S4 EP74: Redesigning Insurance from the Ground Up - Joe Emison, Co-Founder and CTO, Branch Insurance

The Insurance Coffee House is hosted by Insurance Search. Insurance Search provides executive recruitment services to insurance companies, brokers, and insure techs in the UK and across the United States, attracting and retaining the most successful leaders to your insurance business. To find out more, visit insurance-search.com. The Insurance Coffee House, the place where you get to meet and be inspired by the most successful insurance business leaders from across the world, hosted by Nick Houdley, CEO of Insurance Search. Welcome to the Insurance Coffee House podcast. Today, I'm very happy to be joined by Joe Emerson. Joe is the co-founder and CTO at Branch Insurance. And Joe joins us on the line from Columbus, Ohio this morning. Welcome to the show, Joe. Thanks for having me. Joe, it's great to have you on the show. I know I interviewed one of your other founders a couple years ago, Steve, but really looking forward to hearing how the business has developed since then and I've been a very successful time. Before we get into that, though, as we are in the Insurance Coffee House this morning, what's your go-to copy of choice today? My favorite coffee is Hairbender by Stumptown. Fantastic. You have to have it bearing willy because two cups makes my heart audible to people around me, so. You've got to take in small portions, yeah, fair enough. Joe, if we could start off almost at the beginning, really through your career journey, I know you've led technology businesses, you've built technology businesses, branch insurances, very forward-thinking insurance carrier, using a lot of technology to provide benefit. What's been your career journey and maybe what were some of the things that led to you starting the business with the other co-founders? From an early age, always wanted to be a lawyer. I wanted to be Judge Wapter from the People's Court, which may be like two old for many listers to remember. But what I found was, I had an interesting computer. What I found was as a teenager, I really wanted to be given a lot of authority and responsibility and held accountable to do things. I wanted to do that in law and I just wasn't able to. I volunteered for a law firm and they had me getting coffee and, you know, emptying waste paper baskets. I learned how to develop software and suddenly everybody wanted to hire me and I made a shareware so people would like mail me checks to buy a premium version of software when I was 14 years old. And so I landed in this area where I got all of this accountability, I got all this responsibility, I was able to operate really just to the limits of what I was able to do. And I loved that, but I always intended to go to law school. And in fact, I did end up going to law school, I have a JD, but in that journey realized that one, the law I wanted to practice was very isolating. It was much less social than building companies, even in, you know, you would think like as in software development that wouldn't be social, but actually very social activity, I think, and fun and collaborative. And also everybody who had the jobs that I was on the path for were all divorced. And I was like, yeah, you know, there's a number of reasons why this looks like a poor life choice. I spent 10 years kind of pursuing this, becoming a lawyer and building tech companies. And then I was like, I'm just going to build tech companies. So to date, I built six tech companies in a variety of different industries. I built a company called BuildFacts. I was a co-founder and CTO of BuildFacts, which was acquired by Venerys. Was the sort of first aggregator of building permit data in the US. I think still the dominant provider of roofage information in the US today to homeowners insurance carriers. In the process of doing that, I met a lot of people including Steve, my co-founder and branch. And I've always found, I've started a couple of companies as a solo technical CEO essentially, but I've always enjoyed being part of bigger teams, working more collaboratively. And Steve just had a great idea for branch. And I was convinced and I was like, let's do it. Such an interesting journey actually, not too dissimilar to my self when I starting out on the legal side of things. I actually made the move from a malorfer, an insurance law firm, and realized actually that my senior, the roles that I was working towards that partnership, those guys didn't seem very happy in their job as an if that was the end goal, then I wasn't sure I wanted to commit 30, 40 years to that. And found it was very much based on years of experience and time spent, you know, you're literally charging by the hour or by the minute. Whereas I moved in broken, which wasn't such a big leap as what you did, but I found broken to be much more meritocracy. And if you're doing well and performing, you can build relationships near, you can accelerate very quickly. And it sounds like you went into entrepreneurship and using technology at a very young age and develop that. Interesting. That relationship there with Steve, you met Steve at that previous business. How did the year or how did that conversation around building branch? What was maybe the problem you saw in the market that brought actually you guys pairing up together would be a great fit to try and solve. Steve identified like a million problems in the