Vouch Insurance: The Startup Savior

Jake Aaron Villarreal: Welcome to our podcast, From the Ground Up, where we interview startup founders exploring their journeys, their success, challenges, and lessons learned. We hope you be inspired in discovering what it takes to build a thriving startup. I'm your host, Jake Aaron Villarreal, and excited to have with us today Sam Hodges. Sam is a co-founder and CEO of Vouch, an insurance provider serving the needs of tech startups and high-growth companies. Sam was formerly co-founder and CEO of Funding Circle where its leading marketplace for business loans. Before co-founding Funding Circle, Sam spent more than 15 years as an entrepreneur, investor, and advisor. So Sam, you'll fill us some... a lot more about your product and your platform. Before we do that, I want to share a little bit more about you with the audience so they know kind of who you are, where you've come from. And so to start out with, maybe just give us a little background of where you grew up, and what part of the country did you come from?

Sam Hodges: Absolutely. So um, I grew up on the West Coast of the United States. I was born in Santa Cruz, California, and then grew up in Eugene, Oregon, and then Santa Barbara, California. And the commonality between those three places is they're all like university towns. Um, my dad did a mid-career PhD, and so uh the family kind of followed him around as he finished out his PhD in physics and then ultimately became a research scientist uh down at an R&D group um uh in the Central Coast. And so you know for me, I identify fully as a West Coaster despite actually living on the East Coast for about a decade. And um, grew up with a high degree of exposure to you know, science, math and technology. And so you know, from pretty early day[s] had a lot of interest um in those areas. And certainly that's kind of a through line uh to a lot of what I've done uh professionally over the last 20 years or so.

Jake Aaron Villarreal: That's great. Yeah, you've got a lot of great leadership experience and organizations you've helped take from really the beginning to going public. What was your first entrepreneurial experience?

Sam Hodges: Sure. So I, I've known since probably high school or early college that I really wanted to start a company. Um, and what's funny is I, I think when I kind of had that view I didn't really know what it meant. Um, and I was really lucky in my early professional experience um to get some great exposure to entrepreneurs and kind of learn at their, at their knees so to speak. So the, the first startup I joined which um actually is not on my resume at all because it was a short stint uh was um [an] early MVNO in New York, I was at the time called Digicel USA or Blue Mobile uh, working for an entrepreneur named Amol Sarva. And well this one is about six weeks after I joined the company it was actually sold to uh one of its investors. And so it was a very short um exposure stint, but a really good one. And uh you know kind of certainly validated that it was what I wanted to do professionally. And on some level you know, kind of the rest is history. Um you know, most of my, my experiences since then were either in investing in, starting, or helping build other early and growth stage companies.

Jake Aaron Villarreal: That's great. You know, college always has a play in how you sort of navigate your life. And you went to some really good schools, you went to Brown and you went to Stanford. When you were at Stanford, and you left, and now you've been in business for a number of years, when you look back at it, what was the most valuable lessons you learned from Stanford that you've now been able to apply, if at all, in your current career?

Sam Hodges: Sure. Well so I, I think a lot of folks in the tech space rightly are skeptical of MBAs, and I'd say that there's good reason, right? I think a lot of folks coming out of MBA programs um you know, may have higher confidence than competence. And I think that creates a lot of problems, uh particularly folks who are early [in their] careers. That being said, for me my time at Stanford was, was really a valuable one. And it was valuable in three ways. One, it was just tremendous exposure to the Valley. I met a lot of VCs and entrepreneurs and you know operators, and kind of just got a lot of exposure. uh to the curriculum at the GSB uh certainly while I was there, and I believe it's still true today, is there was a heavy emphasis placed on kind of introspection, and really thinking about kind of your place as a leader, thinking about how you show up with other people. You know there's a famous course that uh you know its nickname is "Touchy Feely," which gives you a sense of kind of what it's all about. And I think the reality is, as someone who you know wants to build and lead teams, and ultimately building, lead organizations, that, that view that you really need to kind of understand yourself and understand how you're showing up in the place before you're really equipped to be a good leader of other people I, I certainly hold to be true.

