An insurtech IPO

Today’s a big day for insurtech (AKA “insurance tech”), which ranks with “Brangelina” as one of the least likable portmanteaus out there.

Root — an auto insurer that has raised $500m+ — is slated for an IPO at a valuation of $6B+.

It’s the 2nd big insurtech IPO of 2020 (Lemon went public in July) and shines a light on what the future of insurance might look like.

The company’s beef with traditional insurance

In his analysis of Root, finance writer Marc Rubinstein highlights that the insurance industry rests on 2 pillars:

• Law of large numbers: Accurately predicting claims is easier with a larger (rather than smaller) book of business — all things equal.
• Risk pooling: The insurance model relies on a larger group of people paying premiums (but not filing claims) to cover claims that do get filed (and result in large payouts).

Root’s S-1 filing essentially says that this mode of insurance is unfair to good drivers that have to pay high premiums to cover riskier customers.

Root’s motto is simple: ‘Better drivers deserve better rates’

The way the company delivers this service is equally simple. A user downloads the Root app, which tracks 200 factors including:

• Standard details (age, gender, ZIP code)
• More advanced analysis (braking frequency, turning speeds, phone usage while driving)

The insurer crunches these numbers and can offer relatively cheaper policies for those who drive like Miss Daisy.

Per Rubinstein, this personalized pricing is indeed “fairer, as Root highlights… [and] can influence behavior positively.”

But… there’s always a but

Quoting the book Weapons of Math Destruction, Rubinstein shows how potentially damaging Root’s insurance model can be.

Instead of balancing society’s risks, personalized pricing can “pinpoint those who appear the riskiest customers and then either drive their rates to the stratosphere or, where legal, deny them coverage.”

If companies like Lemon and Root are indeed the future of insurtech, we’ll have much more complex issues to deal with than an unappealing portmanteau.

Celebrity shouts are coming to a business call near you.

Last week, the personalized celeb video app Cameo announced its first B2B partnership: Users of the Sendoso platform will now be able to send messages from the likes of Michael Rapaport and Jaime Camil to customers and prospects.

Cameo’s multi-pronged B2B attack

Cameo’s chief business officer Arthur Leopold told The Hustle that the Sendoso announcement is consistent with the firm’s mission “to create the most personalized and authentic fan connections on earth.”

As a result of these efforts, “democratization of celebrity access has occurred.”

In the B2B space, Cameo has 2 other offerings in addition to the Sendoso partnership: 

• Promo Cameo: Talent can be booked to endorse brands. “Let’s say a normal Snoop Dogg greeting is $900,” says Leopold. “For $7.5k, he’ll do a shoutout for a local car dealership or pizza joint.”
• Brand Partnerships: Full campaigns that Cameo helps manage. For instance, Activision hired gaming personality Captain Price to do 400 fan shoutouts for a new game release.

Can there be too much of a good thing?

As in, will the value of a Snoop Dogg shoutout diminish if everyone gets a shoutout?

Leopold doesn’t think so: “Think of Justin Bieber. His image is everywhere. But if he walks down the street, he’ll still get mobbed by people to take a photo.”

As unabashed fans of “Jimmy from Linkedin,” we’re rooting for any and all innovations in the B2B messaging space.

Check out (very) related coverage:

• The Hustle’s favorite Cameo ever
• The best Cameo videos from our readers
• An unofficial guide to Cameo’s top-earning stars

Do you remember the first time you bought some Gap khaki pants?

Well, cherish those memories: Per the bankruptcy newsletter Petition, the $8B retailer plans to shut down 350 Gap and Banana Republic stores (30% of all locations) by the end of 2023.

This is part of a broader turnaround plan announced last week that will refocus efforts on fast-growing brands and ecommerce.

There’s a new growth engine in town

In recognition that athleisure pants are 500x more comfortable than khakis or jeans for the WFH life, Gap wants to prioritize its Lululemon competitor, Athleta.

While the brand is responsible for only ~10% of Gap’s $16B revenue, the plan is to open 100 new Athleta stores over the next few years.

Also: The Kanye x Gap partnership could be huge

During his recent 3-hour roller coaster of a podcast with Joe Rogan, Kanye West said The Gap was the “Apple of apparel.” 

Steve Jobs, of course, famously returned to Apple and flipped its fortune around in the mid-’90s. Could Yeezy do the same for Gap?

West — who told Rogan that he stole khaki pants as a teen — has already had a big impact: The Gap’s stock is up ~2x since announcing its partnership with the artist in June.

The halcyon days of khakis may yet survive.

(PS. Kanye name-dropped 70+ people in the podcast. Here’s a list.)