market, but I think the core one is it can be described in a bunch of different ways, but all of these are kind of the same problem. One of them is to say if you look at the largest segment in US personal lines, would be people who own homes and owned cars, right? So these are people who buy home insurance, auto insurance, life insurance, boat insurance, like toy insurance, all of these things that are bundles and they're generally speaking bundled by at least by an agent, maybe with different carriers, but they're carriers who will write, you know, all of these are most of these who will take all this business. But if you look at the lost ratios on those segments, they're in the sort of 50, 60 area, which means that at least for that segment, if you think about it, they're spending something like 40, 50% of their premium every year on not clean. And we live in a world in which we have amazing technology. You know, there's a lot of productivity gains out there and none of them have made it into that. Like those lost ratios are the same as pre-internet, pre-smart phone for you, whatever. There's still the same amount of overhead that exists in that system. And those segments, I mean, if you buy that number of things, I mean, if you buy home auto, umbrella, and life, like you're probably going to retain for 20 to 30 years. And so to have like, you know, nearly half of all the money you're paying, not go to claims, it's just a very inefficient financial instrument. So that is the core problem that exists in the market. And the reason why it hasn't been cracked is multi-part. It largely has to do, this is also the reason why so many of the companies in the space are, you know, are 100 years old or so, is that it is hard to buy, right? So the technology in terms of like into the purchase, right, so it's hard to buy, it's not just a technology problem in how it's hard to buy. But if you want to buy that whole bundle that I'm talking about, I mean, you almost certainly can't get it bounded like one phone call. It's probably take like a week or two, and it'll probably take hours of your time. And you're not going to shop around because once you do hours on it, you're like, I just can't be bothered to do anything else. And so because people don't shop this, because it's so hard, so much money has to be spent on the customer acquisition. So of that, if we said, you know, it's like in a 50 to 60 loss ratio for these segments, then like it's like a 40 to 50 expense ratio, fully half for maybe even 60, 70% of that expense ratio is just acquisition. And it's not acquisition in the first term, it just gets amortized over every term. So to some extent, not to some extent, like very much, if you're one of these customers who has this large bundle of business that you need to place and you retain for 20 to 30 years, you're largely just subsidizing acquisition for new customers for those carriers in segments that churn more easily. So that's the problem. That's the problem. Yeah. And a lot of these Steve Hormona ensures a big businesses, their large organizations by their very scale, you know, pie volume business and perhaps they put a lot of legacy systems right. So they're 100 year old companies. So obviously they're probably looking at that right, how they can bring down that expense ratio, but maybe they're their hands tied to a certain extent. Just one thing to note though is if you get large enough, if you're like the biggest one, you've got so much scale that the actual amount of your expense ratio you spend on technology isn't actually like a large number. So when I hear startups going big old insurance company that's huge like they have these inefficient systems and they're spending like, you know, a billion dollars a year maintaining main frames, like that's actually like not a huge expense ratio hit. The much bigger expense ratio hit is what they spend on acquisition. Absolutely. Which is TV advertising and DC, you know, all the big players in the US, it's just sport, stadium advertising, there's teams of it. And then commissions, right? And then these commissions are large, I mean, agency commissions are largely an acquisition cost. So what's the solution, Jay? What a project. The core question and solution is how would you provide a product that was able to take a decent amount of that expense app? And the answer is having much more effective, efficient acquisition channels. And you do that by partnering with companies that are not in insurance that have customers who need insurance because ultimately, and this is what Steve says is that insurance are the batteries and they're not included in the product. So when you buy a home, you need insurance, but they don't get included in any part of that home process. And the same thing, if you want to drive a driver's license, if you want to drive a car in the US, you have to have insurance. And again, it's just not provided, although you'll see insurance agents like next to DMVs or BMVs in some cases. So the question is, can you partner with those sources of people who need insurance in these insurance moments? Can you partner with them and provide insurance in a financial way that doesn't require any TV advertising and doesn't have a traditional, let's say like, 15 and 15 commission structure? And if you can do that, you can take fully 20 points out of the press. Because at that level, those umbrella policies, those personal