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Hippo is reinventing the home insurance industry: Reid Hoffman on SPAC deal

Reid Hoffman, LinkedIn Co-Founder & ReInvent Co-Lead Director, and Assaf Wand, Hippo Co-Founder & CEO, join Yahoo Finance to discuss their recent SPAC deal and company outlook.

Video Transcript

BRIAN SOZZI: Online home insurance platform Hippo plans to go public mid-year, after completing a SPAC deal with Reinvent Technology Partner Z. It's a SPAC transaction backed by LinkedIn co-founder and co-lead director of Reinvent Technology Partners, Reid Hoffman. Reid Hoffman joins us now, alongside Hippo co-founder and CEO, Assaf Wand. Good morning to both of you. Congrats on this deal. Reid, let me start with you. Early PayPal-- founding member of PayPal, early investor in Facebook, early investor in Airbnb-- what brings you to home insurance?

REID HOFFMAN: Well, we didn't start by looking at insurance tech. We were looking for the most amazing technology companies that are transforming experiences for customers and transforming society. And home insurance is one of those super important things because, you know, it's your most important asset. It's kind of the fundamental Maslow's hierarchy of needs-- you know, where you live, and do you feel safe, do you feel secure.

And Hippo, which is essentially the leading company in this category, is using technology and networks to reinvent the experience, moving from essentially adversarial because, like, hey, we don't want to pay out the claims, to partnering, which is, how do we make your home safe by using internet of things and technology and connecting with you in order to say, hey, actually, in fact, you've changed your roof. Maybe we can actually have lower premiums.

Or hey, you've added this feature. You want to protect yourself against it. And it's using technology in order to do that. And when we looked at this, we said yes, this is exactly the kind of transformative technology company that we've set out to find that is good for the individuals and customers, good for society, and good for shareholders.

MYLES UDLAND: You know, Assaf, I want to ask a little bit about the business over the last year. I just bought a home and did not get-- I got regular old home insurance. I didn't get any of the fun bells and whistles that come with Hippo, any of that process. You guys raised money about nine months ago, 10 months ago, at a valuation that was significantly lower than what you're going public now. How has the trajectory changed, given how many people have gone out and purchased homes and rethought their living situations during COVID?

ASSAF WAND: It's a really good question. Firstly, congrats on the new home. But what you see is that our homes became a lot more central to our life. Our home became our office. Our home became our gym. Our home became the school for the kids. And people just have it-- spend a lot more time in the home. And we want to help them take care of their home and basically better live in it.

What we do is we are trying to shift a transaction or something, which an experience that you have now with your insurance company, which is transactional and adversarial and make it into a partnership. We have a component called proactive insurance. We give IoT devices to help people prevent losses from escalating. We have Hippo Home Care that is our tele-maintenance service. We are supporting our customer when they live at home to better take care of their home. We keep on monitor our customer's home. And our aim is, how do we make the lives of our customer better in their home?

- And one of the other things that we should say characterizes Hippo is it actually has revenue. It's not pre-revenue, like some of the companies coming public through SPACs. And Reid, one of the things that we've been talking to people on the SPAC side is whether that was a prerequisite. Because there are so many companies that don't have revenue. I believe, if I read the deck correctly, Hippo also expects to have profit this year. So was that something, Reid, specifically that you all were looking for as well?

REID HOFFMAN: Well, we are looking for the most amazing businesses over the long term. Three years, five years, 10 years. The companies that will truly become pillars of the, kind of, the next generation of the industry in society. And if revenue, great. Always great to have revenue with the business, of course. But that's the characteristic. And so what we saw with Hippo was that they were reinventing this industry in a way that no one else is close to.

And, for example, Hippo has an NPS score of 75, which is twice the industry average. That's the substantiation of that move from adversarial to partnership. And that's the kind of thing that we were much more focused on. Now, the fact that it's already got great revenue, great trajectory, all the things you can see in the kind of the filings that we've made of it, those were also, of course, great.

MYLES UDLAND: And Assaf, speaking of those-- you know, some of those projections that are in the deck and that Reid was just alluding to, how do you plan to initially kind of deploy this capital? Because, again, now a lot of money has come into the business and it really kind of creates a situation where you're going to have opportunities that maybe would have been 5 or 10 years down the road kind of pulled forward to today with this amount of money.

ASSAF WAND: We're going to pursue a lot more opportunities than we had before. We were in a point where we had an abundance of opportunities but not enough resources to pursue them. We want to double down on technology. We want to double down on data. We want to double down on our partnership. We just want to do more of what we've been doing before that was very successful and push harder.

I think what happened during COVID, also, is digitization of a move forward by probably three to five years. People expectations of what they're going to get from their insurance carrier has shifted significantly and we just want to push harder and reach all of the goals that we had in a faster way. And we're very excited by that. We are very optimistic that we're going to reach these numbers. We see great response from our customers. I think we're on the right trajectory.

BRIAN SOZZI: You know, Reid, a broader tech question. You know, we hear from a lot of tech executives that the investments in tech have been pulled forward three to five years worth of investments pulled forward over the past year. But we're seeing now, now tech stocks selling off. Do you sense that there's froth in the market here? Or does the outlook justify even higher valuations for tech?

REID HOFFMAN: Well, so we at Reinvent don't tend to focus that much on what is today or what is this week or what is this month. It's what in the long term. It's part of the reason why, for example, when we structure deals like the ones we've done with Hippo and Joby. We align with management and go for long term ways of doing this. Because the real question is, what is the value three years from now?

And that's why you kind of pick, I think, with even within Tech, the industry-leading, the industry-transforming companies. And so, you know, maybe there's heat and froth in the market currently. I think it's always a question about being in the winners over the long term. Those are the kind of compoundings, the lessons you get from such luminaries as Warren Buffett. And so that's the way that we look at this, is pick the companies that will be the transformation of the industry and will set the new benchmarks for how everything should work.

BRIAN SOZZI: And Reid, it's been a bit. It's been a good bit since we've last talk to you. How would you grade the progress Silicon Valley has made on improving diversity?

REID HOFFMAN: Oh, look. It's super important. And I think the great news is that I think that a lot of firms are-- like Greylock and so forth-- are committed to doing this. Greylock partnered with an excellent organization called Management Leaders of Tomorrow. Other VCs have partnered with other organizations similarly, and it's building the network to create the right kinds of opportunities for founders, for investors, for career pathing. And I think that's in progress. There's a long way to go and I'd say that the primary good news is, when I talk with nearly everybody in Silicon Valley, everybody, it's a top-of-mind issue. Everyone's working on it. Everyone's creating a dashboard with numbers and working towards it the same way that you work towards things as businesses.

BRIAN SOZZI: So realistically, or just based on that, over the next year we should-- you know, know how long will it take before we start seeing more diverse leaders come out of Silicon Valley?

REID HOFFMAN: I think we're already beginning to see some of it. And I think that-- I think you'll see more and more each year. And a little bit like kind of know these things have a little bit of a compounding curve. You know, the curve kind of starts slow and then starts picking up. So I don't think it's, like, immediately next year or the year after. But hopefully, you know, when you get to like three years and five years, you begin to say, OK, this problem is now finally beginning to even out and there is actually, in fact, the opportunity is being reflected by the actual talent. Because talent is evenly distributed across races and genders and all the rest. And so you know that you have a talent gap until you actually, in fact, see it in the numbers.

BRIAN SOZZI: Good to see the work you're doing there. We'll leave it there. Reid Hoffman and Hippo co-founder and CEO Assaf Wand. Congrats on the transaction. We'll talk to you both soon.

REID HOFFMAN: Great, thank you.

ASSAF WAND: Thank you.