Cristina co-founded Crabi, a full-stack insurance product in Mexico. They are +50 team members worldwide and have raised +$8M. Their revenue has grown by 110% this year and is growing at a 2-digit rate. Crabi currently has +10,000 policy holders per month.
Hi Cristina! Who are you and what are you currently working on?
I’m Cristina Carvallo (CPO at Crabi), I’m 35 years old, based in Guadalajara Jalisco. Together with Javier Orozco (CEO & Founder) and with Arnoldo de la Torre (COO), we founded Crabi in 2017 to transform one of the most traditional industries in México: the auto insurance industry.
Crabi is the first and only startup to offer a full-stack insurance product owned and operated entirely by the company. Our insurance company has become the First CNSF (government approval) Licensed Startup to Provide Full-stack Auto Insurance in Mexico and the only new auto insurance company created over two decades in the country.
Crabi is the first car insurance that you can acquire from wherever you are, whenever you want, while only paying for what you need. We envision a new way of providing insurance that focuses on the person and not the car.
Cristina: I’m currently Head of People Operations/PR, and my main focus is building our culture. We are a young, diverse, and geeky insurance company. Many of our team members work remotely from several states in Mexico, so we invest time and effort to instill our values (be bold, be brutally honest & enjoy the picnic) not only in them but to the rest of the team. Crafting Crabi’s culture is something I am very passionate about!
And as in any other startup, another of my “hats” is being the PR & spokesperson for the company. In this role, I take any opportunities available to talk about our history and how we embarked on the mission of creating a modern, fair & robust insurance product for car owners.
What's your backstory, and how did you come up with the idea?
Cristina: Javier, Arnoldo & myself were working on another company founded by Javier. We were manufacturing slot machines for casinos and other venues. One evening, discussing the world and the radical transformation it experienced over the last decade, we began questioning ourselves which other industries were bound to be radically transformed by technology, and a light went on: insurance.
None of us had any insurance industry experience, but we studied, we learned, we listened. After spending a couple of years in the startup scene of Silicon Valley, Javier decided to exit his slot machine company and went all in to start Crabi.
It has been quite a learning experience. Once we had the idea, we invested months reading auto insurance contracts, understanding the terminology, learning about the business model, discovering the legal requirements to start an insurance company, understanding the regulations, etc.
Our first and most important milestone was obtaining our Insurer´s License, awarded by the National Insurance & Surety Commission in Mexico. This achievement didn't come easy; we had to grind for it for a little over two years. But once we were allowed to operate as an insurance company, we were thrilled.
While going through this process ourselves, we understood how intricate this product is for an average person. This fueled our motivation to create something much more straightforward, fair, and transparent.
We wanted to move away from the standard pricing approach by which a user is charged depending on its vehicle model & sociodemographics. Also, we tried to eliminate intermediation as commissions added up to 50% of the total price a user ends up paying for their policy. It is insane!
Using technology & data analysis, we began creating customized pricing models that weren’t so focused on the vehicle characteristics but more on the person behind the steering wheel. Also, we created an intuitive app that allows our potential customers to quote & buy their auto insurance in less than 5 minutes, without depending on an insurance agent. We also focus on communicating our product characteristics, benefits, and rules of operation in a much more straightforward & easy to understand way. We aim to be as transparent as possible.
At one point, we considered including a driving tracking device as part of our service to better understand our users. However, we had to pause this initiative due to high costs.
Crabi has been bootstrapping its way through the car insurance world with excellent traction and valuable user insights without tech and product being the main focus. Now, we’ve managed to create great product teams with an incredible tech infrastructure; this will ramp up our value and differentiate us tremendously from our competitors.
Our initial idea was to focus on a Pay How You Drive model (PHY), which has proven successful in Europe & North America. However, tropicalizing this model to Mexico was difficult, mainly because the insurance culture in the country is minimal.
This is why we had to back out from this idea and craft a model which was more familiar & appealing to our customers.
How did you go from idea to product?
Cristina: Before launching our first official product, we tested an MVP with 300 beta users. This stage was crucial as it provided valuable feedback, especially regarding users’ confidence in our product. There were questions about our solvency, financial backup, and capabilities because we were a new company with a revolutionary business model.
We took this feedback and worked for a couple of months to come up with clear ideas about how to educate our potential customers regarding our model and what it meant for them, as well as to explain & communicate how we worked with an extensive network of top-notch providers all of whom helped us back up our clients in case they needed our services during an accident.
We hosted an official launch in May 2019 at our headquarters in Zapopan, Jalisco. We extended invitations to local & regional media representatives as well as to governmental authorities, and we hired a local PR firm to help us distribute the news.
Which were your marketing strategies to grow your business?