And then the third thing that I got out of Stanford, honestly, was just an amazing friend group and network of folks who are kind of similarly staged in their careers, many of whom have gone off to do really amazing things in a lot of different spaces. And so it's not just the learning that I got then, it's actually the learning that I've gotten over the last you know decade or you know plus... uh it's actually quite a bit more than a decade now, that um when I you know, catching up with folks and hearing what they're working on and you know being able to trade notes and share experiences. And I, and I do think that those, those relationships and reference points are really useful particularly since company building can be a lonely job.

Jake Aaron Villarreal: Yeah, I got it. You know you got into fintech and insurtech, and all, a lot of that is you know complex on the backend, there's so many different moving parts. Funding Circle to me is a really interesting story. And so for, for you getting into that company, starting the company, creating an opportunity and then taking it public, what, what was the inspiration for you in, in getting into that space?

Sam Hodges: Absolutely. So um, two, there are really two things that informed my enthusiasm to build a company in the small business lending space. Um the first was my and my co-founder in the US's experience as investors in small businesses. And uh very specifically um, my business partner Ben and now a guy named Alex Fanelli, he had started a set of um gym franchises that I was an investor in. And we had a really hard time getting loans for those businesses despite the fact that they were you know, cash flow characteristics were good, they were growing, they had collateral, and banks really weren't willing to give us the time of day. You know, think back to you know the years immediately post the financial crisis, the banking system was still pretty, pretty frozen. And so we definitely just saw a real gap in the, in the market.

The second thing that informed the business model that we took in building out uh you know ultimately what became uh you know Funding Circle was a marketplace driven approach. And that was informed by my immediate prior experience running business development for a company called SecondMarket where during the financial crisis and kind of immediately after, we built an electronic marketplace for illiquid financial assets. And what I saw was there was tremendous appetite for alternative instrument[s], tremendous appetite for products that could provide you know interesting return and yield characteristics. And in starting you know what became Funding Circle US really was the marriage of those two you know things. The need for small business credit on the one hand, this marketplace driven business model we're bringing in non-traditional I.E. non-bank uh investors and lenders, we thought could be a really interesting way of, of kind of getting liquidity into uh into the system. So that was the, the seed of the, seed of the idea.

Jake Aaron Villarreal: That's great. A lot of compliance, a lot of areas you have to make sure you have in place when you build a fintech company. And the transition from that to insurance, um in some ways it seems like it's very similar and in other ways obviously it's a different vertical. What attracted you to insurance? Because for insurance a lot of us it's pretty nebulous. You know, you kind of know it's something that happens, you kind of need to have it, you're not sure how it works, ultimately you hope you don't need to use it. But you know it's policies that we have to be covered by. And so for you kind of walk us through that a little bit. And before we do that, I just want to share with you because I was trying to understand insurance too before you had this podcast. And I went to ChatGPT and I just put it in and wanted to see what it told me. And then I said you know what, I want you to rewrite this for a 5-year-old. This is what it told me. It's, let's pull it up here. It's actually pretty... "Business insurance is like a special shield that helps protect businesses. It helps them, it helps them be safe. And sometimes when you go through the wrong and the right choices it can cost you money. For example if something breaks or gets lost, the insurance helps to fix or replace it. When a business gets insurance they pay some money called a premium. If something bad happens that insurance company pays for the damage and the business might have to pay a little bit too." So that was its definition and how it explained it. What's your definition? How do you explain it?

