot of your competitors have raised millions. So I'll be very excited to know your story and how you managed to do all of that. So take us back to the top. How did Casco come to fruition back in 2015? So Casco came to fruition originally we wanted to actually build our own MGA, an embedded MGA. And our hypothesis was that There's various non-insurance specific brands or platforms. Now the term is very widely used at the time. People would still call it affinity, distribution, et cetera, which quite frankly is still today. And we realized we needed our own technology stack to do that, and that's kind of how it started. And so the way we would approach our customers was we were opportunity driven. So we would identify platforms, educate them around the potential to inject insurance for monetization or trust, circle back to our insurance partner, say listen, we have this great opportunity, come up with a commercial agreement and configure the product on our platform. What we then just notice, we were actually approached by some of insurers to say, listen, we actually have some other problems. We have distribution. Could be more, so please bring them, but we have tight agents, we have brokers, we have an exclusive agreement with this bank. But we're also in the midst of digital transformation that is ongoing. Nothing has changed over the last nine years that they're still integrating, replatforming to GuideWire, or another heavy lifting core insurance system. But we don't have the IT bandwidth to design products towards the specifications that sit outside of someone actively looking for insurance. And that's when InsureTech as a service, originally as a... secondary business line but then our full business line emerged. We're now starting to sell just technology but really what we've done, what got us this far, we've always sold use cases. So I rarely talk about here's this platform, now you just think about all the cool things you can do. We usually start a conversation about wow, why don't you offer, I don't know, introduce a new product, pet insurance, cyber insurance. Why don't we look at this is a cool thing about what people have done about customer referrals or cancellations. It's still very much a business and opportunity driven approach. And it then just so happens that we have a technology stack that significantly reduces the costs to deploy. The insurer or MGA can decide whether they want to self configure. or also have us as an integrator or agency, which most use initially because it's a little bit like the analogy I use is spreadsheet software is great, Excel is great. If you've never built an Excel model in your life or don't have to, it's not just magically it's being unique. So you need to also use these things a lot and we're now actually having some power users, some really successful insure techs. looking to insource some of our technology and certain elements. But yeah, that's how it started. But still my conversations revolve around growth, around opportunities, because I'm an MGA by family trade, or a broken, and that's kind of my DNA, much more so than holding a discussion about IT architecture. I That's just not my jam. We have some colleagues who are very good at that, but that's kinda how it started. Amazing, this is very interesting. And to segue a little bit from what you mentioned, you mentioned like GuideWire, which are more of a core policy administration system. They do have more things, but they are quite expensive. They're big, all the big carriers would go after them. If I look at Casco, are you to the extent where you covered the whole insurance value chain, or you focus practically on product building, distribution, and then... Like if I come to you and I want to build a claims module or I want to show an IMS from scratch or even a core policy administration, would that be fitting to me or you integrate with other providers? As any enabling, of course with end to end, low code, no code and super agile and everything's pretty much off of it. So I would say we do have a pretty full suite. So You can configure products. Maybe let me take a step back at its core where we came from, where Guidewire came from claims. We came from a product engine. So the core of what we do is, you know, where you can define your insurance product, your pricing underwriting, but also the customer journey, the API, all the documents that need sending, et cetera, in one independent module. If you like. And that can sit independently. That can be feeding into our own policy admin and our own claims admin, or it can feed in someone else's, but that's the core. Now our policy admin is light touch. I would not recommend running a super complex motor insurance program on it necessarily. But not every insurance product is like that. And it also allows us because we don't need to do financial accounting and all that. It allows us much easier to jump across lines of business. In claims with a very powerful ethanol, because in a way it's a reverse underwriting and we also have claims adaptation capabilities that you can use. But I would never try to compare us against a guidewire system. I would say moreover, our system is very much geared rules-based. So anything that can be put into rules. It's very strong. And so we like to ultimately let the customer decide what they want and what they need and what I mean by that. So for example, we sometimes create the entire, like our own MGA, okay. Where we do everything, policy admin claims, payments, et cetera. And sometimes we just are the front end and it's with the same customer because the customer it's very likely that they run their. retail PNC, the SME, the large commercial, their life, their health, their travel, their systems, their warranty program on just as many systems. The one thing we do not cater to is to say we augment existing systems and we can incubate new systems. I wouldn't say we're not going and say, why don't you just transform your hundred year operation and put it on our system? Because that requires a lot more. integration effort, et cetera. And I'm not saying that is not something in 10 years down the line we might do, but that's how we differentiate ourselves. So at its core, a very strong product engine. Amazing. Going back to the early days, how did you identify your ideal customer profile? So is it large insurers? Is it medium insurers? Is it MGA brokers? How did you think about it early on as you're starting? Okay, so let's leave the kind of MGA model aside, because that's a very different sales approach. We identified insurers at the time, this was 2015, willing to innovate. And the way we've identified them was, that was the time when InsureTech events were sprouting like candy, left, right and center, and