Starting from a tech vision to create a leading InsurTech player!
Today, we will be interviewing Benoit BOURDEL, CTO, and Co-founder of Luko who has joined us for this seventh episode of Innovation Leaders.
Luko is a young company in the insurance world that you will all hear about, with strong values and a very strong technical dimension, and I am very happy to introduce it to you.
You have just announced that you have passed the 100,000-customer milestone, that’s one hell of a milestone, tell us a little bit about the current atmosphere at Luko?
We are all very happy to have reached the symbolic 100.000 clients insured at Luko. It’s a very festive atmosphere, and we are very happy to celebrate this achievement. We are celebrating behind our screens unfortunately because of the confinement but we are very excited about everything that is going on internally at Luko.
From an economic point of view, does Covid have an impact on you?
It doesn’t impact us that much because people still need home insurance, so we do very well during covid times. Although, people are moving in much less at the moment, so it is a bit more complicated for some contracts, but the overall business continues to do very well despite the pandemic.
You’re Luko’s CTO, it interests me personally to understand your career path, going through the school Polytechnique in Paris you’re not really trained to work in entrepreneurship, how did this desire to set up your own company come?
When I was at school my specialty was nuclear fusion, therefore nuclear physics on the R&D side.
I worked on the ITER project which is a nuclear fusion reactor under construction in the South of France. You have to know that these are the acronyms for R&D which last 40 years, so it’s very stimulating from a technological point of view, but you know that your work will not have any results for the next twenty years or so. That was a bit of an electroshock. Because I’m impatient and I want to see my work evolve and the outcome of a project on the scale of days rather than years.
At the end of my school, I said to myself I had to launch a startup. Nuclear power is not necessarily the best sector to launch a company. So, I went to Montreal for two years to do research on Smart Grid. Smart Grid is how to manage an electric distribution network on a national scale, in an intelligent way to be able to put solar and wind energy, which are energies that we don’t control. My topic was to make people’s heating systems intelligent so that they heat water during the day and turn it off at night and artificial intelligence.
There was already the idea of home, sustainability, and connected technologies. Then, I went back to France and I told myself that it is the right time to launch into entrepreneurship at 100%.
At the time, I had no knowledge of entrepreneurship and business. I didn’t know how to raise funds or how to create a business that would bring in cash. So, my first mission was to find someone to associate with.
My brother advised me to reach out to one of his friends, Raphael, who had just left his company where he had been CEO for a whole year. We quickly matched because he has a very good business understanding of the sector and he knows and has already lived in entrepreneurship. We also had the same values, and that’s when we decided to launch Luko 4 years ago.
It’s been 4 years since you started, does this entrepreneurial path resemble what you imagined living?
Yes and no. When we launched Luko, I planned to drop the company within two years, like 90% of start-ups do.
However, what I dreamed of was to create a successful company, to raise funds, so it’s close to what I dreamed of at the beginning but didn’t dare to dream of.
Where are you now in the investment phases, by the way?
We had a small Friends&Family fundraise tour at the beginning of Luko. We also had a Seed fundraise a year and a half ago of around 2 million. We then raised A-Serie to 20 million this year.
Now, we’re starting to position ourselves for the next round and we’ll have some very good news to share with you very soon.
We do almost one fundraiser a year. We want a company that grows fast both in terms of clients and employees.
What does a typical Luko CTO day look like today?
It changes a lot. When you start out as a CTO, the aim is to build the product.
Today this is much less the case, so I do one and one with the Lukom’s (Luko employees) to get feedback. There is also a part of recruiting the technical team and organising and participating in the different daily activities of the different teams. Then there is also a more CTO and co-founder part on how to plan a company vision, and the construction of technical projects and making sure that these projects are linked to the company’s vision.
Looking at your background and your skills so far we could have imagined you setting up a company in a hypercomplex sector, you’re capable of touching on quite sharp technical subjects, but you’ve decided to launch yourself into a world that seems quite mainstream, insurance, a sector occupied by imposing, historic players, one has a bit of a feeling of being David against Goliath when one launches oneself, no? what made you want to tackle this market?
The first point is that we are a tech company before being an insurance company. This choice to go into the insurance business is very much linked to Luko’s history and to our mission which is to help people protect their homes and live better in their houses in a simpler, more serene, and ecological way. That’s why we have put in place tech, and we are responding to this mission with tech.
In the beginning, we started talking with insurers to provide them with this technology, and we very quickly realised that insurers have a relationship with their clients that is not great. They have difficulty moving on technical matters, and that’s when we decided that we would create the home insurance product ourselves so that we would have our hands free to put all the technology we want into our product.
