Karn Saroya is the CEO and cofounder of Cover, which was in the YC Winter 2016 batch.

Cover is a nationally licensed insurance brokerage. You can use their app to take a picture of property you want to insure and they’ll connect you with their insurance partners so that you can get the best price and coverage.

You can find Karn on Twitter at @karnsaroya.

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Topics

00:08 – Karn’s intro

00:33 – Using computer vision to identify and catalogue property

2:00 – How Karn ended up starting Cover

3:20 – Being a maker vs. an advisor

5:30 – Stylekick, Karn’s previous startup

9:00 – Joining Shopify

9:40 – How the idea for Cover happened

11:30 – The capital-light way to start an insurance business

16:00 – Underwriting

17:30 – Lead generation

19:50 – Product development

21:00 – Buying Cover.com for $750k

24:25 – Being engaged to a cofounder

28:15 – Managing two offices and cultures

30:30 – Being an international founder in YC

31:30 – Advice to people in the current batch of YC

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Transcript

Craig Cannon [00:00] – Hey, how is it going? This is Craig Cannon, and you’re listening to Y Combinator’s podcast. Today’s episode is with Karn Saroya. Karn is the CEO and co-founder of Cover, which was in the YC Winter 2016 batch. Cover is a nationally licensed insurance broker. You can use their app to take a picture of a property you want to insure, and they’ll connect you with their insurance partners, so that you can get the best price and coverage. You can find Karn on Twitter, @karnsaroya. Alright, here we go. Alright today we have Karn Saroya, the CEO of Cover, which was in the Winter 2016 batch of YC. So Karn, what does Cover do?

Karn Saroya [00:37] – First of all, thanks for hosting me. I appreciate it.

Craig Cannon [00:38] – Of course.

Karn Saroya [00:39] – You can think of Cover as a multi-line national property insurance entity. Our customers download our apps, we ask a couple simple underwriting questions, and they take pictures and videos of things they want to insure. So this could be cars, they could walk us around their homes, pets, jewelry, electronics. We basically make a market for just about anything you can take a picture of.

Craig Cannon [00:59] – It’s processed with computer vision, not humans, correct?

Karn Saroya [01:02] – On the home side, it’s a computer based, we use a tensorflow based camera to identify, catalog your property, so that when you need to make a claim, there isn’t much of a fuss that’s put up by an adjuster.

Craig Cannon [01:14] – Okay and now is it assessing more than what the object is? Or is it just this is a bicycle?

Karn Saroya [01:20] – The value of us being a visual app is two-fold. One, we’re acting as a sophisticated front-line underwriter or proving the property existed in a given time, place, and condition. That helps materially improve our loss runs. Then for the customer, what it means is that there can’t be very much push back. In the instance of a claim, you have proof that your property existed. An adjuster can’t come back and say that, “Hey, that television that you’re trying to claim is actually something that’s like a inferior model or something.”

Craig Cannon [01:52] – Oh, cool. Got you. Are your models constantly adjusting, per person? Should I be photographing everything I buy?

Karn Saroya [02:02] – It’s just a tool for us. It’s not necessarily the central tenet of what we do. A big part of it is to simplify the onboarding of getting insurance. I’m making it a bit more natural on native mobile.

Craig Cannon [02:11] – Okay. Then this is kind of an interesting divergence for you. Because before, you had a style start-up. Before that you were in consulting.

Karn Saroya [02:23] – Right.

Craig Cannon [02:23] – Maybe you should explain how you ended up here, ’cause I think it’s interesting.

Karn Saroya [02:28] – Sure. I was in management consulting in a past life. I was at Oliver Wyman, specifically in their financial services practice, and I got a CFA at some point. I went to MIT, studied Finance. I was in their finance and risk practice, I did a little of insurance work. It was great. They helped me pick up a little bit of polish, the two years that I was there. Certainly, you can model things, build PowerPoint slide decks, and that was certainly to my benefit. I’m appreciative of the experience that I had there, but at the end of the day, I kind of wasn’t getting what I wanted out of the experience. The risk-adjusted returns to being in professional services, like management consulting, or banking, or private equity are great, but because they’re great, I view them as temporary. So I’m looking at it, I’m like in the long run eventually there’s reversion to the mean. I kind of want to make the jump to something where I’m building things, I’m taking risks, and that justs jell better with my personality.

Craig Cannon [03:38] – Did you find that you were struggling to care while you were consulting? Or you just didn’t feel there was sufficient upside?

