The Sure Shot Entrepreneur

The Insurance Industry Desperately Needs Startups

Episode Summary

Charles Moldow, a general partner at Foundation Capital, shares his remarkable journey from being a Wall Street analyst to becoming an entrepreneur and eventually transitioning into his current role as an investor over two decades ago. His captivating anecdotes leave you eager for more, whether he's recounting stories about his father's wisdom on the internet or recalling a memorable encounter with an exceptional entrepreneur. Charles also delves into the exciting market trends within insurtech and offers valuable insights into the areas to focus attention for fruitful opportunities.

Episode Notes

Charles Moldow, a general partner at Foundation Capital, shares his remarkable journey from being a Wall Street analyst to becoming an entrepreneur and eventually transitioning into his current role as an investor over two decades ago. His captivating anecdotes leave you eager for more, whether he's recounting stories about his father's wisdom on the internet or recalling a memorable encounter with an exceptional entrepreneur. Charles also delves into the exciting market trends within insurtech and offers valuable insights into the areas to focus attention for fruitful opportunities.

In this episode, you’ll learn:

[2:20] Charles Moldow's early entrepreneurial ventures during the dynamic evolution of the internet.

[7:58] The role of a VC in sometimes discouraging founders to protect them from their own pitfalls.

[13:01] The revealing nature of a founder's personal life story, showcasing their unique abilities.

[19:54] "Don't prepare to impress me. Just share your authentic truth." - Charles Moldow

[23:43] The importance for entrepreneurs to explore the vast array of promising opportunities for leveraging technology in the insurance industry.

The non-profit organization that Charles is passionate about: safespace

About Charles Moldow

Charles Moldow is a general partner at Foundation Capital. At Foundation, he identifies technology trends and new user experiences that will change the financial services landscape. His thesis investing has him focused on fintech, insurtech and proptech opportunities with a crypto overlay to everything he evaluates. Since he joined Foundation Capital in 2005, he’s made seventeen successful investments, five of which have gone public and twelve have been acquired. Charles’ public portfolio includes early-stage investments that have led to notable IPOs with DOMA (IPO 2021), Rover (IPO 2021), LendingClub (IPO 2014), OnDeck (IPO 2014) and Everyday Health (2014). 

Fun fact: Charles moonlights as AAA Little League coach and family vacation planner.

Learn more about Charles here.

About Foundation Capital

Foundation Capital is a Silicon Valley-based early-stage venture capital firm that’s dedicated to the proposition that one entrepreneur's idea, with the right support, can become a business that changes the world. The firm is made up of former entrepreneurs who set out to create the firm they wanted as founders. 

Foundation Capital is currently invested in more than 60 high-growth ventures in the areas of consumer, information technology, software, digital energy, financial technology, and marketing technology. These investments include AdRoll, Beepi, Bolt Threads, DogVacay, Kik, ForgeRock, Lending Home, Localytics, and Visier. The firm's twenty-six IPOs include Lending Club, OnDeck, Chegg, Sunrun, MobileIron, Control4, TubeMogul, Envestnet, Financial Engines, Netflix, NetZero, Responsys and Silver Spring Networks.

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Episode Transcription

Whoa, whoa, whoa. Like, excuse me, let me understand this. You became the single best individual in your country at this thing, which in itself is incredibly impressive. But the thing that he became great at is also interesting because to become a great sailor and it's, you know, you're one person in a boat, same boat as everybody else.

You're reading the wind, you're figuring out tactics. You've got a strategy, and for somebody to be able to process, and think at that level tactically and strategically and succeed at it the way he did, I was like, that's a superpower. That's amazing. And I walked outta that lunch and I said, there it is. I got my answer.

Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors, and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to the Sure Shot Entrepreneur. I'm your host, Gopi Rangan. My guest today is Charles Moldow. He's a general partner at Foundation Capital.

He's been at Foundation for almost two decades. He's made many investments, especially at early stages - companies that have gone public, companies that have been acquired, and there are lots of examples of success stories like most recently, DOMA and previously Rover, Lending Club, OnDeck, Power Set, refresh, Zoomer and many others.

