Michael Vega-Sanz On Raising $60 Million To Simplify Getting Insurance Claims

In the bustling landscape of entrepreneurial spirit and innovation, Michael Vega-Sanz’s journey stands out as a testament to resilience, adaptability, and a relentless pursuit of solving real-world problems.

With a relentless focus on solving customer problems and an unwavering commitment to innovation, Michael and his team are paving the way for a future where insurance is not just accessible but revolutionized by technology.

Michael’s venture, Lula, has attracted funding from top-tier investors like Plug and Play, Khosla Ventures, NextView Ventures and Founders Fund.

In this episode, you will learn:

• Michael Vega-Sanz’s journey from a challenging childhood on a farm to pioneering Lula, a disruptive force in the insurance industry, exemplifies resilience and adaptability.
• Lula’s evolution from a failed car-sharing app to a “Stripe for insurance” underscores the importance of learning from entrepreneurial setbacks and pivoting towards solving tangible business problems.
• The critical shift from being fundraising-obsessed to customer-obsessed proved to be the key to Lula’s success, highlighting the significance of focusing on delivering real value to customers.
• Lula’s simple yet impactful business model, providing accessible insurance solutions with twelve-month contracts and a monthly subscription fee, simplifies the complex landscape for small businesses.
• Michael’s vision for the future sees Lula expanding its reach beyond Earth, providing insurance solutions for space ventures, and predicting that AI will power 90% of insurance transactions within the next decade.
• The unconventional fundraising strategy of depending on customers for capital instead of traditional venture capitalists showcases the power of building a strong customer base and delivering exceptional experiences.
• In hindsight, Michael advises his younger self to prioritize understanding and solving customer problems over networking and fundraising, emphasizing the importance of a customer-centric approach in building a successful business.

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About Michael Vega-Sanz:

Michael Vega-Sanz is the Co-Founder and President of Lula, a student consulting association that works with non-profit organizations and social enterprises.

Vega-Sanz has also worked with Kairos Society and the Butler Venture Accelerator Program at Babson College. In 2015, they worked as a Junior Analyst with Atlantic Capital, a Miami-based commercial real estate capital intermediary and investment firm.

Michael Vega-Sanz has a Bachelor’s Degree from Babson College with concentrations in finance and information technology management.

Michael also has a degree in business administration and management from Miami Dade College. Michael Vega-Sanz attended high school at Palmer Trinity School and Belen Jesuit Preparatory.

Michael Vega-Sanz reports to Matthew Vega-Sanz, Co-Founder & CEO.

Connect with Michael Vega-Sanz:

• Crunchbase
• F6S
• TheOrg
• LinkedIn

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the dealmaker show so very exciting episode that we have in front of us you know today we’re going to be learning a lot about building scaling financing and all the good stuff that we like to hear we’re going to be talking about how this entrepreneur got the first customers you know for their business. How you know? Also they went on to landing amazing investors talent how they learn so quickly how they went from nothing you know, even negative you know 2800 all of us are twelve sixteen million in the bank and many more exciting things so without farther ado let’s welcome our guest today. Michael Bega Sand welcome to the show. So originally born in Miami from parents that were from Cuba and then also Puerto Rico

Michael Vega-Sanz: Thank you, Thank you for having me I appreciate it.

Alejandro Cremades: But obviously growing in a small farm with chickens and all the good stuff that maybe is a different picture a Miami you know type of different picture so give us a walk through I’ve walk through memory lane. How is life growing up.

Michael Vega-Sanz: Life growing up was was not very traditional I I grew up like you mentioned first generation american family grew up on a small farm with horses chickens and goats and it was an amazing amazing childhood I had. Really amazing parents I had the opportunity to grow up with my grandparents who were extremely loving people but they were extremely aggressive and they were extremely. They were very very strict and diligent. So from a young young age. Working for what I wanted was instilled in me making sure that I knew how to work hard making sure that I knew that I needed to do what I needed to do and that there were no excuses being accepted that was stuff that was instilled early on. I was also very much pushed to be a curious kid I was never told oh stop asking questions or stop learning or you’re reading too much or none of those things were ever told to me and if I ever had any questions if I have if I ever had any thoughts all of those things were prompted and supported. And so I was very very very fortunate in that regard for my family and for my upbringing.