Karn Saroya [03:44] – Well, I was learning to code while I was consulting, and so I was, “Well, I’d rather be a maker of things than an advisor.” It’s fine. One of the questions that kept like, percolating in my head was “They’re paid millions of dollars to advise banks to do things and to improve operational processes.” I kind of wondered why the partners that I work with just didn’t build a bank. I posed that question to a couple of the partners and their answer was, “We make a lot of money doing this. We’re not going to end up taking these risks, and quite frankly, the scope of building a bank is way, way larger than the thing that we focus on.” Whether it’s an insurance context, solvency related in the banking context, stress testing related or operational or something to that effect. I was, “Well, I’d be the guy that wants to build a bank.” I made a jump and it was kind of ad hoc. The very first thing that I built with our CTO, was actually a body scanner. So we use the three connect sensors because it’s like a depth sensor, Webcam, three points of perspective to get a body form.

Karn Saroya [05:00] – We thought that we could use math to shave away clothes, and use that body form to informed like sizing decisions on the Internet.

Craig Cannon [05:08] – Yup, Right.

Karn Saroya [05:09] – It’s a super creepy thing. I think if we had made a couple of logical checks before we had ventured off to do this thing, why aren’t their body scanners in every mall in America. They probably would have realized that if this was something that, consumers would adopt it. It would be there, it’ll be like a war for a mall space, like mall space across America.

Craig Cannon [05:31] – Was this something that was intended to be a startup? Or did you just think it was a cool side project?

Karn Saroya [05:36] – No, it was intended to be a startup.

Craig Cannon [05:37] – You had left at that point?

Karn Saroya [05:39] – We had left, we were pitching The Gap and a fair number of large retailers and brands. We didn’t get traction on that. The technology was particularly cool. We stepped back and thought about, “Hey, what are we actually trying to do here?” We’re effectively trying to predict the sizing and stylistic preferences of our customers. Over the course of a weekend, we built a super simple app, where we scraped a whole bunch of lifestyle blogger and fashion blogger content and threw up outfits. We threw up outfits and allowed people to scroll and double tap on individual parts of an outfit. All we wanted to see that was that, somebody would indicate a preference for a blouse or a handbag or a hat or a pair of shoes. Lo and behold, the activity was insane. We were picking up users. In fact, we eventually stepped back, we pulled it, pulled it back, and then we built out something, that would register the unique structural elements of individual items that people would interact with. So if you double tapped on a handbag, we know the price point, the colors, the unique structural elements.

Craig Cannon [06:51] – With computer vision again?

Karn Saroya [06:52] – Actually it was even more rudimentary than that, we’re just tagging everything by hand. It was super manual. That was working, and eventually we started getting to a point where we were predicting what people would want to see next. With Stylekick, actually applied to YC four or five times. We were interviewed three times actually, and by the last time that we were interviewed, we had 400,000 active users.

Craig Cannon [07:20] – The business was based, so was it sort of like supply? So it was like affiliate?

Karn Saroya [07:24] – It was a marketplace. Eventually what we had were designers, influencers uploading looks, and we were earning affiliate income doing that.

Craig Cannon [07:35] – Okay, and at that point you had 400,000 active users. How much money were you guys making out of those?

Karn Saroya [07:41] – Not nearly enough, just barely to cover our hosting costs. The reason for that is a lot of the stuff that was being sold was, was super high end. Back then on a four inch screen were smaller, selling a pair of $300 jeans wasn’t an impulsive price purchase. We ended up acting much more like Lead Gen to a desktop purchasing experience. In retrospect, what we probably would have done a step back and looked at what was actually working within the marketplace native mobile ecommerce ecosystem. The things that we’re working on wish, so impulse price purchases, five bucks or 20 bucks, where you didn’t need to think twice about what you were buying. What was also working, we relied heavily on influencer marketing to grow to eventually a million actives.

Craig Cannon [08:31] – This was 2014?

Karn Saroya [08:32] – This was 2013.

Craig Cannon [08:34] – 2013?

Karn Saroya [08:34] – Yeah. If we step back, we would have recognized that there were a lot of these individual brands that were starting to stand up on top of Instagram. We probably could have gone the route of building, actually building out a fashion brand or selling products of our own accord. Glossy is a great example of that. Those are the types that work, either you went vertical or you went impulse price purchase.

