Angus McDonald has gone from growing up on a rural farm, to operating a fast-growing global tech startup that has raised tens of millions of dollars in capital. The venture, Cover Genius has raised funding from top-tier investors like G Squared, Sompo Holdings, King River Capital, and Leap Capital.
In this episode, you will learn:
- The future of insurance
- Cover Genius’ vision
- More trusted brands integrating Cover Genius for their customers
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About Angus McDonald:
Angus McDonald is the Co-Founder and CEO of Cover Genius, one of the fastest-growing insurtechs globally. Cover Genius has received dozens of awards within insurance and tech circles for its patent-pending platform and global capability that ensures user-centricity throughout the entire customer journey, an approach that has led to global partnerships with, amongst others, Booking.com (NASDAQ: BKNG). Prior to starting Cover Genius, Angus was on the executive team of several high-growth technology companies, including iClick Interactive (NASDAQ: ICLK) and Yahoo. Angus has a Bachelor of Science majoring in Mathematics and Computer Science from the University of Technology Sydney.
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Read the Full Transcription of the Interview:
Hey, guys. Today’s episode is brought to you by Zencastr. I remember back in the day when I was looking at putting together Zencastr. I was looking for a solution that would help me in putting things together. Essentially, this is what allowed me to bring DealMakers to life. Basically, Zencastr, what it is is an all-in-one solution where you just send a link to the person that you’re looking to interview. They would plug in their computer with their video, with the audio, and then you are good to go. You would piece everything together, give it to your audio engineer or even edit it yourself, and you are off to the races. Now, if you’re looking at getting into podcasting, you should definitely check Zencastr out, and you could also get a 30% discount, and this is the discount code that you will be able to redeem by going to Zen.ai/dealmakers0. Lastly, I was very much blown away when I found out that investing in wine has been one of the best-kept secrets amongst the wealthy. This is now not the case anymore. I came across this solution, which is called VinoVest, and they are a great solution that allows you to diversify investing by implementing or including wines into your portfolio. Take a look at this: wine has one-third of the volatility of the stock market, and yet it has outperformed the global equities market over the past 30 years with 10.6% annualized revenues. It’s a really good way to diversify your portfolio, and you could also get two months of free investing by just going to Zen.ai/dealmakers, and by going there, you will be able to redeem your discount.
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Alejandro: So alright, hello everyone and welcome to the deal maker show. So very excited about our guests today. We’re gonna be learning quite a bit about product market fit building scaling financing stress testing with massive partnerships I think that. You’re all going to find this episode to break excited so we without furtherdo let’s work from our guest today an was mcdonald welcome to the show.
Angus McDonald Thank you Alejandro! Thanks for having me thanks for your listeners for listening.
Alejandro: So originally born there in a twenty Thousand Acre farm in Australia I mean how how was life growing up especially being forty miles from from civilization.
Angus McDonald Thanks Alex Alejandro look it. It’s a very unique kind of environment to grow up. You know lots of space. Lots of time with your own thoughts. You could say growing up on a twenty Thousand Acre farm in the in the kind of middle of nowhere in Australia. So. Yeah, that was my background and um and I you know I grew up in ah on a family kind of farm in a family business which was which was interesting in itself.
Alejandro:e Now at 12 you went to boarding school and I’m sure that that experience to the he gave you kind of like the the sense of being independent to certain certain degree being on your own and and the uncertainty. So so how was that for you.
Angus McDonald Yeah I think um Independence is something that I’ve always um has always been ah a value that I’ve that I’ve I’ve had um and I think what comes out of that is a sense of transparency wanting to be able to. Um, build relationships with people broadly.. There’s a certain self-confidence that you get from being independent or relatively independent from a younger age and um, you know I think growing up on ah on a farm which is very isolated your. Your natural inclination then becomes to be more independent and to not necessarily be part of the pack so to speak from ah from a young age.
Alejandro: Now for you at what point do you say that you got this global outlook. Okay.