Alejandro Cremades: Now in your case. Ah you wanted to eventually go to wall street but it sounds like going to babson and getting a scholarship there changed the course of everything How was that.

Michael Vega-Sanz: Well, it’s interesting I came from an amazing family but we didn’t always have a lot of financial resources and so from an early age I knew that I wanted to find a way to make money and for lack of a better word, get rich. And so I thought going to work on wall street would allow me to do that and so that was very very much the catalyst for why I wanted to go work on wall street when I got to babson I was very much under the impression that I would go work on wall street and that was my career path. What happened at Babson if you think about the boston ecosystem boston ecosystem. It’s very very tech-oriented. There’s a lot of tech companies pharmaceutical companies and so I quickly realized that going down wall street or going down down that route was not the only way to achieve my goal. 1 ne day being rich or making money what I found there was I found that with technology what it allowed you to do was it allowed you to really use technology to solve problems so you could encounter a problem yourself, you could come up with the solution to that problem in your head. Have an abstract thought and then over the course of a couple of hours a couple of days or a couple of weeks you can take that abstract thought and turn it into something concrete that can solve your problems and can solve problems for other people and if you do that? Really really, really well and you provide a lot of value to customers or to people.

Michael Vega-Sanz: Can extract value in the form of dollars right? and I thought there was more upside and there was more enjoyment going that routes than just chasing wall street and and trading and and doing all of that. So that’s what really drew me to technology that was the big impact that going to school in Boston had on my life.

Alejandro Cremades: So Then what? what about the? um while being there obviously Bobsar an amazing University for entrepreneurship. One of the best in terms of taking a look at problem solving and in solutions and things like that it sounds like you know ordering Pizza. You know it’s something that made you think how is that and how did that How did how did things unfold after that.

Michael Vega-Sanz: Yeah, so that story is pretty funny that what happened there was one night I was in my dorm and I wanted pizza I actually wanted pizza from Papa John’s and they wouldn’t deliver to campus and I thought wouldn’t it be cool. There was an app. Let me rent a car from another student and I shared the idea with my brother and he said let’s build it so we built this app that let college students rent cars from one another. So think turra or I think get around but just for college students and. We did that and launched it in between classes on the weekend just for fun that ended up becoming one of the top apps on the app store. It ended up becoming the second highest rank car sharing app in the country and within a couple of months we had cars physically available on more than 500 college campuses in all fifty states. And even though that sounds like an amazing amazing story and we very much at the time thought we were going to be the next Mark Zuckerberg it was a huge learning lesson for us which was just because you build a product that people really enjoy or that people really like using. That doesn’t necessarily equate to a great business and that was a huge huge huge huge lesson for us with that first business as a matter of fact as we went into this new business lula what we do today part of the emphasis. There was not only building a.

Michael Vega-Sanz: Great, great product but also being able to go ahead and actually make money and be able to do that sooner rather than later and the reason for that was that first business even though it was a great product. It was not a great business and we ended up having to wind it down.

Alejandro Cremades: So then how did that they unfold you know things towards you guys landing on Lula now and and and really thinking at that point like what it would look like if you guys were to build this stripe for insurance you know as as an idea. No I mean how do you go from. That business that you had to close to perhaps you know what you’re doing right now with Lula.

Michael Vega-Sanz: Um, yeah, well what we were thinking a lot about was we said hey the shared mobility market the shared economy. If you think about 41019 it was a really really challenging market to be in. It’s still a challenging market to be in today and at the time there hadn’t really been many platforms if any that had figured out a true path to profitability or to viability and. We had always had a pain point around insurance and so it was challenging for us to purchase insurance as a small business and we often felt that purchasing insurance was a lot like going to a restaurant where they give you the food but no utensils and what I mean by that today is if you’re a small business or you’re a business in general. And you go get insurance once you get the insurance policy the insurance carrier says to you hey it’s really important for you to manage your risk What do you mean what? what does managing a risk mean and then they say it’s really important for you to manage your claims well and have a strong claims process. And I said again, what do you mean? don’t you guys manage our claims and I remember the first time that we ever had a claim or an accident on that car sharing platform I was at a friend’s apartment in Boston and we ended up having to go from Boston to Connecticut ah to the scene of the accident to try to manage it.