Craig Cannon [08:59] – Because something in the middle was never going to happen? Did you consider a full desktop interface, where people could save and then purchase?

Karn Saroya [09:06] – We did. It’s like Neta Forte and like Farfetch. A bunch of these guys went that route. I think we just ran out of steam, you know what I mean?

Craig Cannon [09:16] – Yeah of course.

Karn Saroya [09:17] – In and around the time we were running out of steam, we got to know some of the folks at Shopify particularly well. Craig Miller, who’s a current CPO, Sateesh, who’s a VP and a GM there. We had a longstanding relationship and ultimately we decided to join Shopify and run a mobile product team. We were there for a little under a year. We were building experimental marketplace apps for them, but we still had the itch. We knew that we could build really beautiful mobile products. Stylekick itself was, featured just by every market on the app store, on the front page repeatedly. We rank number one for style in France, it was crazy. We’re driving millions of people through the app, so we had to drive distribution via native mobile. So we started thinking about, what is the next thing that we want to do? We knew we wanted to be mobile, because that was one of our core strengths. We knew we could drive customers. We wanted to make sure at this point that the basic economic model worked, right? And so we built things on weekends. We’d drive to like northern Ontario in Muskoka and just have a couple of beers, and think about what we wanted to build. So we tried things in health care, we considered entertainment again cause Natalie worked for Russell Simmons and it kind of the impetus of us moving forward with Stylekick.

Karn Saroya [10:41] – There were a couple of things we tried. And eventually we settled on insurance. The reason was we had been working with insurance brokers in the past that help us pick up policies for Stylekick and for ourselves.

Craig Cannon [10:54] – But this is not necessarily obvious. Because you were in Toronto and now Cover is in the US, with a more competitive market. What convinced you that this could work?

Karn Saroya [11:05] – We wanted to prove was that the pipe was big enough to drive a significantly sized business. At the end of the day, it was the back of the envelope math that they showed us this could work. A single auto policy that we sell in California, the average premium is something like $1,600, just as a distributor of insurance, nevermind underwriting or moving down the margin stack. We earn anywhere between $200 and $300 of that policy in perpetuity. If you think about what churn looks like in insurance, a very, very good broker is churning 10% per year. A good broker is churning 15%. So the LTV on a single auto insurance policies, thousands of dollars. Which is why you see Geico and State Farm, spend billions of dollars a year, trying to acquire these customers.

Craig Cannon [11:55] – Because they’re just massive. But you also in the beginning, knew that you couldn’t afford to underwrite this stuff. Correct?

Karn Saroya [12:01] – Correct. We were thinking about what’s the capital light way of entering this business. The very first version of Cover was super simple. We didn’t have any licenses because we weren’t selling any insurance. We didn’t know anything really about insurance distribution. There was a camera view with a preamble that said, “Take a picture of something you want to insure.” That’s it. And we launched it and we know we use the methods that we used to grow Stylekick to grow Cover. We ended up being a number one ranked insurance app in Canada the second day. And during YC two weeks into launch, we were featured for the best new apps in the United States. We didn’t have any insurance licenses. We didn’t know anything about insurance. All we could see was that every 60 seconds we’re getting an insurance request.

Craig Cannon [12:50] – Right. How did those conversations with investors go? Because I think you could, as just a distributor, I think a common pushback would be like, “Isn’t this just like running to zero margin?”

Karn Saroya [13:01] – Like any pure Lead Gen business, is just relying on a marketing arbitrage, to continue to exist. There are lots of examples of that in insurance. I don’t think that you can build a durable business, it’s just a Lead Gen, a Lead Gen service. For a couple of reasons. One, there was more arbitrage opportunities eventually dissipate. The second is, you’re not building any brand like equity or value and you’re certainly not doing your customer service by vacuuming up their contact information and selling it on 10 times. To juice average revenue per user.

Craig Cannon [13:33] – Especially as a startup, a venture backed startup.

Karn Saroya [13:35] – We knew exactly what we needed to do. “Okay, we need to start owning the actual customer service. The selling experience and eventually more.” During YC we were, “Okay, well, we’re committed to getting licensed across the country.” We’re committed to getting as many insurance markets as we can on the Cover platform, so that when a customer comes in the door, irrespective of what it is they’re looking to cover, we’re a competitive place. We stood up a national insurance brokerage in under 12 months. We’re in 49 states with 30 carriers in under 12 months. Which is I think enough to show that we could derisk ourselves from an execution perspective, because that’s a nontrivial thing to do.