We're gonna talk to him about his investments, what he looks for in founders, how early is too early for him, how late is too late, what he asks founders in the first few meetings before he makes the decision to invest in those companies. We're also going to talk to him about FinTech. He was one of the early investors in FinTech. And more recently, InsurTech has become a strong trend and he published an article on InsurTech.

We're gonna talk about trends in InsurTech as well. Charles is also a co-investor with me at an InsurTech company called Insurate. Charles, welcome to The Sure Shot Entrepreneur. 

Charles Moldow: Oh, thank you, Gopi. Appreciate you having me. Looking forward to our conversation today. 

Gopi Rangan: Let's start with your background. Tell us a little bit about yourself, where you grew up, and how did you end up in Silicon Valley? 

Charles Moldow: I definitely am an accidental arrival to Silicon Valley. I never had California as a destination for me. I grew up in the East Coast, so I was in New England, grew up in Connecticut, a small suburb of New York City.

And I went to Wharton undergrad, so I was really interested in finance and Wall Street back in the 1980s. Folks like Mike Milken, "the junk bond king", Ivan Bosky, the takeover expert, and others who, by the way, all went to Penn and used to be on the wall of fame at Penn and are now on the 'wall of shame' at Penn, by the way, along with former President Donald Trump. So it's interesting, notable students from Penn that preceded me. I was on like the conveyor belt to Wall Street coming out of Wharton undergrad along with I think 99.9% of all of my co-students. 

And turns out that while it was intellectually quite interesting, I didn't really enjoy the day job of making other people really wealthy. And I thought, "why would I make all these other people wealthy? I could do the same thing and maybe make myself wealthy." But moving money from one pocket to another just isn't that interesting for those that do it for a while. And so I actually started a company while I was an investment banker, which was a pretty odd thing to go do.

Jeff Bezos was an analyst with me at Merrill Lynch and as was Halsey Minor, who founded CNET years and years later. My company wasn't quite as successful as Amazon or CNET. In fact, we lost all of my friends' and family's money, but it was positive for me and that was a very good education, negative for them, and that they lost all their money. And after that venture, I ended up working for a publisher, who invented the simple idea of the in-seat magazine in the airlines. I did that for a little bit and then went back to business school and felt like it was time to do something new. And here's a fun little story. So 1993 picture this, 1993 thanksgiving. I'm a fresh new student at Harvard Business School and I come home for Thanksgiving. So I've been at school for for two months and my 

Gopi Rangan: dad was, this is well before the internet or Well, yeah. Any of these 

Charles Moldow: before.

Yes. Yeah, the browser was two years later. And my dad, who was kind of a smart Alec and he was a technology guy from I B M, and he, he would always have a way of saying things that kind of made you feel like he already knew the answer. And he almost didn't care about what your answer was. And so he said, "so Charles, what are they teaching you at that steamed university about the internet?"

And I said, "the, what?" He said, "the internet." And I said, "well, I have no idea what that is. What are you talking about?" And he said, "it's a network." And he was a professor at university at the time as well as being at IBM. He said, "it's a network that we, professors are using to connect to each other and we're sharing messages and talking."

And I said to him - with as much disdain as I could muster -, "So dad, what possibly could be the applicability of the internet to me and Harvard Business School?" I think that might be the greatest understatement in the history of the world. Like, you know, I was like, "what is this thing? And who gives a hoot about this thing you academias are talking about?"

Two years later I graduated and went to work for the largest cable company in the country because they were promising the world that they were gonna do two-way interactive television over this nice fat cable wire. And while at TCI we thought up this idea to start a company called At Home Network, which was gonna work with the whole cable industry to enable the cable industry to deliver internet access over the cable wires rather than over your phone wire. And so go from, you know, 28 8 modem to 10 megabit, two-way interactive. And that was for us, the beginning of high speed interactive cable in the internet.

That was enough of an allure to move me out to California. Five years later we took that company public and then I started another company that became very notable in Silicon Valley called Tell Me Networks, which was really the precursor to Siri. You dial a phone number and start talking into it and you could get weather and sports and news and a whole bunch of other fun things.

And when the bubble burst on the internet, internet 1.0 bubble burst, we were doomed like a lot of companies find themselves when these bubbles burst and we pivoted to basically be the most comprehensive IVR in the world, in the cloud when the cloud didn't even exist. And we built that business to a hundred million in revenue and we sold it to Microsoft.

