Jay Bregman is a serial entrepreneur and currently the cofounder and CEO of Thimble which is an insurance producer enabling small businesses to succeed on their own terms. The company has raised $30 million from Slow Ventures, LocalGlobe, Frontline Ventures, AXA Venture Partners, OpenOcean, Novel TMT Ventures, ValueStream Ventures, and IAC to name a few. Prior to this, he cofounded Hailo (acquired by Daimler Mercedes-Benz) and eCourier (acquired by Royal Mail).

In this episode you will learn:

  • Building supply and demand as a marketplace business
  • How Thimble is reinventing insurance for small businesses 
  • Unsexy businesses are the best
  • The 3 main business lessons Jay used to build Thimble
  • The value of “think wild and act tame”
  • His top advice for other new founders

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About Jay Bregman:

Jay Bregman is the Cofounder and CEO of Thimble, an on-demand insurance partner for small businesses and independent workers. An innovator in the $100 billion small business insurance market, Thimble is the first and only company to offer on-demand insurance by the hour, day or month to cover the 57 million people who work independently. Thimble has raised over $29 million from top investors including IAC.

Bregman is an accomplished entrepreneur who previously founded Hailo, a London-based ridesharing company backed acquired by Daimler Mercedes-Benz in 2016. Earlier, he founded and sold a technology-enabled services company to Royal Mail, the U.K. equivalent of USPS. Bregman holds a Master’s Degree from the London School of Economics and Political Science and a Bachelor’s Degree from Dartmouth College.

 

Connect with Jay Bregman:

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder that has been there and has done it. He’s now on his third business, so really, he hasn’t wasted any time, and I think we’re going to learn a lot. So, without further ado, Jay Bregman, welcome to the show.

Jay Bregman: It’s great to be here, Alejandro. Thanks so much for having me.

Alejandro: So, born in New York, and then grew up in New Jersey. Tell us about growing up in a family of doctors.

Jay Bregman: Yeah. My father was a heart surgeon. When he was younger, he invented this device called the intra-aortic balloon pump. It allows the heart to rest during heart surgery. My mother also is in medicine, but everybody was actually pushing me more towards inventing something than being a doctor or being in medicine. They felt that that was something, I guess it was filled in their lives, but also economically, it was probably going to work out better than becoming a doctor. I went to a University at Dartmouth. Then I went to LSE to do a Master’s Degree, and I took an entrepreneurship course.

Alejandro: Jay, why philosophy? 

Jay Bregman: You know, it’s very interesting. At Dartmouth, I took the advice of somebody that I felt knew what they were talking about to just go through the ROC, which the 800-page book of all of the courses that Dartmouth offered for my first semester and pick the three regardless of discipline that I wanted to take that I was most interested in. So, I took science culture in the nuclear age, education in contemporary society, and philosophy of computing. Philosophy of computing were fantastically interesting with a great professor there, Jim Moore. He coined the term computer ethics, and I just got hooked and really loved the idea of fusing my interest in technology with a little bit of humanities and study of what had come before, and I put all that together.

Alejandro: Got it. Obviously, after this, then you landed in London. Why did you go so far away?

Jay Bregman: It’s another really good question. I’m about 41 now, so I was graduating Dartmouth in 2001, and 2001 was not a great time to go into technology or into much of anything in terms of the job market. I had done a semester previously at Keble College Oxford, so I’d been over to England, and I had figured I would go over to England for a year or two and then come back to the U.S. once things sorted themselves out. But I got hooked into starting two businesses, and I couldn’t be happier that I did.

Alejandro: Nice. So, you’re coming from a family with a background of stable jobs and very traditional, so how do you go into entrepreneurship? How did this happen?

Jay Bregman: I was graduating at LSE, and I wanted to do something. I was looking for an idea all over the place. Then I met up with a friend of mine who had this idea that we could use these things called hand-held computers in 2004, which were just coming on the market – not way before iPhone or anything else – to create a more efficient same-day courier operation because he was having a lot of problems getting his deliveries done. So, yeah, knowing nothing but that we could do better, we got into the market, and we developed software that allowed couriers to carry around these computers to have GPS. The client could see where the courier was in real-time, and automatically dispatch by an algorithm the work and stack the work up so that we could be more efficient. It was a precursor, in a lot of ways, to the kind of post-made type businesses that are around now, except the types of deliveries that we were doing were more B2B deliveries, so Harrods, Goldman Sachs – these were the big clients.

Alejandro: And also, the tagline: Happiness Delivered on the vans.