Craig Cannon [14:18] – Sure. How much did you have to raise to accomplish that? That was YC? If you’re in winter 2016, so by winter 2017, you were in that position? Right? Post demo day.

Karn Saroya [14:28] – We raised 3.2 million bucks.

Craig Cannon [14:32] – That’s okay.

Karn Saroya [14:33] – Some of it before demo day, a lot of it after demo day. We actually had most of our seed round still, when we raise our A. A big part of it was, we knew that there was going to be a ramp. So we didn’t make our first hire for probably the first year and a half. We knew that it would take a little bit of time to get everything tooled, before we could start to scale. We raise our A, as soon as we were in a position to be able to be selling insurance business.

Craig Cannon [15:00] – Okay. When you raised your A, did you feel that you had product market fit?

Karn Saroya [15:04] – If you take a look at our reviews…

Craig Cannon [15:07] – Reviews or views?

Karn Saroya [15:09] – The reviews for Cover. I think we do. We do everything we say we’re going to do, right? A customer comes into the door, we make the underwriting application process super simple. We do not spam our customers with phone calls or emails. Every single one of our customers gets a dedicated text line where they can text us back and forth to ask questions. It’s a truly millennial first experience, which is a cliche thing to say, but it’s the thing that we do. We do what we say we are doing well because of it.

Craig Cannon [15:45] – When it comes to growth, you guys just raised a B in 2018.

Karn Saroya [15:49] – Correct.

Craig Cannon [15:51] – It’s still compared to Geico, you know, nothing, like a tiny amount of cash.

Karn Saroya [15:55] – There are others who that have raised hundreds of millions of dollars. Still a drop in the bucket. In the insurance market, there are $500 billion in insurance premiums that are written just in the property market in the United States every year. That’s not of concern to us because one, we don’t take balance sheet risk yet. I mean eventually we may be, because we can be pretty opportunistic about the types of requests that are coming in and whether we want to stand up product for those.

Craig Cannon [16:24] – In practical terms for people who aren’t in insurance, what does that mean?

Karn Saroya [16:27] – That means if we see a lot of customers who are coming in for a specific thing, maybe it’s home or maybe it’s auto in a given geography and we’re writing it profitably, we can actually just step in and underwrite the business ourselves. Meaning that we take the risk, or we price the risk, take part of the risk and sell the rest of it on. If we take any risk at all, we need to hold the capital in reserve, to be able to take that risk. Right now we do not. Which is why we can be fairly capital light, and so focus mostly on the distribution aspect of the business and acting a sophisticated front line underwriters. We’re being actually pretty prudent about the types of risks that we do send to our carrier partners. You can think of insurance as three discrete businesses. Distribution, which is a business in of itself, underwriting, claims servicing and regulatory overhead. Folks who are attacking, every aspect of this at once are probably not going to get any of them right, and burn a lot of money right out the gate. Those are the folks that have tended to raise hundreds of millions of dollars to get to at the point.

Craig Cannon [17:42] – Right.

Karn Saroya [17:42] – Our goal right now is to make sure that we’re continuously iterating on the best possible front end experience making that we’re proving out that the product itself is a good way, a mechanism to filter out bad risks. And then moving to underwriting and maybe the rest of the stack.

Craig Cannon [17:59] – Gotcha. How does your Lead Gen work now?

Karn Saroya [18:02] – We acquire exclusively through our apps. So the App store and Google play.

Craig Cannon [18:06] – Really? So just highly rated. It’s all search?

Karn Saroya [18:09] – We’re beneficiaries of like pretty decent ASO very early on. We run a lot of paid, but we take a generally as being like a portfolio approach to growth. So we would acquire via all the channels you expect, Facebook, Instagram, Reddit, etc. We’re good at ASO. We’re starting to build up cover.com, that’ll probably be a fairly material entity for us. We build things that are like what we consider to be pre-insurance. These are tools that we think are useful to our customers irrespective of whether they buy insurance from us right away or not. A good example of that is in the Cover app, price drop alerts. You don’t have to buy insurance from us. What we can do is just programmatically remarket to you. Every time we see a violation fall off of your record. Our claim fall off of your record, where you’re coming up for renewal. That’s a service you don’t need to pay for but it’s pretty valuable because you don’t have to think about it.

Craig Cannon [19:09] – That’s pretty good.

