It all started with a cold email. Subject line: "Want to disrupt the insurance industry?"
That's the message Adam Lyons sent to Mark Cuban about his new startup The Zebra, a little more than a year ago. Today, having closed a $3 million extended seed round from Cuban, among others, the company is officially launching to the public.
The Zebra is a like Kayak for auto insurance, comparing rates from hundreds of carriers across the country. Lyons (and yes, he does get a lot of jokes about lions and zebras) first conceived of the idea while working in the insurance industry in London, where the vast majority of auto insurance is bought through comparison engines.
"I didn't understand why that didn't exist here in the U.S.," he remembers thinking.
He soon discovered why. Auto insurance, it turns out, is regulated state to state, so a comparison engine would have to take into account each state's regulations. And unlike the airline industry, which has aggregate databases of prices from which sites like Kayak can gather their data, there's no such thing for the auto insurance industry.
In 2012, Lyons founded The Zebra and developed the concept in the Pittsburgh-based accelerator, Alpha Lab. Users can log on, enter some information like their credit score and location (The Zebra doesn't require users to give their names or contact information), and get real-time insurance quotes.
The Big Pitch
Unlike many startup founders, Lyons had no trouble finding willing investors. "We had a lot of options on the table, and it became clear that funding wouldn't be a problem," he says. "When you're starting out, usually the big concern is: can we get money? For us, it became: can we get the right people?"
Cuban, Lyons thought, was the right kind of people, so he sent him an email. "I read every email I get," Cuban says. "I delete 99 percent of them before the end of the first paragraph, but Adam got right to the point, and I liked the concept of Zebra."
Cuban says there are four key criteria he looks for in any startup he's considering investing in:
- a unique product
- a motivated and educated team
- knowledge of the market
- a demonstration that the big dream can work in practice.
"They were already doing the work," Cuban says of Lyons and his team. "It wasn't just a plan. They were already executing on it."
Lyons' emails alone convinced Cuban to invest in The Zebra months before the investor ever met the 26-year-old founder in person. Lyons' secret? "Don't try to get a yes immediately. You're going for a maybe," he says. "You want questions asked. Just be prepared to answer them."
The Zebra previously raised $1.5 million in seed funding, bringing the total seed round to $4.5 million. Among the startup's other investors are Simon Nixon, founder of the financial services price comparison engine MoneySuperMarket, as well as Mike Maples Jr., managing parter of the Floodgate Fund. Lyons plans to use the money to hire 40 insurance agents and additional engineers.
There are still hurdles ahead of The Zebra, namely, Cuban says "getting buy-in from some carriers." Currently, The Zebra has partnered with 22 insurance carriers, so when customers buy insurance from those carriers, The Zebra gets a cut. Still, there are hundreds more carriers out there. And while The Zebra can display quotes, users can't actually buy the insurance through the site, so Lyons is hoping that eventually those larger carriers, who are more hesitant about the service, will come around.
"A lot of companies were really excited, but when you're creating anything that’s disruptive you'll get push back from bigger incumbents," he says. "We're not an insurance company. We're a consumer advocate."