Welcome to the Innovation Conversation, a podcast
about innovators, both in business and real life.
Hosted by myself, Ricardo Rescual and Harry McCona.
This podcast is also sponsored by ODEV Tech.
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.tech. The podcast is also sponsored by Notion
.so. Notion is offering six months for free for
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thestoreofevents .co .uk to read in the software.
Hi, and welcome to another episode of the Innovation
Conversation. Today we are joined by Ross McCarthy.
Ross, welcome to the podcast. Thanks for having
me, Ricardo. Look at how it's set. Ross, would
you like to introduce yourself to the audience,
please? Yeah, absolutely. So I'm Ross, the founder
of Frugal. I've been in insurance quite well
now and just started my own venture. So here
we are. All right. What prompted you to launch
Frugal? Customers complaining. No, I jest. There's
a bit of truth in that. Obviously, I've been
in insurance for six years and have had a lot
of customers who are Unhappy shall we say with
with current offerings and about two years ago.
I really started to deep dive into them pain
points interview them survey them ask them why
they're coming back to me each year and Find
out really dig into the pain points and see what
was what so yeah, that was really what? Drove
me into this new venture nice, and I mean you've
actually done I guess your product markets feet
way before you actually launched something which
is unique, I would say, for most startups. They'd
normally do the other way around, which is, oh,
let's build something and see if it actually
fits the market. So you've done all the right
steps. I mean, what's the feedback you're getting
from customers or from, you know, from the market
so far? Yeah, I mean, it's been a bit of a mixed
bag. A lot of the customers are refreshed to
see something new come to the market because
for so long, I mean, obviously, I don't know
your own experiences in insurance. I'm sure we'll
get into that, but A lot of customers, it's the
biggest grudge purchase of the year. It's something
that they've got to have more often than not
legally. And it's something that they just don't
want to think about even when they have to think
about it. So it's one of them annoying purchases
that we're trying to put a spin on that makes
it a bit more of a pleasant process for customers,
but also something that they can rely on and
not have to feel like the backs up against the
wall each year. Surely driven by price. So that's
that's my mission And how is it different than
a traditional? I guess insurance provider. Yeah,
so the traditional insurance providers. There's
nothing wrong with them There's a place for it
and has been obviously they've got Especially
what I call the composite insurers. They've got
massive market share where we stand out and where
we are different We truly put the customer first.
So we provide the customer with the tools to
say look Your insurance is going to cost this,
but we give you this to do this. So we're giving
the customer the tools to make massive savings
on their insurance costs at the end of the year
and every year. So it's not just a backhanded
discount or the customer has to ring up to say,
look, my insurance has gone up again. What can
we do about it? That's stressful for the customer.
It's not paying free. It's not the right approach.
Well, insurance should be taken. Loyalty should
be rewarded. And we're big on that. So we want
to make sure that the customer is our customer
and is going to stay our customer because we're
doing the right things for them. So how we do
it different, to answer your question, is we're
dicking into the world of cashback. So we make
sure that the customer has all the tools to save
a substantial amount of money at the end of the
year. And we think the best way to do that is
by allowing customers to leverage their everyday
bank account spend. So we tap into open banking,
enable customers to earn a bit of extra money
on their everyday purchases, whether that's in
Starbucks, buying a coffee or whether it's a
massive purchase like a holiday. It doesn't really
matter. It's all about the incrementality of
doing the daily stuff that everyone does, but
getting rewarded by one of your grudge purchases
to do that, i .e. insurance. So that's really
our focus and our goal. That's pretty good. I
think it puts a different spin on normal insurance
companies, doesn't it? Yeah, I mean, the best
way to describe it, we're not trying to change
the wheel. We're just changing the tires. That
is literally it. We're not trying to reinvent
anything. It's just something different that
customers hopefully buy into and love. That's
all we can ask. What has been the biggest struggle
so far in your company? The biggest struggle?
Trying to speak to as many people as possible.