Karn Saroya [19:10] – Another example is, for certain markets, we’re giving away access to a defensive driving school. If you got to driving.cover.com, if you’re very stylized example. In Texas, if you go to defensive defensive driving school, you can get a violation knocked off of your record or get access to an insurance discount. So it can be material and be 10% of the overall premium. So we’re talking about hundreds of dollars. Usually those things like there are entities that charge anywhere from like 25 to 150 bucks to go through that course takes a couple of hours. We’re a technology company, we just build it and give it away for free. So that can be funneled directly into our products. In Texas, there are 480,000 people, in over the course of the last 18 months that went through a defensive driving school, just in Texas. If you think about , “Hey, where can I be? Where are my customers? How could I build product to facilitate a transition of those customers from those sources to the actual the apps?” You can build fairly durable distribution.

Craig Cannon [20:16] – Were you thinking about these kinds of programs when you were in YC? Or is this just by talking to your customers, figuring it out?

Karn Saroya [20:23] – It was observing the types of things that folks were asking. “Do you have a defensive driving discount?”

Craig Cannon [20:30] – Really?

Karn Saroya [20:30] – They will literally ask us, “Do you have military discount? Do you have this, do you have that?” And we’re like, “Oh, well maybe we haven’t considered this and we should go build something to support this.” The other thing I do is read a lot of insurance rate filings. It’s a weird thing to do, but to get a fuller appreciation of the way that one, the filings are structured, we’re also discounts that are generally speaking available to our customers.

Craig Cannon [20:57] – Gotcha.

Karn Saroya [20:58] – And how we can build product to make it easier to access those discounts.

Craig Cannon [21:01] – Right. When someone might be shopping around, they’re going to start comparing these things. This fringe benefit might matter a lot to them.

Karn Saroya [21:09] – Geico for example, has this weird affiliate discount where if you own a share of Berkshire class B stock, you get an 8% discount on Geico.

Craig Cannon [21:16] – Really? That’s crazy.

Karn Saroya [21:18] – There you go, now you know.

Craig Cannon [21:19] – Man, I should take advantage of that. Okay.

Karn Saroya [21:22] – It’s the Robin Hood play.

Craig Cannon [21:27] – You mentioned cover.com, and I forgot to put this in my notes, but you guys just bought this domain for recently, right? We’ve never talked about this on the podcast, but you spent a lot of money on it.

Karn Saroya [21:37] – I got a lot of crap for it too on hacker news.

Craig Cannon [21:39] – Really?

Karn Saroya [21:39] – The crux of it is what’s the ROI on buying something like that? Buying a very expensive domain is not going to make or break our business because we bought cover.com does not mean we’re going to be successful. It also doesn’t mean that we’re going to fail. We would fail if we did something fundamentally wrong or continued to build on something that didn’t have product market fit. We know we have product market fit, people buy our products. People spend thousands of dollars with us. So from my perspective it was we’re super surgical about how we acquire. We have to be because we’re capital constrained. At some point or another, we know that an equilibrium, we are competing on general awareness. We’re in the trust business and any minor change, in conversion given super high LTVs, is going to make a huge impact. If you have a $2,000 LTV and conversion moves up a couple of bips, or up or down a couple of bips, when you have tens of thousands of people coming in through every single day, the domain pays for itself, very, very quickly.

Karn Saroya [22:51] – Outside of that, if we’re competing on general awareness, yeah we care about discoverability. That matters. We care that we are discoverable and we own one of the more common words in the English language.

Craig Cannon [23:05] – In other words, you would say, if you have the cash do it?

Karn Saroya [23:08] – It’s on a case by case basis. If it makes sense for your business, and you have to have a very good sense of what the underlying economic model is. We can do the sensitivity analysis. It’s like minor changes in conversion and how that eventually affects the bottom line for us. And for us it’s like, if we’re writing a million policies a year, it’s going to actually takes like a couple thousand policies, less than a couple thousand policies to pay for this.

Craig Cannon [23:32] – Because it was a 900 roughly?

Karn Saroya [23:34] – We paid, 750 for it and the broker fees.

Craig Cannon [23:38] – Ggotcha. Do you have any pro tips?

Karn Saroya [23:41] – The guy that we worked with, if you’re actually considering buying a domain, he was great. He’s a professional. He was introduced to us by Arjun Sethi of Tribe, on our board is our lead investor. A lot of the folks in this space are super shady, right? You should be pretty careful. I would recommend using a broker, irrespective of the general shadiness. The initial bids that we were getting were in like a million and a half to $2 million. I can guarantee you that if we had tried to buy it after our B or C, we’d be looking at like $5, $6 million.

