Tag Archives: Andreessen Horowitz

Firms Must Redefine Cyber Perimeter

The rising business use of cloud services and mobile devices has opened a Pandora’s box of security exposures.

Software as a service (SaaS) tools such as Salesforce.com, Gmail, Office 365 and Dropbox, as well as social media sites such as Facebook, LinkedIn and Twitter, are all being heavily leveraged by companies to boost productivity and collaboration. This SaaS trend also has opened up a whole new matrix of access points for malicious attackers to get deep inside company networks.

Wall Street recognizes that all organizations will have to acknowledge and make decisions on how to mitigate new business risks introduced by cloud services. And big bets are being placed on new technologies to help companies get a handle on these fresh exposures.

See also: The Need for a Security Mindset

ThirdCertainty recently sat down with David Baker, chief security officer at Okta, a cloud identity management vendor that’s one of dozens of security vendors developing cloud security systems. A $75 million round of private investment last fall pushed Okta’s market valuation to more than a billion dollars, vaulting it into so-called “unicorn” status.

Okta’s backers include a who’s who of venture-capital firms that are placing big bets on cybersecurity plays: Andreessen Horowitz, Greylock Partners, Sequoia Capital, Khosla Ventures, Altimeter and Glynn Capital, among others.

Baker talked to us about this particular big bet on cybersecurity tech. The text is edited for clarity and length.

3C: Congratulations on achieving unicorn status.

Baker: Thank you. We have a lot of work to do as a company to continue growing. The problem that we solve is really about enabling companies —  enterprises, as well as small, medium and big companies — to adopt the cloud.

3C: How would you frame the big challenge?

Baker: The problem for companies now is that the things I need to access in the cloud bring a whole host of security concerns. I have users working within my four walls, and they have to authenticate into these applications where I have critical business data. It could be information about my company’s source code, or email or all of the files we share. So what’s needed is a secure way of authenticating users into all of those systems.

It also is a challenge to provision that identity into the downstream applications and, just as importantly, to de-provision users. So when a user eventually is transferred to a different group or is terminated, their access has to be disabled. So it’s about managing that identity and also managing the access of that identity to these cloud services.

3C: Lots of employees set up their own Gmail or Dropbox account to be more productive. It sounds like they shouldn’t be doing that?

Baker: Correct. The security piece is knowing what set of tools you want your employees using, and then making sure you have an authentication mechanism in place to enable them to go securely into those cloud-based applications.

See also: Cyber, Tech Security Start to Merge

3C: The company sets the rules, and its employees should use only the company-sanctioned versions?

Baker: Correct. Users get exactly the version of Dropbox the company wants them to use, not their own personal account. Okta creates a secure connection to that version. The IT administrator can give the employees access to hundreds of apps. Right now, we have connectors to well over 4,000 different applications across the internet.

3C: Seems like we’re extending the traditional network perimeter. It’s not just the on-premises servers and clients that companies have to be concerned with, it’s everything out in the internet cloud that employees might try to use.

Baker: I’ll do you even one better. The perimeter really exists with respect to identity. When I’m sitting at home or in the coffee shop and using my cellphone to get access into an application, I am now the perimeter. So that’s why we like to say, really, identity is the new perimeter.

This article first appeared at Third Certainty.

More stories related to cloud security:
Be selective about what data you store and access from the cloud
Cloud apps routinely expose sensitive data
SOC-2 compliance crucial for keeping data safe in the cloud

Zenefits: Only the Start for Brokerages

As this election year unfolds, many are questioning what created Donald Trump. Why him? Why now? On the other end of the spectrum, the same could be said of Bernie Sanders. In the benefits world, I relate the political landscape to Zenefits and former CEO Parker Conrad. What is it that allowed Zenefits to come to be? As Zenefits now regroups to begin its post-Conrad journey, firms like Namely are getting press and stepping into the market in a similar way.

Some say Silicon Valley breeds arrogance and often enables young entrepreneurs to create companies and attack the market and competitors with a vengeance. These young guns want to disrupt the market and change the rules of the game to deliver something new and better.

See Also: How Likely Is Zenefits to Change?

Whether you agree with the Zenefits model or not, you can’t argue with its results. According to Bloomberg, the company’s revenue was close to $63 million annually as of the fourth quarter of 2015. This means:

• $63 million in customers fired their broker because Zenefits promised something their current broker was not delivering;
• $63 million in customers valued what I think is the equivalent of a $5 per-employee-per-month (PEPM) technology more than they valued the services delivered by their $25-$35 PEPM benefit broker; and
• $63 million in customers did not care that there was no local service.