policies, for the end customer, it's not a big part of their life, it's not like a specialty insurance carrier, it's something they want to get ticked off and if the premium is reasonable and the coverage is reasonable, they want to get on with their day. So it's not a case of, you know, trying to reinvent the wheel in terms of the underwriting, like you might do in specialty or other parts of the market. Yeah, there are more commodity test products. You can get into a lot of discussions here. I mean, there are certainly people who should be using agents to help them understand, you know, what they need and go get what they need, right? But certainly from my perspective, from my own insurance, I'm fine with the commodity off the shelf, you know, insurance products that I could get from any carrier. Like all of those products would be fine. They're going to cover me to what I'm looking for. Yeah, awesome. And how's the business in the present day? So we're May 2025. What's the business like at the moment? Well, it's growing. We are growing profitably. We had some rough years, right? Inflation and wind and hail. 2023, 2024 kind of the worst wind and hail years in a while. So those were really tough. So we had to take appropriate actions and make sure we were writing profitable business. And so we're finally out of that period of time. So the geographic, okay, where is the majority of business? Is it nationwide, focusing certain things? You can sort of think of us as in the middle of the country. We're writing new business right now in 25 states, and it's sort of the center of the country. So we're not in California or Florida or New York, you know, we're in Texas all the way up. You know, if you run Texas all the way up and then, you know, over a bit, but we are coast to coast. We sell in Georgia. We sell in Oregon. You know, you've got a connective way to make it across the US and branch territory. In terms of team, and there's a you remember if you got different offices, where most are team based. We have an office in downtown Columbus, but we give flexible work. So lots of people work from home. Yeah, we don't require any in office days. We find it actually a pretty significant hiring advantage. We were forced into it very early on in COVID, and we spent a lot of time. We built up a very good people team. We have a wonderful chief people officer. And we spent a lot of time thinking about how do we solve for some of the problems that remote has. I certainly talked to a lot of CEOs, senior executives who will say, well, yeah, I'm just not the same. There are too many challenges in it. I just don't think that's true at all. Sounds a lot like to me, people who aren't curious about how you might try to solve those problems. It's just a sense of like, it's different. So it must be worse or it's different. And I can't do this one thing that I'm used to. So therefore, there must be no substitute for it. One of the constant conversations I have with people who are returned off as I'll say, you know, you talk a lot about serendipitous conversations between people. But what's happening in your office is not serendipitous conversations. It's actually like just repeat conversations from the same people talking to the same people. It's like, we have donut. It's a slack plug-in that arranges serendipitous conversations between people all the time. We have actual serendipitous conversations that is spread across the entire company that pairs people randomly with other people. We know we can get like a full spread so everyone can meet everyone, which we'll never happen in an office because people will run in clicks. If you let serendipitous conversations send everybody home and do donut, it will be much better. I was great to hear the passion now. I'm sure the different schools will pose. I'm thinking it works differently, the different companies, different leaders as well. We're talking just for the call about something that you're very passionate about. It's about how you build your tech team there at branch. Can you share the listeners a little bit more about that? So when building branch, I built my sixth company building from scratch. And I have been passionate my full career on how do we build software more effectively? I think software is eating the world. The most effective companies are companies that are building software and using software. And the key skill that you need then is how do you build software effectively over time at scale? And I certainly see this as a consumer of products. When I work with companies, I think of, oh, this company can ship features. They can ship improvements and they know when they build and get benefits from them. This company, we bought their product five years ago, it hasn't changed a bit. They don't know and they sort of talk about it, but they don't know how to develop software anymore. So they might be a tech company selling software as a service, but they actually can't build it software anymore. They're just stuck. So I've been very concerned and interested about how do you do this thing where you keep building effectively? It's not like you do the story you build and then boom, technical debt, I can't resize a button anymore because I'm just stuck. So what I have discovered, I view as my core expertise, is that there are a number of things that really matter, but the biggest one is whether you can keep your team small and let them