Sam Hodges: Sure. Well so business insurance, any type of insurance is a promise to protect. And so I actually really like that, that ChatGPT description. Um I tend to agree with [how it's] laid out. In our context the way I think about this is when you're building a company all sorts of things can go wrong. And some of those things are inside of your control and others frankly aren't. You know, accidents happen, things happen. And that could be a theft, it can be a fire, it can be a lawsuit from a disgruntled employee or a descendent investor. There are all sorts of things where if you've been around company building long enough, you've probably experienced you know half a dozen um of these things. And the reality is if you let these, these kind of risk events you know get, get on too much, or if you don't have insurance in place to protect you against them, they can end up chewing up a tremendous amount of time and frankly a lot of money. And so in our context, you know where we're insuring and helping get insurance for other high-growth entrepreneurial companies, what we're really trying to do is make sure that companies don't fail for the wrong reasons right. The reality is many startups will fail, but our hope would be that startups, if they fail, they fail because they don't find product-market fit. They don't fail because they get caught up in a really nasty lawsuit that ends up bleeding them dry over, over a period of time. And so we provide a comprehensive suite of insurance solutions ranging from the basics you know, covering property and basic liabilities, obviously much more complex uh you know financial loans and professional lines type insurance as well.

Jake Aaron Villarreal: Got it, that's great. Yeah, something that we have... we've always had it in different life cycles and companies, you might need more, you might need less. Um for you, if you look at it, what does your platform do differently than say just going out and buying insurance in the marketplace today?

Sam Hodges: So when we started Vouch about five years ago, there were two core parts of our thesis. The first was a view that high growth, innovative companies really were poorly served by incumbents. And I think you know if you look out across the insurance landscape, there's, there's been plenty of innovation on the personal lines space. On the commercial lines side um I.E. insurance for businesses, it's been far more stagnant. So the coverages that are in place, the experiences that you have, how long it takes to get insurance and so forth, those things really are pretty badly broken um, or in still water.

And the second uh you know perspective was we thought we could actually use advanced analytics and technology to not only make that experience better, but actually also better understand the exposures, the, the actual risks these businesses have in a more comprehensive way and ultimately build new insurance products that um are better matched to them. And so we started Vouch um as what's called an MGA, Managing General Agent. We have built a set of proprietary insurance products, we also sell products from other carriers to comprehensively meet the needs of all our, our clients. Um, but for, for our proprietary products we've really tried to do is design those in a way where they match to some of the specific risks that our clients have that perhaps more traditional offline businesses don't.

Jake Aaron Villarreal: Yeah, that's great. You know, artificial intelligence has come out and it's hit every industry in a different way. Um, is AI part of your platform today and with customers that are building AI, so AI startups, what are some of the risks that they need to be aware of that a potential product like yours can help support them in?

Sam Hodges: Absolutely. So I'll start by saying we already serve I think more AI companies and startups than any other insurance provider in the world. I'm not 100% sure that's true, but I'm pretty sure we serve hundreds of companies in the space already, simply because of our vertical focus on the innovation space. And if you look at what's happened in the venture-backed ecosystem, particularly over the last year, there's just been an absolute Cambrian explosion of companies that are you know building around generative AI in, in various ways. So we are very excited about the opportunity, and we're honored to have the opportunity to serve a lot of great companies out there that are building in the space.

In terms of the impact of, of AI, um we look at it on two levels. One is obviously the impact on our clients um, and whether you are building AI technology or whether you're using AI in how you build your company (and in our view most companies will do one if not both of those two things pretty, pretty quickly here) the reality is it does introduce um some novel risks and exposures that um you know other companies may not have. Specifically related to generative AI, things like advertising injury, model performance become you know real issues. And so we've actually formally launched AI as a vertical uh for Vouch about a month ago. We have a bunch of content which I'd love for folks to check out, you can check it out on the, the Vouch website. Um we also have a number of folks on the team who are specifically working with AI companies to make sure again they really understand those risks and have the right protections in place to uh, to, to address them.

The other implication of AI is in how you build an insurance company in its own right. And this is another area where we're quite excited. If you think about what insurance, what an insurance product is at the end of the day, an insurance product is a set of text, it's a legal contract. And it turns out that large language models are pretty good at um interpreting and also generating some of that, that information in a way where you can actually do some really interesting things. For example, we're running pilots around helping clients understand their existing coverage. If they have insurance with an incumbent, and helping them decipher how does that coverage map to some of the unique risks um in their business. A second example um: taxonomizing or classing companies. It's a notoriously hard problem in insurance, you really need to understand what a client is doing in a very granular way. And one way you can tap into that is by looking at all the text that they have around their business, what they put on their website, what other people say about them. And again, that's an area where large language models we think have a really valuable role to play in, in kind of uh you know serving as an interpretive layer and then ultimately generating information that's uh that's useful for both, both us and clients in terms of how we, how we serve those. So those are just two examples. There are many others.