Then I needed a break. My wife was yelling at me so much that I felt like I couldn't put it off any longer. And I decided to take some time off and time off back then meant go hang out with your friends at a venture capital firm. That's what, that's what time off meant. And, uh, having done that for a few months, I was like, you know, this VC thing's kind of interesting.

It combines my entrepreneurial interests with my finance interests. And I thought I would do it for a little bit and you know, like you said, almost two decades later, I'm still doing it somehow. And, uh, honestly, it's gone very fast and it's been a, a great blessing and I just get to meet amazing people every day, who tell me about their passions and they're risk takers, and they're relentless and they're just remarkable human beings, and I have great admiration for all of them. And while some of them may succeed and some of them may fail, I can't help but have great admiration for all the people I've met along my journey. 

Gopi Rangan: What an amazing journey. Wharton is a strong finance school. You were on the conveyor belt on the way to Wall Street, but you turned around focused your entire career on internet when it was just beginning to evolve. You started companies, you had an amazing stint as an entrepreneur, and then you switched to the other side of the table. You've been a VC at, Foundation for almost two decades.

You mentioned that you admire founders, and of course founders are amazing. They're passionate, they're mission driven, and they have great ambition. What about VC do you really like and what keeps you as a VC for two decades and you're still going strong? 

Charles Moldow: There are certain things that I love about my job and frankly, after all this time, there's certain things that I don't like nearly as much.

I try at this later stage of my career to do the things that I love and obviously avoid some of the things that I don't like as much. For example, this might find it shocking to you, but at my age, which is not that old, but old enough with kids outta college, I don't enjoy going to raves in San Francisco to meet entrepreneurs.

Gopi Rangan: No burning man for you? 

Charles Moldow: And listen to EDM music at four in the morning on LSD. It's just not my thing. It's other people's thingss. That's great, but just not my thing. So you don't go to Burning Man? I am dying to go to Burning Man. I am that, that actually Okay. I'm into but the relentless networking of, of the 20 somethings is better left to 20 somethings I think. And so if you break venture into, let's say, finding and really evaluating and doing and then helping and then exiting, yeah, that's a, you know, a rough description of the path. I now mostly leave finding to the younger crowd and, you know, my network over 18 years is pretty well established, so the, the good things that are meant to find me will find me without me having to go look, which is wonderful and that's a, a great luxury at this stage of my career.

I do enjoy the evaluating part. Because a good idea is great, but a good idea paired with a great entrepreneur is magical, can be amazing. And so a lot of my job is to figure out why somebody is special and why this person might succeed with an idea that 10 other people are executing against simultaneously. So I would say I enjoy that part. What I really enjoy most honestly, is working with my CEOs and management teams and co-board members. It's the best sense I get of building; although a fraction of what it was like to be an entrepreneur and to build I can't get that in my seat, nor do I deserve to have the spoils that come with that.

I really enjoy helping others achieve their dreams. You know, and I have the luxury at this stage of my career to be able to do that. And so that for me is amazing. You know, when I can sit at a board, have a great conversation, stimulate and push and prod and encourage people to achieve, I would say the most that they're possibly able to achieve, that's when I get my greatest reward.

And then, you know, of course the exit is always fun because it's the acknowledgement of all that work, but the work itself, the journey is the reward much more so I guess, than the destination. 

Gopi Rangan: When founders land on a fantastic idea, unleashing that potential to get to the maximum outcome, that is indeed very fulfilling. And we meet these founders at the point of origin, we can see that journey start and grow. That is very, very satisfying indeed. 

Charles Moldow: Can I just say something? This is kind of fun cuz I've been known to do the opposite too. So lemme just interject quickly. The way I think about entrepreneurialism is that an individual who's passionate about an idea is gonna go invest their most valuable asset, which is their time to go make this thing happen.

And that's noble and it's amazing, but it's also possibly incredibly expensive and dangerous because not every idea is a great idea, and not every entrepreneur is skilled and capable of delivering what they're trying to deliver. And so while most of the time my job is to encourage them to fulfill their dream and destiny, sometimes my job is to discourage them and to save them from themselves.

