Bootstrapping a Virtual Company to $10 Million from Atlanta: Field Pros Direct CEO Matt Anderson (Part 3)

Sramana Mitra: What did you launch with? You talked about the two-sided marketplace. Did you have insurance companies already recruited who were going to hire out of your marketplace? How did you gather the critical mass of adjusters?

Matt Anderson: A lot of insurance adjustment firms were asking to find adjusters. I started with those firms by providing resources to them. That’s the first thing that we did.

We went on to provide the service to insurance carriers. I started as an adjuster and I knew the pain points extremely well. We interviewed hundreds of adjustors. Our mission is about improving the claims experience not just for the policyholders and carriers but also for these adjusters.

We are the only company that takes that approach. Adjusters were eager to participate in our platform because we are able to consider their preferences and consider their skillset. Other traditional companies don’t have the technology or business model for that.

That’s one of the ways that we are able to attract adjusters – building a company or platform that is service provider-centric. People talk about the claims experience and improving it, but most of the time it comes at the adjuster’s expense. Improving the claims experience for the policyholder or improving the claims experience for the insurance carrier comes at their own expense.

The field adjuster is the boots on the ground and the person meeting with the insurer ultimately ends up being the face of the insurance company. We are the company that caters to them. So much of the technology that we invested in beyond the matching was just other items that make their jobs easier. 

Sramana Mitra: What were the economics of the business? If you were to work with a customer, what was the average deal size of your relationship?

Matt Anderson: We experimented with that over time. Some of it was transactional. We had some subscriptions. We had some that were $20 a claim just to do the matches and hand it to the carrier. Sometimes it involved shepherding the claims from beginning to end and that costs hundreds of dollars.

In the early days, it was wide-ranging. Because we were bootstrapped and it was important to generate revenue, we were opportunistic. We would listen to the pain points. We already have the solution and we would tailor that to clients before we had the full-blown product-market fit that we have now. 

Sramana Mitra: You started in 2017, what was the trajectory of your revenue?

Matt Anderson: We did just over $5 million in revenue in 2017. 

Sramana Mitra: Already? So your first year was $5 million in revenue?

Matt Anderson: It was. It was a wild ride too. 

Sramana Mitra: Let me just understand the business a bit. What is your revenue model?

Matt Anderson: It’s evolved. In 2017, we did a lot of different things. We were getting paid for matching an adjustor to a claim. Sometimes it would be a subscription plus a fee for the match. We would also get paid for the full-blown service. We would receive the claim and we would match the claim with the best available adjuster for the claim. Then we would essentially shepherd that claim to closure and we get paid for each of those claims. We get paid per claim and then our direct cost would be whatever we pass on to the adjuster. That is our top-line revenue. Our direct cost is probably around 60%.

Sramana Mitra: The adjusters that you work with are freelancers? They are not on your payroll?

Matt Anderson: They are independent adjusters, correct. 

Sramana Mitra: A large percentage of your revenue is a marketplace commission. The $5 million number is a gross business volume that you did. Your real revenue is 40% of that top line?

Matt Anderson: Yes. 

Sramana Mitra: What happens in 2018?

Matt Anderson: In 2018, we got a little bit of product-market fit. The word about us got out a little bit. We essentially shifted from working with incumbent independent adjusting firms and doing what we consider as enabling them a little bit to competing with them.

We didn’t go to the clients that we interacted with when we were helping, but we stopped soliciting independent adjustment firms because we were becoming a modern alternative to an independent adjustment firm.

We’re calling up more on carriers and partnering less with independent adjustment firms. In doing that, we lost some revenue, but we more than made up for it with carriers and we grew to $10 million in the second year. 

Sramana Mitra: Did anything different happen in 2019?

Matt Anderson: We made a decision to focus more on carriers and growing carriers. That was when we started having employees. In 2017, we had no employees at all. We had people work for us through Upwork or past relationships, but they were paid as contractors.

It was on the basis of seeing how it goes. If it goes well then, they would be hired as an employee. In 2018, we started hiring and started building out the team. We started making the company more professional in 2018. 

This segment is part 3 in the series : Bootstrapping a Virtual Company to $10 Million from Atlanta: Field Pros Direct CEO Matt Anderson
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