Um but we're really excited about how AI and specifically generative AI is going to impact insurance. Obviously machine learning, how you use you know uh kind of non-linear analytical techniques on large structured data sets, that's been part of the insurance equation for a long time, we do that as well. But generative AI definitely introduces some new opportunities that we're pumped about.

Jake Aaron Villarreal: Yeah, really exciting. There's so much going on there. It's trying to carve out what niche you can provide some value at, and how do you integrate AI to help support not just your platform but also what's the user experience going to be like because you're utilizing AI? And hopefully it helps them do, make better decisions, make it faster, and ultimately have a better experience overall. Um, when you first launched um your current company here and you started getting into the market, building a marketplace is, is pretty tough. How did you get your first cohort of clients, and what from your view looking back now was a marketing experiment that you did that you were pleasantly surprised by the results?

Sam Hodges: So what was this question? Um so I am a big believer in a strong ground game if you're doing a B2B product or service. And for us uh we, we selected in Utah as our launch market. Um as you probably know insurance is regulated primarily by the states. And so if you're building a new insurance product or company you need to take a state-by-state approach [in] rolling it out. And so we did a, we did a bunch of thinking around what would be the best place to launch. And ultimately we selected Utah uh really for two reasons. One from an insurance regulatory perspective it's a very straightforward uh place you know. You, you can understand what the, what the rules are and make sure you meet those requirements in a pretty you know standard way. There are other states that are important but frankly harder to get into. And so that was, that was attractive.

But the other reason we chose Utah is there's an absolutely amazing entrepreneurial ecosystem there. You know what sprung up kind of in, in the Salt Lake City area down in, and all the way South over the last you know 10 years or so is incredibly impressive. Lots of real, really cool companies being built there. And we fortunately had some good connections into that, into that community. And so for our first couple months immediately prior to launch and then immediately after launch um, both my co-founder and I but frankly particularly my co-founder spent a huge amount of time on the ground talking to companies, getting them to sign up, in some cases literally working with them to make sure that they were putting in their application in the right way. And honestly it was those efforts that got us our first 100 clients or so.

Jake Aaron Villarreal: Wow, that's great. Utah is a great place to ski too, so hopefully you got some of that in there or some snowboarding process.

Sam Hodges: Absolutely.

Jake Aaron Villarreal: Great. Um so your company looks like it started five years ago and has kind of gone like this uh, up and up and up. Um typically companies that we see and we work with... and we work with a lot of startups... at some point they got to make a left or right decision, to pivot, to rethink of where they're going and how they're going to get there. Doesn't sound like you've had to do too much of that, but let's talk about how you've evolved. What are some of the things or some of the milestones that you've hit and you've broken through to, to take next steps within your company?

Sam Hodges: Absolutely. So I mean as with any company we certainly have made missteps and things we've had to evolve. I mean you're right I think our fundamental strategy has borne out largely the way we hoped, which you know we count ourselves lucky for. Um the way I think about what we do today it's, it's number one, we're focused on serving the innovation economy writ large, both early stage as well as scale-up companies. Number two, you know building products that are actually really relevant for those, those types of companies at risk. Things that have changed in terms of how we've run the company: there have been lots of internal changes, and particularly you know how we ran the business prior to COVID versus during kind of that you know intense period of COVID to now, kind of largely in a post-COVID world, that has been a lot of change.

Um one other thing we've done is we started with an initial focus on early stage startups. We then realized pretty quickly we need to serve growth stage companies as well, for at least one very simple reason. Which is: we're seeing tons of our clients go from being little baby companies to much more mature growth companies very quickly. And so if we weren't actually able to keep pace with their needs both in terms of products but also our service offering, we did, we churned those out. And you know early on we did lose some of those accounts. Over the last couple of years as again we've kind of expanded our aperture and service offering, we've got a much higher degree of success on retaining those companies as they uh, as they scale.

