During the 2021. North Coast Ventures Annual Meeting, NCV’s Managing Director Todd Federman speaks with Tricia Griffith, President and CEO of Progressive, about the insurance company’s strategic trajectory, changing economic trends, and interactions between startups and large-scale, public companies. In addition, Tricia discusses the launch and ongoing work of Level 20, an innovation program and business incubator that collaborates with early-stage ventures.
Listeners can expect to learn about Progressive’s role in the local and national startup ecosystems, emerging trends with which Progressive is currently grappling and Level 20’s future goals.
Watch the video or read the full transcription of the session below.
- Todd Federman, Managing Director of North Coast Ventures
- Tricia Griffith, President and CEO of Progressive
- “When I pass the baton over, I want to make sure that the person after me has a really great game plan.” - Tricia Griffith
- “What Remesh has done, especially at Level 20, is help us understand how to bring the qualitative data to quantitative data quickly.” - Tricia Griffith
- “My goal is to act like a startup to consumers and get those insights from Remesh and even our media buys in house to understand consumers - what they want, what they need, and what they’ll want to buy from Progressive.” - Tricia Griffith
- “Progressive is a technology that happens to sell insurance.” - Tricia Griffith
- “If you [approach innovation] right you will fail, and that is just part of it. You can’t ever be really hugely successful unless you’re out there on a limb, and then you can always step back.” - Tricia Griffith
Todd: We are back at Progressive and pleased to welcome Tricia Griffith, the CEO of Progressive Insurance. As you may know, Tricia is a thirty year veteran of the company and rose through the ranks starting as a claims representative. She held a number of senior roles including head of HR, which is an unusual stop on the way to becoming the CEO of a Fortune 500 company, but a stop that Tricia credits with giving her a lot of perspective that helped Progressive turn into the company that values and established a culture in diversity and inclusion - one that was recognized by the Wall Street Journal just a year ago as the number one company in the country for diversity and inclusion. Tricia has overseen tremendous growth at the company in her tenure as CEO, and was recognized as the first female businessperson of the year by Forbes Magazine two years ago. So please join me in welcoming Tricia Griffith.
Well thank you, Tricia, I’m sure you can hear the roar of the virtual applause in the background! We are happy to have you here, and I might just start out with a question about why you are here. You’re the CEO of a 50 billion dollar publicly traded company with forty thousand employees, and oftentimes the CEOs of those companies don’t tend to think about the innovation ecosystem, the startup world, or the early stage investing world. So why’d you agree to be here?
Tricia: Well first of all I’m here because Jim Haas works for us, and he’s an investor and a great guy and super innovative, but that’s not really the reason. I would do this regardless. I’ve always seen Progressive as an innovation company. We’ve always been a technology company, a data driven company, and especially in the last three of four years and when I got this job almost five years ago, I really started thinking about the future and making sure that I didn’t lose sight of changing technologies, the competition of insurtech and fintech, and to make sure that I didn’t have my head in the sand. So as I thought about our long term strategy, that had to be a big piece of it. Initially I thought well I can do it myself, but as the company grew I realized that we needed to formulate a whole team that thought about this all the time, and that’s really how I think about innovation and startups and investing. So that’s why I’m really happy to be here!
Todd: Awesome, and was that line of thinking the impetus for Level 20?
Tricia: It was the impetus for the Strategy team, so my very last interview for the CEO role they said “what will you do with the company in the first several years?” And I started thinking of it with the McKinsey construct, so the Horizons [read more about Progressive’s Horizons in a 2018 Letter to Shareholders]. I knew we had a lot of runway in terms of more private passenger auto, more homeowners, we’d bought a homeowners insurance company in 2015, but what about the other Horizons? So I thought about Horizon Two in understanding the adjacent businesses we could have. So I’ve got Execute [Horizon One], Expand [Horizon Two], and then the strategy team was Explore [Horizon Three]. I looked for a leader of the strategy after I’d gotten the CEO role and ended up hiring Andrew Quigg, who has been with the company for quite a while, has an immense amount of experiences around the company, and then he has set forth corporate development, understanding what we call runways, so what’s happening in the world, and then Level 20, Ozzie Hardman runs that, is really the incubator downtown Cleveland that is starting to think about how we can play and different areas and can we win. To me that’s been an important part of my tenure. When I pass the baton over, I want to make sure the person after me has a really great game plan and it wasn’t just oh we grew a bunch more auto. That we really grew across all three Horizons, and for me the important part of that is investing concurrently to make sure we have an enduring business.
