Why Richard Joffe is shaking up home insurance

Tech entrepreneur Richard Joffe has big ambitions to shake up the home insurance sector.

He talks about founding his latest disruptor, Honey Insurance, and the lessons he learnt along the way, from Silicon Valley to Sydney.

Honey uses artificial intelligence and smart sensors in the home to reduce premiums.

Tell us about your early years.

I grew up between South Africa and Canada, and my family has always been entrepreneurial.

My grandfather was tinkering with electric car ideas in the 1980s and when I was a kid my mum created children's games while my dad launched a business from home. From as far back as I can remember, I've always wanted to be an inventor.

What were your formative money experiences?

We moved to Canada when I was 12 and I had a typical immigrant experience.

My parents were an amazing team, and they juggled long hours to pay the bills while raising three kids without any support. Money was tight for many years and this rippled through everything in our lives.

My father once told me that there were only two things he could guarantee in my life: a family name that makes me proud and an education.

Everything else would be up to me to build and create. I know how much my parents sacrificed to give us a better life, and this has always been a cornerstone of my work ethic and my obsession with making value-conscious decisions.

Before moving to Australia, you started and sold two successful tech companies (Park Assist and an AI marketplace called Stella.ai). What did you learn about launching new ventures at this stage of your career?

I've come to the conclusion that there are a small number of things that have an outsized impact on the success of a new business.

First, cohort matters. If you surround yourself with the best in your industry, these people will continue to do great things in their career and that whole group raises each other up. The early teams at PayPal, eBay and Amazon have all gone on to do great things together.

Second, it's critical you pick a top quartile industry in terms of profit margins and growth.

You are statistically better off being average with an ecommerce company than the best in a retail business. Finally, co-creating companies with your customers by having them as investors or advisers is the best way to design your products and reduce execution risk.

What led you to move to Australia in 2019 and what were your initial impressions?

I moved to give my kids a stable childhood and I can't imagine a better place than Australia to grow up. My initial impressions were that Australians are far better than they give themselves credit for.

They are early adopters of technology, there is strong engineering talent and there is a culture of having a fair go. The only challenge is getting a big idea off the ground since most industries are oligopolies, so it's hard to compete against that scale in the early days.

But if you can get over the hump and hit scale, then Australia is an unusually attractive country to be an entrepreneur.

I understand you could have retired. What motivated you to continue in the start-up space?

I am fortunate to have found my calling, so launching a start-up feels closer to play than work.

I'm not immune to the stresses and fears of failure that haunt all entrepreneurs, but I'm not sure I could do anything else. I suppose it's the same for athletes, artists or scientists - there is no finish line, you are simply doing what you were put on the planet to do.

What gaps did you see in the Australian market that led you to launch Honey Insurance?

Insurance companies in Australia are all generalists that offer dozens of products typically across dozens of countries.

As a result, I saw an opportunity to be famous for a product area, home insurance, and create a better experience for customers.

We've obsessed about how to digitise the product and reduce risk for customers by giving them free technology and services to keep them safer. Ultimately, it became a win-win and no other company locally was focused on innovating around technology and business model.

What challenges did you face finding initial investors?

We had 92 investors say 'no' during my first capital round, and I went to 306 investors during our second investment round.

Without exaggeration, it was 80- to 100-hour work weeks for one year in order to get it done, which is about a 99% rejection rate.

My mindset going into all these meetings is to try to learn one new thing from every investor. It might be about how to improve our business model, introductions they can make to new team members or industry insights.

I think if you're relentless and get a little smarter with each meeting you'll ultimately get lucky.

Other significant challenges you didn't anticipate?

Home insurance is exciting to me, but it turns out to be a grudge purchase for most people.

I thought we would be able to succeed selling the product through some unique channels, such as energy companies and home builders, but it didn't work. If you want to create and innovate, you have to love the experimentation more than simply winning.

What are your ambitions for Honey Insurance?

We have a five-year goal to have one in 10 Australian homes protected by Honey with thousands of claims avoided every year through smart technology and services.

I also have a more personal goal, which is to see the team at Honey ultimately go off to create their own start-ups and help drive big ideas forward using the skills they learned in our business.

Have you identified other sectors ripe for disruption? 

I think there are lots of exciting ways to leverage generative AI to give people data in real time to service customers better.

For example, imagine a wealth manager could see customised and unique recommendations to share with somebody who is retired based on their personal risks, interests and real-time changes in world events.

Or perhaps a teacher in a developing country having a virtual assistant so they can educate students in a similar way to teachers in Australia, despite them only having 10% of the training while managing classrooms with five times the number of kids, which is an impossible task.

Any advice for young tech entrepreneurs in Australia?

Don't let perfection stand in the way of progress. I meet a lot of founders who think they need a perfect plan and that is never the case.

Pick an industry that is growing, a problem you understand, and find yourself one customer who wants to work with you to solve the issue.

Then crack on and embrace the grind. There is never a perfect time or plan, and I'm convinced half of success is showing up and trying.

What's the best investment you've made?

The best investments I've made have been when I've bet and invested into great talent rather than picking an impressive resume.

There have been a handful of people I've worked with who have changed the outcome of all the companies I've founded.

They were great 'athletes' and hands down the best investments I've ever made. There is also no better feeling than helping someone win who deserves it, so in the end it was a great investment for them too.

Worst investment decision?

In the first company I started, we had a well-known client, but I never did the maths on the true cost to service them.

I was so smitten with the idea they had chosen to work with us that I didn't want to admit they were sucking up 50% of management's time, destroying our product roadmap with customisation requests and killing our ability to support our loyal and profitable customers.

We should have fired them after the first project, but I insisted we invest into the relationship for several years. It cost us millions of dollars.

Your greatest professional achievement?

I'm proud to say that customers have funded all three companies I've started. I think it's hard to convince partners to put their chequebooks and reputations on the line to help you solve a problem, and it's made the past 20 years of business building so much more interesting.

There is nothing I love more than co-creating new ideas with customers and bringing those concepts to life together.

What about your greatest personal achievement?

Rebuilding my life in Australia was really tough, but I decided I didn't want to be a victim, so I've worked tirelessly to try to build the life I always wanted, which has paid off.

I'm now remarried, to an amazing woman who loves me for who I am along with all my baggage, the kids are in a safe and settled environment, and I've been able to pull together an amazing group of people at Honey who are world class and doing a fabulous job shaking up a big industry.

Overall, I wouldn't change anything in my life.

How would you spend your last $50?

I would go to an old bookstore for the day and spend $20 on a good biography. Then I'd spend $20 on red wine and $10 on some baklava to make it all the sweeter.

Finish this sentence. Money is good for...

... having experiences you will never forget.

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