The other, the other vector changes really quickly is we started with an initial focus on just tech. So software, internet, consumer, you know hardware that doesn't go in your body. And then what we've done gradually over the last couple of years is broadened that to serve emerging categories. You know categories like Web3, like AI, um but also to get into the health and life sciences space, which we're really excited about. I mean there's just a tremendous amount of activity in that category. Uh we're super pumped, we're seeing a lot of stuff in digital health and longevity, um in kind of novel therapeutics. We, we wanted as we've done for tech startups, we want to be the go-to place for [an] early stage life science or biotech startup to go as well. Um we're still reasonably early days with that, but uh are definitely investing more in that category.

Jake Aaron Villarreal: That's great. So if you continue to scale up, walk us through over the last five years you know, started out [with] your founders and then from there grew. How big is the company today employee-wise?

Sam Hodges: We're about 215 people today.

Jake Aaron Villarreal: That's great. And looking back now, was there any one role you wish you would have hired sooner that would have helped you in a way that would have progressed the company?

Sam Hodges: It's a really good question. Um I mean, short answer, I don't want to sound arrogant here. I don't think so. I think we actually largely gotten the right hires at the right time. We certainly have made hiring mistakes, right? I think that's you know, always true. Um I try not to make too many hiring mistakes, right? And hiring quality is something I think we really pride ourselves on. We certainly have gone through different um iterations on how we are organized. Um you know, we went from again being kind of single category, single segment, early stage tech, to now multi-category, multi-segments. And so we've evolved both how we organize our go-to-market efforts, but also how we organize our underwriting and insurance product innovation um teams as a result of that.

We also have evolved frankly a lot around how our product, engineering, and design teams work. And part of that just comes with you know... we obviously early on took kind of a somewhat hacker-like mentality in terms of how we build out our tech, tech stack. The reality is we're building really complex enterprise systems, right? We have our own proprietary policy administration system. We have a API, bi-directional API that allows us to deliver embedded experiences. We're, we're building a lot in terms of using generative AI and kind of working on, on you know foundational models to do some real interesting stuff in the ops space. Those things require real technical investment, and an engineering and product org that's designed appropriately to actually uh you know do that, that complex work. So that's an area where definitely we changed our org structure a lot, but in terms of specific roles that I think we should have hired earlier or differently, um I don't, I think we've mostly gotten that right.

Jake Aaron Villarreal: That's great. Well as you scale any company, you always have to make a lot of choices in the people you bring on and scale at the right times. This is a challenging market today, it's different than it was five years, six months ago, 12 months ago, a year ago. For you, walk us through, if you're a company looking to scale, some of the maybe insights that you can share, some of the lessons you've learned that in this type of market can be beneficial for them to know about.

Sam Hodges: Sure. Well so look, talent markets um change and evolve in terms of their competitiveness and in terms of you know what's actually available. I think there are two really meaningful shifts that have happened just over the last year. One is, um there's obviously the continued trend of globalization of access to talent. I think we continue to see that continuing to play out in a really exciting way. The other is um obviously the software engineering market and general talent markets for you know startups as well as you know public companies has changed a lot just because um there's a lot more pressure on the ecosystem. And what that means is there's frankly more talent available now than any point that I can remember in the last five or six years, um which you know obviously you don't want to see these pressures in the market and we obviously want to see people you know gainfully employed. On the other hand, as a you know company looking to hire, I actually think it's a pretty good time to build uh, to build a great team.

I do think this is a moment where being really clear on your purpose and finding people who are willing to, to work hard and do hard things uh in a pressurized environment is really important. I think there were lots of people who got attracted into venture-backed companies for the wrong reasons when money was really easy and when scaling a company was as you know, easy as, as clicking your fingers. And today it's a lot harder. The burden of proof on companies to get to their next rounds are much higher than they were certainly in, in the second half of 2020 or 2021. Ultimately I think that's probably a healthy thing for the space. At the same time it does make you know, the type of team you, you build, the culture you, you build, uh the expectations around performance, those things have shifted quite a bit.