Angus McDonald So I think you know I remember I remember watching watching australians you know, go and play global sporting events. Um, you know as ah as a ten year old boy I was Matt keen on tennis and. Ah, there was a australian tennis player 1 Wimbledon in 1987 for those listeners who probably don’t remember Pat Cash he was my absolute hero was a kid growing up and you know I think being able to see people come from all over the world and be able to. You know, be the best or challenge the best on the global scale was something that that I was always really really motivated by ah you know after I left school I traveled to the Uk and I you know I had a ah gap year we call it in between um, school and starting university and. I worked over in the yeah uk and did some backpacking around europe and tried to experience different cultures. not just that not just the anglocultures I guess but also more broadly. Um european cultures and that was a great experience for me and and certainly meant that when I came back to start studying I think. As a nineteen year old I was I was more interested in in global business global people, global cultures. Um, and certainly that then I think shaped the kind of roles and jobs that I wanted to do in the future.
Alejandro: Ah Mathematics Why mathematics I mean you probably as you were saying you grew up in this family business all about farming and I mean math math Math. You know sounds a little bit far away from that. So How did you come across that law for math and. And technology and and and computer science.
Angus McDonald Yeah, so I ah, um, look I think I was always had that inclination of maths and science but maths for me I I used to just walk around as a kid trying to do numbers and sums in my head you know we had a lot of cattle and sheep on our farm and I remember. Having helping my grandfather who was still alive and working on the farm I remember helping him count the sheep and we had twenty six thousand sheep so that was a lot of counting and um, you know numbers were always part of our life and I always loved how they operated and. So maths for me was just it was my interest it was my passion. Um, it was something I ah really liked thinking about how they work. Um I didn’t think particularly deeply but I I would say less theoretical and more about how you apply maths into into business senses. Um, into the into the environment into how maths kind of operates in in ah in everything that we do.
Alejandro: So so for you after you got the degree you went into into a very interesting path which is pretty much software companies and internet companies. So was there like ah a particular trigger that really pushed you into that direction.
Angus McDonald Yeah, look um man I mean I think you’re talking about someone who was you know graduating effectively in the late 90 s two thousand it was the tech first tech boom um, these businesses that were starting you know from. In that period were incredibly exciting. The growth was incredible. It was a real sense of opportunity I think that you know that this was going to be the next big opportunity for everyone. So so I wanted to be part of that and I was excited. To try and you know build the next websites and things like that I thought that was going to be pretty interesting and so yeah, that’s that’s why I went into it.
Alejandro: And so what did you learn from being at companies like Yahoo I mean obviously companies that are globally recognized and you know I’m sure that you got like a good understanding of maybe like what what entails to to build such a massive company perhaps in in a short.
Angus McDonald Yeah I think what I what I found about Yahoo was their incredible global outlook you know like you’re talking about a business that you know ended up I guess not being as successful as they would have wanted to but certainly in the early two thousand s was an absolute.
Alejandro: Of time.
Angus McDonald Pioneer and powerhouse of the internet’s landscape and you know invested in alibaba when it was really early. You know had amazing kind of pushes into Asia and other parts of the globe and so for me that was. That kind of sat well with the values that I was already kind of drawing on. Ah you know around having a global outbook and and wanting wanting to work in global business and wanting to work across the ah truly across the lot across all all cultures and things like that. So. Um I got ordered that out of Yahoo I remember going to um you know partnership events partnership team events in Sunnyvale and in California and there were literally people there from Hong Kong from Germany from Uk you know Singapore like all over the place. Japan. Um, and yeah I found that really exciting.
Alejandro: Now in your case, you made your partner and you guys had those ideas going on. So First you had the the different you know, buying and selling domains then you had the adventure trips in the Apac region. Now at the same time you had the um the the full time gigs I mean your full time jobs that you were executing while well you guys were kind of like doing this as well as a site you know type of thing. What do you think that that that triggered you know for you to say you know what? Um. Going to go at it full time which is what essentially ended up happening with cover virginias.
