(Image source: Drone Nerds YouTube channel.)
In times of industry disruption, companies may face strategic decisions about the best way to bring value to their customers. This is true of both insurers and suppliers, but a good example was recently provided by property intelligence vendor Betterview’s decision to exclusively license its drone roof inspection software and services to DroneBase—and thereby effectively get out of the drone business.
Betterview was founded in 2014 to solve the problem property/casualty companies had in accessing reliable and accurate roof data for underwriting purposes. As commercial drone adoption was increasing, Betterview’s founders David Lyman and David Tobias saw drones as the perfect tool to capture high-resolution imagery of roofs. Within two years their new company performed over 6,000 roof inspections and saw usage of its drone software and services steadily climb to over 90 customers.
“As our drone inspection business was growing, more and more of our customers started asking us if we could help them to triage their drone inspections,” comments Lyman in a blog about the decision to get out of the drone business. “While decreasing costs improved ROI for drone inspections, our customers wanted to use drones for high ROI use cases.”
However, Betterview’s team found that it could use high-quality imagery from satellite and fixed wing aircraft to answer most of the questions our customers were asking. Not only was this much quicker than ordering a drone inspection, but it was also more cost-effective and scalable for Betterview.
As a result, the company created a platform and began testing it with its customers who responded very positively, according to Lyman. “Customers loved the information they were getting and mentioned how it could be used in quoting, loss control/underwriting, catastrophe modeling, and claims management,” he says. “With this feedback, we added more AI roof detections, integrated more third-party data sources into our platform and added new tools.”
Doubling Down on an Alternative Strategy
In late July of 2018, Betterview launched its risk management platform under the product name Property Profile. Lyman relates that as the company’s customers started seeing the platform transform the way they were doing business, Betterview’s leadership was faced with choice: “Do we want to focus on drone inspections or our risk management platform?’ While being a lean-and-mean startup has many advantages, we didn’t have the resources to do both,” Lyman recalls.
“It was at this point in time that Dave and I, along with the support of our board, investors, and team, decided to double down and focus on our risk management platform, so that we could fulfill our mission of making each property thoroughly understood,” Lyman says.
When a strategic decision results in happy customers and eager prospects, there’s not a great deal of room for criticism. However, Betterview’s strategic shift raised eyebrows and resulted in some confusion among a subset of customers and some industry observers. Betterview addressed those questions through a blog from which IIR drew for the purposes of writing this article. But Betterview has also enjoyed validation from the analyst community.
Betterview’s strategic departure makes sense in terms of the utility of available technology for the purposes in question, suggests Mark Breading, a partner at Boston-based research and consulting firm SMA. While there is still a place for on-demand or pay-as-you-fly drone services, more of the value has migrated to the analytics on the aerial imagery data he opines. “There are many uses cases for insurers related to understanding the past, current, or future state of a residential or commercial property, based on data from drones, fixed-wing aircraft, and satellites,” Breading elaborates. “Companies like Betterview that are building risk management-oriented platforms that leverage machine learning to analyze and package data, and provide scores for specific insurance purposes, are well positioned for growth.”
In addition to being an astute move in terms of the match of technology to problem, Betterview exemplifies a key strength of startups and a significant challenge for insurers—the ability to pivot. “While dramatic, Betterview is an example of what InsureTech startups bring to the ecosystem —a fierce commitment to creating value, even of it challenges all that came before it,” comments Mike Fitzgerald, Senior Analyst, Celent (Boston).
Bringing creative solutions and new approaches to the risk management opportunity holds great potential to add value to the customer and to society as a whole, Fitzgerald adds. “At its core, insurance more is about managing risk,” he clarifies. “Sensor technologies, predictive analytics, and A.I. are welcome additions to the traditional financial indemnification approach. It appears this pivot supports such advances.”
The ‘Fail Fast’ Imperative
Betterview’s hard decision exemplifies one of innovation’s most important best practices—to “fail fast,” according to Jeffrey Goldberg, Senior VP of Research and Consulting, Novarica. “A company needs to figure out if a project is going to work—or, more importantly, not going to work—quickly so time and money isn’t wasted chasing bad ideas,” he explains. “But innovative companies don’t just need to fail, they need to pivot and evolve, they need to figure out what is working for them and direct their limited resources.”
Betterview’s decision to hand off its drone business to DroneBase doesn’t represent a failure for anyone, Goldberg adds. “It’s one company doubling down on risk management analytics and another on drones, allowing each to focus on core competencies,” he says. “So, perhaps the corollary to ‘fail fast’ is ‘pivot fast’ or ‘evolve fast,’ taking what you’ve learned in one area to make others better.”
Since making its decision, Betterview has not looked back. The vendor quickly got customers in production on the new platform, new commercial agreements in the pipeline, and multiple proofs of concept underway, according to Lyman. The company has since expanded its staff by appointing a Chief Science Officer, it has hired two more distinguished data scientists, announced its Series A funding and its addition of Guidewire’s CMO to its board, and appointed a new Director of Sales. “As we embark on the second half of 2019, we plan to put the pedal to the metal by announcing more commercial agreements, strategic partnerships, new hires, and platform enhancements,” Lyman comments.