While Conrad has left this stage, the conditions that allowed him to grow his business still exist. And I am sure the Zenefits executives and investors — including Andreessen Horowitz and Fidelity — are not going to let $63 million in revenue slip away without a fight.

What Zenefits accomplished is to let the world know there are many employers out there that value what Zenefits promised to deliver. In fact, according to industry analyst and marketing guru Mark Mitchell of the Starr Conspiracy, there was $2.1 billion invested in the human capital management technology and services space in 2015 and $600 million in the first quarter of 2016. As Mitchell said at a recent conference, “Those checks are being cashed.”

Soon, there will be a tsunami of new products, services and marketing in the human capital management (HCM) technology and service areas that are going to hit the market. Employers will be getting phone calls and webinar invites and attending conferences where these new solutions will be heavily promoted.

Case in point: Have you ever seen a TV commercial or heard a radio commercial about HR technology before Zenefits and Namely? This is a hot market, and as one venture capital firm representative said to me, “We are only interested in investing in firms that go after the benefits commissions.”

The commission is in play, and $2.1 billion in investment capital knows it. I have been in the benefit business since 1986, and many of the same problems still exist. Administration is still complex. Benefits are still confusing and are only getting more confusing. Costs are still going up. And now, in today’s world, cost shifting onto employees is creating financial stress on them. It is getting worse, not better. As long as the current market does not solve these problems, then there is an opportunity for someone else to do so.

In the political arena, whether Trump wins or loses, the conditions that allowed him to secure the nomination aren’t going away. Certainly, the millions who support him won’t disappear overnight. They are still Americans living in our society.

In the benefits world, whether Zenefits survives also doesn’t matter. The conditions that enabled it to enter the market and grow still exist. Employers still want what Zenefits promised. Managing benefits is still burdensome. Costs are still going up. People still don’t understand their health insurance. The market conditions have not changed. The opportunity for another company like Zenefits — or 10 of them or 100 of them — still exists. And while Parker Conrad is in the rear view mirror, others are coming. And it will be a tsunami.

This was originally written for Employee Benefit Advisor Magazine. The post can be seen here.

Insurance Disrupted: Silicon Valley’s Map

With $5 trillion in premiums, an incredibly low level of customer satisfaction, aging infrastructures, an analytically based, high-volume business model and a “wait until we have to” approach to innovation, insurance is now fully in the sights of the most disruptively innovative engine on the planet, Silicon Valley. The tipping point for insurance is here.

More than 75 digitally born companies in Silicon Valley, including Google and Apple, are redefining the rules and the infrastructure of the insurance industry.

Inside the Insurance Tipping Point – Silicon Valley | 2016

It’s one thing to listen to all of the analysts talk about the digitization of insurance and the disruptive changes it will bring. It’s quite another to immerse yourself in the amazing array of companies, technologies and trends driving those changes. This post is the first of a series that will give you an inside look at the visions, culture and disruptive innovation accelerating the digital tipping point for insurance and the opportunities that creates for companies bold enough to become part of it. (Join us at #insdisrupt.)

Venture firms are catalysts for much of Silicon Valley’s innovation, and insurance has their attention. Frank Chen of Andreessen Horowitz sees software as rewriting the insurance industry, AXA insurance has established an investment and innovation presence here. Others, including Lightspeed VenturesRibbit Capital and AutoTech Ventures, are investing in data and analytics, new insurance distribution plays and other technologies that will change the shape of insurance.

New business models: MetromileZenefitsStride HealthCollective HealthClimate Corp., Trov and Sureify, are using technologies to redefine and personalize insurance and the experience customers have with it.

Rise of the Digital Ecosystem – Expanding the Boundaries of Insurance

Digital ecosystems are innovation catalysts and accelerators with power to reshape industry value chains and the world economy. They dramatically expand the boundaries within which insurance can create value for customers and increase the corners from which new competitors can emerge.

Silicon Valley is home to companies acutely aware of how to establish themselves as a dominant and disruptive platform within digital ecosystems. That includes Google, which is investing heavily in the automobile space with Google Compare and self-driving vehicles and has acquired Nest as an anchor in the P&C/smart homes market. Fitbit is already establishing health insurance partnerships. And let’s not forget Apple. The Apple Watch already has insurance-related partners. Apple has clear plans for the smart home market and has recently launched AutoPlay, its anchor entry into the auto market. There are rumors that Apple plans to develop an iCar. And that’s just what we know about.

