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Karn Saroya: Democratizing property insurance

Karn Saroya is the co-founder & CEO of Cover, a YC-backed insurance technology company that simplifies the process of getting property insurance and focuses on underserved communities.

About this episode

Karn talked to us about the inefficiencies of the property insurance industry and explained how introducing things like financial transaction history and elements of behavioral data results in a better risk segmentation, fair prices, and in many cases - access to the insurance in general.



Karn also discusses how he left a career in finance for startups, and shares details of developing and selling StyleKick, a high-end fashion e-commerce business, to Shopify. Karn also details what made them decide to focus their efforts on young people and under-banked communities.



Karn shares his thoughts on building a diverse workplace and challenges that startups face during the hiring process. He also talks about building a business with his wife and how that influenced their fundraising process for Cover.

Episode transcript

Greg Miaskiewicz:

So, one question that I've been meaning to ask you, you started a company with your wife.

How did investors react to that? Because I worked for a husband and wife team, I'll say personally, it

was somewhat chaotic, in the sense that there wasn't a standard amount of pushback that you would

expect, that like a professional level.



Karn Saroya:

Yeah. I hear that.



Greg Miaskiewicz:

Like one person would bend to the other's person in the fight without a normal discussion about pros

and cons, or things like that. That was a little chaotic from a managerial perspective. And then I know

the VCs, like probably discounted the valuation they could have gotten by like 20% or 30%. They got the,

you're married discount because it's a risk you might get divorced. This is 10 years ago. Their attitudes

might have changed. I know during the pandemic, a ton of couples started companies.



Karn Saroya:

Yeah, yeah. It's a fair set of questions. I think the context is I've been together with my partner for a very

long time. And we are now two businesses and an acquisition in. We do very, very different things. And I

trust her within her domain space. She trusts me within my domain space.



Having commingled professional and personal risk for so long, we're also probably experts now at

conflict resolution internally, and making sure that we're good at not making sure it spills over into

either context, either personal or professional. That being said, it's not perfect, right? And no one is.

We've gotten to a point where we're super functional and clearly have been doing this long enough and

well enough to get to where we're at today.

On the topic of investors, right? I think it's possible that you wouldn't see it looking at our cap table, butit's certainly possible that there is a discount described to husband, wife, or partner related couples. Iwill say it's probably come up three or four times in the history of my own fundraising history. And usually, it's a simple, "Hey, we've been working together for a very long time or do very different things." A lot of what we just talked about. And they don't think about it again.

It may be that I'm treated differently from how Natalie is as well. I can almost guarantee you that as a founder, she's treated fundamentally differently from how I am. And I've seen that in action at investorparties, where folks will walk up to her and say really ignorant things like, "Hey, have you met Karn from Cover? We're thinking about investing in him or have invested in him." Not knowing that she's one ofthe co-founders of Cover. Really ignorant stuff happens all the time. And I think that's probably the more challenging stuff that we face. And I think it's specific to her as opposed to us as a couple.
QUESTION • 3:45 min watch
Can running a startup along with your partner influence fundraising?
Greg Miaskiewicz: What are some of the challenges you encounter dealing with providing insurance coverage? Do you have to get licenses on a state by state basis?

Karn Saroya:
Yeah. So, it's a heavily regulated industry, right? And one of the unique aspects of insurance in the United States is that regulation is done at the state level. So, it's not like banking. You can get a federal banking charter, which up until a couple of years ago, or very recently, it was very difficult to get. But having an insurance company set up or having licensing as an agency is a state-by-state process. Again, candidly, it's not as difficult as a setting of a bank, but it is a substantial effort, both from a time and monetary perspective.

Insurance companies have completely unbridled. I'm sure there will be bad actors that discriminate inclear ways, overcharged their customers. The insurance regulators are really there to make sure thatdoes not happen, as a starting point. And then to make sure that the insurance companies that offercoverage and policies can remain solvent, given what their rates are. Because at the end of the day,insurance companies are actually just public utilities. They're supposed to be effectively a service to thepublic, the diversification distribution risk.
QUESTION • 2:02 min watch
What are some of the challenges of providing insurance coverage?
Greg Miaskiewicz: How do you approach, I guess, the issue of diversity and hiring? Do you do anything in particular to try to get a more diverse pool of candidates?

Karn Saroya:
I would probably go on a limb and say that we're incredibly diverse. We're actually, the entire founding team is minority. And we have a female co-founder. I have my wife. The executive team is relatively diverse. We do go out of her way to try and hire a female technical candidates to the extent that we can. It's just not that there isn't supply. It's just a difficult thing for us to do as an early stage startup to beable to pay as much as, at least historically have been able to pay what others have been willing to pay. But super, super supportive of the non-binary folks on our team.

There's not really much else I can sayabout that. It's just like, hey, we're a set of diverse co-founders from all over the place, staunchly anti-racist, as opposed to going in the direction of having regimented programs dedicated to diversity. I think we're just naturally advantaged being a team of pure minority founders and attracting other minority talent.
QUESTION • 3:35 min watch
How do you approach the issue of diversity in hiring?

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