16.07.2020

Clearcover: how to admit your mistake and increase business turnover by 10 times

One of the most important skills of successful founders is to admit their mistakes (even if it needs to be done publicly). Today we would like to share with you the experience of Kyle Nakatsuji, founder and CEO of Clearcover, a digital auto insurance provider. On his Crunchbase blog Kyle revealed how to adequately assess the steps for further growth and business development and not be afraid to admit your own delusions.

Kyle is a co-founder and CEO of Clearcover. Under Kyle’s leadership, Clearcover has raised more than $104 million to date, and operates in multiple markets – in California, Illinois, Arizona, Ohio, Utah, Texas, Wisconsin, Louisiana, and other states. Prior to Clearcover, Kyle co-founded American Family Ventures, where he was responsible for sourcing, valuing, and structuring over 50 equity and debt capital investments in national technology startups. Prior to that, Kyle worked as a corporate lawyer at AlphaTech Counsel, dealing with business issues. Kyle has a law degree and an MBA from the University of Wisconsin.

When launching Clearcover startup, Kyle publicly announced that the company did not intend to distribute its product through insurance agents. This strategy proved to be good – the business started to grow, stable sales and more than 20 partners appeared as well, including Chime, Credit Karma, The Zebra and Cars.com. The company has achieved success. So, what happened next?

Clearcover faced a new challenge: how to continue to expand. It was necessary to find new opportunities for growth, while maintaining stable dynamics. To determine the next step in development, the company came up with its own special decision-making framework. This framework eventually led them to the conclusion that at this stage, serious growth is possible only with the involvement of those independent agents, which they firmly decided to give up sometime in the past.

The entire team mobilized to implement this direction, Clearcover created a separate sales channel for independent insurance agents, which proved to be a successful strategic decision at this stage of business development.

Kyle claims that the developed decision-making framework is suitable not only for their specific tasks, but also for almost any business with similar problems. We cannot guarantee this statement, but we believe these ideas are definitely worth paying attention to.

So, when analyzing and developing the next steps in the development of the company, the following questions were posed to the management:

1. Does the considered growth opportunity have sufficient potential?

The point is that you should not be scattered about 10% growth opportunities but focus on those areas that will allow you to achieve 10x growth. For example, the market opportunities that Clearcover studied through agents ranged from $70 billion to $80 billion.

2. Is the growth opportunity leveraging the company’s strengths?

At this stage of growth, the company clearly felt a lack of time and resources. It was impossible to change the entire business model. The solution with the agent channel did not require such measures; it only needed to rethink some business processes and reallocate the available resources.

3. Is it possible to test the effectiveness of growth opportunities without serious costs?

Do not throw all your efforts into an untested direction, otherwise you risk losing funds and not benefiting the project. In Clearcover’s case, the team did not need to make significant investments, almost all the technologies used were already developed earlier. The agency channel quickly showed its effectiveness, after that it became expedient to think about investing in the optimization and development of this direction.

4. Have you truly analyzed the concept you previously adopted?

You need to be ready to change your opinion. For further development, you may need to change one of the foundations of your business concept. Do not be afraid to stop being consistent and admit that the original concept was ineffective at this stage.

Top tip: analyze and question your own statements, be bold in your decisions, even if they may seem inconsistent. We all tend to make mistakes; constantly check your assumptions and adjust your business concept if it helps its growth and development.

Read Kyle’s post on his Crunchbase blog at https://about.crunchbase.com/blog/trying-to-grow-your-startup/

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