CS 638 Starting a Software Company AlphaTech Counsel, S.C. American Family Insurance
Who Are We? • American Family Insurance (AmFam) – Marty Buchheim, Business Development Director – Peter Gunder, Chief Investment Officer – Dawn Mortimer, Innovation Director – Dan Reed, Business Development Director – Jose Rivera, Web Experience Manager • AlphaTech – Matt Storms, Founder 2
Today’s Discussion • Why are we here? • What does our business look like today? • What could our business look like tomorrow? • Why do we want you to “disrupt” our business with amazing software? • How big is this opportunity? • How can we help you be successful starting your own software company? • What’s in it for you? 3
Why Are We Here? • Identify the market opportunity • Innovate quickly • Disrupt our businesses ahead of the competition • Show we support SaaS • Empower your successful software startup 4
What is American Family Insurance? • Founded in 1927 • Top 10 US “personal lines” insurer (home, auto, life) • Fortune 358 rank • Revenue 2011: $6.2 Billion • GAAP Net Worth 9/30/2012: $5.9 Billion • $15 billion investment portfolio • Policies in force: 8.42 million 5
Where do we currently sell insurance? 6
How many people work at AmFam? • Exclusive Agency Force: ~4,100 • Employees: 7,230 • National Headquarters – Madison • Mutual legal form 7
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$250 Billion Annual US Personal Lines Premiums 50 Billions 45 40 35 #10 30 25 20 15 10 5 0 10
What is Insurance? • Insurance is transferring risk in exchange for $$ • Hedging your bets • Confusing terminology 11
What is the Insurance Value Chain? Claim Service Policy Service Customer Acquisition Risk Pricing Multi- People & Billing & Payment Channel Risk Changes Distribution • $ for • Paying • Auto • Agent covering • Home the bill • Web & people • People, • $ for Mobile product covering • Call and things Center (i.e. cars, coverage • Retail computers, changes homes) Promise Keeping Moment: Restoring to Right 12
Digital Marketing Today • Goals of our Digital Footprint • Increase Online Presence Amfam.com • Amfamlatino.com Enhance experiences based on needs Brand Awareness Account Mgmt. • Drive User Traffic and Engagement Engagement Support Content Tools • Sales Provide Educational Tools • Increase Purchase Online Activity • Influence Service Funnel • Coordinate Support Options Segmentation Personalization • Promote All channels Online, track Mobile Technology attribution Search & Email Marketing • Monitor, Adjust, Refine and Execute Analytics The never ending cycle of marketing optimization Social Media
Digital Marketing Tactics and Amfam.com? KBO’s – Understand the business objectives Awareness? Increase purchase consideration? Growth? Retention? Activation – Call to action, what's in it for the user and the company? Audience – Does it exist? If not, how to build it. Develop pre-production tactics. Streamline to increase message/opportunity accuracy. KPI’s – How will the KBO’s be tracked? Identify the metrics that influence adjustment and yield success DIGITAL MARKETING STRATEGY Research Customer Needs Give Utility & Value – 7 dimensions of value User insights will drive feature set. Activities Monetary, Content, Access, Service, Experience, should include competitive analysis and direct Premium, Societal customer feedback Insights Drive Digital Marketing Tactics and Deliverables Application Web Content User Engagement SEM Social Media Cross- Channel LINE OF TECHNOLOGY DELIVERABLES
Overview of TeenSafe Driver Program SM 15
Teen Driving: The Problem • One in six teens are in an accident during their first year of driving. • More than 6,000 teens died in car crashes in the United States in 2003, and more than 500,000 suffered life-altering injuries. Car crashes are by far the #1 cause of death among American teenagers . • In 2002, the estimated economic cost of police-reported crashes (both fatal and non-fatal) involving drivers ages 15 to 20 was $40.8 billion 3 . Sources: University of Iowa , U .S. Center for Disease Control, National Highway Traffic Safety Administration, Insurance Institute for Highway Safety 16
Teen Driving: The Problem Teens are much more likely to be involved in an accident than their parents. NUMBER OF ACCIDENTS PER MILLION MILES DRIVEN (NHTSA) 5 4 3 2 1 0 15 16 17 18 20 25 30 35 40 45 50 55 60 65 70 75 80 85 Source: National Highway Traffic Safety Administration 17
Technology: Event Data Recorders SIDE VIEW FRONT VIEW 18
Feedback Process 19
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How big is the market for “re - imagining” insurance?