Michael Vega-Sanz: And so we realized that we were not the only companies or the only businesses facing these challenges. We realized that car rental agencies face these challenges car sharing platforms Uber Lyft Airbnb trucking companies. And so we began to realize that there was a really really strong pain point around insurance and this insurance infrastructure and so when we looked at the market there were 12 insurance companies in the fortune 100 so we said it’s a really really large market. It’s extremely fragmented. Low Nps cores across the board. And by the way it’s extremely profitable if you can figure out how to build a great product in insurance. There’s a true path to profitability and viability and those were some of the things that drew us to insurance so in March of 2020 April Twenty as the pandemic is sitting college campuses are shutting down. Our first business ends up dying and when I say it died it literally died. We went from having cars on more than 500 college campuses in all fifty states. We ended up having to shut down the business we had to lay off the entire company. We missed payroll our company bank account went negative so it hit negative $2800 Matthew and I Matthews my cofounder and twin brother. We ended up having to sell our cars to make payroll and I didn’t mention this but we had actually withdrawn from school ah to pursue this idea so you fast forward to March slash April of 2020. We no longer have our scholarships. We.

Michael Vega-Sanz: Business that we had been working on failed. We had to lay off the entire company. We misspayroll. We owed the world money and and it was really really rock bottom for us and we were thinking about hey this is not the end of our story. This is not the end of the journey and we kept thinking a lot about insurance and the pain points surrounding insurance. And we said hey what if we could build stripe for insurance in the same way that stripe eliminates the need for companies to build their insurance I’m sorry their payment infrastructure. We said what if we could eliminate the need for companies to build their own insurance infrastructure. And so imagine whether it’s a small car rental agency a small trucking company or Uber Or Airbnb Imagine if they didn’t need to build out their insurance infrastructure imagine if they did not need to have their own insurance team their own risk and safety team and their own claims team. Imagine if all of those functions could be outsourced to a company like Lula and so we started working on that right away and by late Twenty Twenty we were in market with a product and we were generating revenue.

Alejandro Cremades: So then I guess hey at that point then you know when you’re talking about generating revenue I want to hear you know like how were the early days how was like you know going to those first customers and getting chased by a dog or getting screamed at you know or some of some of those things that you guys had to encounter and dear you finally fell like you. Turn around you know coroner.

Michael Vega-Sanz: Yeah, my brother my my cofounder my brother always always says something I think it’s extremely true. He says and I’m a huge advocate for this try to try to go talk to your first customers or your prospective customers in person and the reason for that is. Cold calls are really challenging right? Cold emails are really challenging think about everybody that you’re competing with in somebody’s email inbox think about everybody that you’re competing with if you’re calling them if you’re actually walking into your customer’s office or into your customer’s doors. There’s not much competition there. If you walk into 20 small business offices. Probably 10 of them will kick you out but you can probably have pretty good conversations with 10 of those business owners or 10 of those business managers. You’re not competing with a lot of people once you get in-person. And so that was something that we quickly realized we said hey there’s an opportunity for us to have face-to-face conversations with the customers now one of the things that we also realized is b two b. There’s a simplicity in b two b that’s beautiful that you don’t necessarily have on the consumer side. What I mean by that is when you’re selling b two b the value proposition is typically 1 of 2 things you’re either helping that company make money or you’re helping them save money right? and so right off the bat our pitch when we would walk into the office is hey we can help you save money on insurance.

Michael Vega-Sanz: And make money on insurance and this is exactly how and that was the pitch and we quickly just added it to a formula I said if we have a 5% conversion rate from walking into these offices or walking into these doors. I know that in order to get our first five customers I need to go talk to a hundred people if I want to get to our first fifty I just need to go talk to a thousand people and so to your point we would literally just go to the go to for example. Some of our first customers were car rental agencies independent car rental agencies so we would drive to airports think about Miami international airport. We would go to where all the small car rental companies were located. We would just walk office to office office to office office to office. We would do that in Fort Lauderdale we would do that in Jacksonville in Tampa in Orlando in Naples and to your point a lot of people got upset at us and screamed at us and kicked us out and I even had dogs chasing me out of the offices and certainly that happened but hey we. In a couple of weeks we had 25 companies sign letters of intent to 19 of them ultimately converted to customers so that worked extremely well today and by the way we got to our first thirty million dollars in revenue with a sales team of less than 10 people and no marketing.