Jay Bregman: Yes, the vans were great. We did a lot of investment in brand because we figured we had hundreds of these vans around the city, so it was a free or relatively low-cost opportunity to promote our brand. And it worked brilliantly. So, those were the days.

Alejandro: This was venture-backed too. You guys raised some money, and then you went off to the races. What ended up happening here?

Jay Bregman: Business was growing quickly. We were not so concerned with unit economics in those days. I don’t think we really understood what it was. This was very much a growth at all cost type business. Then 2008 hit, and what we saw was a hugely significant low to our delivery volumes. Almost overnight, all of the business, whether it’s investment banks, deals to each other, or Harrods sending suckle pigs around the city, all of that dropped off almost at the same time. So, it was a very bleak time for me, just remembering back to it. It was my first disaster as an executive, and I just felt completely shell-shocked by what was going on. Things were going so great one day, and then things were going so terribly the next. At the time, I didn’t realize, but it would probably be the best education and hardening and stress that I could have had to be able to prepare me for what was going to happen with Thimble today with coronavirus. 

Alejandro: Of course. There’s one thing there that I think is very important that I’d like to touch on. I think that this taught you how to find clarity within chaos, so can you expand on that?

Jay Bregman: Yeah. There’s a temptation when you’re younger to be moved and really swayed by external events. So, things are happening to you. You’re feeling shell-shocked all the time, you’re not sleeping well, but you’re really a product of your environment rather than the other way around. One of the things that I have really taken to heart in the many, many years since is how important it is to really protect yourself as the CEO – your mental clarity, your sense of calm, your environment, your sleep, all of these basic needs all the time, but especially when bad things are happening because that’s when everybody needs you most, and your clarity will basically reflect on the entire organization, your investors. Everybody needs you in your absolute best form. A lot of times, that really is more to do with simple things like continuing to work out, being on schedule, sleeping eight hours a night – all of these things that they don’t teach you as entrepreneurs but are so important to your capability to lead when times get bad. And times always get bad in one way or the other, at least from time to time. 

Alejandro: And this was your first experience, as well, doing an acquisition, getting a company you finally acquired. So, how was that for you?

Jay Bregman: It was fine. It was not the stellar acquisition that we had all hoped financially, but we did get the business and its employees and its couriers to a good outcome. It was purchased by the Royal Mail, which is like the post office, essentially. But what it did was, it also allowed me to think about what to do next. There were some great people at eCourier. We thought about, “Look. There’s this thing called the iPhone that’s coming out. The taxi market is the grown-up big brother to the same-day courier industry; it’s a larger market; it’s a consumer market; it’s regulated. So, why can’t we use this new technology, this new infrastructure in the iPhone to create a similar network that would be matching consumers and black taxis? That was where Hailo came to be. By the way, this is probably 2009, maybe early 2010. Uber is only in San Francisco, so this is still very early in the idea that there could be a very big transportation tech company. In fact, people were turning us away left, right, and center. Uber, too, at the time, didn’t think that transportation could be a globally-scalable market, that it was a cottage industry. To me, getting involved in markets when they are not yet sexy, I think is the key, and that’s one of the reasons we’ll come back to why I love insurance and what we’re doing at Thimble now. That’s that.

Alejandro: So then tell us about the founding of Hailo and how you guys brought it to life. 

Jay Bregman: One of the great things that we did at Hailo was we recognized very early that in order to really differentiate and build a substantial business, it was all about happy drivers and being able to create a scaled community of drivers. If you didn’t have the drivers, you really didn’t have the business. The more drivers that you had, and the more engaged that they were, the better business you would have because you would have a bigger network than anybody else. So when a customer went to get a ride, they would see you had more taxis, and you would get better service, etc. So, what we did was, we co-founded the business with Terry, Russ, and Gary, three London black cab drivers. We knew about them because they had developed a website of their own that was trying to do something vaguely similar with different technology, and they knew the market. They knew the area; they knew the drivers. They knew how to talk to them, and they knew how to get them to accept this new technology. It was a very interesting marriage of really traditional English black cab drivers and high-tech, but it worked brilliantly. I think there were 10,000 drivers right now in London that are using this application today.

Alejandro: You were talking about happy drivers. Would you say that was one of the main strategies that you guys used for the supply and demand?