We are investing to re-imagine AmFam. • Just announced $239 million purchase of “The General” – 4 th largest provider of online quotes behind GEICO, Progressive, Esurance [Allstate]. • Keeping separate brand • Expected to close December 2012 http://www.youtube.com/watch?NR=1&v=vjTw sgXGmYQ&feature=endscreen 24
We are investing to re-imagine AmFam. • Private Accelerator http://www.gener8tor.com/ 25
Biz-Dev Objective: Disruptive Innovation • Ubiquitous Connectivity – Home – Auto Growth in sensors and devices: Estimates of as many as 15B connected devices by 2015, growing to as many as 200B by 2020 1 Source: Ericsson 26 1 Cisco, 2011; Tata Consulting Services, 2012
We are nearing a transition point in the “Connectivity” marketplace 27 Source: Harbor Research
What is the “Connected Home?” • Many big players: Comcast, Verizon, AT&T, Time-Warner, etc. • Small, emerging players too: Twine… http://www.youtube.com/watch?v=ckb6MaQI4GE 28
Why is American Family interested? • Reduce $100’s millions of dollars in losses for our customers that could be either prevented or reduced in severity via Connected Home technology • Top loss categories: – Wind / Hail – Fire – Water / freezing damage – Theft – Sewer Backup – Lightning • Sensors could alert consumers of potential loss (fire, water, theft) or help insurers rapidly mobilize resources to respond to losses (wind, hail, lightning) 29
Why is this confluence – insurance and Connected Home – an opportunity for you? Insurance is currently the “ignored step - child” of the Connected Home value chain Connected Home Value Chain 30 Source: IBM
What is the “Connected Car?” The Evolving Connected Car • Big players: The changing phases of car technology GM, Ford, Garmin, Verizon, etc. • Smaller players as well: Waze Crowd Automated sourced traffic Vehicle-to-Vehicle Vehicle /Vehicle-to- “The vehicle management: Environment controls all.” Context- Communication http://www.youtu Sensitive “The environment Automation responds” be.com/watch?v= “The vehicle Telematics responds” “The GdxsBx_FzKI vehicle speaks” Today 2015 2025 2035? 2050? 31
Why is American Family interested? Leading Causes of Accidents • Reduce losses and injuries / loss-of- 3% 57% life for our 27% customers (and the 94% Roadway Driver general public) 3% 1% • Leverage systems 6% that provide Vehicle automation, alerts, 2% guidance, coaching or other information to The Role of Perceptual and Cognitive Filters in Observed Behavior," Human Behavior in Traffic Safety, eds. L. Evans and R. Schwing, drivers to make Plenum Press, 1985 travel safer 32
Telematics Consumer Trial 33
Why is this confluence – insurance and Connected Car – an opportunity for you? • The car is an Internet “White Space” opportunity: 52 minutes per day spent in cars by 144M Americans (76% of them alone) 1 • Opportunities for new protection-related products and services that leverage this connectivity as well as social, mobile, cloud, or Big Data 34 1: US Census Bureau
Who is AlphaTech Counsel? • A law firm focused on entrepreneurs and their emerging companies – We don’t represent investors, conglomerates, individuals, American Family, UW/WARF, etc. – The companies we work with have technology-oriented, scalable business models--e.g., software/Internet, life sciences, medical device, advanced materials • Rely heavily on technology for routine matters • Maintaining a high level of practice sophistication, knowledge of market terms, and network contacts are important parts of what we offer 35
Why is AlphaTech Here? • Support entrepreneurial efforts • Demystify basic legal issues associated with starting a software company • Provide overview of certain software company startup issues – When to form a company – Basic founder issues – Top IP issues for software company startups – Resources 37
AlphaTech: When to Form a Company • More than one creator of technology, code, etc. and at least one person wants to start a company • Hiring or engaging an employee, consultant, or contractor • Creating or acquiring significant intellectual property • Need to enter into agreement (e.g., nondisclosure agreement, material transfer agreement, lease, license) • Acquiring investor money • Grants, tax credits, business expenses • Credibility • Limited liability 38
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