rely on an existing platform to work on. And so Amazon famously writes about this as two pizza teams or people, there's a great book called Team Topologies, which talks about how to organize these type of teams. This isn't like, I didn't make this up. I think a lot of people came to the same conclusion when seeing these companies can ship and these companies get stuck. And so there's this need then to have this platform, these building blocks that you use to develop your software. And what I have noticed is that cloud vendors over time have made them more and more effective so you can hand more and more of your work to cloud vendors, but there's a problem because a lot of senior experienced tech people either really love doing those things that you can let the cloud providers do so they want to do or they just aren't aware of those things. They maybe read something about them, they tried them for 10 minutes, it wasn't something they really understood immediately and they just ignored them. They're like, well, I've been doing this thing for 10 years and I've gotten raises and people say I'm great, so that must be good. And this also comes out of having no continuing education in IT. So in IT, you can graduate in the year 2000, you can be like a VPN engineering CTO now and literally not know a lot of the advances of a cloud and still think like the cloud is sort of like not a thing that really matters. That isn't very different from not the cloud, which is not true. But there are plenty of those people around and they interview really well and they get, they're in leadership positions actually all over and in insurance companies, I've met lots of them in insurance companies in leadership positions, right? People who just don't understand the technology. I knew that if I wanted to leverage the cloud effectively, leverage managed services effectively that I would need to not go out generally and hire for the typical senior talent because they wouldn't know of it and they would say, well, I know this thing and we're going to do the thing I know. And this is a huge problem in companies. You hire tech talent and you say, I want to do this thing and instead of them saying, let's look at what's available out there and how might we do this better? They will and said, go, I know this thing. I'm bringing it to you. That's terrible. And most CEOs wouldn't accept that in any other division, but like IT and software development is like magic and we don't understand it. And so it's sort of like, let's let the wizards do the wizard thing because of that, I knew I needed people who weren't in that position. So I was going to need to build an organization of people who didn't have preconceived notions about this is how you do it. And I was going to need to bring enough of an example of this is how we want to do it. And then teach people who really didn't know any better to say, let's not do it that way. So my first four hires on the tech side were all people who really had never worked in software development before. They all the boot camp grads, college grads, self taught developers who knew enough but didn't have a preconceived notion that the way I wanted to build this really using a lot of what Amazon has in Amazon's web services as core component. And by the way, I've written a book about this published by Pearson called serverless as a game changer that was published in October 2023. You know, Amazon. But yeah, so sorry, that was a long answer, but that's the framing of why I felt like anything but higher more junior talent. I mean, there's a lot of parallels within the insurance world, right? Then people want a higher broke because they want to hire underwriters but often they're bringing those same, that skills and experience that they had at their previous business. They want to bring that into the new company and if the new company is trying to be different and you need to set about approaching those changes in a different way, you really need a different way of thinking. So how were you then expanded that across the technology part of the organization like where do you look to get your tech team tech staff from and then how do you look to train them up? So once we had four developers and actually we also were working with a firm in Uruguay who had some developers that I had worked with before who we had working with us as well. And another way to say what we did was we largely were looking for front-end software developers. and turning them into full stack software developers by way of having a very simple backend that really relies on Amazon's managed services. By the way, our entire infrastructure, all of the development, work spaces, all of the testing ones, all of the production ones, cost less than $10,000 on Amazon Web Services, who's also cheaper. All of this is cheaper, faster, better. I'll also say the amount that branch spends for the number of states we're in, and we have home auto renters, condo, umbrella, all live. There are startups that started up around the time, maybe a little bit before we did, that are public companies now, that have always spent like 30 times what we have spent on technology, but we have built as much or more, really, because more lines of business, and as fast, but much more cheap. What's the impact for the business, cost is one, but what's the impact being for you as you build that team? Anytime you can have a smaller number of people, you