We are putting technology into a business that hasn’t yet taken the turn of new technologies, and we’re managing to create sparks in this sector fairly quickly. So, we started with a technology that we wanted to sell to insurers.
Did you have any knowledge of the technological challenges of the insurance sector before you started working with Luko?
No, neither Raphael nor I had any real knowledge about it at the very beginning.
This was a great strength because we were focused on the product from the very beginning. We took out the whole insurance technical part, the so-called actuariat. If I were a customer of an insurance product, I wondered what I would expect as a product from my insurer and what kind of technologies I would have liked to have. What was interesting was our approach as a beginner in insurance instead of someone who knows insurance very well.
We compensated with the fact that we know less about the world of insurance with a lot of learning on our part, but above all with the recruitment of people from the insurance world.
I put myself in your shoes with Raphaël, I imagined myself in 2016 launching a new insurance player, an essentially digital player in concrete terms, where did you start?!
We started with the product and the go-to-market.
We decided in January to make a home insurance product and create it ourselves.
In March, we started to build the product, and in July we had our first customers who subscribed to our home insurance on our website.
Our first focus was on how to do onboarding, how to create a client area, and how to find the client and user who will subscribe to a contract with us as quickly as possible.
In the beginning, it was handmade, and at the same time the user had the impression that he was signing a contract on a very well-done website, and that was the most important thing. We wanted the product to be available as soon as possible so we could start getting feedback. The front-end was mature but the operation part was done by hand.
We also found a partner for the professional insurance business who could provide us with this part as an outsourcer. But we really focused on the product and the customer experience to differentiate ourselves from the market.
I have a question, I’ve experienced, and I’m intrigued by it, how a young player like Luko can enable its clients to have a file analysis that takes a few minutes, where traditional players take several days. It fascinates me, yet these actors have teams and budgets 10x (100x?) bigger than Luko, why don’t these actors work more on their product-market fit, or on the user experience, that seems to be the basis, doesn’t it?
I think that these are big structures that necessarily evolve much more slowly than a more agile startup can do.
It’s also a different corporate culture because at Luko we are not afraid to deal with a very technical subject internally. We have the strength and the will to say to ourselves that even if this subject seems very technical, and rather complex, we will take it and deal with it and we will always do better to internalise the technology and our core business that creates this product rather than to outsource it or work with other actors.
Luko’s mindset is to internalise all the technologies which are entirely created internally. Everything that is underwriting, mobile apps, we do it at Luko which allows us to go much faster.
At Luko, how do you ensure (no pun intended) that your product corresponds to its market, what’s your secret?
There is no secret sauce.
It’s a lot of work, sweat, and agility. Very quickly we will go and get a product, bring out a tangible product that we will push to our client. Then we will look for a maximum of feedback to find out what works and what doesn’t work.
It’s the speed of having this loop that allows me to quickly push the first product, to test, to get data and feedback, and to push this new version back into production. This side is also very beneficial and allows me to have a well-finished product that pleases the customers.
Tell me about the main phases of setting up the Tech and R&D departments in a company like yours, between the launch phase and the more mature phases, what are the main stages in the deployment of this technical department?
There are three types of subjects, tech, and R&D at Luko.
- You have the very dev part, where you build the product. Were we do updates, a fraud detection algorithm, creating an onboarding step… So, we take, produce, and iterate on it.
- Then there is vision development. That is to say, testing new technologies, experimenting with new solutions. For example, here we produce a CMS tool for our app to push content spontaneously so that it can live from day to day.
- Finally, there is the research part. At Luko we have our own water sensor that allows us to follow the water consumption of households in real-time and therefore we can detect a dripping behind a washing machine, a tap that stays open and prevents water damage. We are on a 2-year development period, we are doing research in the pure and almost theoretical and fundamental sense, which is to say how I can design a product, a technology where the flow that happens live is indicated without the need to put a meter on it.
We have these three points that feed into each other and translate into the development phase. So, on the Luko Water project, we think about how we can put an algorithm that will allow us to remotely update our Luko Water, then how this algorithm will be transformed into something precise and daily.
These three points are built progressively, and they are in order. First, you start with the product, which should mobilise all your resources from the beginning, then you start with the development, spend a little more time on the techno, finally, you can afford to start the research part.
Personally, as a CTO, which subjects have given you the most trouble so far?
