Three years after starting Clearcover, I did something pretty unusual for a startup founder: I issued a public apology.
After over a year of stating publicly that we had no plans to distribute our product via agents, I shared our change of mind at OnRamp—and then, subsequently, on Twitter. The shift was companywide and a significant course correction for our business. So what happened?
We’d reached the stage most new startups dream of: We were seeing real success. Our sales were steady, we’d launched over 20 partners in three years—including Chime, Credit Karma, The Zebra and Cars.com—and we’d progressed several iterations past our minimum viable product. We’d built a great business.
But then we faced a new challenge: keep growing. It was a daunting one. We needed to find our next big expansion opportunity while maintaining the success and momentum we’d built in our current channels. And we needed to do it all fast.
To address the challenge, we built a decision-making framework to help us determine our next move. And when we applied that framework to the possibilities on the table, we found that taking our product to independent agents was actually the single greatest opportunity for growth. After we wrapped our heads around that fact, I apologized, the team mobilized, and we built out an independent agent channel that is proving to be the right strategy for our company.
So here’s the framework that helped me change my mind—the four major questions that clarified my thinking and helped the Clearcover team identify our next steps. While we built this set of criteria to address our situation, it’s broadly applicable, and I believe it can help you find your next opportunity, too. Here’s what to ask yourself when you’re evaluating a new growth strategy:
1. “Is the impact big enough?”
You’re looking for an opportunity with a 10 times benefit, not a 10 percent benefit.
When we more seriously considered the independent agent channel, we were struck by the sheer size of the market. We found that 35 percent of personal auto premiums in the U.S. is sold by independent agents, representing about $70 billion to $80 billion. It was a distribution channel that we weren’t tapping at all—and one with a huge potential upside. In other words, it was exactly the kind of opportunity we were searching for.
2. “Does it leverage our existing strengths?”
You have to acknowledge the facts on the ground.
At this point in Clearcover’s growth, there were distinct time and resource constraints as well as processes we couldn’t abandon. It was unrealistic to rebuild our technology or our core insurance product. Fortunately, building an independent agent channel didn’t require a complete restructuring, only a rethinking and a different allocation of resources.
3. “Can we test it efficiently?”
You can’t afford to pursue an opportunity that you can’t quickly test.
We had already built much of the technology needed for an independent agent channel, so we knew that we’d be able to reach the experimentation phase soon. If the new channel wasn’t viable for us, we’d quickly know and could take appropriate action.
4. “Have we truly questioned our most basic assumptions?”
You need to be willing to change your mindset.
Be warned: Sometimes this means changing your decision-making framework itself. Our first set of criteria mandated that any new opportunity be consistent with our original vision for the company. But, after thinking about the challenge for a while, I realized that this was exactly the wrong way to approach expansion.
Our original vision depended on assumptions that weren’t serving us and, in fact, were actively holding us back. Once I stopped trying to stay consistent—and embraced the apology tour—the way forward became clear.
Those questions are the starting point of analysis. But, ultimately figuring out when and how to expand your distribution depends on the right blend of being analytical and being bold, and that blend will look different for every business. You need to consider your options carefully, but you also need to act quickly and be prepared to adapt to the consequences as you go. We launched our agent channel with an MVP that wasn’t ideal for every agent, but that was okay: It allowed us to prove out the new model before we scaled—and put us in an excellent position for our next growth phase.
So it’s a fine balance, and every startup will do it differently. But I’m convinced that as long as you’re willing to keep checking your assumptions—and to correct course when you’ve made a mistake—bold decision-making will result in growth, both on your bottom line and in your perspective.
Kyle is the co-founder and CEO of Clearcover. Under Kyle’s leadership, Clearcover has raised more than $104 million to date and has launched in multiple markets – California, Illinois, Arizona, Ohio, Utah, Texas Wisconsin, Louisiana and more on the way. Before founding Clearcover, Kyle was a founding member of American Family Ventures where he was responsible for sourcing, evaluating and structuring over 50 equity and debt venture capital investments in nationally-based tech startups. Prior to this role, Kyle was a corporate attorney focused on emerging company business matters at AlphaTech Counsel. Kyle has a law degree and an MBA from the University of Wisconsin.
