Building a new business from scratch is a massive challenge. But leaders at Brazilian financial leader Caixa Seguradora felt they didn’t have much choice when they built Youse, a direct-to-consumer digital insurance business. Youse CFO Jose Filippini (pictured above) and Youse CTO Alvaro Anton explain how and why they did it, and what they learned.
The decision to move first
Jose Filippini: We developed our business case to launch Youse based on the need to avoid threats from nontraditional competitors in other industries and to seize an opportunity. We realized we didn’t really have a choice because we saw that it was a strategic necessity. If you don’t jump, you’ll disappear. But you have to understand that you’re jumping without any real certainty of where you’re going to land.
We also based the decision to launch Youse on the clear idea that there is strategic advantage in being the first mover. In benchmarks we developed, the first mover won 30 percent of market share.
The degree of certainty was low when we launched Youse. We had business plan with positive ROE, but we were aware there was a lot of volatility. And as soon as we started working, every new day was a new discovery and new risk. But the north star was the same. The strategic pillars, main drivers, our values were always the same from the beginning.
Why build a new business
Alvaro Anton: Caixa Seguradora is a large, traditional company. It’s really difficult to move and adapt quickly. Launching Youse as a new business gave us total independence and made sure that the traditional culture (hierarchy) didn’t affect the culture we were trying to create. If we’d built this within Caixa, the antibodies in the company would attack the culture we wanted to create and protect.
Going the new-business route also allowed us to build a technology architecture from scratch, and tailor it to our own needs. You don’t need to build a Ferrari if all you need at first is a Mini. This approach allowed us to create something that was flexible so we can make incremental changes in the future.
Built to change
Alvaro Anton: We have a lot of metrics and have built Youse with the idea in mind that we can adapt quickly if needed. For each product we develop, we test, put it into the field, and adjust to the feedback. We have systems in place to monitor in real time and make small changes so we can experiment to find a solution to a given problem. Within a week or a month, you know if the numbers are better or worse, and we learn from our mistakes.
Jose Filippini: The metrics that we focus on have shifted. In the first phase, it was all about validating the product in the market. Last year it was about improving the operational efficiency of cost per acquisition (CPA) and the claim ratio (percentage of claims costs in relation to premiums earned). Our biggest questions were around CPA because we had no experience with that. So we tracked it closely, and made adjustments based on what we learned.
Big lessons learned
Alvaro Anton: When we brought in new talent, we wanted them to innovate but we also needed them to build a solid foundation as well—the traditional things an insurance company needs. Some team members from the beginning only wanted to work on innovations. So we had to clearly say to the teams, yes, we’re a digital company and have a mindset of innovation, but we need a solid foundation.
Jose Filippini: For example, in the first year, the team created the “Youse Hero” product. It was a panic button in the app that you pressed if you have an emergency, and it would call friends and family. But customers didn’t really want it. In the meantime, we had big issues in our claims journey and basic insurance offer.
Alvaro Anton: We also had to learn when it made sense to test a product. If you’re a digital company, you don’t need to wait for a product to be 100 percent done before you test it. But at the same time, you need to be careful to make sure a minimum viable product (MVP) makes sense. Everyone talks about how important it is to launch an MVP, but the user doesn’t know it’s an MVP. They want something that works. There is a cost to not having a well-defined MVP, and it can result in poor user experience or big unexpected costs.
Jose Filippini: At the very beginning of Youse, we launched so-called MVP features and products that generated huge costs because customers weren’t sure how to use them, and this ended up flooding our call center with calls.
Two key roles
Jose Filippini: We had trouble finding good product owners at first. These are people with many skills—they have to know tech, UX, business, and finance. It was tough to hire these kinds of people with that knowledge already in place.
Alvaro Anton: We thought we needed POs who had experience working in digital companies. If they’d worked in that environment, we thought they’d bring the digital culture with them. We didn’t pay as much attention to seeing what experience they had building products in their careers. We realized pretty quickly that it was more important to find people who knew the steps of how to build a product and knew the relevant methodologies. We could help them to improve in other skills and fit into our culture.
Jose Filippini: Chapter leaders are our experts on the ground who work with teams. They are the top experts in their given field. We have a UX chapter leader, for example, who is an expert in UX. He is at the teams’ disposal to answer questions and guide teams, either in person or through our internal methods.
Alvaro Anton: Chapter leaders help define methods for solving problems and are responsible for performance and developing people. They often have experience working in multiple companies and bring that “muscle memory” with them to help teams solve problems that they’re already familiar with. They share best practices, and keep on top of relevant developments in the market to share with the teams. They essentially operate like ambassadors for that area of expertise.