How Myhippo CEO Assaf Wand grew Myhippo to $119.3M revenue and 160K customers in 2024.

hello everyone my guest today is a soft one he's the co-founder and ceo of insurtech startup hippo based in palo alto the company is modernizing home insurance through the lens of homeowners all right so if you're ready to take us to the top bring it so you got hippo going on here now listen my audience is usually pure sass so let me just ask you your revenue model is it pure sas or or if not what is the revenue model so the revenue model is is commission driven we basically make uh percentages of every premium that we actually sell however uh because you mentioned that your audience is mostly sas think of insurance as one of the most interesting sas businesses you can find i get yearly pay the average policy i think is like twelve hundred dollars so i get an early pay of twelve hundred dollars from you where i'm getting making my commission the churn is really really minimal you know because you didn't change your uh home insurance very very often however uh it's a business that actually have the market and the marketing capabilities of a consumer side so you can target customers directly is a hundred billion dollar and go in at five billion a year so you get the positive side of consumer uh basically businesses with the benefit of a sas business so break break this down for me is that 1200 number you just gave me is that a fair average in terms of what consumers pay you per year for their home insurance that's that's the average in the u.s okay in the u.s and and how many and how many of these how many of these do you have issued at this point outstanding of a hundred and fifty hundred and sixty thousand okay hundred quite six yeah it's significant okay right 160 thousand we'll talk more about that here in a second but break down the economics on the 1200 so that's the pay to you now is that top line revenue or do you have to pay a bunch of that back so that's top line and we're making uh percentages out of that okay and do you negotiate your bda team negotiates the percentages based off the sales channel one one by one uh we we're agnostic we'll always get the same commission the same structure no matter what so we're not gonna do uh uh it's mostly to focus on the customer so the customer would not feel that if he comes from channel a he potentially got a different price or someone else got a different cut with agnostic no matter what channel you're coming to ippo we're always making the same pay and you as a customer always pays the same amount okay so what are you making on the 1200 we're talking like 10 or more no no quite significantly more okay wait can we can you give me a range it's in the uh uh 20 to 30 percent okay and how did i i'm just uneducated here how does that compare traditional home insurance oh it's it's the same structure like the uh 15 commission because we're doing a lot more than what any other agent doing we're collecting the data we have our policy management it's our own filing it's our own product uh so our cut is quite significantly better but you're also uh doing everything that you need so now an agent is not going to take care of you on the claims the claims move to the claim department in the insurance we have our own claim department we're doing all of that stuff we'll basically think of it as a virtual insurance company for for an ease of thought a soft 1200 per year where you're taking your minimum of the range you gave me of 20 is essentially 240 bucks per year to you or about 20 bucks a month across 160 000 paying customers that puts your monthly recurring revenue somewhere around 3.2 million on this stream is that accurate it's it's it's you know let's not get into it it's it's actually quite significantly higher than that okay other products uh auto flood there's all kind of other components as well that coming in yes are all of these additional products that drive that driving expansion revenue on that same customer base or these are so you're serving these these products to different customers entirely customer base different same oh same okay so so i want to walk through a life cycle here so you get me on the insurance 1200 per year talk to me about your other products that you might upsell me in your susan three two three four no it's even most of them are in the same time if you are living in a flood zone we'll sell you a flood insurance we're obligated to offer you an earthquake insurance in california different states have different products that are mandatory to offer you and we offer them and we sell them we are a lot less focused on upselling this is not our focus our focus is whatever is best for the customer but some customers wants to bundle in off in and add the auto we're happy to offer that it's a very customer centric rather than maximizing revenue per customer it's about growth if we're you know in the region of 200 000 customers now there are 120 million households in the us there's so much more to go by focusing on getting more incremental revenue rather than adding up selling opportunities sorry are you at 160 000 customers today or 200 000 across all your products you know it's in betweenish so you have about 40 000 that might not pay at all for the home insurance but they're paying for just earthquake or just flood or something else no no no it's like it's just the pace of the growth is so high we acquire the company there's so many other moving parts of the you know the business so the specific number of how many customers is is a moving target this business in terms of valuation you know churn is obviously critical you mentioned churn was fairly low if you look at the past 12 months in terms of gross revenue churn are you in the single digit percentage range yes okay so under 10 annual gross revenue churn which is uh overall the standard for insurance in general when was the last time you replaced your home insurance can i can i be honest with you i have no idea if i even have home insurance i hate all this administrative stuff some my family office takes care of this stuff for me as long as you have a mortgage on your how on your home you have a home all right fair enough all right so call it ten percent gross revenue annually or lower now i know you know obviously if you drive activation of these users you upsell them on things do you have expansion remember that more than makes up for that ten percent hole and it's it's uh it's it's it's as i told you it's a lot less of a focus area another stuff but that's achieved that's it that's a that's a very ceo answer view which i appreciate but you if you tie customer value to your pricing you then directly align customer value with your revenue so i'm going to push you a bit harder here do you have upsell revenue that more than makes up for the 10 percent loss so your net revenue retention is above 100 there's also a price increase which is embedded in every home insurance policy so a standard increase in a home insurance policy yearly is around four to five percent and that's just because the risk associated with your home keep on increasing because an extra year passed and the plumbing is a year older and the you know and stuff like that so you need to compensate for this extra risk plus people are actually adding to the small change and change up in your house because you probably added a deck changed the kitchen bought new stuff your for your house so people have a tendency to accumulate and in in increase the size of the home so that also pushes up the the prices so it kind of mitigate that and the upselling stuff which will not as i said as i told you we are not focused on that is usually it's a wash because most of the saves that we're doing on the upsell is a day one rather than try and keep on pushing your stuff ongoing got it so you're i'm going to decode this what do you tell me if i'm decoding accurately here you churn maximum 10 you sell most of stuff on day one there's not a lot of upsell motion happening here except the natural five percent accelerators in the home insurance programs with risks that's associated over time so you have somewhere between call it ninety percent and a hundred percent net revenue retention annually yeah you can you can basically what's the team size today how many people it's 150 people uh split between three offices we have a palo alto office of around 65 people we have the biggest office for repo is austin we have all of our insurance operations our agents our claims are billing all of that kind of servicing and then we have a company that we acquire that is based in dallas okay around you know 65 in here and i know 85 in the other okay how many of the how many of the total folks are engineers sorry again how many of your folks are engineers uh 30ish to 40ish okay 30 to 40. if you you you put bi you it depends on you know the definition but it's around 30 is supported and any quota carrying sales people no we don't we don't use quotes in general like uh it's not something our call center and agents are basically our frontline people and they don't have a clue i don't mind if they spend you know with nathan an hour and a half and tell you that your actual insurance with farmers is good i'm completely fine even with that because we automated a lot of the stuff because we choose very specific empathetic people uh you know my guess is they're selling 3x what the industry average for for an agent is yep so...