Seth Birnbaum is a serial entrepreneur and the co-founder and CEO of EverQuote, the largest online auto insurance marketplace in the U.S. He provided some good advice about transitioning from engineering to the CEO role. His transition included learning the importance of developing a people-focused culture: He thinks of himself as part cruise director and greatly enjoys working with millennials. Seth also advised that every business should be doing marketing and advertising based on data science.
What did you want to be when you grew up?
Seth: I was always into science and engineering and sci-fi even as a little kid. When I was seven years old I saw the MIT robotics competition on TV. After seeing it I wanted to be in it. I wanted to be an engineer but specifically go to MIT and be in that competition. About 12 years later I was! I got into MIT and I did compete in that competition. I was semi-finalist so I didn’t win unfortunately, but I had a great time there. The people I met in school changed my life in a lot of amazing ways. I still work with a lot of the folks I went to school with 22 years ago.
Did you think you wanted to be a CEO?
Seth: Around my teenage years I really got into the notion of starting a company. I did not necessarily want to be a CEO, but since I was 12 I wanted to create a start-up. It was a lot about building my own PCs. And of course Bill Gates was very famous at the time. So my entry to building a company was through the engineering interest.
When you got your engineering degree at MIT, what did you think you would do with it?
Seth: I wanted to do start-ups, specifically in biotech and bio-pharmaceutical. I ended up with some guys from school and some folks I’d worked with on summer jobs and research with at school. We started a biotech company in Cambridge in 1997 (NeoGenesis Pharmaceuticals). We sold that business to Schering-Plough in 2002.
What role did you perform in that company?
Seth: I was one of the founders and served as head of engineering. I put together chemistry and a tech screening for early stage drug candidates. We built these automated screening systems that had chemical libraries and mass spectrometry and liquid chromatography screenings for new drug candidates. We actually found some pre-clinical candidates from these automated screening systems that we built. It was a really cool technology. We sold it as research system under contracts with big pharmaceutical companies.
When we were selling we caught some senior scientists who we suspected of trying to steal our data. Tomas Revesz, who is now my co-founder at EverQuote, was running IT at that time and told me he thought these guys were trying to steal data from the company. We confronted them. They were leaving in advance of an acquisition. From that experience, Tomas came up with the idea to create a company that actually prevents the theft of data as an asset. I became the CEO of that company (Verdasys – now called Digital Guardian). It has grown quite large and is now contemplating an IPO. That’s in data security.
While we were doing that company, we ran into a group of MIT alumni whom we had been friendly with for the better part of 20 years. They had done a number of vertical internet companies that had grown very quickly; much faster than anything we had done. They had sold some of them and were working to take some public. We joined with them to start EverQuote. So this is the second time I’ve been a CEO. The prior company is running happily. EverQuote is the largest business I’ve ever worked at, much less run. It also has the biggest market. We really have a great team. It’s been a lot of fun. It’s a very fast growing business.
How many employees do you have now?
Seth: Tomas and I and a few other people launched the company in January of 2011. We now have 240 employees. It’s been a lot of hiring and a lot of growth. We are largely profitable and running cash-flow positive. The compound annual growth is huge. EverQuote is the largest online insurance marketplace in the country. We see about seven million unique visits per month of consumers who are looking to find the right insurance. We connect them to 7,000 different insurance agents and 100 carriers. It’s been an amazing ride. It’s the first large-scale data driven marketplace on the internet.
Are most employees in Cambridge?
Seth: We have 230 in Cambridge. About 120 are either data scientists or engineers. It really is a data and software company.
When you first took the CEO role at your previous company, did anything surprise you coming out of an engineering background?
Seth: Just about everything surprised me about it! Some people are naturally good at managing people. I’m not one of them. I think managing people is very difficult. It was a surprise at how many challenges you have running a business that are people related. This is especially true in tech where there’s just a ton of opportunity and it’s about getting the people and the people management right. This was a big lesson for me as a CEO.
Tomas and I have focused a lot here at EverQuote on culture. It’s not just about people but people who like to spend time together, work together, and have fun. Our culture has been built around people. It’s made the journey very different for me.
What were your influences in trying to build that people culture? Did you use any models to develop it?
Seth: In terms of the data science part of the business, we inherited a bit of that. We launched EverQuote out of a local accelerator called Cogo Labs. Their culture is centered around 100 percent transparency. This means seeing what every individual is doing and being able report on revenue and profit on a daily if not hourly basis. We adopted that at EverQuote. That’s very different from our prior businesses. We look at revenue and profit on a per click basis. It’s been very powerful.
Our level of transparency based on individual ownership has been a big cultural shift. We’ve learned to trust people of all ages with no bias. We have a ton of young people working here. I’ve learned that I should be comfortable working for someone who’s 27. They have a lot of insight, especially around the internet, that I didn’t have. The notion of not ordering people by age and experience but really by talent and almost raw intellect is especially rewarding in a data driven business.
Especially in biotech and in software, seniority is traditionally what matters. But look at Zuckerberg and these super young internet guys. We reflect some of that where there are young people running huge swaths of the business. They are doing it better than I ever could, and I’m overjoyed by it.