And what's interesting about that side of the, of the coin is that in the moment, You're never gonna find an entrepreneur who says, "oh my God, Charles, you've pointed out this fatal flaw in my idea and it'll never work. And you're right. I'm gonna stop doing this idea like zero." I have 0% batting average achieving that.

But what I have had happened to be on a number of occasions is people come back to me six months, one year, five years later, and they say, "oh my goodness. Either I eventually listened to you, or boy should I have listened to you because you were the person who spoke the truth, and I just was too emotionally attached to the idea to see it, but you were looking out for me and you appreciated that my time is the most valuable thing I have, and you were trying to save me time," and that's very rewarding. I mean, it not as rewarding as, you know, helping somebody achieve a big public company for nothing. But it is very rewarding to have entrepreneurs believe that I'm looking out for them as much or more so than, you know, my LPs who I have to look out for. You know, at the end of the day, yes, my job, of course is to make money from my LPs, but I feel like there's a, I have a, a human interest, a human connection with the entrepreneurs that maybe surpasses my responsibility to my LPs.

Gopi Rangan: Doubling down when things are working well is one thing, but it's also helpful to get advice on when to pull back, when to stop, when to pull the plug, and, and sometimes these struggles are not worth it. The market's not there, or no various other outside reasons why the founder should probably give up or change course. And that is the wisdom that you can bring. You have lot of successes, but you've also seen lots of struggles along the way. You mentioned evaluation. What happens in that first meeting? What do you look for? 

Charles Moldow: I'm looking for a couple of very specific things, and it's interesting because. Do you remember that book about thin-slicing? I think it was Malcolm Gladwell talked about this concept of thin-slicing, right? Where your gut, yes, it's not just your gut firing, but your gut is a assimilating lots and lots of data points that then is leading your gut to feel certain way. When I'm sitting with an individual and my gut starts firing, I start to almost get like a nervous energy inside me. And that's a signal, that's a very strong signal. So then the question is, "okay, well why? And what, what, what is causing that signal?" And there is no prototypical entrepreneur. You can have introverts and extroverts, you can have engineers and business people. You can have people who went to amazing schools, people who never went to school, like, you know, there is no simple formula that we can look for. And so it's, it's these intangibles. I think of them as superpowers. So the question I ask myself is: what is this individual's superpower? Are they amazing at leading people? Are they amazing at encouraging people? Are they incredibly empathetic? Are they technically very deep? Do they have great vision? Are they a tactician of tactics versus strategy? I'm looking for things that might indicate. Some very strong pension toward one or more of these things. And I'll give you like a perfect example.

This is a really interesting example that I've thought about many, many times in my career. 15 years ago, give or take, there were two companies that I was evaluating. One was called Prosper, the other was called Lending Club. And they both were pioneering this concept of consumer unsecured lending, but using retail capital rather than institutional capital.

There were two entrepreneurs who started those two companies. Chris Larson started Prosper, who was a multi, multi-time famous entrepreneur, kind of a shoot from the hip cowboy kind of guy, very charismatic. And Renaud Laplanche, a French trained lawyer-turned-entrepreneur, and both the companies were raising money at the exact same time.

This was 2008ish, so there wasn't a lot of venture dollars chasing ideas. In the world where like there's a buyer and a seller, I was at that time a buyer and they were sellers. They were selling me their stock and their wares. Today, the market's very different, but that's what it was then.

So I kind of had this opportunity to figure out like which of the two entrepreneurs was I going to back? Because both businesses were of roughly the same size in the late seed stage. And Chris is definitely the kind of guy who gets you fired up and he is passionate and emotional and typically he's the kind of guy that I think could like run through walls and, and make success.

Renaud, I mean, French people very reserved, kind of got a thick accent. Uh, he might have been wearing a blazer when we met, and he was a lawyer. I was like, he was in finance. He was like, lawyers. Yeah, like lawyers are not great entrepreneurs for the record. So I thought surely I'm gonna go with Chris. Like how can I not pick this like cowboy shoot from hip entrepreneur?

Well, there were two factors that I, I was thinking hard about. One was that this is a finance business and in finance you have regulation. And regulation matters. I was like, okay, Renaud probably could navigate his way through regulation better than Chris. But I went to lunch with Renaud when I was trying to make my decision and he started telling me his story about growing up in France.