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Jay Bregman: The main strategy was that we could over-fleet and oversupply the market by building value into the driver app and driver community. Yeah, that was one of the key strategies. Look, for regulated markets, it worked very, very well, and better than any platform out there. What worked less well was in markets like the U.S., the black-car market. But then, again, the way that I look at this is, the biggest issue that Uber and Lyft are having today is their drivers and the trust with their drivers, creating a real community of drivers. It’s unfortunate that that’s been abandoned, and now, that’s coming to bite these companies. They’re having to do a lot to rebuild trust with that network, when that was something that Hailo had put in place from the beginning.

Alejandro: I guess with Hailo, and especially for the people that are listening, what ended up being the business model?

Jay Bregman: The business model was that Hailo would give away its app to the driver and to the customer for free. Hailo would take a 10% commission of any of the successful purchases that went through the driver app. Basically, if a customer hailed, and the driver accepted that hail, we would take the payment, and we would pay the driver 90% and keep our 10%. In London, at the time, the London cabs did not have the ability to take credit cards, which was a huge frustration on the part of many consumers because you would walk into a cab, and if they did have credit cards, it was like a 15% surcharge or something ridiculous. We also allowed the drivers for free to use our app to take credit cards off the street for zero-percent commission. That was something that worked very well too, at least for a long period of time, to be able to build value for the drivers. But that was the business model. It was a commission-based model.

Alejandro: A business like this and given what was going on with marketplaces and ridesharing where they were scaling super-fast, how did you go about scaling. I see that you guys raised about 100 million. Is that right?

Jay Bregman: Yeah. The harder part about building a business in Europe, in the UK – the UK market is only so big, but actually, ridesharing is even harder because you not only need a big country, but you need a big city because ride-hailing is predominantly centered around large cities. So, for example, London, New York, Singapore, etc. You not only need to go into a second country; you need to actually capture all of these cities. It’s very expensive to be able to go in there, recruit the drivers quickly, and recruit the passengers quickly. It’s also very expensive to do when other companies are getting the time, what seems like infinite caps of finance to be able to do that first. So, it was quite a challenge, but I think there were markets like Ireland where we have wonderful executives there that got the drivers bought in early before we ever got into the market, and it is still the dominant service – Free Now is what Hailo is now called – in Ireland because the drivers bought in early, so nobody else was able to really get a foothold into the market.

Alejandro: What about scaling the team?

Jay Bregman: There was a period of time that I can remember where I was spending 80% of my time on hiring not only in the UK but also in other countries. I think my sense is that it is probably easier to scale executives in the U.S. just because the market is more homogenous and is larger. It’s also more challenging to manage a business that has five or six countries than something that’s in 50 states. That was something that I learned, as well. If you can build the business to be very, very large inside the U.S. without having to go elsewhere, it’s probably best to do that in phase one versus trying to conquer the whole world at once.

Alejandro: Got it. The raising, it’s pretty interesting now. You can obviously compare with Thimble because you have Thimble here in New York, but Hailo, this was started in London. This was also in 2010. Now, we live in an even more connected world. You see VCs going to other countries to make investments, but back then, if you were to go to Sequoia, they would probably tell you that they only invest in a company that is a bike-ride away from their office. So, what kind of challenges did you also experience on the venture financing side? 

Jay Bregman: It’s clearly a lot harder. Maybe it’s gotten somewhat easier now, but there was a much higher bar for a country to raise for U.S. investors outside of the United States. It’s just more difficult, but it’s also more difficult from another reason, which is – one of the things that I really love about working with IAC, which is one of the investors in Thimble is, they’re all here. They’re a cab ride away. They’re all based in New York. So, it is very easy to be able to have casual investor conversations all the time when your investor is across the city. So, Sequoia, they’ve got a point about why they had invested only in the same zip code is because there was definitely a benefit having the investor and having, particularly in an early stage, the investor and the entrepreneur in the same city and the same place. That said, it’s tough because also if you’re in London and you’re expanding to the U.S., and you think there are some benefits potentially you can get from venture capitalists that are in the U.S. maybe some of that is true. It’s unclear what the best strategy is.

Alejandro: Then, with you, and with the business, you ended up doing a transaction with Daimler. Why did you think that was the best way to go?

Jay Bregman: Daimler had already acquired another business called MyTaxi, but it had really only been successful in Germany, and Germany was a very tough market to break into from anybody else who had not been able to do that. Daimler is a very forward-thinking car company that really believed in mobility I think before a lot of other car companies started to join the fray. So, the idea was, “Let’s merge these all together and take the Hailo platform and the Hailo cities and merge them with MyTaxi cities, and we’ll create a much bigger business. To their credit, over the last couple of years, they have done that. It’s billions in GMB; it’s in all of the world by now. It has a very disciplined model and operating structure, but it also has investment now, not only from Daimler but also from BMW, who had decided to combine their mobility investments together with Daimler into this structure.