You mentioned transparency. Is that a custom system you all have built?
Seth: It is for us. There are components of the business where we use off-the-shelf systems such as Salesforce. We monitor almost any activity a human being can have at the company. We have NOC walls of our marketplace of real-time arrivals, revenue by team, sales goals, etc., instrumented and made available to just about everybody.
It’s made for an amazing culture. There’s not a lot of argument over what we should do. We literally just say, “Hey, let’s try that and see if we get a lift in the business.” It’s enabled a very test-driven culture and reduces the amount of he said/she said that I despise. It’s created more objectivity and fluidity in decision-making than I’ve ever had in prior businesses. I don’t want to ever go back to a more subjective approach. A data-driven approach is a great way to run a business.
What do you tell a new employee if they ask what do you do as CEO?
Seth: Whatever it takes. Whatever needs to get done. Where do I spend the bulk of my time? 1) On the data side looking at numbers in excruciating detail; 2) I focus with my partner Tomas on the products for both consumer and advertising; and 3) An increasing amount of my time is spent being a cruise director to make sure a bunch of people, especially millennials, enjoy themselves at the company. Ensuring new employees are having fun is really a part of my job and something I do quite happily. There are lots of opportunities for talent, especially in tech. If you want to engage best talent, you need to want them to come here and stay here.
If you could go back to school, is there anything you’d do differently?
Seth: Yes, I would go back and take statistics, specifically machine learning, and more coding classes than I did. MIT gave the worst, most commercially irrelevant coding classes. I had to self-tech myself Python and others. But I would focus more on statistics than coding, even if you get an English degree. We have a lot of great analysts who are English majors who taught themselves statistics and coding and are doing extremely well. It’s important to learn at least a few commercially relevant coding languages.
You’ve mentioned millennials several times. How are they different from the previous generation?
Seth: I grew up in an environment where you salute the flag: If your boss says “do it,” then you salute and do it. If they stay late at work, you do too, even if you have nothing to do. A lot of older managers have gotten it wrong around millennials: They’re not that formal. They don’t salute the boss. They are more comfortable questioning authority. They are self-servicing around information. They expect more flexibility. If they don’t have something to do, they’ll be out. On the flip side, they are way more efficient. They get a ton done. If you give them flexibility and respect as peers, the rewards are immense.
There’s a movie called “The Kids Are Alright,” and I give a talk titled that where I discuss how to adapt to the way millennials like to work. As I said, they are more flexible and less formal. They work their asses off and are just rock stars.
So the kids are all right Joel! Many managers out there are fearful or frustrated working with millennials. I feel the exact opposite. The experience is making us very successful. I am very grateful to have the opportunity to work with these young folks.
Maybe these managers are a little jealous of millennials.
Seth: There may be a little bit of that. We joke around and call ourselves “elderly internet entrepreneurs.” We know there’s an age difference and try to make light of it. We wear sweatshirts around the office, almost as an ironic statement. I’m in meetings often with someone who’s telling me what to do in a particular aspect of the business, and I realize I graduated from college before this person was born. You have to get used to it. You have to muscle through it. As tech accelerates this will become more and more true.
What trends do you see in your part of the world that would be generally interesting to CEOs?
Seth: I think there are some big trends not so much specific to insurance but to the Internet advertising world:
1) For the first time maybe ever the internet audience is equal or identical to the general TV audience. Five years ago the consumer you would market to offline was different from the online consumer. Now they are identical. Social media and especially internet videos have dragged in all consumers to the internet. All CEOs should be aware of this.
2) There will be a massive shift almost 100 percent in next three years to individually address and personalize insurance for people. For example, addressing general U.S. consumers or wealthy people in the Northeast is an old way of thinking about your advertising. The internet is enabling you to customize the experience for each individual. You can customize ads, products, and pricing to maximize your click-through or conversion or buy rate. It opens up whole new world to targeted advertising and micromarketing. This is very powerful.
3) If you don’t have data scientists who are functionally growing your business in some area, you are missing out on a vast opportunity. I don’t care if you’re Exxon Mobil or running a restaurant. You should be leveraging data at least in customer acquisition and retention programs and in advertising online.
What other companies you would say are capitalizing on the customer experience?
Seth: The Facebook platform is amazing. EverQuote is a big partner of theirs. Ditto with Google. Amazon is killing it by customizing the consumer experience. The offers you receive from them, even your pricing, is designed to drive sales and long-term value. Your experience on Amazon is very different from mine. It’s driving long-term value and revenue using internet and data sciences. Any fast-growing, successful company is using some sort of individual marketing or sales program based on data.
What’s the value proposition for EverQuote?
Seth: We’re creating a place where folks can, in a relatively easy and simple way, save an average of $536 a year. That’s a good chunk of change for most Americans. They are shopping their insurance in our marketplace not just for savings but also to find the right insurance. We also have an interesting and fast-growing app called EverDrive. It’s a social safe driving app. It’s not linked to selling insurance. It’s a cool way to measure how safe a driver you are and compete with friends and family to be a safer driver. You get some awareness around driving habits, whether it is phone distractions, speeding, braking, etc. We have crossed 250,000 app users and are growing very fast.