Yes, we’re even mimicking tech startup practices in the world of insurance. Hiscox CEO Steve Langan talks Silicon Valley, failing fast, and the ever-increasing risk of internet and data crime.
I was lucky enough to spend some time in Silicon Valley recently, visiting Google and LinkedIn, and hearing from the Venture Capitalist companies that fund the waves of start-ups which emerge each year in this extraordinary place.
What struck me most was how easy it is to get a tech venture up and running these days – ten years ago it cost $5- $10m, but now all it takes is a credit card and a weekend. Time to market has also shrunk massively, while seed funding rounds have become much bigger.
Whether there is now a bubble is a matter of debate, but it is clear that many high calibre companies, big and small, are still being created, on both sides of the Atlantic.
In fact, all companies could benefit from thinking and acting like tech businesses, and there is no better starting point for inspiration than our Tech Track 100.
While they come in many different shapes and sizes, at their core these companies share many common attributes and mindsets.
The entrepreneurs behind them experiment constantly, efficiently transforming their ideas into marketable services and products. If they don’t get it right the first time they fail quickly and move on; they aren’t afraid to try something else. Nor are they constrained by geographical boundaries.
“The requirement to think globally is common across all tech companies by their very nature. There are no boundaries or borders, and everything needs to be designed to reflect that,” says Martin Rosinski, who has constantly evolved Palringo (No 7), since he started the messaging and gaming platform in 2006.
The entrepreneur, who designed his first commercial software programme at age 11, says problem-solvers tend to gravitate towards the technology sector. “Tech companies are good at taking difficult problems, breaking them down and then tackling them,” he says.
Rosinski launched Palringo at the age of 21, with an instant messaging tool for his father’s engineering company. He then targeted the app at major corporates, before switching to focus on the consumer market. The company pivoted again as he found a niche as an online community for keen gamers – particularly in the Middle East. Following two acquisitions, Palringo has now taken on a new life as a games developer.
Many other pioneers on this year’s table share Rosinski’s approach. No 3 company FanDuel, a fantasy sports game developer, was born out of the ashes of its co-founders’ previous venture, called HubDub, in 2009.
Although popular, this political forecasting game proved difficult to monetise. “It was crunch time, we needed to do something, and had a brainstorming session,” says Nigel Eccles, one of FanDuel’s co-founders and its chief executive. “We renamed as FanDuel, secured our first fundraising, and six months later we launched our first, one-day fantasy game in the US.”
Eccles’ masterstroke was to offer one-day leagues rather than committing players to entire sports seasons in their chosen sports, which include baseball, basketball, American football and ice hockey.
The Edinburgh-based company, which makes its money from North America, now boasts more than 1m paying users and has raised a staggering $363m (£232m) from investors, valuing it at more than $1bn.
At Hiscox, we have been handling often complex technology-related insurance claims since 1994, so have been fortunate enough to see first-hand the growth of many British tech success stories, such as Palringo and FanDuel.
But the rapid adoption of internet-related technologies, from mobile working to ecommerce, has been accompanied by an alarming increase in internet and data crime.
The cold reality is that any business is at risk if it has a website, holds sensitive customer details such as names and addresses or banking information, relies on computer systems to conduct business or accepts card payments online.
According to a Cabinet Office report that Hiscox contributed to, UK Cyber Security: The Role of Insurance, four fifths (81%) of large businesses and 60% of small businesses in the UK suffered a cyber-security breach in the last year, and the average cost of a cyber-breach to business has nearly doubled since 2013.
Even the most successful global businesses are vulnerable. In August mobile phone retailer Carphone Warehouse revealed that up to 2.4m customers may have had their personal information stolen by hackers. In another high profile incident this year hackers showed they can remotely control a Jeep travelling at 70mph. Jeep owner Fiat Chrysler subsequently recalled 1.4m vehicles for software updates.
The businesses we speak to are becoming more aware of these risks. In our annual “DNA of an Entrepreneur” study of 4,000 small businesses across six countries, which we conducted this summer, almost a fifth (19%) told us they fear the loss of data and cyber-attack.
But their remains a gap between perception and reality. Companies have remained reluctant to protect themselves and at the end of 2014, it was estimated that only 2% of companies in the UK have insurance cover for cybercrime. We want to make this type of insurance simpler and more comprehensive, so last year we launched a new-look cyber and data insurance product. It is just one part of our commitment to support the thriving tech sector. As the success stories contained within this year’s Tech Track 100 supplement show, Britain’s strong and rapidly evolving technology scene is an asset that’s worth protecting.
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