And he's like, "yeah, my mom and dad owned a grocery store in Southern France, and I used to bag groceries." I was like, okay, that's a nice story, like humbled beginning. I can appreciate that. And then he said, "oh, and then I got really into sailing." I was like, what do you mean? He's like, "oh, well we live not that far from the water. And I kind of started to get into it and I happened to win the French National Sailing Championship." I was like, "when?" He's like, "oh, when I was 16 and 17 and 18, and then I became, I came in second in the nationals when I was 19." 

I was like, whoa, whoa, whoa. Like, "excuse me, let me understand this. You became the single best individual in your country at this thing, which in itself is incredibly impressive. But the thing that he became great at is also interesting because to become a great sailor and it's, you know, you're one person in a boat, same boat as everybody else. You're reading the wind, you're figuring out tactics.

You've got a strategy. And for somebody to be able to process and think at that level tactically and strategically, and succeed at it the way he did, I was like, that's a superpower. That's amazing. And I walked outta that lunch and I said, there it is. I got my answer. And I bet on Reno. And Reno took Lending Club public at $10 billion 5 years later. Chris got shut down by the SEC and regulators for impropriety cuz he was trying to kind of skirt the rules and eventually, Prosper succeeded to some degree, although it's never gotten liquidity and it never went public.

And I've always re reflected back to like, what is the superpower? What makes this person amazing in some unique way? And, and how can I look for breadcrumbs that might suggest that: because they are amazing at that one thing, they might be amazing at other things?

Gopi Rangan: My previous firm invested in Prosper, and...

Charles Moldow: Ah, there you go.

Gopi Rangan: I watched the story play out. Lending Club has far greater scale than anybody else in the market that started around the same time. Sometimes we do get carried away by charisma, and as investors, we need to watch for how we get tricked into our own biases, and we need to stay true to objective things and look for the real magic.

That's a very fantastic example of how you really did that. What did you ask Renaud? 

Charles Moldow: I was just having him tell me about his childhood because I do love to hear about people's families, their siblings, their parents, how they grew up, where they grew up, what their parents do or did for a living, how they navigated to where they were, how they decided what school to go to.

Like I love to get into the thought process because from that I can find insights about how they think and I also can learn a bit about their reflections and whether and, and how humble they are. And their willingness and ability to identify and admit failure in their lives. Like, Hey, I did this. It was a mistake.

I changed it. Or this didn't work for me. Cause I think entrepreneurs need to have that fallibility, that vulnerability. It's the opposite of, I think what entrepreneurs think they need. They think they need to have every answer and be able to like drive the troops in a direction. But the reality is nobody can have every answer.

And the great entrepreneurs I think are able to say, I know this thing and I'm going to help us in that thing, but boy do I not know this other thing. And in that regard, I'm gonna raise my hand and ask for help. And I love entrepreneurs who can admit that they don't know everything. 

Gopi Rangan: You mentioned many things that you look for. They're qualitative and they are kind of fuzzy, like drive motivation, perseverance and those kind of things. The kind of stories that really appeal to you don't come up naturally in conversations. What can founders do to prepare for a meeting with you? What's your advice? 

Charles Moldow: Well, the first thing I would say is I, I don't want them to prepare and I wanna get the unvarnished truth. I wanna learn who they are. If they present to me somebody who they're not, and ultimately I figure out who they are. That's not good for them, and it's not good for me. By the way, I want them to know who I am. Like I am very forthright when I meet with entrepreneurs about what I'm good at and how I can help them and what I'm bad at. And what they should not rely on me for. And then the same way I want to know that of them. So I would say to them, if you wanna rehearse all day long about how you answer the market size question or gross margin question or cash burn question, absolutely you should, cuz you should know your business.

There, there's no right answer to those questions. There are thoughtful answers to those questions, and I think people like me will wanna evaluate how thoughtful they were in, in thinking through the roadmap, the burn the market. But with respect to who they are, I just, I want the end of earnest truth, and they should want that from me as well.

Gopi Rangan: How long does it take for you to make this decision from the first meeting? 

Charles Moldow: Five minutes. It's fast. I'm partially being serious. Most times it is fast. This doesn't mean that there aren't people that turn me around one way or the other by the end of a half hour or an hour, you know? It's like, oh, okay. You know what? I too quickly judged who they were, and now that I've got more depth, I appreciate that there's somebody very different than I thought. That does happen, but most times it's pretty quick. 