Jake Aaron Villarreal: Yeah, that's great. Well you've gotten the hiring aspect right. Is there one question that you'd like to ask when new hires are coming on board that kind of gives you a sense of "this feels like the right type of person for the company, company or culture" or "this is definitely not the right fit for kind of what we're looking for?"

Sam Hodges: Sure. Well I really go down to skills and mindset right, which is you know that's not my framework, lots of folks use it, but I really do think you can distill most um most hiring down to an evaluation of those things. One thing that I look to do certainly for people who are going to be in leadership roles of any sort (so kind of managers plus), um the, the metaphor I would use is you need to make it um a bit of a, an obstacle course. Uh which is a concept I talked about actually a lot with my, my executive coach in my prior company. And what I mean by an obstacle course is, being a leader means you have to be good at many different things, and being effective is contextual. And the problem with a traditional interview process is you sit people down, you get a sense of their experience, you kind of talk to them a little bit, and then most people kind of do a sniff test and decide whether they want to hire someone. And the reality is the error rate on that is incredibly high. And so my view is particularly for folks who are [in] really important roles, you know more senior roles, whether they're ICs or leaders, you really want to be able to get a complete picture of someone. So doing some behavioral interviews, doing some resume review interviews, doing some um casework, um ideally you know for folks who are in more collaborative roles, get them into a conference room and actually do a whiteboarding session with them, and then references. And so we try to, when we're again when we're hiring for more senior, more kind of important roles in the company, we try to be pretty comprehensive in our approach. So we really understand someone's skills, motivations, mindset, how they're going to show up in different contexts, before we ultimately uh you know move forward and make that offer.

Jake Aaron Villarreal: Yeah, really cool. Culture is a big part of every company. There's a certain aspect of it that maybe you, it comes from you as the leader of the company right, the tone set, the leadership describes what they want, the philosophy, and ultimately it kind of trickles down. What kind of culture do you have and what have you nurtured at Vouch?

Sam Hodges: Well I'd like to think that we have a very values-driven culture. I mean that's certainly what we aspire to. Um when people talk about business cultures, they oftentimes describe kind of social cultures. And I think social culture is an important part of company culture, but it's not the most important part. Um when I think about what makes a company culture, it's ultimately what are the behaviors that are selected for and rewarded, and how do you go about making decisions. And I think a lot of um both business performance, but also is a company or organization a good place to work, really stem from those practices.

You mentioned it starts with leaders, the founders, I absolutely agree with that. At the end of the day, a culture is going to be most reflective of how the founders and executives show up and behave, not only with each other, but also with folks on their team. If you have a highly politicized leadership team that you know uses interpersonal relationships as opposed to data [and] analytics to get decisions done, well guess what, that's going to translate down through the organization. For Vouch, we, you know, one of our most important values is "Listen, Challenge and Grow." We try to take a very kind of logical and you know um call it uh uh comprehensive approach to making decisions where it makes sense to, to do that. By the way, many decisions the right decision is the one you can make quickly. But for the decisions that really matter (you know, those, those kind of one-way door decisions, to use the Amazon word), being really thoughtful about how you do that, and you know doing the, the necessary work and being objective um in, in it and challenging yourself to be really you know make sure that decision is really high quality, I personally think is, is important. So um just to give you a flavor of how we think about kind of uh culture building.

Jake Aaron Villarreal: Yeah, there's a lot of people that are going to listen to this, they might want to join your company. So uh just giving that kind of overview is really good. Is there anybody... I'm going to put you on this funnel over here. Is there anybody aside from your founding team that you feel uh gives you the best picture of what your culture really is on a day-to-day perspective from your opinion?