The layout and adequacy of the development and research product took a long time to set up. That’s why today I’m quite clear on these three levels.
One of the big mistakes we made at Luko was to start with research. At the very beginning of Luko’s history, we told ourselves that we were going to do something very complicated, very state of the art, but we got into big trouble. We couldn’t do it because we didn’t have enough subjects to accomplish it and our clients weren’t looking for that.
We then refocused on the product to have the go-to-market and meet the customers with a product that was the most important thing.
What are the mistakes you made that you could have avoided or maybe the things you would have liked to have understood earlier that would have made your life easier?
It’s to have badly mastered my priorities and to understand that you don’t do tech for tech’s sake but for a product. To know how to start from the product knowing which tech to put in it so that the user only sees very fluid onboarding with great functionalities.
Back to your team and Luko’s R&D, how are your teams organised?
Today a big third of the team is part of the product and the tech. This is a number that will grow a lot in the coming months.
It’s quite small, but you have to know that we have a big component at Luko on the whole support and customer relationship part which is extremely strong where the tech can help but doesn’t do everything. We also believe very much in the human aspect of customer relations. This explains the high proportion of customer support, claims management, and so on.
So, technology and customer relations are the two main areas of focus at Luko.
We have a two-level, 2D tech structure. On the one hand, the chapters are the different jobs in the tech (dev front-end, back-end, and mobile dev). Then the part of connected objects and sensors (Luko Elec, Luko Door, Luko Water) we also have firmware developers who develop software that is embedded in the sensors and the hardware. This is our horizontal structure, which are the chapters that correspond to professions.
We also have a vertical structure where we have three chapters at Luko that correspond more closely to the concrete product.
- We have the first tribe which is the acquisition department that deals with the product relationship, i.e. from the moment the customer visits the site until he signs the contract. They will be in charge of the subscription process of our website, the content, and creating the best content on the market.
- The second tribe is the one that takes care of the life of the contract, so from the moment the contract is signed until the end. In this tribe, we will find the personal space part but also the sinister management part where we will put a lot of technologies and means to be the most fluid sinister management on the market. We still need to improve on this.
- The third tribe is the home care and commitment part of our client, i.e. the way we handle home insurance. This is where we will find Luko Elec, Luko Door, Luko Water, and all the technologies and services around our client’s homes that make Luko today not just another home insurance, but a startup oriented around the home and home care.
Which technologies are there, which technical stack do you work on?
On the mobile part, we work on React Native to be able to work quickly on the product.
On the backend, we use Python with Flask to create a technology that is simple and quick to develop for the user. Thanks to Flask we can create a backend in 10 minutes, which is in line with our values: doing things simply and efficiently.
On the front side, we use Vue.js .
On the infra part, we use AWS.
On all our technology steps we want it to be simple and quick to set up. I am convinced that if you keep a code and simple technology steps, the technical bugs will be easier to solve.
What values can you find on the technical side at Luko?
It was something very strong at the beginning of our meeting with Raphael, our will to create a company that carries the values we wanted to put in it. Especially the positive impact side, which is something very strong. We want Luko to have a positive impact on society, the world, and the environment in which we live. That’s why we went for B Corp certification.
We also have this give-back concept, which is fundamental in our product, which means that what our customers pay every month for their insurance, we take 30% of it every month which makes the company live. The remaining 70% is used to reimburse claims. At the end of the year, the remaining amount goes to the association of the customers’ choice. This allows us to realign the interest of the insurer and the insured. As an insurer, whether or not I reimburse a claim doesn’t change anything on my salary, so my goal is to create the best insurance for my clients.
Everyone at Luko is happy to work for a company that has a positive impact on our society, and that’s what gives me energy.
Internally, there is a great deal of mutual support and a very cooperative side to it. We want to help each other, and we have created a very strong fraternity.
From a technical point of view, the product side is centered around the product and a product linked to our customers. We recruit tech profiles, interested in the product but above all interested in creating a product. We don’t want people who do tech for tech’s sake.
It’s very important that the tech we build has a link with the product, and that doesn’t mean we’re doing deep tech or something complicated. What we do on the Luko Water, and yet the app for the user is very simple.
Can you tell me a word about the qualities, skills, and mindset you are looking for in the profiles you recruit?
There is that first very important mindset which is a very strong attraction for the product and the user experience. You also need the cavity and the speed of execution, which is very important at Luko, to be able to release a product and a feature very quickly. It takes simplicity to build the best product.