Michael Vega-Sanz: Largely based off word of mouth that we largely built in those early days so that works extremely Well I could not recommend it enough.

Alejandro Cremades: So for the people that are listening to really get it here. What ended up being the business model of Lula how are you guys making money.

Michael Vega-Sanz: So what we ended up doing is well in short, our business model is really simple. We have twelve month contracts with our customers and we charge them a monthly subscription fee and typically that subscription fee is either per each or per asset. We recently came out with a consumption-based model. But historically, it’s typically been perce or peracset what does that mean take a small car rental agency. For example, if you’re a small car rental agency. Let’s say in Orlando you come to lulab. we’re going to provide you 3 to 4 offerings what does that mean the first thing is we’re going to make it really really easy for you to purchase insurance so you come to Lula and within a couple of minutes you could have an insurance policy and by the way there’s not even a need for you to talk to a human. So you can get an insurance an insurance policy in a matter of minutes for your business. So that’s number 1 number 2 it’s really really important for you to have proper risk mitigation and risk management tools. So you think about uber lyft airbnb. Anytime a customer signs up or a driver signs up on one of those platforms. There’s like 20 checks going on behind the scenes they’re verifying your identity. They’re verifying your driver’s license. They’re verifying that you have proper insurance coverage I mean they’re doing a ton of risk management behind the scenes.

Michael Vega-Sanz: So one of the things that we do is we make those tools available to everyday businesses. So when you come to lulight, we’re not only making it really really easy for you to get insurance. But we’re giving you some of the best risk and safety tools available on the market making that accessible to you and then lastly. Managing your claims or helping you manage your claims one of the pain points that we often see is small business owners. 1 of their vehicles gets involved in an accident one of their vehicles gets involved in an accident and. And suddenly that business owner is having to manage that claim is having to manage the litigation is having to deal with third party defendants and so what we say is hey you simply just have to submit the first notice of loss and from there we take it all the way to settlement or to payout and so like that we truly. Become your insurance infrastructure and and the business model simple. It’s we have twelve month contracts with our customers. We charge them a monthly subscription fee. Typically it’s on a per seat or per unit basis and we recently came out with a consumption based model. So that’s pretty much it.

Alejandro Cremades: Now you guys have a have been able to raise you know quite a bit of money about 60000000 from some really amazing investors like founders fund costsla ventures or Bill Aman you know to name a few. How has it been the journey to of of raising money for for a company like this.

Michael Vega-Sanz: Yeah, you know it’s really funny because I get asked a lot hey what’s some of the best fundraising advice that you can give me and what’s interesting is that for the first business I mentioned to you. That first business I used to think a lot about fundraising so I was consistently thinking about fundraising I was consistently thinking about Bcs and in many ways I was I was almost a fundraising obsessed founder and and so when we started this new company. Since we had been so unsuccessful in raising vc dollars for the prior business. We realized that we can no longer be dependent on vcs. You think about 2020 which is when we were starting. The capital markets were pretty dry. There weren’t many people deploying capital at that time. And so we basically said hey the only source of capital for us right now is our customers or prospective customers and so that’s where we basically came up. We didn’t come up with this but that’s basically where we began taking the approach of. A company can be 1 of 4 things. A company can be customer obsessed product obsessed competitor obsessed or even in today’s day and age fundraising obsessed. We said let’s be a customer obsessed organization and everything that we do. We start with a customer and we work our way backwards from there now. The reason I go ahead and I give you that.