Todd: So you mentioned the Horizons… As investors when we think about the future we often think in terms of secular trends. What are these big things happening? Whether we like it or not we know they’re happening, though we might not know how quickly. And when I think of the secular trends that must be in the back of your mind, they’re probably not rocket science. We’re thinking about gig economy, which is here today, self driving, which is here between now and five to eight years, and then the future of vehicle ownership. So how do you balance these different worlds which will be here very quickly?
Tricia: Well I think you look at it differently depending on the trend you talked about - those are exactly spot on. So for the gig economy, we wanted to be a part of that and wanted to be able to monetize that so we work very closely with both Uber, UberEats and Lyft on making sure we insure the drivers that are on their platform. We continue to grow and understand miles driven and of course last year that dipped precipitously so we wanted to make sure that we are continuing to work with the gig economy and insure that area, so that’s been a big part and a very successful part. For autonomous cars, that’s really how Level 20 started. I said to Andrew, think of 20 years from now, what do we look like? Can you create three or four or five businesses, not millions or hundreds of millions of dollars, but billion-dollar businesses that we can grow into and assume that cars are Level 5 autonomous. I think it’ll take longer than most people think, and if you look back at the records you see that in 2015 there were headlines that said all cars would be autonomous. That said that it’s not necessarily Level 5, you know, how safe can Level 3 cars be and Level 4 cars. So we’ve got to be thinking about the whole adjustable market in the private passenger auto segment, and that’s really why we thought about Level 20 and Horizon Two even to be thinking about other areas that we can monetize to continue to have a really robust business. If i had to bet, I would think that autonomy might come a little faster in the commercial area, because there is some limited talent in terms of drivers, and think of it as on a freeway - you could platoon, one vehicle after another. I think about that as well because we have a pretty large commercial auto business.
Todd: Terrific. Tricia, as you know we have a company in our portfolio, Remesh.ai, which is a terrific company, world-class business, with customers like PNG, Kraft, J&J and Progressive. It’s been a lot of fun to see them work within the Progressive ecosystem and see them grow, and I imagine there are thousands of startups that knock on Progressive’s door every year. So how do you think about the pros, cons, and just approach to have a large organization like Progressive be in a position to work with these fast growing but sometimes fledgling startups?
Tricia: I think it’s an important part of who we have been and who we will be. For us, working with Remesh has really added value. You don’t do it just to be kind and be nice, you want to add value to your organization. What Remesh has done, especially at Level 20, is help us understand how to bring the qualitative data to quantitative data quickly. When talking with Ozz today, it’s been really helpful for us to be very efficient in understanding what consumers want and whether it’s through the polling process and being able to change on a dime the questions that you ask or even being able to show the participants visuals. To be able to say if this looks like this, what does that mean to you. In Azadeh’s world, we are just at the very beginning of thinking about businesses that we think can be really big but we need to understand it from a consumer perspective and Remesh has been really valuable with that for us.
Todd: Remesh connects to the advertising and the marketing spend, which is a huge portion of Progressive’s budget. I read a billion dollars a year, and I imagine you must learn a lot from using all these different channels, these levers, direct marketing, seeing responses. How do you think about the value of that data and the insights that you’re learning on how to talk to consumers?
Tricia: You’re a little bit low on the budget but I’m not gonna go in but probably the last time you read it it was accurate, all those insights are so important because we want to understand share of wallet in each household, we want to understand the needs and will people want those, and obviously some of the things that we’re working on in Level 20 is really direct to consumer. We’ve separated them from the mothership so they can really think about ease of use and that’s how I think about startups. I think about the fact that they don’t have the legacy systems and they can be really nimble and that is going to be expected of all consumers. How can Progressive be that way even though we’re over 80 years old? That’s really my goal - to act like a startup to consumers and get those insights from Remesh and even our media buys in house to understand consumers - what they want, what they need, and what they’ll want to buy from Progressive.
Todd: You mentioned the future of Progressive, the different Horizons, and where Progressive is placing bets, but I also saw that Progressive recently closed an acquisition of what seems like a traditional property and casualty insurance company. Can you tell us about how you’re focusing on the future? How you’re continuing to grow the core of Progressive?