that is where we went. So we would go, size didn't matter, but an insurance company that was looking to... accelerate product innovation. That was ultimately the gem and that's how we targeted them, primarily through these events. And we also spoke to brokers and MGA's, but the truth was the business case was less strong. So that is, we now talking to larger MGA's, but we've also significantly driven down the configuration effort, having done this now nine years and counting on eight years, almost nine years. But yeah, it was willingness to innovate. and then the product people. So someone in charge of PNC retail, who had a backlog of products that they wanted to go live. That was kind of the end. Amazing. So events were your first outlet. You went out, you built the brand, you found your customers there, you piloted, then go on, they would have gotten the license. How did that evolve? What was the next common sense channel to go after? Okay, so I think once you do that, you kind of obviously account management itself becomes important because you continuously engage and inform. What we then started doing LinkedIn worked really well for us where we would target similar people with more or less warm or cold outreaches and they've worked okay as you would. I would never just do that but that worked reasonably well and the third thing recently and it kinda, and that to be fair, kept us busy. Events, cold outreach on targeted LinkedIn and then a continuous re-engagement with people every three to six months where we informed them about usually things in the month. So we've actually then also built a newsletter that didn't talk about us or our, it sometimes does, but who cares? It talked about things in the market that we'd see because the impression was if you can educate someone with an existing insurance operation and brand and capabilities about what you and I see about what's just coming on the horizon, then they would increase their demand to innovate, still not have the capacity to do so, and ask us for help. And that has worked moreover with what you do build, and I think that is the key thing. you move away from a purely transactional relationship to some form of real relationship. And if you're doing this for years, you start to see the rewards. It's not a quick win, but we're definitely seeing relationships matter. Huge. Yeah, this is very interesting. A follow up question is how do you manage that risk when you're selling to enterprises when the sales cycle is long? So you didn't trace 50, 60 small sum of money and when the sales cycle is long, how do you manage that risk so that you can get into the accounts of big players? I would say two things. One, you need to have lots and lots of conversation in parallel and you also need to reduce the pre-investment per lead. So for example, we moved away from creating a bespoke presentation with use cases and just putting them into an email. Because that's like three hours. And if you have a few hours and if you multiply that, you know, I would have 20, 30 conversations a week. That was that. So you need to do both talk about many people with many, but you also need to minimize and I had to unlearn some of the, which I really thought was cool tools and capability I learned from strategy consulting, because it was just too much effort and it was just too much time. Amazing. So if you go to the enterprise sales playbook, there's a few gatekeepers in front of you before you get the deal done. You have the champion, which is responsible for the day-to-day implementation. This is someone who would support you because they understand the value of the product you're offering. But then you have the technology buyer, which is someone who is inside the organization who would vet these purchases or licenses. And then you have the economic buyer, which is the... person who holds the purse strings, and then you have the decision maker. Now the decision maker could be one of all of these, depending on the size of the operation, but it could be distinct characters. So when you started, how did you overcome these different players? And a follow-up question on this would be, where does your sales process start? Sure, luckily, we usually have... let's say we really have the decision maker, the champion and the financial person in one person usually because the head of PNC either on a board level or below has exactly that. They have budget to allocate to innovate on products which makes it much easier. Now you need to convince this person or listen to them about that which other initiatives they could do and what they would need to get budget approval. That simple as that. And sometimes it comes with a business case, sometimes they've got competitor did X, sometimes it comes with this be innovative, you know, these things matter, these things are different. They're not always the same because sometimes depends a little bit on where they are. Think what you then need to do. And over time you learn that you need to almost preempt through good communication, good documentation, all of the... concerns that the technology decision maker has. But you absolutely don't go to the technologist before you define the use case. Because again, it matters hugely. Are you running a parametric natural catastrophe product is very different than a scooter insurance just in terms of the follow-on processes and thus impacted subsystems. And so we try to not make it very specific. And then almost procurement is, I think, what we also tried, because we tried to create engagements that were below 50,000 euros in the first year, because then you had some form of discretionary budget control. Now, this is now changing somewhat, because inflation and profitability concerns, people are tightening their budgets, which is fine. trying to make a smaller ticket that is still substantial. The other thing we've learned in the sales cycle is actually before that, and I think you need to do some stuff for free. But for example, we would now go, if we're going into certain educational elements or things where we would kind of, which other people would take money for, we would say, if you need to design the product and you need us. We're happy, but that costs something. Or if you need market research, or if we bring your distribution partners. So we started putting price tags on top of it. Not so much to the tune that would add massive amounts of revenue, but it clarified very quickly on whether someone had budget control or any interest, and thus it allowed us to focus a little bit more. Yeah, that was kind of mainly, it prioritized our deal pipeline. Amazing. What has been the hardest thing to build your insure tech? Hmm, I don't know. I mean, I feel there were different things at different