Michael Vega-Sanz: Is I found that is the best fundraising process. What I mean by that is if you go ahead and you truly truly truly focus on your customers and providing them a great experience really solving their problems providing them a great great experience. If you start there. It becomes much much easier for you to actually fundraise why is that if you’re actually solving problems for your customers and you’re giving them a great experience or a great product. It’s going to be much easier for you to get customers. It’s going to be much easier for you to charge customers and actually get Paid. You’re not going to need to discount or subsidize your product as Much. You’re not going to have challenges or as many challenges with things like Churn or retention or attrition and so what I found is that the best thing I did early on in that we continue to do. Is we focus on the customer and we focus on the fundamentals of building a great business for me the fundamentals of building. A great business is focus on the customer focus on building a great product focus on great distribution and focus on great marketing and I found that a lot of founders Put. Ah. All that energy that should be going to those 4 things they put it on fundraising and it actually should be the inverse you should focus 90% of your energy on the customer on product on distribution on marketing and if you do that fundraising is going to be so much Easier. So.

Michael Vega-Sanz: That was the big unlock for me that was and it’s worked out really really well for us our series. A I will be the first to admit, our series a which we raised in the summer of 2021 we reach we we raised that a little bit before the peak of the market. It was not a very challenging series a to raise right? But a lot of that was the market cycle if you think about our series b we initiated our series b process March Seventh of 2023 2 or three days later Silicon Valley bank blew up right. By the way we signed term sheets within 3 to four weeks and we had term sheets from multiple firms and why is that because leading up to the fundraise we were super super super fixated on the customer I’m building. Great product on distribution on marketing and by the time we got to the series b our numbers were phenomenal. They were great. So I find that the best fundraising strategy is just to go ahead. Really really focus on solving real problems for your customers giving them a great experience focusing on distribution and it’s almost like the score takes care of itself. You focus on those things. Everything else comes much much easier and. And that’s that’s been my personal experience.

Alejandro Cremades: So in the in that in that sense, you know as we’re thinking about the future here for Lula Imagine if you were to go to sleep tonight and you wake up in a world where the vision is fully realized what does that world look like.

Michael Vega-Sanz: Well, that world looks like today less than 10 percent of the world’s population has access to insurance and so for me that vision looks like 100% of the world’s population has access to insurance. And not only 100% of the world’s population has access to insurance. But we’re even providing insurance in outer space. So international space stations satellite um, starling Spacex. Multiplanetary rockets. All of those things have access to insurance and a lot of that is made accessible and made possible because of Lula Lula’s built out that insurance infrastructure now some things that are not as abstract some things that are more tangible I believe in the next ten years 90% if not more. Insurance policies and insurance transactions will be powered by things like artificial intelligence and so I envision that largely being powered by Lula right? I think that insurance costs right now are sky highh unnecessarily. And a lot of insurance related expenses could be lowered by better workflows better efficiencies better systems implementation of Ai and and I really do think 90% of insurance policies in the next ten years could be powered by Ai and I think Lula can make that possible.

Alejandro Cremades: So in that case, you know we’re talking here about the future the future but I want to talk about the past and and doing so with a lens of reflection. Let’s say I was to put you into a time machine and I bring you back in time maybe to that moment where you were still at vapson and and thinking about a world where you could do something of your own. Imagine if you had the opportunity of having a chat with your younger self and giving that younger Michael one piece of advice before launching a business. What would that be and why given what you know now.

Michael Vega-Sanz: I would spend much much more time on the customer and solving the customer’s problems and the reason that I say that is I think as a young founder you often find yourself focusing on everything but the actual customer problem. So for example I remember in the early days at Babson talking about oh I’m going to go meet an investor or I’m going to go talk to an investor or I’m going to go to this convention or this event and I’m going to network and. I found that a lot of that time and energy would have better would have been better spent talking to customers learning about customers learning about their problems learning about their pain points and a lot of those events are deceptive. They make you feel busy. So. Make you feel like oh I’m actually doing stuff I’m meeting people I’m interacting I’m working but you’re not really moving the needle and so if I can go ahead and tell my younger self something pertaining to business I would say really go ahead and make sure that you’re focusing on solving true problems for your customers. Start with the customer and then work your way backward from there.

Alejandro Cremades: I love it so Michael for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Michael Vega-Sanz: Um, I’m somewhat active on Twitter so Twitter works. It’s Michael Vas Sands and also extremely extremely responsive through email. So my email is Michael at lula.com those are typically the 2 best ways to get in contact with me.

Alejandro Cremades: Amazing, well easy enough. Well Michael thank you so much for being on the deal maker show. It has been an honor to have you with us.

Michael Vega-Sanz: Yeah, no problem. Thank you.

*****

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