There are a host of other companies placing digital ecosystem bets in Silicon Valley, as well: GE, which is driving the Industrial Internet of Things; Parstream, with an analytic platform built for IoT; the IoT consortiumJawboneEvidation HealthMisfit Wearablesicontrol NetworkGM and its advanced technology labcarvi; and DriveFactor, now part of CCC Information Services.

Then there are the robotics companies, including 3D robotics, the RoboBrain project at Stanford University and Silicon Valley Robotics, an association of makers.

Customer Engagement and Experience – New Digital Rules, New Digital Playbook.

When your customer satisfaction and trust is one of the lowest in the world and companies like Apple and Google enter your market place, it’s really time to pay attention. There is a customer value-creation and design led innovation culture in the valley unrivaled in the world, and the technology to back it up. Companies like Genesys, and Vlocity are working on perfecting the omni channel expereince. Hearsaysocial and, declara, are working on next gen social media to help customers and the insurance industry create better relationships. Many of the next generation of insurance products will be context aware, opening the door to new ways of reaching and supporting customers. Companies like mCube and Ejenta, are working to provide sensor based insight and the analytics to act on it. TrunomiBeyond the Ark, and DataSkill via cognitive intelligence are developing new innovative ways to use data & analytics to better understand and engage customers. Lifestyle based insurance models are being launched like Adventure Adovcates and Givesurance, And some of digital marketing automation’s most innovative new players like Marketo, and even Oracle’s Eloqua are rewriting and enabling a new digital generation of marketing best practices.

Big Data and Analytics – Integrated Strategies for the New “Digital” Insurance Company

The techno buzz says big data and analytics are going to affect every business and every business operation. When you are a data- and analytics-driven industry like insurance that deals with massive amounts of policies and transactions, that buzz isn’t hype, it’s a promise.

The thing about big data and analytics is that when they are used in operational silos, they provide a tactical advantage. But when a common interoperable vision and roadmap are established, analytics create a huge strategic advantage. That knowledge and the capability to act on it is built into the DNA of “born digital” entries into the insurance market like Google.

The number of companies working on big data and analytics within the valley is staggering. We have already discussed a few in the Customer Engagement section above. Here are a few more, In the area of risk: RMS is building its stable of talent in the big data spaceActian is delivering lightning-fast Hadoop analytics; Metabiota is providing epidemic disease threat assessments; and Orbital Insights is providing geo-based image analysis. In the areas of claims and fraud, PalantirScoreDataTyche and SAS are adding powerful capabilities for insurance. Improved operational effectiveness is being delivered by Saama Technology, with an integrated insurance analytics suite; by Prevedere, with data-driven predictive analytics; by Volumetrix, with people analytics; and by Sparkling Logic, which helps drive faster and more effective decision making.

Insurance Digitized | Next Generation Core Systems

With insurance boundaries expanding, integration with digital ecosystems, increasing reliance on analytics and the demand for personalized and contextualized outcome- and services-based insurance models, core systems will have huge new sets of requirements placed on them. The requirement for interoperability between systems and data and analytics will grow dramatically.

Companies like GuidewireISCS and SAP are building a new generation of cloud-based systems. Scoredata and Pokitdoc are bringing new capabilities to claims. SplunkSymantec and FireEye are addressing emergent cyber risks. And companies like Automation EverywhereOcculus RiffSuitable Technologies and Humanyze are enabling the digitally blended and augmented workforce.

The latest investment wave includes artificial intelligence, deep learning and machine learning, which core systems will need to incorporate.

Surviving the Tipping Point – Becoming One of the Disruptive Leaders

This is a small sampling of the technologies, trends and companies just within Silicon Valley that are shaping the digital future of insurance. The changes these will drive are massive, and they are only the tip of the iceberg.

An Insurance Tech meetup group open to all the insurance-related companies within Silicon Valley was just announced by Guillaume Cabrere, CEO of AXA Labs, and already has 64 members. For established companies to survive the tipping point and thrive on the other side of it requires more than handing “digital transformation” off to the CIO or marketing team. Success requires a C-Suite that has become an integral part of the community and culture building the digital generation of insurance companies.

For technology companies and next-generation insurance companies, success requires building partnerships with established and emerging players.

This blog series is designed to inform and accelerate that dialog and partnering formation. It will include a series of interviews with disruptive leaders from industry and Silicon Valley. If you or your company would like to be a part of that series, please let me know.

Join us for the next Insurance Disrupted Conference – March 22-23, 2016 l Silicon Valley


ITL readers receive a 15% discount when registering here.