stages were hard. Getting your first customer was hard. Probably the hardest part of our journey, but no, that's not even true. I mean, we've even had to downsize. Was that hard? Well, it wasn't fun, but it also wasn't hard because there was no other choice. And so... I wouldn't say that was a hard thing. Some things were obviously more pleasant than others, but as I think anyone who will kind of looking back, look for the pain and you'll see where the growth has happened, right? I mean, so I wouldn't say anything was particularly hard, but it wasn't necessarily all super enjoyable. Now that I'm talking, listening to myself, I would say the hardest part for myself was disentangling my own identity with whatever success I thought the business would have had to have. You know, you've talked about fundraising with three millions. I'm very happy that we're not on the BC bandwagon right now, but that was not the case five years ago. And you've seen others and you felt it didn't feel good. You had to explain to people why other people more successful than you. And you know, you put your... heart and soul and blood and sweat and tears into this and to disentangle yourself with the success of the business, one. And the second thing, we've talked about it earlier, becoming a father, but even before being a good partner to other people and finding a way to build, to try to be mentally present when you're not working. And to this day, this is difficult for me. Because I really like what I'm doing, you know, I read an email and then I think about this stuff and it's cool because what you realize is there's a problem and you can call a bunch of people and you can fix it. And that's cool. I like that. I really, I really like that. So I would say that's probably the hardest. Sorry, it was a bit convoluted way of trying to get to an honest answer to a cool question. No problem at all. Thank you for sharing this transparent answer. What is the principle that you live by that has helped you in your journey? I mean, there's not just one principle, but I do feel, you know, obviously, don't be an asshole. It's a good one. Which doesn't mean do only things that other people like. What that means to me is more to say, if whatever you decided it did were on the front page news tomorrow, would that be okay? I don't try away from conflict. I don't mind it. If I feel that someone wronged me or is in the wrong, I'll argue my case. I think I'm getting a little bit smarter and sort of putting my head through the door every single time. But I think that's a good maxim to kind of live by because transparency that kind of follows from that prevents you from taking the occasional shortcut that you do when you know that no one's looking. I mean, everyone has these thoughts and it's just better to surround yourself with people, processes that... prevent you when you're in a weak moment. Makes a lot of sense. What's your superpower? I think my superpower in doing it in SureTech is I'm genuinely interested. Genuinely, I love this shit. I love talking to people like yourself, I love talking to other people, there's so much to learn and I am genuinely interested in identifying problems, finding... solutions doesn't have to be the next Facebook type of solution and working with because working and talking to people about solving problems is something that I really like because otherwise I'm it comes to the flip side I can be very bad at parties because I hate small talk and if I'm I get bored not bored I find it really difficult to be polite and give someone the attention that they deserve. when I'm not interested in what they're saying, I find this really difficult. And so I think that's my superpower is that I am genuinely drawn to what I'm doing, like naturally. Thank you, Nicholas. This is very genuine, the answer. Thank you for sharing that. One last question. What's next for Casco? Super exciting, I would say. So first of all, we've managed to kind of claw our way for the last two years into cashflow profitability. We managed to do that by expanding our core technology offering. So we continue to do our core technology offering and we have a great product out there that allows people to self-configure and it's cool. It's really cool. I'm not saying that there are others out there who do a cool job, but it's a really comprehensive, it's a great solution and our customer feedback supports that. However, we've also added two new lines of business. One. We are building what I believe the kind of first European MGA platform. It's first and foremost a compliance platform and we allow UK and US MGA intermediaries to get really easy regulatory access across the European Union through Germany. It was something that opportunity created when Brexit happened and we're adding with 25. Currently it's equal to our tech business. in its trajectory and it's really cool and we're building, sometimes we're selling technology to them. The third one is we've engaged in a partnership with Ronald Engel, a strategy consultant and working for Arthur D. Little and we are supporting them in what we kind of call a strategy plus implementation and expertise where we build companies and also share our expertise sometimes or we do to diligence of... technology companies so you can get the brains without the product. But it sometimes so happens that there's a product. And these three things work really well together. And what I'm looking forward is to following these opportunities by ensuring that everyone who works with us, you know, has meaningful work, meaningful relationships, fair compensation, and we continue to build our relationships and are by definition very relationship and opportunity driven. As I still find it really hard to have a crystal ball about what's going to happen in the next three to five years. I find, if anything, I mean I don't have to tell you, you flip on the news and it's like what's going on? Absolutely. Nicolas, thank you very much for sharing your story. We wish you the best of luck. How can people reach you and are you hiring? So yes, we will be soon starting to hire. Funny, we are also hiring for other intro techs because sometimes it comes with company building and having kind of that network. So if you're looking for change and you're kind of in the European intro tech space, connect me on LinkedIn. That's the easiest way to reach me. We'll put all of this in the show notes. Thank you for stopping by and we wish you the best of luck on your new initiative. Thank you so much. Have a lovely day. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play, or Spotify, and share it with a friend starting their entrepreneurship journey. Leave us a five-star review. Your support will help spread our podcast to more viewers.