get all of these benefits. You don't have bad communication overhead. You get a lot more empathy. It's a lot easier if you're in a team of like, 20 developers, 15 developers. It's a lot easier to just have empathy for all the rest of the developers. It's a lot easier to have empathy for the rest of the company, too. I think that there's this huge problem in most software development orgs, where every software developer thinks that they are like some kind of amazing superstar ninja, and they look down on everybody else in the company. I think it's a lot easier with a smaller number of people. You're not like this big horde, first of all, that out numbers the rest of the company. I mean, the software development team at Branch has always been small, relative to like claims, remember support, or sales. It sets up an environment in which you're much more part of the overall company, part of a team. I also personally have set up pathways where if you are like helping one of our customers, one of our members, and you run into a problem with the system, you have a way to escalate that directly to like one of the developers who works on that product. Developers are on call every day. Like certain developers are on call every day to just deal with like, I can't get this thing to work, or I don't understand this. Right? The product managers are there too. So there's this amazing sets of empathy that people have for each other, that I think it would be much harder if we had 200 software developers and they kind of outnumbered a lot of the other parts of the company. Tapting to your thesis while bringing down that expense ratio, right? So it's got multifaceted benefits. Joe brings us nicely onto the espresso round now, with the questions that short-shop to the point. We're going to be focusing on talent, bringing in talent and developing talent. Are you ready for the espresso round? Sure. The espresso round. Joe, what piece of advice would you have for someone coming in to interview for their tickling in the technology team? How would you advise someone to prepare and present themselves with an interview with you? Certainly, if they're interviewing a branch, would be to respect and appreciate working on front ends and working on interfaces. There are a lot of people in software who seem to think that the only meaningful thing to build is like a scalable backend. And actually, what you should love to do is build wonderful interfaces that make things easy for people to do, especially insurance, which is complicated for most people. So having a passion and joy for that. And your peers in the market, fellow CTAs or hiring managers within insurance businesses. What's been the one thing that's been successful for you when hiring people? What advice would you have when it comes to hiring tech or insurance people? I don't think enough organizations seek to build talent. There are a lot of organizations that are like, "We just have to get this done. We need the most senior person possible." And so just like find the talent, and if they seem like they're kind of a terrible human being, that's okay, because you know, programmers and tech people are terrible people. I think we frequently will say, "This person has the talent we need, but is not a cultural element, whatever, we'll hire them." I would say, "I've never seen anyone of my peers say, this person is like going to be perfect as a team member, but they don't quite have all the skills. So we'll invest in them and get them on a skill-level basis. Just don't see that happening a lot. And I think that's a huge mistake. Much better off spending money there than you are, taking a longer to place or paying like extreme places." Well, that's it. I can't change someone fundamentally, certainly the values of their personality, but that you can enhance their skills. If they're culturally aligned, and they really see the vision and what I work hard on that, then bringing the skills should come more easily. This is slightly longer question for you, Joe. Which is, say, the one lesson your job has taught you that you think everybody should learn at some point in their life. Growth provides dividends. If you are in a growing city, in a growing company, there's more for everyone. Growth provides these wonderful things. If you're not growing, it's a zero-sum game. If you're shrinking, it's a worse than zero-sum game. So you should see growth. And if you're not in a place where there isn't growth, it's likely to become toxic. Awesome. I've been actually great at that. So I'm going through the moment where it expects in our second in the next couple of weeks and certainly realise from becoming a father, you know, so true as you go through life. Also business as well, right? Sharing and elevating other people really raises standards across the board and enhances unity for sure. Joe, we've almost reached the end of our time together. Time's gone extremely quickly actually, and it's been a really interesting discussion. Before we leave, what piece of closing advice would you have for our listeners? And there are folks out there, technologists out there, insurance people out there interested in opportunities at branch. What's the best way for them to retouch? We have a careers page. I should know. You're all but branch.com. Then there's a career link at the bottom of the page for us. I think the piece of advice that I would have certainly in insurance and for executives in general, certainly non-technical, but also technical is that building technology isn't magic. There are real metrics we know. And 20 years ago, it is true that we didn't really know what the best way to build software was, like how to get efficiencies. One of the right metrics to measure. 