Insurers: the New Venture Capitalists

Property and casualty insurers are as rich as Croesus, awash in capital and having a tough time figuring out where to put it. They can certainly invest (and largely do) in the equity and bond markets, but the paltry returns give deep pause for additional consideration. So a few insurers are stashing at least some of their cash in a venture capital fund.

As cash piles grow bigger, property/casualty insurers that have had limited success in launching new technologies to support their businesses are now choosing to buy rather than build. Over the last two years, roughly a half-dozen property/casualty insurers have formed venture capital funds, among them AXA, XL Catlin and American Family. Not only do these funds present the possibility of big winnings by betting on an investment in a unique start-up venture, these same ventures may be of use to the companies in their underwriting, claims management and sales and marketing strategies.

The industry has long been branded a technology foot-dragger, the perpetual latecomer to the digital party. Potential disintermediation by established technology players Google, Amazon and Apple is the 800-pound gorilla sitting in the boardroom. Few insurers were prepared, for instance, when Google launched Google Compare to sell automobile insurance. Even fewer imagined Zenefits, a start-up on track to displace insurance brokers in the provision of employee benefits. The company in May was valued at a staggering $4.5 billion.

Why didn’t a seasoned insurance company or brokerage invent Zenefits, which allows small and mid-size businesses to manage employee benefits in a very simple way? Chalk it up to a pronounced lack of leadership and intellectual capital-visionaries and software architects with real technology chops.

Insurers simply have not grown their workforces to spawn the technology leadership of a Steve Jobs, much less the programming savvy of a Steve Wozniak (Apple’s founders, of course). While many carriers are just now beginning to create digital ecosystems, they’d like to goose the process. That’s where the venture capitalists come into the picture.

“We’ve been investing a lot of time and money in process improvements and digital technologies, but the truth is we weren’t doing particularly well in getting access to new and innovative ideas in the insurance and technology spaces,” conceded Manish Agarwal, general partner of AXA Strategic Ventures, a venture capital fund launched by AXA in February 2015. “We weren’t seeing the ideas that could be game-changers.”

Other carrier venture capitalists were set up for the same reasons. “Not all the innovation happens inside our company or inside our industry,” said Dan Reed, managing director of American Family Ventures, the venture capital fund formed by American Family Insurance in 2013. “A lot of brilliant stuff happens outside the marketplace.”

Just the stuff these carriers are looking for, too. Their venture capitalists are investing millions of dollars to buy small stakes in a stellar array of extremely innovative businesses, most of them creators of novel digital technologies that may be useful to the funds’ parent companies in future.

“We’re looking to fund or create ventures that can significantly improve the cost or the effectiveness of insurance,” said Tom Hutton, managing partner at XL Innovate, the venture capital initiative launched by XL Catlin in April 2015. “These include new models for providing, distributing and capitalizing insurance.”

As the old refrain goes, “If you can’t build it, buy it.” Besides, why should the venture capitalists at big firms like Andreessen Horowitz have all the fun and make all the money?

You Gotta Put It Somewhere

Property/casualty insurers may well be smart in their decisions to launch venture capital funds to invest in myriad tech and other startups. The challenge for the industry in recent years has been where best to invest its massive cash hoard, built up from years of low losses, particularly on the property-catastrophe side of the house.

Meanwhile, the pile is growing, according to a study by BlackRock last month (October 2015). With all this excess money lying around, the asset management firm believes that insurers are experiencing trouble determining where to invest it. That’s causing more than a few insurers to simply sit on the cash, sticking it under the mattress like Grandma used to do.

Certainly, every insurer would like to buy more high-quality bonds, but there aren’t enough to go around. Consequently, 40 of the insurer respondents to BlackRock’s study plan to use derivatives to gain exposures to assets they’d like to buy but can’t. Others are turning to alternative assets with longer-term yields matching their liabilities, such as infrastructure debt.

Then there are those placing their bets on a tech start-up becoming the next Uber or Zenefits. Not that this is unique. “Insurers have always made investments in areas that were either directly or tangentially aligned with their business models,” said Robert Hartwig, president and chief economist at the Insurance Information Institute.

In the 19th century, insurers were heavy investors in railroads, Hartwig noted. In the post-war 20th century, they were big investors in real estate, “looking to both diversify their investments and generate an additional revenue stream off a physical asset-in this case property and buildings,” he said.

Hartwig is not surprised that insurers have formed venture capital funds to invest in technology and other start-up businesses. “The industry has record capital to invest on a global scale and is suffering like any institutional investor from low yields on traditional investments,” he explained. “It makes sense to look outside the traditional range of investments so long as they are not risking policyholder money.”