Arnoldo: Initially, we began promoting and selling our first policies to our family members and friends, but as you can imagine, we got to a point at which this wasn’t just scalable anymore.
We then decided to jump into Google Ads and began running performance campaigns but soon discovered that this was not economically feasible at such an early stage.
We were unaware that the auto insurance industry is one of the most competitive niches regarding Pay per Click marketing. For this reason, we decided to temporarily pause this growth tactic and search for a more efficient alternative.
The next thing we tried was collaborating with online aggregators which specialized in lead generation. We partnered with one of Mexico’s top auto insurance comparison sites and quickly began our 2 digit growth month-over-month. This helped us scale rapidly and create a relatively extensive customer base to test our operations.
We also set our eyes on organic growth and began optimizing our site’s SEO. Our team worked over a couple of months to create a blog that touched every part of the inbound marketing funnel. This past July, we released it with over +90 informational articles. This one tactic has helped us increase our organic traffic from 3K visitors per month to almost 70K per month in about 3 months. And we are now in the process of optimizing our conversion rates to increase our lead generation.
We are growing our revenue by improving our product based on customer feedback. We are also opening new cities & states regularly to increase our presence nationwide. Finally, we are focusing on enhancing our renewal rates.
How are you doing today and what are your goals for the future?
Arnoldo: We are testing new ways to continue growing. Partnered with Buyapowa to launch our first “Refer a friend program”, by which we reward both the referring customer & the referee when they buy an insurance policy with us.
We also launched a new program to reward our best-driving customers when they renew their policy with us. This way they can rack up additional discounts on our already competitive prices.
Finally, knowing the price of an insurance policy might be high for people in Mexico, we created a “Subscription Program” in which customers can insure their cars, paying a monthly subscription, like Netflix. And if they want to cancel it, they can do it without the hassle and penalization.
We are the only company offering these differentiators, and our customers are reacting quite positively to them.
We are more than 50 team members working hard to brainstorm, analyze, execute, implement and promote all these ideas and strategies. All this work is being noticed by our investors, led by Kaszek Ventures. They recently announced an additional $4M in Series A funding, together with Tuesday Capital & Redwood Ventures.
We have grown our revenue by 110% this year, and we will continue growing at a 2-digit rate for the upcoming year.
To offer a unique experience to our users, we are building an “Instant Claim” platform that will allow us to dramatically reduce response times to settle a claim, from a 4 hr average down to only 15 min.
Cristina: We are always looking for great talent, which has mainly driven us to accomplish what we have done. Great people are self-directed with autonomy and curious to challenge the status quo and build a zero to one solution.
Since starting Crabi, what have been your main lessons?
Pay attention & listen to your customers. Almost every idea in our pipeline comes from trying to eliminate our customers’ pain points. We listen, prioritize, implement and iterate until we solve the problem.
This is especially important since we target digital natives who are technology savvy and appreciate being engaged in the process.
What were the biggest obstacles you overcame? What were your worst mistakes?
Cristina: Being a new insurance company with an innovative offering, we faced an initial distrust & misunderstanding about our products.
Customers buying auto insurance in Mexico are used to being sold their policies face to face from an insurance agent.
Changing this mindset was our first obstacle as customers were not used to buying intangible products by themselves, let alone from their mobile phones. Fortunately, digital natives have been our most frequent adopters, and they are helping us spread this new model via word of mouth. This is why we are looking for ways to keep incentivizing and rewarding them.
Arnoldo: Another challenge has been finding new ways to invest in our growth. Being a small player in the industry means we have a limited budget to compete with already established insurance companies with substantial marketing budgets that allow them to invest heavily in national media & PPC campaigns.
In our case, we have to be super creative and efficient. This is why we are investing in our long-term growth by focusing heavily on inbound & content marketing. We know this will take some time, but it will be way more cost-effective for us in the long run. This does not mean we do not invest in PPC campaigns. We do, but with laser focus and constantly iterating to learn and build upon that knowledge.
What tools & resources do you recommend?
Arnoldo: Hubspot's CRM is our most important tool as it allows us to manage, nurture and close the leads we acquire via the aggregator and our direct efforts. It is also super helpful in creating landing pages to test some theories via PPC quickly. Finally, it is helping us lately to create intricate retargeting strategies based on the funnel stage at which the lead is.
MessageBird is another excellent tool as it allows us to reduce response times to less than 3 minutes via Whatsapp. It's also a great tool for creating different communication flows depending on the user’s request on various channels.
Some books I recommend are:
1) Blitzcaling: The lighting-Fast path to building
2) Billion Dollar Company by Robert H. Hacker
3) Zero to One by Peter Thiel
4) No Rule Rules: Netflix and Culture of Reinvention by Reed Hasting & Erin Meyer
5) High Performance Habits: How Extraordinary People Become That Way by Brendon Burchard