Sam Hodges: Yeah, it's a great question. So um hopefully that doesn't come off the wrong way, but one thing I think about a lot is... and I'm going to use a loaded word... but basically as a leader, how can you get "spies" in the organization who are actually going to tell you what the heck is going on? Right, because particularly when you're talking about an organization [with] more than 50 people, certainly more than 100 people, what you are hearing as the CEO or as an executive is going to be a subset of the truth. And oftentimes it'll be shaded. And it'll be shaded sometimes in a manipulative way, but sometimes just frankly through a game of telephone, right? Because it takes time for information to work its way through an organization. And so I, I do skip levels regularly. I have people on the comp-, all across the company and every team who I feel like I've got a good honest relationship with, where if I go to them and say, "What's actually going on? What's working? What's, what's screwed up? If you were me, what would you be paying attention to?" And where again, I won't always get the right answer, but I'll get a lot more than if I just relied on the kind of the natural information flow. So I do think figuring out how you can kind of get a comprehensive view on what's going on in the organization is, it is a very important uh thing to do as a leader. In obviously in a pre-COVID "everyone's in the office" you know moment, it was a hell of a lot easier candidly. Right? Because you could just, the whole "management by walking around," you could just go walk into the sales area and like hear what the salespeople are saying. Doing that via Zoom and Slack is harder, but I do think that you, you still can do it quite a bit.

Jake Aaron Villarreal: Yeah, it's really insightful. I've never really thought about it, but it is true. You know, we don't have a 200 person company like yourself or 215, but you know so many times I don't hear the backstories that are going on until I go one-on-one and then "Oh, I didn't even know that was happening, why didn't you tell me? We could have helped you, I could have supported you here and you know we could have fast tracked this or made a different decision." So it is, it's hard to always get that information, but you know when you can get it, you got to figure out how to get it and keep that line [open].

Sam Hodges: A leader who I really respect, who's about 10 years further along in her career than me, she made a really interesting observation which is: there's a difference between being a "micromanager" versus being "micro-interested." And I think being micro-interested, like really understanding the ground truth in as many areas of your company as possible you can, is really valuable. You don't want that to translate into being a micromanager though, because then you're going to disempower your people and you're going to really slow things down. So I think it's... I, and I tell people who I work with like, "Look, keep me in the loop. I want to know what is going on, but that doesn't mean you necessarily need my sign-off to do stuff. I just want you running, I just want to be aware so that if I see something that's out of sync or if I see a problem starting to emerge, I can help get on that as soon as we possibly can."

Jake Aaron Villarreal: Yeah, really cool. You know your company looks at companies and helps them avoid risks, and you've talked a lot, a little bit about that, but I want to go back to that a little bit from you know, what are the common risks from founders that founders face in the startup world today as [they] are building, that maybe you can see from a different lens when it comes from an insurance platform perspective, or just in general maybe you can share some insights about some of that?

Sam Hodges: Sure. Well look, I mean I think the tricky thing about risk management in the context of a startup or high growth company is: startups and high growth companies are inherently risky. And so if you spend all of your time worrying about risk management, you're never going to actually do the thing that's most important in building a company, which is figuring out what your customers need and building things that you can offer to them in a way where you ultimately can make money as a company. And if you can't do that, and if you can't build a good team [and] an organization to support that business effort, you're not going to be successful.

So what I'd like to think is, when Vouch partners with one of our clients, we can actually help shoulder some of the load thinking about some of those risks. When I think about risks that are very common, they come down to uh the, the property of businesses, the products of businesses, the people of businesses, and also the partners of businesses. And when you think about the types of risks that are specific [to] those, it really comes down to: are you protecting your intellectual property, or your physical products and your inventory? With your people, are you in a situation where you're doing things that are breaking the law? It happens more often than we'd like to see honestly. Making sure you're comp-, you're compliant and you know doing things in a way that's, that's legal, particularly in regard to state laws is you know, you gotta get those details right. And even if you do, you're sometimes gonna have situations where, for whatever reason, an employee becomes disaffected. And you know, for better or for worse in the US you can get sued by anyone over anything at any time. And so we do see kind of employer-related risks as a common uh you know, common thing for, for partners.