Angus McDonald Yeah, so the trigger for me was um, you know I had a I was probably a later by that stage it was later in life entrepreneur I guess I was kind of mid 30 s um and you know I had a wife and child and. You know things things were pretty real and so having it as a side hustle for the first year few years made sense for the different businesses that Chris and I had you know I think Chris and I met at university were you know best friends in our 20 s we played sport together. Our wives are very close. So a very um you know a very strong personal relationship. Um, and so when we started doing things together then it was it was a pretty sort of natural um way that we kind of just did things around respecting each other always. Making sure that that we challenged each other but we did in a respectful way. Um, and so when I when I think about what made us kind of jump into doing it permanently. It really was the the fact that we could see this massive opportunity. The businesses that we’d had um were in areas where there were giants online travel. As an example, you know we knew, but you know Expedia and booking dot com and these kind of businesses were getting larger and larger. Um the smaller kind of regional players were getting. Taken out by them as well. So we could see that the really big opportunity um when we saw the really big opportunity in insurance that we did with cover genius it was really then that we made the decision hey we’ve got to go hard at this. We’ve got to invest all our time and efforts. But to obsess about it and make it a great business.
Alejandro: So then what was the what were the early days like of the company.
Angus McDonald Ah, they were pretty stressful as you can imagine I mean we were bootstrapping it based on our you know the effectively the the money we’d either made personally from from jobs or or or that we’d made from earlier businesses. So um, you know that year which was. I think pretty much 20 from late 2014 to mid 2015 Chris and I funded it. We bootstrapped it? Um, but we had a great initial partner and so you know I think that was the other thing that we saw that we had a very small part of. We just won a very small part of booking dot com’s ground transportation business in like one market and so we felt that we were onto something and that was really exciting because we knew that the addressable market size we targeting was huge. It’s like a trillion dollars or something so you know insurance tends to have these kind of huge target addressable markets. But even when we were talking about 1 partner. We knew that this overall size of that opportunity was was massive so getting a little bit of a little bit of a. Very large kind of opportunity was exciting for us in those early days and so we just obsessed on delivering a great partnership for those guys. Um, you know and that was that was the early days was making sure we could always deliver on what we promised.
Alejandro: Because for the people that are listening what ended up being the business model of Cover Genius How do you guys make money.
Angus McDonald So We’re in an embedded insurance in short tech. So. It’s kind of before insure Tech was a word but we could what we do is we sell insurance at the point of sale or at Inso in a shopping cart in a booking form. Registration forms something like that. That’s our business model. So We’re absolutely laser focuseded on that we don’t do a lot of Direct-toconsumer Insurance Sales We’re all about that embedded insurance offer and so the the original spots that we operated in were in travel. So you know booking dot com’ is a good example. When you were renting a car and http://booking.com you would be off at our insurance product when you when you went to hit book now and ah so our whole go-tomarket was Partnerships. We had to work with these big digital platforms or um, you know to be out a. Encourage them to to want to work with work with us and to see the opportunity for them to make some money out of those those sales but also primarily for them to give a great customer experience to their end customer so that they’re getting an insurance product. That’s absolutely fit for purpose. That that transaction that that were doing.
Alejandro: So so there was one partnership that you guys closed and that was with a bookings dot com and and definitely that was exciting but at the same time very stressful. So so why was it so stressful.
Angus McDonald Look it was stressful because you know booking dot com is the largest ota in the world. You know tens of thousands employees um operate in the whole world. All countries pretty much if if you book on the map. They’ve probably got an office there. We were. Small technology company based out of Sydney with an offer where we had to deliver the solution in in Europe and it was for customers who are going to travel to the Us. So it was a really kind of global kind kind of initial project that we had for them. Um. Why it was stressful was you know when you do a partnership like that it stresses your legal team it stresses your finance team it stresses your technology stresses your customer service. It stresses your customer success or your partnerships kind of function stresses everything in the business and it stress tests it. I would say and so we felt that we wanted to obsess on that and make our business able to deliver those solutions for those really large enterprise-grade partners because we thought that was going to be our go-to-market. We didn’t want to have to do you know hold a small kind of business. Thought hey what we’re going to do is really big enterprise clients and to do that we need to build a business in an organization. That’s absolutely the best at it and so we use that as an opportunity to kind of build that. But yeah, the first one was was stressful
Alejandro: They’re no kidding now in this case for you guys I mean was there like a turning point was there like a moment where you said to yourself. We’re gonna make it right.
