Lemonade CEO Sees Path To Profitability After $319 Million U.S. Debut

published on July 17, 2020

How did you weigh going out right now in the middle of a pandemic and a recession Emily great to talk to you it's been an exhilarating day but I have to tell you that the performance of lemonade over the course the last few months has been little impacted by the pandemic much to

Our surprise so that the business has proven itself to be more resilient than you might have imagined or we might have feared and a lot of the key performance indicators that we've been tracking for a while that where we're on an upwards

Trajectory continue to despite the pandemic so the health of the business has proven strong and resilient and that's allowed us to go public shares trading up now almost a hundred forty percent above the initial price that's

Great in terms of positive momentum but are you concerned at all that maybe you under priced or were too conservative given the money left on the table honestly where our young company would be in a market less than four years and

We see ourselves as having a journey of 20 years of growth ahead of us which is why we went public now we thought the public markets are really the place on which to build an enduring iconic company we're not going to look at what

I chairs do in a number of hours or minutes we're really going to look at building value for years and hopefully decades to come and we'll measure against ourselves ourselves against that rather than against a few hours of share

Performance however exhilarating those have been so speaking of the long term one of lemonade selling points is just how quickly you deliver quotes how quickly you pay claims that said you're still not profitable what is the

Timeline for profitability so we do feel that this is the time to make bold investments that there is a window of opportunity now that may be the cheapest time in the next hundred years to build the reincarnation the 21st century

Incarnation if you like of what a modern digital insurance company can be and given the size of the prize making bold investments now make sense that said we already see a path to profitability our losses per every dollar sold have been

Shrinking pretty rapidly so we lost about two point four dollars and 2018 for every dollar and that dropped to one point four in 2019 to 70 cents in the first quarter of this year all the while our marketing

Efficiencies have doubled over the last 12 months so I do think there are indicators to suggest that the investments that we're making will over the long term produce real returns I wonder though we've seen so many tech

Companies invest a lot of money for the long term and given the environment we're facing right now we've seen a lot of companies have to pull back Airbnb uber lyft you know massive layoffs and more uncertainty ahead so I wonder if

Conserving cash right now is something that you're also considering you know when the pandemic hit and the lock down began we did that we took our foot off the pedal and waited to see what would happen and when we compared the 30 days

Of April of this year which was really the height of the pandemic and the lock down to the 30 days during the same period last year we spent a third fewer dollars even though our business was twice the size in terms of marketing but

There's marketing efficiencies that was so great that we produced 130 percent more sales so actually we continued to grow even as we took the pedal of the metal and that embolden us to go back into a more of a

Growth mode in fact we've increased our headcount by about 20 percent during the lockdown so as I say I know that the pandemic has affected many businesses in a very tough way has been helpful to some businesses for lemonade we've

Really seen a continued up into the right progression which began before the pandemic has continued during it and we hope that signifies that it will be able to continue after the pandemic as well Softbank owns a 20-plus percent stake in

The company given all the struggles they've had over the last year what's it been like working with them and through this IPO process Softbank have been just the dream investor for us they really have now I

Know that they've taken a lot of hits and other companies and in public perception but if it wasn't for reading the papers just looking at what we know of our relationship with them they've been stalwart supporters they supported

Us throughout this IPO they supported us beforehand and we're really proud to have them as shareholders meantime insurance claims are down to record levels given the pandemic you've got folks out there who can't even make

Rent let alone pay renter's insurance whom who maybe aren't moving right now how do you see growth playing out over the short-term as you know economy start to reopen but in fits and starts and we're seeing a resurgence of the virus

Around the world yeah absolutely and we try to help out in a variety of ways so as I say that the core business has been resilient notwithstanding that and we've done a lot of things in terms of allowing our customers to delay payments

Etc really tried to make every accommodation needed for our customer base during these rough times what we also do laminate is unusual because a portion of our profits go to nonprofits we are a public benefit corporation

We're certified be called and once again it's actually right now in July we have a giveback day where residual premiums are given to causes of our customers choosing and while when the pandemic hit we wrote to all of our customers and

Asked them if they'd like to channel those monies towards kovat relief and tens of thousands of them did that so we're really glad to say both in terms of taking care of our customers and our customers being able to take care of

Their communities we're trying to do our part so last quick question we've got about 30 seconds left what's your global plan I know you're also in Germany and in the Netherlands yeah so the fabulist thing

About insurance is that it generates companies that can last a hundred plus years and do tens of billions if not over a hundred billion dollars a year certainly a price worth fighting for we're in the early innings we're four

Years old we've got a lot of work ahead of us but we do want to continue to expand so globally we are now in Europe we launched Germany we launched the Netherlands during the lockdown we're expanding throughout the United States

And we hope to expand into new customers new geographies and new products in the month years and decades ahead

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