A company in the UK called "Sheilas' Wheels" tried to offer car insurance that was only available to women. The logic was that, as average claims by female drivers are lower than average claims by male drivers (presumably fewer accidents and/or less serious accidents), by limiting policy holders to female drivers they could offer them better pricing. But the European Court of Justice found this breached gender equality rules - with the company quoted as saying the ruling was 'unfair' and would lead to 'premiums rising drastically for young female drivers'. The company's branding (name, colour scheme, graphics) seems to imply that it's just for women, so maybe they've been able to get around the judgment by just dissuading men from applying. The conflict between equality concerns and statistically significant differences between sub-groups seems like an interesting area to study. Thanks for the video - really interesting.

This is pure gold. Thanks a16z

Very interesting. Especially on how you analyse that these companies target the customers on their ‘positive’ personallity traits and offer them a better price. Just all the good customers

Super sane analysis by Alex. He's clear concise and knowledgeable in his area for sure best A16z video for sure.

The idea of sub branding for a specific segment of the market is also seen in M. Christensen’s ideas. Using his theory of jobs to be done, we can see how segmentation could work in the insistence example.

This was a really great conversation, thanks guys!

MA&A "Most people are measuring outcomes and not process"

44:00 M & A Strategy is fascinating

Excellent! Psychology applied to business models. Boom !!

Very insightful business proposition. The fintech disruptive solution is relatively 'simple. Develop 'new customers' at the industrial level along 'BIG DATA' based on individualized de-risking profiling evaluation and provide a commensurate individualized risk based premium. Change the rules of the game at an industrial-level and blow the competition away...

Really impressive breakdown of basics. Loved it

You guys are always teaching.

Brilliant, it's mainly about insurance but it explains a lot about big data across sectors

What do you mean amazon gets paid $1, and why does the customer habe to pay them? the book? So how does that work?

The idea of "best customer" is (mostly) fair and makes most sense financially, of course, but, ethics aside, it can backfire badly, especially nowadays when the public is less and less tolerant of companies focused on profit first (with no real care for social or environmental good). The alternative is to take on best customers and, at the same time, to give honest but rejected customers a chance to become best customers. Make the helping service part of your company, or create/partner with a non-profit that can do the helping. Rejected customers have to contribute somehow (skills or money) to make sure that the services they are provided with are not a financial drain on the provider (i.e. they don't end up being subsidized by the best customers). This way you are being financially smart but also truly fair. People who are rejected and take advantage of your offer prove that the situation that made them "undesirable" is a matter of circumstances, not character. The rest will call you unfair, but there's real proof that you did your part in creating a win-win partnership between you and them.

I'm curious if the idea of going after 'good' customers in these niche financial spaces can be generalized to the wider B2B space by identifying less-costly customers--those that will demand less of your support/features etc.

Patagonia has stopped doing those vest in April 2019 but the "midtown uniform" leaves on

I noticed in this conversation, that the services of the company was not particularly relevant, but the focus was on Customers. Know your customers and then segment - like Gyco in the insurance space. Create sub-brands is a company that focus on the customer group, and based on what they learn, they create a sub-brand which has messages and branding to match that group. Is there a brand that only focuses on the Customer, and the intelligence of knowing the Customer?

Fantastic - does a16z have any best in class behavioral finance resources?

Alex is a genius. Thank you for sharing!

Don't confuse a bad outcome with a bad bet.

Awesome discussion, conversation and ideas sharing.

The idea that you should go after the best customers is important; however, it is really about CRM. we need to make good customers better.

Very constructive conversation. Thanks for sharing!

Nice conversation. I liked the analysis on how each incremental customer for financial services is a profit/loss decision unlike other industries. A couple of comments/questions. I would think the big insurers have already given incentives to their 'good pool', it wouldn't be that easy to steal them. Would the Grameen bank model created by Prof Yunus work in more developed countries where social security on loans would probably not work so well?

This is awesome! keep up the good work, great chanel

Interesting... but they are already doing this in China aren't they? Monitoring everything, rewarding or punishing based on behavior? Damn...

Fantastic Discussion, thanks guys!

Interesting take.

The car insurance comparison is not correct. Every time you claim, insurance increases your premium, etc.

Found some useful insides. Thanks!

I was thinking about that. Very interesting conversation.

I love it. Good stuff a16z

Love these, keep 'em coming please :D

Love this discussion!

super - how do I pay my panadero with crypto- he works harder than anyone- how convenience take time to read- behavior manipulation-

The interviewer is irritating and then he seems happy after having asked a question as if his question is more important than the answer.

first

I love your guys' videos, but this is so tone deaf. You KNOW that it's poor people who have worse health, poor people who are more likely to default etc etc... it's not a market failure to price them in with others. It's just not as profitable. It's nice that you're being honest about the kind of business you do in this video. But we live in an age where inequality is a key evil in society and you guys seem fine contributing to it.

a bunch of ramble with no focus on the pertinent points.

You're literally on the wrong side of history. Not profit wise of course. Had you worried there, hadn't I? No no, not profit wise.