Investors love to talk about ‘contrarian’ as one of the standard pillars of VC investment. The logic goes that early-stage startups are a risky business so we need outlier returns to make the model work.
Looking around us, however, we see VCs flocking to the “hot” sectors of the day: cyber, Web3, AI. No doubt there is still potential for unicorns to emerge in these areas, but the odds of real outliers are so much greater if you look left, while everyone is looking right.
When Faye co-founders Elad Schaffer and Daniel Green approached us with a travel tech concept in early 2020 — amidst the pandemic that had ground travel to a halt — we said welcome, you are in the right place.
We recognized that, while it may take years to overcome Covid-19, it also takes years to build an insurtech company in a highly regulated space — so let’s do this.
We offered Faye backing through The Junction, our pre-seed program built to support founders in underserved or overlooked sectors with the guidance, network, and capital to achieve early market validation.
The travel insurance market is estimated at $21 billion and growing. With the pandemic came a seismic shift, changing the perception of travel insurance from a nice-to-have, to a must-have.
Yet, travel insurance is marked by some of the worst customer satisfaction and retention levels of any consumer sector. Travelers may be more aware of the need for insurance, but they also expect instant and personalized services delivered on the go through a mobile app. Faye caters to this need with personalized coverage, real-time travel care, and quick claims processing.
Combined with insurance underwriters’ pandemic-driven willingness to embrace innovation, Faye found its runway for liftoff.
The Path to Profitability
When Columbus sailed off into the ocean blue to prove a contrarian thesis, he didn’t sail blind. He used the stars and dead-reckoning techniques to approximate his location and progress at any given time. Likewise, Faye navigated unknown waters with key performance indicators from Day One
During their first 6 months with us, based on KPIs, the company pivoted from a travel companion service to a full-fledged insurance platform. From that point, the founders oriented their limited resources toward achieving an underwriter agreement and then brokerage licenses across nearly every state. Now, post-seed round with a product live in the market, they are razor-focused on measuring and managing based on unit economics and return on investment.
With large screens mounted around the office, and refreshed on cloud-based dashboards, every Faye team member can see the trends and progress toward profitability as the company charters new territory in the insurance market.
Travel-tech may be hot now but it was ice cold in 2020. Back then, the quality of the founding team made Faye stand out.
What kind of founders does it take to build a contrarian company?
Faye co-founders Elad and Daniel personify what Katherine Boyle recently described as “the trait that is most meaningful yet hardest to describe. It is the fire in the eyes, the ferocity of speech and action that is the physical manifestation of seriousness”.
Their optimism and spirit are obvious on first impression; their seriousness is something we only came to fully appreciate over the year they spent heads down in our office, first ones in and last ones out, every day.
Elad and Daniel followed a playbook they developed and refined at their last successful startup together. While plenty of VCs said no, they relied on each other and the market for validation, attracting other passionate players to their crew to improve the odds of success along the way.
The Faye team now consists of seasoned travel and insurance leaders including Jeff Rolander, former Director of Claims at Allianz, Moran Treiser, who co-founded the growth marketing operation at Lemonade; Lauren Gumport, who built and executed Guesty’s global communications strategy, among others to form Faye’s executive ranks.
With a two-year head start, Faye is now serving an educated customer base with a team combining vision with grit and investment with accountability.
Contrarian bets often look obvious in hindsight; in a few years' time, Faye will surely stand out as another classic case study in outlier success.