We will also test the fraternity aspect on the link with the teams. In our recruitment process, we have one hour of peer programming with Luko’s devs where the candidate is immersed with 2 or 3 devs on a precise subject where we challenge his ideas and we try to evaluate and test these informal and difficult aspects to analyse on a CV but that is very important for us.
Lately, when we make a job offer for a candidate, we give him/her access to the whole company. They can therefore contact whoever they want, from the intern to the co-founder, to benchmark the atmosphere at our company.
In terms of management organisation, do you have any specificities?
We have this two-tier approach.
We have a very vertical approach by project, by feature, with all the technical teams associated with an engineer manager who is an experienced dev who will help and guide them in the development of projects and features. The engineer manager’s skill is cross-chapter, so he will discuss with mobile developers from frontends to back-ends.
Then we have the horizontal part where we have tech leads, who are experts in their technologies, so we have python experts, React Native experts, and Vue.js experts. They are there to train and educate the developers at Luko in their techno and stack they use daily.
Finally, we have this matrix which is both, from a project feature and product realization and accomplishment point of view, and then the front end on the trade and the tech.
A word on the future of R&D and the major trends in the insurance sector, what are the issues of tomorrow that you are currently working on?
For us, it’s home care. Today a home insurance product is a contract that stays in a drawer until the day you have a claim that is sometimes well managed and sometimes badly managed, but that’s all. So, every month you pay for something you don’t need.
Our vision at Luko is not to have this insurance vision but the vision centered around home and to allow customers to live better at home, to be more serene without problems.
At Luko we do this through different things.
First of all, our sensors, in which we use a lot of resources and create a lot of technologies prevent fires, water damages, and burglaries.
At the same time, we are working on services such as a service we launched a month ago called DoctorHouse. It’s a teleconsultation for your home which is a building expert that you’ll have a call with for 20 minutes face-to-face and who will go around your home to check your shower seals, electricity, whistles… At the end, he’ll send you a PDF report with solutions to improve your home and tutorials.
We are really on the vision of changing an insurance product. We want Luko to be the partner of choice for everything concerning your home.
Soon we want to set up a network of craftsmen who today are used to repair our customers’ damage, but one day they will be available to our customers so that Luko can do the work in our customers’ homes.
And for Luko, having passed the 100,000-customer mark, what are the next major objectives?
The big step that will come next year is the opening of a new country in Europe. We want to become a European player in homes and then start exploring elsewhere in France. So, it will be a big milestone to be expected in 2021.
A few quick questions for you to end this interview:
If you were to give advice to future entrepreneurs, what would it be?
I have several pieces of advice: What are your values and what is your driver and motivation for your company?
On the first day, we decided to create a company that has a positive impact on society. In order to have an impact, you need a profitable business so you have to play on the business board and the impact side at the same time. That’s how we are going to create a company that will change society whilst having a positive impact on the environment. The value side is very important and we have to validate it with our associates.
The second piece of advice is a very ambitious and relentless side. I have in mind the music So Easy by Flowers Breakers. The music says: if it was that easy, everyone would do it, who would you be to succeed, everyone else failed. You have to do the opposite of that, it’s not because others have failed that you with a lot of determination and ambition can’t achieve great things.
You also need alignment, complementarity with your associate(s). You each need your own dedicated areas, confidence in the objectives, and the challenge.
Tech companies that inspire you?
Amazon on the focus they have on the product and the technology implemented. For example, the return email hasn’t changed since the 2000’s when they have the technology to do so but they have been able to ask themselves where their customers are looking for value and therefore put the technology in place for the customer.
A CTO that stands out according to you?
Elon Musk, I’m not being original, but for his strong confidence in what he does, his vision, and his energy in his projects.
According to you, a technology that will become a must-have in the coming years?
From a tech point of view, the smartphone side is becoming more and more innovative. Phones look more and more like computers.
I think that the desktop mode, which is possible on several Android phones, that allows you to put your phone down with a keyboard and a screen and your phone is the processor will become a must-have.
A book
A Lego technical manual — the side of creating modules, blocks, engines that run on their own and where you put these blocks together. It’s like coding, independently they don’t have a lot of meaning and interest, but by assembling them you manage to get a global picture that gives it meaning and value and creates the product.
App
Revolut or N26 — an easy to use tech for the product and breaks the codes.
Tech profile for future podcasts you recommend?
Charles Gorintin, CTO of Alan, his career and what he has built-in terms of vision and structure is very original and interesting.
Aymeric Augustin, CTO of Qonto, also has a very interesting background at Oscaro and Canal+.
Personnality
Company
