By Tom Still
MADISON – From the outside, American Family Insurance might
strike observers as a buttoned-down, old-line company operating in a
traditional business market.
Beneath that blue-chip exterior beats the heart of a
corporate entrepreneur.
Founded in Madison nearly 90 years ago, “AmFam” is a mutual
insurance company that grew steadily but somewhat slowly across the United
States for much of its history. Its property and casualty insurance sales are
the foundation for about $7.4 billion in annual revenue and $20 billion in
assets, good for a spot on the Fortune 400 list.
Long known for its attention to customers and community
involvement, American Family has emerged as a prominent example of a company
that values innovation – not only within its own walls, but inside companies in
which it may invest or otherwise take an interest.
That message was stressed Monday at the second annual
Wisconsin Tech Summit by Peter Gunder, American Family’s chief business
development officer and an architect of the company’s innovation strategy.
Read this story in the Wisconsin State Journal here.
Gunder spoke at an event that epitomized how large companies
can interact with emerging companies, often to the benefit of both. The Tech
Summit matched 15 major companies and more than 50 emerging companies, many
with technologies tied to the “Internet of Things,” digital health and advanced
manufacturing.
Throughout the day at the GE Healthcare Institute in
Pewaukee, those companies engaged in more than 175 “speed-date” meetings
lasting 15 minutes each to talk about possible partnerships – from exchanging
research to investment to sales channels.
For the major companies, it’s often a case of staying ahead
of the curve. They want to hear about ideas before their competitors. They also
don’t want to rely purely on innovation from within, which can be difficult in
larger companies that sometimes move more slowly.
Gunder noted how Google became a billion-dollar company in
just eight years and that Facebook did the same in five, Tesla in four, Uber in
two and Snapchat in one. And he noted that iconic camera-maker Kodak is now out
of business – despite having invented the digital camera in the 1970s. Gunder
said his company realizes the need and potential financial rewards of embracing
change.
“We live in an exponential era,” said Gunder, who quoted the book “Bold.” “Either
disrupt yourself or be disrupted by someone else.”
American Family is one of just two major insurers — the
other being San Antonio-based USAA — to add corporate investment to its
business strategies. While American Family began investing in venture capital
funds in the 1980s, it wasn’t until 2010 that it launched its own venture fund.
The company plans to see returns on its venture investments
over time, but it also expects to benefit from investing in companies that help
improve the company’s core business, which is insurance.
That means investing in products or services that help
prevent burglaries, detect or suppress fires, mitigate water damage and more.
Those kinds of claims produce about $335 million in losses annually, he
estimated.
Examples of inventions in which American Family has invested
include a device that detects if heating elements in appliances are left on and
a security system that notifies homeowners of disturbances via cellphone.
Gunder said his company is watching the evolution of
self-driving and other “connected” cars that allow even visually impaired
individuals to travel safely. It also invests in insurance sales-related
technologies, such as tool to allow consumers to easily compare its insurance
packages with those of competitors.
Finally, the company remains interested in innovations that
help the company use data to understand customer needs and serve them – while
limiting the risk of having that data be compromised. “If you think about it,
we have a brand of trust,” Gunder said.
In addition to its venture fund, American Family is a
partner in the “StartingBlock” entrepreneurial hub in Madison and a supporter
of “The Commons” entrepreneurial project engaging colleges and universities in
southeast Wisconsin.
With a background in engineering and information technology,
Gunder has kicked plenty of startup tires in California’s Silicon Valley. He is
“bullish,” however, on Wisconsin’s ability to create more companies that can
compete nationally and beyond.
For those emerging companies to take root, however, it will
require more state companies such as American Family acting out of a sense of
enlightened self-interest. The right partnerships between big and small can be
profitable for all.
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