Kate Stillwell, founder and CEO of Jumpstart, a natural disaster insurance startup, built her company back up after a devastating blow.
Jumpstart, which launched on Oct. 2, 2018, is a new type of natural disaster insurance that helps families and individuals bounce back from earthquakes through an immediate payout initiated via text message. Jumpstart connects the insured person to the insurer.
Founder and CEO Kate Stillwell said she believes her company is, at its core, about resilience — ensuring more money comes into the system after natural disasters and creating an upward spiral of recovery. But when natural disasters occur, everyone experiences losses at the same time, so insurers themselves need insurance (“reinsurance”). She tells us about her worst moment, when Jumpstart unexpectedly lost a partnership and up to $100 million was at stake.
What follows is a firsthand account of this person’s experience. This interview has been edited for length and clarity.
My worst moment was eight days before Jumpstart’s initial planned launch, about a year ago. We had built up a team of eight people. For 16 months we had worked shoulder-to-shoulder with our reinsurance partner, in preparation to sign the agreement that would authorize us to start selling policies on their behalf (and fund us with six months of runway).
But someone got cold feet, and up to $100 million — the entire pot of money we had in capital reserves to pay out our customers — was at stake.
I was in our office in a coworking space in Oakland, meeting with my team as part of our weekly “sprint.” My phone rang, and since I recognized the number calling was our partner’s account manager, I excused myself and walked into the common space.
The account manager had been my primary point of contact for the past 16 months, and I could hear that he was close to tears. I remember him saying that he wished he wasn’t the one who had to give me the news but that it had been decided that our two companies were no longer going to be working together. They had called off the partnership.
There was silence for about 10 seconds.
I asked if he could tell me why, and I remember hearing that it was a combination of the high risks and the fact that we were a startup. Eventually, we hung up.
Since Jumpstart pays out in earthquakes, where everyone needs money at once, we need access to a large pool of capital. But a startup doesn’t have millions of dollars in reserve, so we partner with one or more established companies who have deep pockets to make the payouts. There’s a David and a Goliath dynamic; we’re mutually dependent. The product can only be sold if we cooperate. The difference is, for “David” (us), this is the only product: cooperation is life or death. For the “Goliath” (the partner), this is one of many products — they have other income streams.
In my previous startup, we had a great partnership with this particular Goliath, so against the number-one piece of advice from almost everyone in the industry, I had agreed to be exclusive. That was my first mistake — let’s call it an error of optimism. Another of my mistakes? I took at face value a claim that the partner would make us an investment worth several months of runway. I should have raised funds sooner from other sources.
I felt blindsided, but that’s only because I was wearing rose-colored blinders. I should have seen the signs — months of delays, creating new hurdles each time we cleared the last one, the right hand not talking to the left hand, reasons that didn’t quite add up.
I returned to the team and pretended like nothing had happened because they were still in the middle of the meeting. That day it was my turn to drive the carpool of kids home from school, so I picked them up and then texted my mother about what had happened. I was very withdrawn. I remember that my mother gave me what I wanted to hear — “You don’t deserve that!” — while my husband had a different mindset: “Well, you knew this could happen.”
Without the authority to sell, we couldn’t launch — and we were at negative runway. The day after I got the call, I had to break the news to eight different people on the team individually.
One of my teammates was leaving the next day to settle her late mother’s estate. I asked if I could drive her to the airport in the morning. She knew something was up. On the way, I remember telling her how sorry I was but that we’d have to let her go. We’d both known going into it that working for a startup is risky, but it was hard because we’d just hired her about six weeks before, and it was her first job after a career change.
I went back to the office and met with our main developer, who was a contractor, and told him the bad news. I remember saying, “We have no more money. The launch is now many months, if not years, away. We don’t know what the future of the company is, and I’m going to be laying off everybody else.” He spent the next two to four hours buttoning things up and left. After that, I told another co-worker what happened — and that I didn’t have to lay him off that day, but we were at risk, and I didn’t know exactly what would happen over the next two weeks. I told him it would be a good idea to start looking for other jobs. And that night, I had dinner with another teammate and told her the same thing.
That’s how the team went from eight to six in one day. There we were: no launch, team gone, out of money, no basis of raising money. I was angry, humiliated and just plain sad. But I was still optimistic: We had fallen off the proverbial cliff, but we didn’t die.
The core value proposition of our product — what we’re fundamentally selling — is personal resilience. It’s resources to tap into the inner strength that’s already there and adapt to the new normal after a shock. So, as a company, I thought, we’d better be able to walk that talk.
Five weeks after that initial call, me and two of my remaining teammates — people who knew their jobs would likely be gone soon — took a huge risk. We decided to spend the company’s remaining funds on a flashy publicity stunt at an insurance conference in Las Vegas. We brought a “shake trailer” — which simulates an earthquake — and 400 conference attendees took a ride in it. One of them called it “brilliant marketing” and the “most fun thing” at the conference. About eight months later, his company would end up being our next partner.
But that was months away. On the afternoon of the conference’s second day, I had to sit down with both team members who had accompanied me. I remember telling them, “I can’t pay you after today. I have to lay you both off.” One of them burst into tears.
It took us over a year to make a comeback, but we survived by the grace of a few industry insiders who provided enough funding to tide us over. I remember them saying, “We know what happened to you, and it sucks. No one should have to go through that. We want to make sure you come out alive.”
From this experience, I learned that there’s no other choice than to be optimistic. Entrepreneurs are creating the future — not just for ourselves but for our communities and our collective children. That’s a huge responsibility and a huge opportunity. Having the courage to be optimistic — in the face of setbacks, in spite of shock — is the test of being a true entrepreneur.
To others going through something similar, my advice is to stay optimistic and make decisions assuming the best. I relied solely on optimism and didn’t have enough of a safety net or plan B, so along with optimism, make a freaking backup plan!