20 years ago, we were very bad at that as an industry. Today, I think we've largely solved the problem, but I would say a good 90% of people haven't read the book. And so it doesn't matter. There's a book called Accelerate, the Lean Science of DevOps. It's got another subtitle. One of the authors is Nicole Forzgren. It's the most important book that's ever been written about software development and the perspective of if you're a CEO or you're an executive that wants to understand. I think it's very easy to look and go, we have a software development organization. They build software. Are they any good? I mean, this is the central CEO or executive question. Are we good at this or not good at this? How would we know? That's certainly a lesson I've learned over 30 years looking at various different departments. I now know, this is a good people team. This is not a good people team. This is a good financing. This is not a good financing. It's taken me a long time and I've experienced, you know, good and bad of basically every organization I think that a company can have. And when it comes to technology, we know like what metrics we should be measuring and why. And because there's no continuing education in IT, there are lots of people who appear who are very confident, who appear knowledgeable and interview very well, who run technology organizations really badly in a world in which we know how to do it properly. And so I wish everyone would read this book and accelerate. I've saw that I agree with like every single sentence in it. To some extent, my book, "Serveless as a Game Changer" is a yes and two accelerate. But it's really important. And so I'll leave you with this closing metric, which is that basically the most important metric you can have, if you're just going to have one, is how often do you ship to production? Every company, including regulated companies, including airlines, every company can be shipping at least two times a week, at least once a week, ideally once a day. Every company can do that. And if you look at your company and you say, "Wow, we only ship every two weeks or every three months." But we couldn't do it. We're unique. You're wrong. You could be shipping every day. And if you had good tech leadership, they would be working up. Would you recommend that book for an insurance leader or an executive who's thinking about actually joining an insure tech or see some issues in the market that thinks can be solved and is looking for a CTO technology co-founder? That a good way for him to get started so that they can start interviewing on data, in fact, could be a big problem. Absolutely. I think anyone who is hiring like a technical co-founder or a vice-engineering or a lead engineer or even like, I'm trying to find an outsourced firm to do software developments, I would consider an enormous red flag if you are considering hiring a technology leader who has not read. It does not do what are called the Dora metrics. Those are the ones introduced in Accelerate or Everywhere in my opinion. It doesn't know them or doesn't believe they're the right ones. To me, that would be an enormous red flag. I would not hire any technology leader who didn't basically agree with, say, 80% of the Dora metrics. Not just believing in them, but believing that that's what you should optimize for first. When I get asked the consultant or if I got dropped into an organization as a software development leader, the very first thing I would do is put the Dora metrics in place and make sure we get on a path to shipping at least once a week. because that is, again, if software's eating the world, every company is a technology or software company, your ability to succeed as a business is based upon your ability to write and ship software, solving for how you effectively write and ship software should be your number one priority. - I see. Joey, thank you so much for your time today. It's been really interesting. It's great to get a really solid perspective from a technology-leaded lifestyle. We also have a really strong understanding of the insurance market. I think a lot of our listeners be really interested in that. There's a lot of insurance leaders that I'm really grappling with how they make that next step. How do they find that co-founder? Or if they're looking at a company to invest in or to join as an executive, what are some of the metrics they need to be looking at from the tech perspective? Most very literate on the financial sides of the business, but actually having a deep dive into the technology and what that looks like. Some great advice. Most certainly post links to your book there, to the book accelerate there as well for listeners to click for and download. Joey, thanks so much for your time today. It's been a pleasure to have you on the show. You look forward to catching up with you soon. Thank you for listening to the insurance coffee house with Nick Houdley. Join us next time for another episode packed with insights and advice for senior leaders. See sweet executives and ambitious insurance professionals. Stream all episodes at insurance-search.com.