Angus McDonald Yeah I think once we’ve launched that first bit I felt that we had something you know to think the great thing about our business is the un hack economics are really kind of clear and that was something that that I kind of always wanted. You know Chris and I had always wanted in in our businesses was we really liked the idea of knowing when we’re making money you know like every sale are you making money? Um, and what we get from our business is because we know how much commission or you know marketing fee that we’re paying our. Our distribution partners. We can fix that amount. We also then know what the underwriting fee is going to be with our insurance carrier so they give us ah a wholesale price effectively and then because we manage the claims. We manage the customer service. We manage everything on their behalf. Um, our margin in in the middle is is pretty is pretty much fixed and so if we make ah if we sell something for a dollar we know exactly what we’re going to make and I felt that as soon as we got to that sort of business model then it was just about scaling. And you’re always going to have something you know, even if you know something you know you decided that you didn’t want to continue. We could wind our business back and it would just sit there churning you know making its margin. Um, so it was very much like a software kind of business which you distribute out and yes, you’ve got to. Provide your support but you can run them on very low overheads and they can just be quite high margin high margin businesses. So I think that’s kind of what I what I liked about what we’re building from the start having that business model. Very different tool. A lot of what other ins short techs or you know digital insurers have tried to do because they have a lot of marketing costs that they have to try and fund. You know they have to get their brand out and things like that and really, we’ve kind of solved that if you like ours. It’s fixed. It’s. We know from our partnership. How much we’re going to pay for the effective marketing of the product.
Alejandro: And how much capital have you guys raised to date and goes.
Angus McDonald Um, so we went through a seed round and a series a and series b um, and then we’ve recently closed our series c so our series c closed last year we raised seventy Million u s dollars as part of that. Previously the rounds were relatively small so you know as a bootstrap business. We’ve always been quite conservative I guess with what we’re raising. We’ve always wanted to have a pathway back to profitability. Um, and when your unit economics are as strong as ours then. That’s kind of easier to present and and we’ve we’ve kind of managed that our series b is an example was 15,000,000 which is a relatively small amount but we had ah we kind of didn’t need anymore and we knew that if we were able to spend that money to grow back. And then grow back into being profitable again that was the right kind of shape for us. So that’s kind of how we’ve thought about capital raising. It. It’s probably different to others. But um, yeah.
Alejandro: Now in terms of the um you know Cover Genius For the people that are listening to really get around understanding or maybe like the scope and size I mean anything that you can share maybe in terms of like number of employees or anything else.
Angus McDonald Yeah, so um, look we’re sort of 300 plus employees now around the world where we do a lot of our software engineering in in Australia but we’ve. Recently launched remote teams in in the us and South America um and and that’s going pretty well the us has been a big growth focus for us. We’re sort of we’ve tripled our team over there in the last sort of twelve months so um the business works with you know. 3 of the leading 5 ecommerce companies in the world and you know does all sorts of other non-travel stuff now so we do product warranties we do renters insurance in 50 us states where where um. Doing all sorts of insurance products and I think that’s kind of been the change for us was to you know and we started in our travel kind of area that we were talking about earlier but the vision for cover genius is to be able to help the world’s largest digital platforms to sell. Any insurance product to their global customers and so we have global licenses in all the major markets to allow us to do that. We have a platform that’s now stress- tested with you know the likes of Amazon and ebay and wayfair and ecommerce and booking dot com and. Um, sky scanner and others in travel. You know Ryan air as an airline as an example so just loads of really great partners and I think what? what? I’m amazed with is that you know that it it works pretty much everywhere. You know as an example, we started working with flipcart who’s the largest ecommerce provider in India and you know it’s the same kind of problem that we were trying to solve with booking dot com back in the early days how do you sell insurance to that customer and at the point of sale. And it’s just amazing to see it in all the different places that we’re that we’re operating in now from South America to Korea to India it’s it’s pretty cool.