There's only obviously a very very small team
and there's only so many hours in the day that
I could speak to people. I wish I could do that
as my sole responsibility in the business but
unfortunately there's a few things that I need,
a few other plates that I need to spin at the
moment. I completely get that. It's like sometimes
you actually need your, even though you're just
starting out, you kind of need an assistant from
the get -go. does get, you know, complicated,
especially when you don't have unlimited budget
because otherwise you can just, you know, get
multiple people doing it. But yeah, I completely
get that. And, you know, what's the next step?
I mean, you kind of told me off, I guess off
the timer, that you're looking for investors
right now. So you're looking for a pre -seed
or... Yeah, we like to call it a mini pre -seed.
So we're not obviously... a position I would
say is yet to really go into to BCs or anything
like that for obvious reasons with pre -market
and pre -revenue. So really at this moment in
time, we want to speak with angel investors that
have either an avid interest in insurance and
changing the game a little bit, or just angel
investors that like what we're doing and obviously
buy into it. So when I say mini pre -seed, we've
got an amount of money that we'd like to raise,
obviously for functionality of the business and
stuff like that. We're not wanting to go wild
on any mad marketing campaigns. We want to take
it really, really slowly, gain customer trust,
and then build from there. So there will be a
place for further investment and follow on, but
at the moment it's specifically angels that we
want to speak with. And your market age, just
the UK? Yes, just the UK. I know. for now that's
the key element there just for now yeah interesting
and you know when you're coming up with this
idea with how should i put this not so much of
what's the biggest struggle but what's the thing
you kind of want to change looking you know looking
back when you first started what's the one thing
you kind of realized by now actually we should
have done this differently oh very good question
speak to more and more people obviously i think
i think i did the right thing with That was the
first thing that I did before I even registered
a domain name or anything like that before Frugal
was even a thought and a prayer. It was speak
to customers. And I had the beauty of doing that
because of the job that I was doing anyway. So
I was speaking with customers. It wasn't like
I was coming out of the blue at customers standing
in the street saying, what's going on with your
insurance? I was already deep diving into it
with customers because I was helping them in
my other position. Um, but I wish if obviously
I had the time again, I would have just gone
a bit harder on that. And maybe even put a bit
of money behind surveys, like professional surveys,
not just me speaking to the customers that I
could. I mean, we got a good, a good scope of
it. We had hundreds of customers that we surveyed
and ultimately joined the waiting list. But I
wish I probably would have put some money behind
it, maybe like a survey monkey campaign or something
like that to, to really. dig a bit deeper, but
hindsight's a wonderful thing. True. Is this
your first startup? Yeah, my first startup. Okay,
so what did your friends and family told you
when you told them that you're going to launch
a startup? They said you're going crazy or about
time? There's probably a mix of both. I mean,
I've always been doing different sort of things
on the side, never a full startup that's proper
anyway, shall we say. But I've, yeah, my family
were, weren't so surprised, probably think, oh,
raise Ross with another venture again or another,
another dream to chase. But this one, they actually
was like, no, this is, this is clever. This is
smart. They like the simplicity of it. And again,
family, family and friends is probably an unfair
judgment of your business because they have obviously
got, they've got bias towards it. But with this.
They were like, no, I could see myself using
this straight away. So it was like a nice refreshing
thing. And I wanted it to be as holistic as possible
and just take me out of it. What do you think
of the proposition as a whole? And yeah, they
like it. And how are you finding the fundraising
process? Is it very complicated or very straightforward?
I think the hardest part about the fundraising
is actually putting I aim to do it. It's, it's
a full -time job in itself. I mean, I could,
I could easily spend hours on LinkedIn and go
into events and things like that. But at this
moment in time, I had to make a judgment call
to say, what's more important? My customers are
investors. So I think my, my time is best served
with the customers because At the end of the
day, I could speak to a hundred investors. Some
of them might like it, but it's always going
to be that time that it takes to get the money
in. And then I'd still be in the stalls with
customers because I might have money in the bank,
but I won't have customers that know what I'm
doing or what we're doing and where we're going.