Um, honestly uh most common thing that we see there is uh commercial disputes. Not all of those are insurable, but certainly thinking about what are the risks inherent in, in a partnership, that, that is uh a certainly important [thing]. And then with respect to products, product liability and product functionality right. In the context of a service, it'd be more of an E&O type risk. That's an important piece as well. So there's a lot of stuff in there. Ideally we want to be pretty comprehensive and you want to be pretty tailored to the specific type of company and product you're building.

Jake Aaron Villarreal: Yeah, that's great. Well you've covered a lot about insurances and I, I love where you're going with your company and the growth of it. You had the luck and not maybe the luck, but actually the, the success of taking a company public. It's the goal for a lot of entrepreneurs to really take a company from the beginning all the way through to being a public company. When you do that as a leader, it must give you some confidence. But what, how do you feel once you go public? What is it psychologically, what's it do to you?

Sam Hodges: Well, so first off, to be clear, when I was in, in Funding Circle I transitioned my operating role uh before we, we took the business public. So I was not heavily involved in the, in the IPO or the immediate aftermath. I mean I went to the IPO party which was amazing, stock changed, all that good stuff. Um I was still involved um on the US board and as, as an advisor at that point in time. And my experience of it, you know, with that context was, it was just this incredible milestone event. And you know I think a lot of people view an IPO as an exit. And for some shareholders it is. The reality is an IPO in most cases is a financing. And so reminding people that an IPO is not the end state, rather it is a, it's an interim milestone that you do as a way to bring the company, a company to a further level of maturity. I think that's an important piece. I think we largely got that right at Funding Circle. Certainly there was a bit of a tonal shift with the team. And you know some folks got to view that as like "okay, well now I've done my stint and I'm ready to go." Um in other words, the reality is if you look at the way most tech companies have performed over you know, [a] multi-decadal period, more value creation happens after companies go public before rather than before they go public. And so again, I do [think] an IPO is a... it is one way to create liquidity and get capital for a company, it's certainly not the, the only way. For some companies to go public makes sense, a lot of other companies I think really benefit from being private just because you, you can kind of relieve some of those, the pressures that come with being, with, with being a public issuer.

Jake Aaron Villarreal: Yeah, makes sense. Is there anything I haven't asked you that you want to share?

Sam Hodges: I don't think so. No, I've covered a lot of ground uh both you know, on for me, the business, and kind of what we're seeing [in] the insurance landscape. I mean that's my closing comment would be: just view this as a obviously a pressurized uh moment in the, in the venture-backed ecosystem. Uh moment of frankly a great opportunity and discontinuity. And so I think it's [a] pretty interesting time to be building something. Um and be thinking about how you build something uh given all the changes in the market.

Jake Aaron Villarreal: Great. Well as we end here I'd like to first give a shout out to you Sam for joining and sharing your story. Not just about you but your company and where it's going. And also to our listeners, thank you for your time spending it with us. Hopefully you'll be inspired and entertained at some level. And you know, we'll follow back up with you in the future Sam, to see where things have progressed. And if companies or people want to hear or find you, uh where can they sign up for your insurance? Where should they go if they want to just explore more?

Sam Hodges: So we're easy to find. We're just vouch.us, and there's a you know "apply now" uh bit. And I'm easy to find as well, I'm just sam.hodges@vouch.us. Um and so if I can be helpful in any way to anyone in the audience obviously feel free to reach out.

Jake Aaron Villarreal: Great, perfect right, thanks. And uh we'll see you on the next episode.

Before we wrap up, I want to give a big shout out to all the entrepreneurs that are joined to make this podcast possible. And for all the listeners for listening, it means the world to me that you chose to spend your time with us today. I'm your host Jake Aaron Villarreal signing off for now. We can't wait to connect with you all soon on the next episode. Take care.

This show is sponsored by Match Relevant, a company that helps venture-backed startups find the best people in the market and they do it in three simple steps. First, they sit down with founders to understand their story. Second, they tell their story into multiple candidate channels. And third, they schedule interviews within 48 hours. Find us at matchrelevant.com to learn more about how we do it.  

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