Craig Cannon [24:22] – Right, okay. So did they know it was you?

Karn Saroya [24:24] – No, they didn’t. We had a broker who proxy through another broker.

Craig Cannon [24:28] – Really? I’ve heard about people who own many of these big TLDs, they will only work with the customer.

Karn Saroya [24:35] – I think we were lucky enough to have network access. Does not necessarily afford to everybody, but it saved us a lot of money.

Craig Cannon [24:45] – That’s great. To go off on a tangent a little bit, you are engaged to one of your co-founders.

Karn Saroya [24:53] – Right. I got engaged to Natalie, who heads up all the product at Cover, when we were at Shopify. We think we were thinking that we would be there for awhile and this will be a little bit more stable than the ups and downs of a working for yourself.

Craig Cannon [25:11] – You can or budget for a wedding.

Karn Saroya [25:12] – You can budget for a wedding. Given what how Shopify stock has done. So we were at Shopify, “Okay, this is going to happen. We’ll plan this out, we have some time now, and then we applied to YC.”

Craig Cannon [25:30] – For the fifth time.

Karn Saroya [25:31] – We’ve been rejected so many times. What’s another time? So we applied and we got in. It was a basic prototype. They didn’t have any users really. Which is I guess the way the world goes. Then like two weeks later we flew from Toronto to California, and is used Zeus at the last minute to get some housing. Since then it’s been a roller coaster. We did YC, raised our seed, started scaling a team, building up a business, and it’s been a pretty aggressive run. We’re probably going to get married this summer.

Craig Cannon [26:06] – Okay, congrats. Very exciting. How do you manage that relationship? Cause they’re obviously, relationship tension, co-founder tension, and then you have to deal with employees at the same time.

Karn Saroya [26:17] – Co-mingling professional and personal risk especially if you’re starting a startup, is not necessarily a recipe for success, to be quite frank. We’re the beneficiaries of having worked on two businesses together now, have been acquired into Shopify and working on the same product team. There’s a clear division of the scope of responsibility or role. She’s an exceptional designer. She’s an exceptional product person. She got Stylekick and Cover featured on the front page of the US App Store simultaneously, which I think very few people like that can have claim to. I trust her completely to take care of that function. I work on the rest of the business. I work on the insurance aspects of the business. I’m thinking about what do we need to do to continue to deliver an exceptional product experience? What products should we be standing up, who should be, we should be working with? They’re very different roles. That helps a lot, but I think it’s been a net benefit. Because the cohesiveness of our co-founder team is pretty atypical. In the end I went to high school with Natalie, I’m engaged too. Ben was our first hire into Stylekick and we’d been working with him for six years. That helps a lot.

Karn Saroya [27:46] – The strength of that core team cause they’re all awesome with what they do. It’s helped us hire very well.

Craig Cannon [27:55] – When it comes down to the actual tactics that you use to make sure the relationship, the conflicts will obviously happen, but it doesn’t implode, like what do their tactics say?

Karn Saroya [28:05] – Eventually you feel out, with your partner what you need to do to deescalate. You will know exactly what buttons you can push and you shouldn’t be pushing. You step back and you realize that you’re on the same team and that like helps certainly.

Craig Cannon [28:25] – Do you have to put any rules in place, in terms of like living together, working together?

Karn Saroya [28:29] – I don’t think there are no hard and fast rules, actually, our co-founders still live together?

Craig Cannon [28:33] – Wow, okay.

Karn Saroya [28:35] – We’re as tight as you can get I think.

Craig Cannon [28:38] – Okay. Now that you guys have raised your Series B and are quite large, you have two offices, so you have the Toronto, and you have your San Francisco office. As the CEO, how do you manage that?

Karn Saroya [28:54] – Anand is fulltime in Toronto. Natalie flies between the two offices. Most of the product is in Toronto. We have some senior engineering in San Francisco. Our sales lives in San Francisco, insurance operations lives in San Francisco. The folks are running their respective functions are where their teams are. I make an effort to be wherever we can be and then we run these off sites. We’re heading to Vegas next week. The entirety of the team, we’ll be together. Division of Labor, we invest. We’ve invested in zoom rooms and like very high quality AV equipment to make sure that, at least communication is a solved problem.

