Fintech/Insurance/Opinion/

Startups, don’t worry about building the tech — focus on your customers

Founders that believe that they’ll win just because they have a specific algorithm or piece of technology are making a crucial mistake.

Credit: Elise Moutarlier, cofounder of Lovys
Elise Moutarlier

By Elise Moutarlier

Consumer founders today fall into two camps: those that believe that startups need proprietary technology or intellectual property to succeed, and those that believe that customer obsession and experience is key to disrupting an industry, relying broadly on plug-in tech.

I’m squarely in the second camp. Founders that believe that they’ll win just because they have a specific algorithm or piece of technology are making a crucial mistake. Why? Because most of the time, they forget that technology should make their customers’ lives easier, not be an end in itself. Tech doesn’t necessarily drive innovation, it’s just a facilitator for it. 

Nowhere is the ‘technology fallacy’ more pernicious than in my industry, insurtech. I once knew a CEO of an insurtech company — a brilliant and outstanding manager as well as a sharp entrepreneur, with unrivalled technical intelligence. Today, he’s out of business. He made only one mistake: he forgot that in order to succeed, his company didn’t need to create the best technology and develop a good turnover. He forgot who his customers were and what his core mission was. 

But this has also been proven in industries from healthtech to fintech. The vast majority of startups are never going to develop some epoch-making, breakthrough technology. The way that they will succeed will be by listening to their customers and building with them in mind.

Think about neobanks. Their real appeal for consumers is simply the ease of use, the customer experience, and how easy it is for customers to give feedback. The fact they’ve leapfrogged the legacy technology used at big banks is helpful, but it’s not their silver bullet (indeed, most neobanks use third-party tech providers, rather than building their own stacks).

Focus on trust, not tech 

Why is this such a problem in insurtech? Because we’re an industry built on trust. Policymakers entrust us with their money and expect us to have their back when the worst-case scenario happens — they have a car accident, their house catches fire, or their beloved pet falls ill. Data, algorithms and design are nothing if we aren’t able to help our customers quickly when they file a claim or provide policies that fit them. 

Customer obsession is also the only way that we’ll win out over incumbents. People choose us because they’re sick of being stuck for hours on the phone to file a claim with a traditional insurance company, sick of struggling with online services with UX from the stone age, and sick of policies that don’t fit modern lifestyles. They choose insurtechs for the ease of use, the customer care, and the offers shaped to their needs, not the tech. 

The anti-tech model

In a way, startups have a decision especially early on. They can either focus on investing in customer research and iterating to suit their needs or build an extraordinary tech engine that they then hope still fits customers’ needs three years later, when it’s ready.

At Lovys, we’ve shown the former works. We implement features just because some customers request them (eg. electric car batteries), and we only sell products to those who really need them and could afford them. Sure, it isn’t the most profitable choice from a purely business point of view. But long term, this is the foundation for a relationship of trust with our customers.

In other words, I firmly believe that ‘customer care’ can be a USP and competitive advantage in itself. Boasting about technology is a nerds game that has been cultivated to win investors and conference rooms — not the everyday customer on the street.

We’re not here to feed our customers fancy tech from the top-down, we’re here to build bottom-up. That means keeping our ear to the ground and listening to our customers. Startups — especially insurtechs — should be in a race to understand our customers and help them, rather than a race for innovation. It’s a shame more founders don’t understand that truth. 

Elise Moutarlier is cofounder and general manager at Lovys, an online insurance startup. 

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Titus Abe
Titus Abe

This is a classical example of putting Customer Engagement as priority over Operational Excellence