One of the many ways we academically intersect with founders is through our work and support of Stanford programs — especially the Stanford dy/dx program — which focuses on preparing founders for success after company formation.
This accelerated four-week residential program allows us to provide our teams with ongoing learning from the best professors, CEOs, entrepreneurs, and leaders in the world. This is especially important for the companies and founders we intersect with, who are often multidisciplinary and highly technical.
Today’s story comes from one of those multidisciplinary founders. We are thrilled to share exclusive insights from dy/dx alum and Co-founder and CEO at FutureProof Technologies, Alisa Valderrama. In this piece, Alisa shares how the Stanford dy/dx program impacted her and her work at FutureProof.
When it comes to climate risk, the operational response from the property insurance industry has been almost entirely reactive. Faced with mounting losses in cat-exposed property markets, insurance companies have headed for the exits. Over the past two years, newspaper headlines have blared an especially drastic exodus. In Florida, Farmers Insurance stopped writing new business and did not renew its existing Farmers' business, while State Farm and Allstate cut their California coverage, to name a few high-profile examples. There are a number of reasons for the exits, but a common theme is the increasing frequency and severity of climate-linked natural catastrophe losses and an inability to profitably underwrite those risks.
At FutureProof, we believe that there is an opportunity to build a new kind of insurance company based on a foundation of leveraging AI to better price climate risk and aiming to elevate the role of the insurer in catalyzing large-scale investment in climate resiliency.
A unique opportunity for accelerated learning
Our technology offers a solution to a massive problem in an important global market. However, that alone is not enough to launch a company, as any founder can tell you. Even though the property insurance industry needs exactly the type of technology that we provide, present market dislocation is so extreme in markets such as California and Florida that it is extremely challenging to bring new solutions to market.
Moreover, a founder needs to build and iterate on a product, relentlessly refine the product and its marketing, manage runway, balance innovation and optimization, and make high-stakes hiring decisions. Perhaps most challenging, founders need to motivate people both within and outside the company around a vision of the future that is not yet a reality. And there is no time to spare.
So, enter the Stanford dy/dx program.
When our investors at Innovation Endeavors offered us a chance to participate in dy/dx, we jumped at the opportunity, even though we were not entirely sure what we were in for. One could describe dy/dx as a super-condensed Stanford MBA geared toward early-stage founders. For three weeks, legends from the startup, venture capital, and corporate world shared knowledge and insights on everything from how to pitch, to the fundamentals of successful marketing, to the role of emotions in decision-making, hiring and giving feedback, the importance of culture — the list goes on.
Swirling in the back of our minds while we were at dy/dx was a key decision we were facing — an inflection point whose resolution would define the future trajectory of our company.
Our inflection point
Here at FutureProof, our uniquely granular view of risk takes property-specific features into account so that a more resilient property will pay a lower insurance premium — this allows us to profitably price risk in markets that others see as too risky. Our pricing model, trained on millions of insurance claims, is predictive for a number of perils, especially hurricane losses. It also happens that the biggest, most catastrophe-exposed (in terms of total insured value), and not coincidentally the most dislocated insurance market in the United States is Florida (by some estimates, a full 20% of Florida property owners don’t have insurance, either because it’s unavailable or unaffordable).
We had been debating the pros and cons of a Florida launch. Florida provides an opportunity to prove the predictive power of our model and to grow quickly in a massive insurance market, but it is also a market so troubled by large-scale insurance failures and exits over the past few years that only a few carriers are left standing. While recent legislative changes in Florida have shown some success in stabilizing the market, it was still a very risky proposition for a product launch. We could burn months of precious runway trying to find Florida launch partners (as a Managing General Agent, FutureProof needs carrier and reinsurance partners to launch any new insurance product).
The first week of dy/dx, our reinsurance brokers put us in touch with a team of Florida-based entrepreneurs standing up a new Florida property insurance carrier with a timeline that matched ours as well as possible. Now our big decision was staring us in the face. To launch in Florida or not?
Betting big on ourselves
It was certainly tempting. The new Florida carrier we were talking to was founded by sophisticated technologists who wanted a new approach to pricing the Florida market for their new carrier. Given the market opportunity, they wanted to have a huge first year, working with us to write more written premium than any MGA we had ever heard of. Their needs fit our strengths exceptionally well. Meanwhile, in class at dy/dx, we were neck-deep in classes about company culture: how to identify it, how to infuse it throughout operations, and even make it part of our external-facing brand. In this way, dy/dx gave us a combination of elements we needed at the just right time: space to think deeply about our culture at a crucible moment.
We thought back on what connected our founding motivations to our future ambitions. Taking stock of the milestones that got us to where we are today, our takeaway was that FutureProof is a culture of big bets, backed by careful calculation. Cat-exposed Florida property is the biggest bet in the insurance world, and we have unique technology to win in that market. Success in Florida could quickly catapult us quickly into a position to innovate on insurance products that motivate investment in climate resiliency.
Sitting together in the Stanford GSB classroom after a day of dy/dx seminars had ended, the answer was suddenly quite clear. We had done massive amounts of work and analysis to understand the Florida markets and how our model would perform. We were confident in our model. We should absolutely bet big on ourselves with a Florida launch.
Looking ahead
We went ahead with our new launch partners in Florida and have not looked back. At this point, additional carriers have come to us, asking to launch additional programs, so we feel that we absolutely made the right decision. We will have the big Florida launch, and we have a couple of additional programs in our 2024 pipeline as well.
Looking back, we’re grateful that we committed to opening our minds to dy/dx’s mix of superstars across the investor, founder, and academic realms. We didn’t know how much we needed the time to think deeply about our company culture — so the coincidence of the two at dy/dx was certainly timely for us. We’re in the final stages of getting ready for our Florida launch now, and we’re extremely excited about what comes next.
About FutureProof
FutureProof’s AI-driven projections of asset-level losses from hurricane wind and flood are helping to power a new generation of insurance underwriting and pricing. FutureProof’s API delivers real-time algorithmic underwriting and pricing, providing instantly-bindable, price-differentiated quotes. FutureProof’s climate-smart insurance products will help close the coverage gap and motivate investment in climate adaptation. www.futureprooftech.io