Alejandro: And it took no time for you, Jay. So, what happened next because one thing that I’ve seen in your journey is that you’ve definitely never taken a break. The first one to the second one to the third one, so what happened.

Jay Bregman: Look, I’m driven to this stuff that’s so interesting. Also, it just happens. What happened was, I had been very interesting always by the idea of what would come to be called the gig economy. People say business is like Hailo, and we were the first gig economy-type businesses because drivers were taking work from other sources and platforms. I find it very interesting, this idea that you could create a small business just with yourself. You wouldn’t need anything else, not a storefront, not a shopfront, not even a website. You could just start doing work by subscribing to some platform or some services. I thought about insurance because frankly, after Hailo, which was a highly operational business and had hundreds of thousands of drivers in many cities across the world, this was a very difficult thing to manage. I wanted an electronic business, so business that basically you were selling an electronic product that was highly scalable, etc. So, I thought insurance would be a very interesting area, and I thought insurance had the same characteristics as transportation did in 2010 that it was a very large market, but it was very fragmented. It was really no use of technology, but it was really unsexy. So, it started out – happened to run into someone I knew, Eugene, who was also an entrepreneur, had started a business previously, called Quidsi, that was an eCommerce and logistics business that had the domain diapers.com and soap.com and many others – competed head to head with Amazon, and it was eventually sold to Amazon in 2011. I think it was an over 500-million-dollar sale. Initially, Eugene was a tech consultant at Hailo, so we knew each other. I guess I must have really convinced him because I thought I was meeting him just to be an investor advisor, and he actually wanted to get out of retirement to come back and to help me with this business. It’s been a great partnership. Since then, we have about 25 people here. We have about 20 engineers in addition to that. Basically, the idea is that we are creating a new kind of insurance with a new kind of small business out there that does not want a one-year annual commitment, but wants a modern subscription month-to-month or even hour-to-hour or day-to-day if you want it, that reflects the uncertainty in starting, growing, and just generally maintaining the business. It has been a huge exercise to be able to create the same kind of on-demand experience that we did with Hailo, and Eugene did it for Quidsi with insurance. The regulations are unbelievable. Every state is different. It is a substantial effort to get to a point where you can sell this pdf with somebody’s name on it that guarantees that your claim will be paid under certain circumstances. But it’s also very reassuring because, from a consumer perspective, everything else is the same except for the products like ours that have actually taken the trouble to go through and develop these insurance products from the ground up.

Alejandro: Basically, just to recap, can you summarize for the folks that are listening what the business model is of Thimble?

Jay Bregman: Sure. The business model of Thimble is that we make insurance simple, and we create an app, and we create a website for you as a small business to access this insurance. Then, we connect you. And the backend, we are underwriting that with a carrier, and we take a commission, a very large commission from the carrier as a result of brokering this new kind of insurance policy.

Alejandro: Now, with events that we’re dealing with like coronavirus, obviously, this is triggering a lot of people working from home and potentially exploring doing something on their own. So how do you think all this remote environment is going to change things for you guys?

Jay Bregman: In all of our business, we see it accelerating trends that were already there, but we see it happening much more quickly. There are definitely types of businesses that are doing spectacularly well in this environment, mostly blue-collar businesses like landscapers, handymen, contractors, etc. What we found is that there is this massive change in consumer behavior where a lot of consumers now want to see insurance. Before, they might not have cared so much when times were good, but now, consumers want to change insurance, businesses want their suppliers to have insurance before they do a job. Insurance and safety are the words of the day. So, we’re seeing a lot more people that are buying our insurance for the first time, but we’re also seeing a lot of people who had annual contracts before. Those annual contracts were based on exposure basis like, “I had a payroll of $250,000.” They’re clearly not true anymore. Because these companies are facing the same kind of uncertainty that you face as a starting business, they think that a continuous month-to-month solution like we provide is a great option for their business. So we have people that are buying our month-to-month policies instead of annual policies because they don’t have to worry about having an annual commitment in the time of great uncertainly.

Alejandro: For this, you guys have raised quite a bit of money, so how much money have you raised?

Jay Bregman: We’ve raised 29 million dollars, which is definitely a lot, but I think the standards I’m used to are the ride-hailing market, and it’s actually pretty tame for that given how many years we’ve put into the business. But it is expensive in order to actually develop new simple insurance products and bring them to market in all 50 states. It requires a lot of infrastructure to be able to do that. Operating the business is totally automated, but the setup costs are pretty high.