Gopi Rangan: Malcolm Gladwell talks about thin-slicing in this book, Blink. He says that we often form opinions and then we spend the rest of the time trying to prove to ourselves that it was the right thing to do or disprove that we don't wanna do it because then we try to find reasons and that reason finding expedition is the due diligence process that we end up spending a lot of time on, which is mostly wasted. 

Charles Moldow: I, I guess one of the fun things about early stage seed investing, like really, you know, pre-seed, I guess in today's language, pre-seed investing is there's really nothing to go on, but the individual or team, and boy does that simplify the equation.

Yep. Yeah, because sometimes, you know, in that early stage, I almost don't even care about their vision for the product because it's gonna change 50 times between now and then. I'll tell you one fun story. I wish this story had a better ending just for the, for the record, but a couple years ago I had two guys come into my office to pitch me an idea about a podcasting platform, Paul Davidson and Rohan Seth, and I'm sitting there listening to these guys and I'm thinking, They're amazing.

They are compelling. Paul's an amazing product eye and Rohan a great technologist. And Rohan and I bonded in the meeting cuz we both have special needs kids. And I was like, I love these guys. And I sat there and I thought, I hate this idea, this idea, this idea is not going anywhere. They're so much better than this idea.

And at the end of the meeting I said to them guys, I don't like this idea, and I don't even think you're gonna do this idea. In fact, I'm gonna bet that you're not gonna do this idea, but I wanna invest in you. So I'm in and. We invested and at 12 post million dollars and six months later they invented Clubhouse.

I didn't invest in Clubhouse, I didn't know anything about Clubhouse. I invested in, I invested in Paul and Rohan and they created Clubhouse. And of course I wish I had exited it at $4 billion evaluation, but that's a great example where at the earliest stages, I just don't care much about the idea. I'm really looking at the conviction and capabilities of the individuals. 

Gopi Rangan: The founder matters and how they view the future and the passion they bring to the table really attracts you to the conversation. And then what they build later they hopefully take some advice from you and. They will also learn from the market and kind of channel their passion. 

Let's talk about InsureTech. Why are you passionate about InsurTech? 

Charles Moldow: Yeah. You wouldn't think that that's a topic people can get passionate about, although I have many entrepreneurs who are quite passionate about it, which is great.

Insurance, a very old industry, like one of the oldest in the world, historically very stayed, very analytical; but at its core it's a bit intriguing because it's all about risk and risk taking, right? It's how do you quantify risk? That is insurance and your quantification of it ends in a dollar figure, a dollar of risk willing to take and a dollar premium you need to charge.

I was attracted to the market because, insurance companies are not tech companies. They're risk evaluators and their, and they're distributors, but they don't have much tech. They really don't have any tech. And so if you're looking for technology to disrupt an industry, try to find an industry that itself struggles with technology and to me InsurTech, let's say in contrast to FinTech, cause I invest in both, you know, the industries are probably of similar size, you know, north of a trillion dollars. But the financial sophistication and technology sophistication of financial services companies vastly surpasses that of insurance companies.

And so it strikes me that, entrepreneurs have a much greater opportunity to materially change how business is done in insurance than it necessarily does in financial services, and that's what attracts me. 

Gopi Rangan: Everything underneath an insurance company is based on data and they barely invest in R&. They're kind of stuck in stone age, and these are words by the CEO of Aviva in one of the quarterly meetings. That's why I focus on InsurTech as well. There's a massive opportunity and pretty much all of us have some kind of insurance product. Actually a few of them, Apple would be envious of an insurance company, the number of products that we have in the insurance sector. But yet there's very little innovation in this sector, so that's why I'm excited as well. 

Charles Moldow: Yeah, it's very frustrating to be an InsurTech investor. I'm sure you experience this just like I do, because the three most prominent InsureTech companies to have seen some kind of IPO exit - Root, Lemonade, and Hippo - all three of them have suffered dramatically in market cap in the public markets.

