Prior to one of the attempts to climb the summit of Everest, a journalist asked George Mallory why he wanted to climb that peak. He replied: “Because it’s there.” The relevance of this answer didn’t dawn on me until someone asked me the same question.
It might’ve been a totally different setting, but in essence, I feel it was the same. I was guest lecturing at an entrepreneurship undergraduate course. One of the students raised his hand and said: “Why did you decide to start a business in the insurance world?”. I smiled as I remembered Mallory and his mountain as I answered: “Because it’s there”.
Far far away, behind the word mountains, far from the countries Vokalia and Consonantia, there live the blind texts. Separated they live in Bookmarksgrove right at the coast of the Semantics, a large language ocean. A small river named Duden flows by their place.
I LOVE CLIMBING MOUNTAINS (LITERALLY)
Even as I studied Actuary and my MSc in Applied Mathematics, I never did see myself working in the insurance sector, where a lot of the actuaries seek employment in Mexico. Instead, I dreamed of finding something that posed a challenge big enough to put my creativity and problem-solving skills to good use and -even better- gave me an adrenaline rush. At the moment insurance just wasn’t it.
But poverty and its devastating effects in our communities moved me. Finding a solution to help millions of people build a better quality of life for them and their families was something that fulfilled my wants and needs.
So, as I embarked on the adventure that meant being a pioneer in the Mexican fintech ecosystem back in 2014, I felt that I had found an exciting path: providing a micro-credit solution that could bridge the gap between those with access to credit and those without.
Co-founding Cohete, one of the first online lenders in Mexico and my very first startup, gave me the same kind of rush as whitewater kayaking and rock-climbing. I loved it. It also tested my limits the very same way: stretching, shifting, ducking, balancing, focusing, hanging on… it certainly also gave me a good dose of humble pie and some major lessons in resilience.
Cohete ended up having to enter the liquidation and closure process. I had risen and fallen. Felt a bit bruised, but nothing was broken. And, just like Mallory and many other explorers, kayakers, climbers, and mountaineers, I was ready for another challenge.
I talked to the core team members and shared my intention to tackle the insurance business and invited them. You see, I had learned that the main reasons people seek credits were accidents or illnesses in their families. Most of the time, they defaulted on the payments and ended up losing everything. If people had insurance the whole situation would be easier.
It made me uncomfortable to realize how vulnerable we are in the face of financial hardship. This was heartbreaking and inspiring at the same time. I was ready to find a solution. Raúl and Rafael, with whom I’ve been working for more than 7 and 5 years respectively, chose to climb this new peak with me.
HIDDEN PATTERNS: A ROAD TO ADDED VALUE
Insurance, from a mathematical point of view -like many other interesting problems that apply to daily life- is related to Probability Theory, one of the branches of mathematics that I’m most passionate about.
I love this theory when applied to health insurance because although we do not know what can happen to us individually, we can predict what will happen to us in the aggregate. This method allows you to actually predict something that seems unpredictable. So insurance, in its essence, seeks to take advantage of hidden patterns in the risks that surround us.
As a student, I learned a lot of fascinating things about mathematics. There are two elements that really stood out and that I’ve been able to extrapolate to life in general:
”Most valuable is an open problem without a solution.
The elegance in the solution is in its simplicity.
In this case, the important part of the problem that we faced was: How can we ensure everyone? Looking for the answer to this specific problem is quite bold and challenging.
As of today, no one has come up with an answer and perhaps not many have raised the question, despite it being a very visible and obvious problem.
In mathematics, the reason why the elegance of the solutions or proofs is based on its degree of simplicity has to do with the fact that the way to find a simple solution or proof is when you have managed to mature the concepts and have deeply understood the problem to be solved or the theorem to demonstrate.
This meant we had to start a long process of understanding the insurance sector, the reasons why so many people do not have insurance, and the feelings that insurance generates in people who are insured and those who aren’t. In a nutshell: a behavioral science approach.
After many months of research, we found a very elegant solution: “Free insurance”.
The freemium business model has been widely used in the digital world. Digital subscription models have been very disruptive in other industries, like streaming and cloud services. The idea is very simple: the most basic plan is free and people can have premium plans in which you have to pay.
And that is how Zenda.la was born.Sounds easy? It wasn’t.
LAUNCHING ZENDA.LA: AN UPHILL BATTLE
So I had already managed to round-up a team, and we had our big idea. Now we needed to find money to make it happen.
Like most startups, a significant part of the pre-seed round came from friends and family who trusted our ability and our desire to build something truly disruptive. Fintech misfits like the serial entrepreneur Armando Kuroda, who fell in love with our idea from the very beginning really made a difference. To them, I will be forever grateful.
Our model meant we had to create a product that would be so cheap, we could even give it away for free. We didn’t find one in the market, it seemed that most products out there were meant for people with lots of money and a good understanding of finance. So we had to design it.
We managed to get Swiss Re interested. This was a great surprise since it is one of the most respected companies in the sector worldwide. Together, we began to co-design a product that had to meet 3 characteristics that we believe are essential for digital business: simple, transparent, and easy to use. Oh, and add truly affordable to the mix.
Creating an insurance product from scratch is a long and winding road. To add some more excitement, we also needed to build our platform. So, as we were doing that, we decided to connect our back-end with Qualitas and HDI to have car insurance as our first cross-selling product.
Months later we allied ourselves with Prevem Seguros, a Mexican insurer specialized in personal accidents and serious illnesses who also believed that our model could radically increase the number of insured people in the country.
With Prevem’s team, we have worked over the last few months to have an integration that allows us to issue an insurance policy in real-time and claim within a digital process. That in itself has been a whole other adventure.
Our first round of venture capital investment at this pre-revenue stage also posed some major challenges… After this process, I’m left with the impression that VC funds in Mexico are more comfortable investing in entrepreneurs that are basically adapting models that have already been proven successful in other countries. Our idea, it seems, sounded too far fetched for most of them and, although we sometimes generate a lot of curiosity because of our model, almost all of the early-stage VCs asked us to come back once we were operating.
Luckily, we crossed paths with 2 early-stage VCs, G2 Momentum Capital, and Lotux VC that trusted us and supported us from the very beginning. And surprisingly -even for us- Angel Ventures invested for the first time in a pre-revenue startup.
We have decided to keep climbing, step by step. Some people decided not to continue, and others like Mario and Eva have joined, making a truly remarkable founder team. And this team has evolved into a crew.
Zenda.la is launching in the middle of a pandemic, whose reach has not only affected how we think about our health and the health system but has also wreaked havoc in economic and social structures.
The on-set crisis has brought instability, making us even more aware of the meaning and role of financial resilience. Especially in a society in which the majority of its members have never had the privilege of having health insurance and historically they have had to face health problems individually or with their families. Being able to offer reliable and affordable financial resources and tools for people to be able to rise up after such a shock, became more important than ever.