Lemonade CFO Tim Bixby Interview - Deep Dive Into LMND Business Model

Timestamps:
00:00 - Introduction
00:32 - Tim's background before Lemonade
3:40 - Tim's role at Lemonade
6:35 - How was Tim introduced to Lemonade?
10:40 - Breakdown of employees
12:36 - What one metric is the most important to you as CFO?
15:08 - Net promotor score
23:17 - Starting with renter's insurance
32:10 - Have incumbents brought more competition in renter's insurance?
35:58 - Is renter's insurance slowing growth?
40:17 - Why q over q customer growth rate slowing down?
43:00 - When switch focus to in force premium over customer growth?
45:05 - Tension in focusing on customer growth vs in force premium?
50:00 - Why was 6% customer growth an anomaly?
52:40 - Key insight in tackling a more competitive home owner's insurance market
56:40 - Not competing in price for homeowners insurance
59:08 - What percent of homeowners are new customers vs shifting customers?
1:02:19 - Strategy for pet insurance
1:10:30 - Life insurance roll out strategy
1:16:50 - Future insurance products
1:18:50 - Strategy to enter auto
1:22:58 - How is it possible to have 1700 data points? Where outside data coming from?
1:28:00 - How able to get that much data from such a quick sign up process?
1:33:18 - Does Lemonade have ambition to give a better insurance with fewer exclusions?
1:37:45 - Unit economics of Lemonade
1:45:15 - Capital requirements with reinsurance
1:52:01 - Marketing approach and acquisitions
1:59:30 - Why 2020 marketing spend decreased?
2:00:35 - LT goals and ambition for Lemonade
2:04:00 - New product line timeline
2:05:08 - Conclusion

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💁🏻‍♂️ Disclaimer: All content on this channel is for discussion and illustrative purposes only and should not be construed as professional financial advice or recommendation to buy or sell any securities. Should you need such advice, consult a licensed financial or tax advisor. All views expressed are personal opinion as of date of recording and are subject to change without responsibility to update views. No guarantee is given regarding the accuracy of information on this channel. Neither host or guests can be held responsible for any direct or incidental loss incurred by applying any of the information offered. Author is long TSLA, LMND, SQ, and other stocks at time of original video publish date.

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Videos:

[ryansnell]

I've become a huge fan of Lemonade as a customer and investor. I was able to secure a policy with ring coverage for my wife in 9 minutes. The Lemonade employee helping with the ring documentation was engaging and fun, and they gave me an option buy him a reward after providing feedback about my customer experience.
This company is a breath of fresh air in a space that is ripe for disruption. Also, I love their transparency on display here with Tim. Thanks Dave (and Tim!), this is another layer of confidence for me as a long-term investor.

[weikitkhoong]

This is amazing, thanks Dave. I haven't seen a company with such an active and engaging management team that cares so much about the consumer. You can really tell that Tim is focused on the quality of customer experience and that speaks volumes for Lemonade's future. Conviction raised and will consider adding more to my position.

[NeuraPod]

I believe the real value of your channel is in the $10's of millions. Great interview.

[feverpitchn]

If I could choose one person on earth to interview people like Tim Bixby, it woul be Dave. I sometimes find myself focusing on "what is Dave's insight or fundamental question, given the question he is posing to the interviewee" rather that on the actual question being asked and answered.

Thank you Dave for expanding the scope of my thinking about investing and all it entails.

This was a fantastic conversation. Very insightful. You hit on a lot of the questions I've had myself about this company, both longer term and specifically as a result of the q4 results and letter.

[dt]

He talks just like It’s CEO Daniel, similar style! Love it. So much passion! Customer oriented company is always a good investment!

[creator]

Thank you so much, Dave & CFO at LMND!

[PaperBagInvest]

Tim seems like a genuinely kind and trustworthy guy.

[joefresso]

one of the qualities I look for in intelligence while speaking is not saying, "um" or "you know what I mean" non stop. I like how he listens, stops, thinks, speaks intelligently and when he needs to collect his thoughts he is able to do so without filling gaps with nonsense.

[giffica]

Dave, you are the goat. Perfect. EXACTLY the interview I needed.

[michaelnuovo]

Dave, this video is an absolute gem. In two years, the stock is near all time lows, and the fundamentals have done nothing but get better. This is when we should start hyping this stock up at $18, not two years ago at a $100+. I'm about all on this stock ATM. Back of the napkin math based on your video, the stock is trading somewhere around fair value for the renters market alone (2-3 billion dollars IFP), and that's not even considering the 100 billion IFP home insurance market in the USA, and another 100 billion in Europe (based on what the CFO in your video said).

[simonb]

Tremendous interview, excellent work Dave, your interview style is really good. Also trying to clarify the structure of the economics and the marketing economics was really helpful, thank you for organising, editing and timestamping. Tim was excellent as well, very candid and clear.

Perhaps you could end the interview with two questions,
1. What is the limiting factor for Lemonade,
2. Which other company in the industry do you admire or are worried by as a competitor.

Many thanks

[JW-zcvx]

Thank you Dave and Tim for doing this. What an amazing interview. Really gave me a deep understanding of LMND. I'm very excited about the future of this company.

[bluen]

Thank you Dave,
I still have a faith in Lemonade.

[whitebusinessman]

Very much enjoyed this deep dive into LMND business. I'd love to see a summary from you specially regarding the breakdown (haha I watched a few times and still got a bit confused during that part) of the unit economics, how that relates to IFP, gross margin, earned margin etc, and your final thoughts. One thing that's clear to me is that the team has very strong leaders including Daniel, Shai and Tim. Please interview Shai, if possible. I have watched few interviews of him, and he indeed is a brilliant mind with strong technical background. The conversation would definitely be interesting. Finally, thank you so much for creating these thoughtful videos. The recent one on NanoXplore was quite fascinating and I learned a lot. Thanks again!

[DmitriyDranko]

Thanks for this Dave. I am pretty sure you mentioned Tim Bixby during your interview with Couch Investor regarding his talks at Barclays. I never actually got around to finding that interview. Hearing Tim's point of view and his perspective was really great. Props to him for coming on, and for you organizing this.

[azulsimmons]

Something other than Tesla. This is cool.

[seayum]

Great questions. Thank you.


Renters market size - In 2019, there were 43 Mn home renters in the US. From the interview - $3 Bn market size at $160 avg renter premium equals to about 18 mn renters with insurance

LMND has 900K renters as customers.

TAM (Total addressable) - 43 Mn | 2% penetration
SAM (Served Addressable) - 18 Mn | 5% penetration

Just in renters there is a lot of growth possible for LMND

[dksculpture]

FWIW, I “applied” for a Lemonade house insurance quote but the value of my house was too high. So it seems credible to me that they are being cautious right now.

[anyplacewilldo]

Dave your on FIRE right now ! Your interview with Elon is INEVITABLE ... and I cant wait for that !

[rkalla]

I've had an opportunity to work with a few really strong CFOs and I have to agree 100% - good ones are in the middle of everything YET somehow still behind the scenes. A good one is like steroids for a company. A bad one is like a glorified controller.