And I hear people say all the time, "oh, InsurTech investing is dead" or "You can't make any money in InsurTech investing." And it drives me crazy because, those three companies try to innovate in distribution: "I'm gonna put this product online, I'm gonna make it easier for customers to buy it." And that makes all the sense in the world but there's nothing differentiatable about that. There's no motif that you create as a result of that and so as a result over time for them to grow and gain market share, they had to get more and more aggressive on price, and as you get more aggressive on pricing insurance, you take more and more risk. And their lost ratios were greater than a hundred percent of the premiums they took in and they became bad businesses.

Doesn't mean InsurTech is bad, it just meant investing in a company that innovates on distribution alone is gonna be a hard business, and the industry is so vastly bigger than rental apartment and homeowners and auto insurance sold online by InsurTech startups. Yet there is some part of the population of the public that doesn't understand that that's not representative of the opportunity.

Gopi Rangan: When the internet started, we don't see successful companies like Facebook, like prior to Facebook, we had Friendster and MySpace that did, did not end social networking. Similarly with browsers like Gofer and a few others, they don't exist today. That doesn't mean that the browser business is not good. In fact, Chrome came much, much later and that's now dominating the, the browser business.

So the InsureTech industry, the is massive, and it's waiting for innovation. Lemonade, Root and others were just the early signs of that, and we're gonna see many, many more success stories come up in the future. That is well said. What is difficult about building an InsurTech startup compared to other types of businesses?

Charles Moldow: I think that the InsurTech entrepreneur will tend to look pretty different than entrepreneurs of other businesses because there's so much institutional knowledge that is generally required because of regulation, because of reinsurance, because of insurance capacity, the MGA concept, and the concept of brokers and agents that it, you're typically gonna find an entrepreneur who comes out of the industry, who understands many of those nuances.

Somebody walks into my office and says, I wanna create an insurance company outside of the insurance industry is gonna definitely face a lot of skepticism from me because, you know, unlike other industries where maybe you can skirt regulation, yeah, you can't do that in InsureTech. You need to embrace regulation and, and work with it, uh, and work within the confines of it.

And I think that might necessitate a slightly different personality type. You need to find somebody who is willing to understand and adhere to rules and be very risk averse and be entrepreneur like, that's a weird Venn diagram. I'm not sure those things intersect at all. So that's, you know, that's hard to find.

Gopi Rangan: We invested Insurate and Joe McILhon, the founder and CEO is the mayor of that intersection of the Venn diagram. He has all these multiple pieces of experiences altogether in him. It's very hard to find such founders in the ensure tech industry. Agreed. 

We're coming towards the end of our conversation, and I want to ask you about your community involvement. Is there a nonprofit organization you are passionate about? Which one? 

Charles Moldow: My wife started a nonprofit about a decade ago, and obviously we're very big donors to that. It's called Safe Space. Safe Space was started to help children in our communities - junior high, but most of high school kids - deal with all of the pressures they face and challenges associated with depression and anxiety and cutting and suicidal ideation and gender identity and obesity in the list goes on and on.

And the wonderful thing about safe space, And the insight that my wife had, to her credit is that these children, these kids, they're trying to figure it out. And the one thing that we know is they don't give a hoot about what some adult thinks. Uh, they really care about what their peers think. And so the organization is a peer led organization where the kids are trained to help each other and to be on the lookout for each other and to embrace each other.

And so it's a, it's a volunteer led, student led organization that penetrates high schools and creates activism around those issues, which I think is really neat, 

Gopi Rangan: especially in today's world. With so much, uh, social media and peer pressure, uh, this has become much more acute. Thanks for sharing that story, and thanks a lot for spending time with me today.

Thanks for sharing your nuggets of wisdom. I look forward to sharing your nuggets of wisdom with the world. Oh, 

Charles Moldow: I'm so sorry. That time ran out so fast that we were just starting to, we're just warming, warming up. I know We have. Thank you. It's been great. 

Gopi Rangan: I look forward to sharing this with the world, and you've given me very, very insightful stories.

Specific examples from your experiences. 

Charles Moldow: Oh, thank you. Well, it was wonderful. I hope your, I hope your audience enjoys it and, and, and learn something from it. 

Gopi Rangan: Thank you for listening to the Sure Shot Entrepreneur. I hope you enjoyed listening to real life stories about early believers supporting ambitious entrepreneurs.

Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast. I look forward to catching you at the next episode.