Alejandro: So as you thinking about growth and and the future Do if if you were to go to sleep tonight and you wake up in a world where the vision of Cover Genius is fully realized what does that world look like.
Angus McDonald Well I think what? what it looks like is you know undersurance has been ah has been a pretty big problem for a lot of lot of customers out there and I think it’s increasingly becoming a problem for younger parts of society. What we solve with embedded insurance is making sure that people get the insurance that they need based on the transaction data that they’re doing so it’s less about their personal data. Their personal situation. You know who you are what your name is that sort of stuff and more about what what you’re doing. What activity you’re doing or what service you’re buying or what product you’re buying. So if you’re buying a bicycle and on Amazon well you should get being off the something that’s relevant to that bicycle purchase you’re making and so what I see is. That that proliferating across all the fintech apps banking apps property proptech kind of platforms I think there’s lots of opportunity there I think there’s going to be opportunity in crypto platforms as well as they become more mainstream and offer different different assets. But anywhere where there where there are transactions occurring where you have rich data about that product or service. That’s that’s happening I want to be able to use that to be able to target the right insurance or protection product for the customer. Who’s who’s doing that and I think the outcome of that is is people buying the right product. You know, not buying the wrong product and not having to read a 10 page policy wording document which they don’t really understand at the end but feeling confident that hey. That product is fit for purpose. It’s kind of been recommended by a brand I trust which isn’t an insurance company brand. Let’s face it. It’s not 1 of our traditional insurance brands. It’s it’s more likely the brand we use every day. The booking dot com the Amazon the wayfare. Our customers. Trust those brands more than they do the traditional insurers so we’re all about empowering those guys to build a really great customer experience and I think if I wake up in the future I think we’re going to see a lot more of that.
Alejandro: Nice now. Imagine if I put you into a time machine and I’m able to bring you back in time back in time maybe to that moment where you and your partner were thinking about building something together. Imagine you had the opportunity of sitting down that younger. Angus and giving that younger angus a piece of advice before launching a business. What would that be and why given what you know now.
Angus McDonald Ah, look I’m I’m a massive believer that you’ve got to have persistence. Um, you know you’ve got to but you’ve got to believe you’ve got to work on your strategy work on how you know what your business is going to be about. Um. Were very clear as an example that we wanted to do embedded insurance. We wanted to help others sell insurance. You know whenever we’ve kind of strayed from that it hasn’t worked for us. So I think be really focused on your strategy and what’s going to like why. Why you think your business is going to be successful. Um, and so you know that would be my recommendation to my young self stay focused and if you think it’s right then just persist. Um and by persisting I don’t mean just doing the same shit over and over again excuse my french but. I mean get try and get better at doing the same stuff. Um, you know sometimes you’re not going to win that partnership that you hope for in your first week but go back to it six months later look at what you know what your pitch deck looked like look at what your demo is that you presented. Make it better and then go and try again. Um I like to say like I like to say to our partnerships team and when someone says no, they’re not actually never saying no to us. They’re just saying not now so how do you persist and how do you kind of keep making what your solution is better. So that eventually they say yes and that’s what I’d say to my young self keep keep getting better.
Alejandro: Wow I Love it So an is for the people that are listening. What is the best way for them to reach out and say hi.
Angus McDonald People who are listening um where you can reach me on Linkedin but you can also reach me at angus at http://covergenius.com I’m not really on Twitter or anything else. So. Ah, that’s probably the best way to get me.
Alejandro: Ah, amazing. Well hey Angus Thank you so much for being on the deal maker show what on honor.
Angus McDonald Thank you a Alejandro great to be great to be here and thanks for thanks for the conversation.
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