Alejandro: Obviously, when you’re dealing in a regulated market like this one, legal and all of these costs are crazy. But in a business like this, what would you say is the biggest challenge?

Jay Bregman: I think the biggest challenge is trying to think wild but act tame. That’s actually one of our core values at Thimble. What it means is that insurance is a highly-regulated compliance-driven business. You will not get very far like Uber did in just flouting the rules. It just doesn’t work that way. You won’t get to first base. So you have to find a way to achieve your goals of creating a great user experience, but you have to do it within the rules. Now, you can bend the rules; you could do the rules in different ways, but ultimately, you’ve got to fit whatever you’re doing within the rules. I think that is a very, very tough exercise for any company of any skill to do, particularly a startup where people want to do things right away, and they want shortcuts, etc. So it takes a very seasoned team to be able to think wild and act tame.

Alejandro: Now, Thimble is your third rodeo, and with Hailo and with eCourier, we’re talking about over a decade of experience and lessons learned. What were the three main lessons that you knew you would absolutely apply when you were building Thimble?

Jay Bregman: It’s a very good question. The first thing I think was that I wanted to work with people that I absolutely loved and could work with and could enjoy in good times and bad times. As much as I paid attention to the team and the team was fabulous in the first two businesses, it’s even better in this business. The second was that I wanted to enjoy every minute of it. I have been through many, many ups and downs, as any entrepreneur that’s been doing it nearly as long as I have has done, but what I really recognized and hoped was that if I structured myself in the business properly, there might be tough times, but actually, I could even enjoy slightly the tough times and be able to help the business get through those tough times and to be the calmest person in the room when it came to thinking about what to do and to try and find opportunity in every letdown and in every disruption and in every environmental exogenous issue. The third thing was, I wanted to build something lasting. I’ve seen businesses that have been sold very quickly, that have been built to sell very quickly. With this business, what I really wanted to do was to build something that was going to be scalable, iconic, profitable, stand on its own two feet, independent, and lasting. That’s very much what I would hope to do and what I got up every morning trying to think we can do here.

Alejandro: Amazing. Talking about getting up every morning, if you were to go to sleep tonight and get up in a morning that is five years after, so a tremendous snooze, and you wake up in a world where the vision of Thimble is fully realized. What does that world look like?

Jay Bregman: I think about a world where businesses are proud of their insurance company. I think about a world where businesses put up little thimbles in their shops, and they put them on the pizza boxes, and they put them on their shirts, because they’re so happy that there was this company that actually made a very complex thing simple for them at the right time, and as a result, gave them a stepping stone to success and that helped them succeed on their own terms. I think that world is coming. Somebody is going to do it because the emotional attachment that any kind of self-employed person has to their business is huge. Right now, I don’t think anybody is listening to that, or anybody understands that as well as we do. You couple that with the kind of technological change, etc., and I think that is a much better world for everybody where everybody can start a business, everybody can succeed on their own terms.

Alejandro: I love it. I typically ask this question to the folks that come on the show. I know that we’ve talked about many different lessons during your incredible journey that you’ve had as a founder and now the third business that you’re in. If you had the opportunity to go back in time and have a chat with that younger Jay that is coming out of the Master’s and thinking about maybe doing something and starting a business if you were able to sit down there with your younger self and just tell yourself something about maybe one piece of advice before launching a business, what would that be and why knowing what you know now?

Jay Bregman: Honestly, I think it would be to take care of yourself. I think this is the lesson that I and many other entrepreneurs get wrapped up in: how hard can you work? How many hours can you work? It’s so great to be working all the time. Obsessive – the social network – whatever you want. This is what I see in myself at that time as an entrepreneur. The thing is, by doing that, you really miss a couple of things. One is, you miss some clarity about what really is the right path and consider the decisions you’re making. Also, you miss the fun of the ride because you’re so obsessed into it, you never take a chance to step back and congratulate yourself on what you’ve built. I think that’s what I would say.

Alejandro: I love it, Jay. For the folks that are listening, what is the best way for them to reach out and say hi?

Jay Bregman: You can email me anytime: jay@thimble.com. Also, you can subscribe to our blog, which is Thimble Insurance, which has a couple of articles that I’ve written about my experiences in 2008 and in prior businesses that maybe be of interest to people that are suffering through coronavirus right now.

Alejandro: Amazing. Well, Jay, thank you so much for being on the DealMakers show today.

Jay Bregman: It was a pleasure. Thank you very much, Alejandro, for doing this. It’s a great service.

 

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