Craig Cannon [29:40] – In terms of culture, how do you keep people on the same page?

Karn Saroya [29:42] – That’s interesting. The individual cultures are pretty different. One is very product oriented and we have a sales office in San Francisco, is super rambunctious. I actually don’t have a problem with that as of this point. My job primarily is to make sure that we’re all aligned in what the ultimate goals are for our organization. We’re trying to build it out fair and sustainable insurance entity at the end of the day. We know what we need to do. We need to make getting insurance easier. We need to make it a fairly priced for individuals for whom it should be fairly priced. We need to be in around when claims are being made and help facilitate those claims, so that our customers have positive experiences around that because that’s the ultimate function of an insurance company. Again, effectively act in that advisory capacity and scale that across just about any line of business and insurance that we can.

Craig Cannon [30:38] – That makes sense. As an international founder, we have a million questions coming in from Twitter all the time. How do you deal with this as a international founder applying to YC? You’re doing YC, or post YC. The most common place of anxiety where people are like, “I think I can figure this out in three month term.” Longer term, what is your advice to those people? How do they make it work?

Karn Saroya [31:01] – We were all in San Francisco, and decided to open a Toronto office, because we know the market, we knew where to look. We have a pretty good site and as a super high quality team. That decision we made conservatively because we had an edge in doing that. If you’re talking specifically about, “Hey, like if I’m an international founder, should I stay in the bay area or should I be somewhere else?” My objective opinion on that is this is the beating heart. This is the beating heart of everything technology, and you should have a presence here. Absolutely. If you can get your visa issues resolved. We had issues like Anand was stopped at the border three times, turned around in 01, which is kind of ridiculous, but that stuff happens. You just have to work through it.

Craig Cannon [31:49] – It happens to everyone, you make it through. But obviously, neither of us are lawyers. The new batch is starting?

Karn Saroya [31:59] – Yup.

Craig Cannon [32:00] – You guys haven’t been out for that long, winter 2016, it’s in recent memory still. What advice would you give to the people just entering the batch?

Karn Saroya [32:09] – Actually I ran a startup school batch. There are a couple of the companies that were in my batch now in YC. I’ve been doing this for a little while. Pre-coaching folks who are entering YC. One of the folks, the first folks I did it for was Austen Lambda School.

Craig Cannon [32:28] – Okay, cool.

Karn Saroya [32:28] – I ended up being one of the first investors. Well, gave me the opportunity to be one of the first investors in Austen Lambda School. I think the core advice that I give is actually not that different from what YC partners give right? It’s, “Pick a KPI, make sure you’re growing with that KPI.” Everyone implicitly knows that a couple inches deep into your startup, everything is held together by duct tape and glue. The bet that folks are making on you is that eventually you’re going to figure it out. Go into it with that in mind. Make sure you hit your KPI, and you talk about it. Cause it’s important to actually talk about your successes. Then outside of that, the typical advice, is don’t hire anybody because you shouldn’t be hiring anybody. Don’t go to conferences or parties that are not directly related to the KPIs. If it’s going to make you revenue, if you’re going to build revenue doing it, fine, but otherwise don’t be doing it. Otherwise, don’t get distracted. This is a three month like sprint for you to truly accelerate in what you’re doing.

Karn Saroya [33:34] – YC is a forcing function. If don’t have product market fit, it’s going to help you determine that you don’t have product market fit pretty quickly, and if you do have product market fit, it’s going to be an accelerant.

Craig Cannon [33:48] – What about post YC? I know there are many companies who kind of go through a lull and they need to decompress for a week or something. But how did you guys find your rhythm again?

Karn Saroya [33:59] – We’re the beneficiaries of having done this a second time, so the ups and downs are not as aggressive. The highs are not as high, the lows are not as low. We kind of just kept our heads down. All the lessons we learned from the first time around were compost. We have a pretty good cadence of just making sure we’re hitting our goals, and communicating that to investors, why we raised an A pretty quickly. You keep doing what you were doing to YC, you should be okay.

Craig Cannon [34:31] – Cool man. Well this has been great. Thank you so much.

Karn Saroya [34:33] – Yeah, thanks for having me. I appreciate it.

Craig Cannon [34:35] – All right, thanks for listening. So as always, you can find the transcript and the video at blog.ycombinator.com and if you have a second, it would be awesome to give us a rating and review, wherever you find your podcast. See you next time.