Because the sums are small relative to the insurers’ overall investment portfolios, Hartwig is not worried. “Some of them will produce strong returns, but not all of them at the same time,” he said. “Besides, these investments in technologies like next-generation [automobile] collision avoidance systems can be a hedge against current business risks.” He’s referring to the reduced automobile premium volume insurers have experienced as cars become increasingly safer and accidents fewer and less catastrophically severe.

Each of the venture capital funds has capital provided solely from its parent company. The money is earmarked to invest in start-ups or slightly older businesses with a unique product or service twist on underwriting, selling, marketing and distributing insurance, among other traditional insurance functions.

AXA Strategic Ventures, for instance, has two investment strategies: early-stage to seed money to a new company and later-stage to do the same for more established entities. AXA has allocated 200 million euros (about $290 million) to the venture capital fund for both purposes. The fund is set up in a separate general partner/limited partner structure, its returns not reflected on the parent company’s balance sheet.

Over the past year and a half, AXA Strategic Ventures has made seven investments in the U.S. (three of them made public) and 10 in Europe. Among them is PolicyGenius, creator of an online platform for consumers to review insurance coverages and research and compare quotes for term life, long-term disability, renters and even pet insurance.

“The reason we made the investment had less to do with the idea of buying something online, which is not really new or novel,” Agarwal said. “What we especially liked was the great front end they had created to engage customers. It really stands out.” (See for yourself at www.policygenius.com/.)

Another investment was in Limelight Health, designer and developer of a mobile, cloud-based technology that helps smaller companies simplify the process for providing health insurance and other benefits information to their employees. “Today this process typically involves a lot of work with an agent, with multiple paper-based quotes and a lot of faxing things back and forth,” Agarwal explained.

He said that the technology enables brokers and carrier representatives and underwriters to immediately respond to customer quote requests, compare this information and model the different benefits provisions and quotes against real-time market data (a concept that sounds similar to the Zenefits model).

American Family Ventures has invested in approximately 30 companies so far, according to Reed. They fall into three categories: companies in the data analytics space; those that make technology tools considered of use in the insurance value chain; and those that provide Internet of Things (IoT)-type connectivity, as this relates to the insurance products and services of its parent company. With regard to the latter, Reed provided the examples of autonomous vehicle technologies and the smart meters turning on our air conditioners, lamps and appliances. “These are new digital signs of risk,” he explained.

Among the investments (or “partnerships,” as Reed called them) is ImageVision, a provider of visual search and analytics tools leveraging machine-learning technology, and SNUPI Technologies, a sensor and services company focused on home safety and security. “Its customers use a wireless device that alerts them when a hazardous event occurs in their home,” Reed said.

XL Innovate is investing in businesses identified as offering new underwriting opportunities, such as New Energy Risk, a provider of data analytics and performance warranty products. The eight-month-old venture capital fund is in the midst of acquiring a cyber analytics company, whose name Hutton was not at liberty to divulge. “We’re also in early talks about an investment in a property data company,” he said.

Several life insurers have recently formed venture capital funds, among them Massachusetts Mutual Life Insurance. Many of the same reasons apply. “A lot of amazing innovation occurs outside the industry in the entrepreneurial community, and when there is equity ownership in these companies this tends to spur innovations faster,” said Eric Emmons, managing director of MassMutual Ventures. “By partnering with these companies, it keeps senior management aware of what is coming down the road.”

Small Steps, Big Gains—Maybe

Other insurance companies, like the Hartford and Transamerica, also have venture capital units but were unable to provide comments by press time. In all cases, the parent insurers are not dabbling-there’s plenty of cash going into these activities, albeit nothing along the lines of Sequoia Capital, the Silicon Valley giant that has invested in start-ups that command more than $1.4 trillion in combined stock value today. (Source: “Inside Sequoia Capital: Silicon Valley’s Innovation Factory,” Forbes.com, March 26, 2014)

Still, the nearly $300 million invested in AXA Strategic Ventures and the reported $50 million invested in American Family Ventures isn’t chump change. Neither are the sizes of their investments, with American Family Ventures typically investing between $100,000 and $2 million in early-stage companies. “We generally receive 5% to 10% [of equity] in return,” Reed said.

Down the line, maybe one of these funds will become the equivalent of the next Uber, not to mention Google Compare or Zenefits. Not only would this be great for the insurers’ investment income, but it may also help differentiate their value propositions, products, services and operations.

Besides, it would be a heck of a lot of fun. Who says insurance companies are stodgy? Not the folks running their venture capital units.

This article was originally published by Carrier Management.