Tricia: I cant talk too much about that acquisition because it hasn’t closed, so I don’t want to talk too much other than what we’ve said publicly, and that is it helps us with the bigger addressable market on the commercial side, and larger fleets and workers comp. Other than that, I can come back next year once it’s closed and tell you a bit more about the transaction.
Todd: I’ll take that as an invitation to reach out again! That’s great. So these big publicly traded companies like Progressive are complex beasts. 20 years ago someone would have said that Progressive is an insurance company. Today you might say that it’s a data company, an analytics company. What is Progressive at its core today?
Tricia: I would say, and I believe Peter Lewis would say this and his father started the company in 1937 and Glenn Renwick my predecessor would say that we’re a technology company that happens to sell insurance. It used to happen to sell auto insurance, and now it’s many different lines of insurance. At our core, we’re data driven, analytical, our segmentation is industry-leading, and really using data to understand how to profitably grow.
Todd: Awesome. Any ideas on what it takes with the ecosystem here so that we can generate the next three or four Progressives within the next decade?
Tricia: I think a lot of what you’re doing is the startups that think about it differently. When you talk about Remesh, when I think of the focus groups that I’ve been a part of in the past, it’s really hard to find participants. Sometimes they show up, sometimes they don’t, sometimes it’s just for the money. There’s usually seven or eight people in a room, I’m behind the glass, and I’m trying to think of questions. The person who is facilitating doesn’t necessarily know insurance and doesn’t have the algorithm behind it to say go this route, or here’s the quantitative stuff coming out of the qualitative conversations. If you had said two years ago we’re going to do focus groups, it’s going to be online and here’s how it’s going to work, I would have thought no because you have to be there in person. I think COVID did help to help innovation in terms of how you can do things differently, and frankly, better, and so I think having a bunch of startups like that, some will fail because that’s just the beast, and some will be extraordinarily successful, but us being a part of that and being able to give that feedback from a big corporation I think will be really important. We’re very supportive of startups and the whole ecosystem because it’ll make us better.
Todd: I’m curious, where does failure fit into the culture here at Progressive? I read recently that Jeff Bezos had a quote when the fire phone died and lost 175 million dollars that “that was our biggest screw up so far and it’s not gonna be our biggest screw up in a few years.” Embracing failure.
Tricia: I would’ve said that we didn’t embrace it as much until we started the Strategy team. What I said initially to Andrew and his team was if you do this right you will fail, and that is just part of it. You can’t ever be really hugely successful unless you’re out there on a limb, and then you can always step back. Obviously we’re a publicly traded company, we have shareholders, so I care deeply about being a steward of those dollars. But I also care about growing it on behalf of every stakeholder and our shareholders as well. I think we’re really building in failure and they know that’s an ok thing, and that they’re going to especially at Level 20. They’re going to try things that seemed great and just didn’t play in Peoria.
Todd: Last question, Tricia. It’s always hard to say who’s your favorite child, but Progressive has so many interesting commercials and characters. Which one’s your favorite?
Tricia: It’s so hard because in any given time I find it differently. Right now I’m a huge fan of Dr. Rick! Mainly because when I was COO my CMO and a few of us sat in my office and we started talking about not having a reliance on Flo or the superstore and really spreading ourselves out, and we started thinking about having a character that you become your parents when you buy your first home, and it’s funny because it’s true. So many of those lines we all just brainstormed and they’re things our parents said. I have an affinity right now for Dr. Rick because it’s just funny to me.
Todd: Well I’m right at the age where that rings true and is scary so I also enjoy those. It’s hard to balance between that and Baker as a Clevelander, right? That’s gotta be high on that. Tricia, with that, I’ll thank you once again and turn to camera one here and just mention to everyone at home to keep an eye on your email. Very shortly, the investors in our fund will receive an email that has some additional info on the funds’ performance over the past year, including videos of many of the companies that we were not able to include in the program tonight, and everyone who registered will receive an email with a survey link. We’re hopeful that everyone will give us your candid feedback. We have a number of virtual events coming up this year and we absolutely do read, look at and incorporate the feedback that comes in so please do share that with us, and with that I will thank all of our presenters once again, thank everyone for their support, and we look forward to a terrific 2021!