So yeah, I'm happy with the position that we've
took and it started to organically trickle in
with investors just by being visible on LinkedIn
and stuff like that. So I am actively pursuing
them, but at the same time, I'm not putting days
out of my week into doing it. It's just been
more of like a laid back approach now, whether
that's right or wrong, time will tell. Time will
tell. I'm always curious on the entrepreneur
journey, like what do you actually do when you're
having a bad day? Because I'm sure you have plenty
of those, right? Especially when you're building
something from scratch. What do you do? How do
you recharge? How do you get back into shape
type of thing? Yeah, I mean, I'm I'm very lucky
in that regard that I've got, obviously I've
got two co -founders. I've got obviously Sina
of who you already know and you're familiar with.
And I've got another co -founder called Asaf
who's based in Washington DC. And Asaf especially,
he's been in my seat, been there, done that.
He's obviously a CEO of a business already. And
he very much keeps me in check. We are chalk
and cheese as in personality wise, I'm I'm the
dreamer. He's the realist. And when I am having
a bad day, obviously he's there to pick me up.
Cena as well, we sort of like bounce off each
other really. But it's a lonely place. You're
right. It's something where you've got to shake
it off quickly because there's nobody really
coming over the hill to save your day. It's either
you or nobody. So yeah, shake it off quickly
is my answer to that question. Interesting. On
your journey, what type of books inspired you
to kind of launch the business, if any. Yeah.
I'm not a massive reader. I'm more audio books
and that's purely because of obviously concentration.
I've never, I've never been geared the way of
that in a classroom and the conventional there's
a book digest all of that. And then write an
essay. I'm more on the job sort of thing, but
the books that I love. You've got obviously The
Brew Dog, Butch's Man in Babylon, all of them.
80 -20 Principle, I've come to love more and
more as I've actually understood what it means.
But yeah, probably out of the three, 80 -20 Principle
is my go -to, I would say. Interesting. And Brew
Dog as well, as a book. Yeah, shoe dog, shoe
dog. Sorry, I thought you meant brew dog. I'm
like, oh, the guy actually wrote a book. No,
no, no. I don't think I'd buy it if you did,
to be fair. Yeah, good beer, but a highly controversial
fellow. Yeah. Yeah. And how are you finding this
whole journey? What would you change if you could
change something in the whole journey? because
there's always something like some people say
oh it's hard to get funding or I don't like the
current legislation or this or that so what would
change if you could think I think there's a lot
to be said about funded I mean you probably could
tell by the common accent I'm not from London
I'm from Manchester and there is there is a stigma
around funding in the UK especially that it all
has to come from London And there's probably,
there's probably a lot to be said for that because
a lot of the majority of the funding for my type
of business does come from London. It's not a
big arena in Manchester for InsureTech especially.
FinTech's starting to rise and I would probably
consider our business hybrid between a FinTech
and an InsureTech. I'd probably say that it was
more accessible where you can find it without
having to hunt for hours of where these people
live, breathe, work, that would make it a lot
easier and bring that barrier down because unless
you know where to look, who to speak to, and
it's all built on connections, but if you're
a founder that has no clue of the tools to use
or where to go or potentially to give yourself
a head start, it can be very daunting and you
might even get your business off the ground without
even having the tools to be able to do it. So
yeah, that would be my only gripe really is where
are these angel investors? Where are these VCs?
Where do they hang out? What do they want to
see? And yeah, to, to be more visible. I think
there's, I think the one that I admire probably
more than anyone is Harry Stebbins. I think he's
a fantastic advocate for investors because he
doesn't hide behind anything he's very very visible
he doesn't obviously a podcast as well and it
just gives people ammunition to say right okay
this is what an investor is looking for let's
do that or let's approach it in this angle because
sometimes if you're just looking at a face on
a screen you don't know what gets them out of
bed in the morning what they like what they don't
like is yeah it's very very old approach I think
Harry is a testament to him with that he's very
very good at it Did you ever, because you just
said you come from Manchester, do you ever find
that people are, I guess, doubtful of your ability
to do things because you come from Manchester?
We're quite on the contrary of the big Oasis
fans. And I think no, no, I'm sure you can. No,
you're absolutely right. You're absolutely right.
It's I think I've had a few interesting conversations
with with people. I mean, it's all in jest, but
my accent is very, very strong. And the the the
best way of describing it is sometimes to break
the ice with that. They always say, have you
ever seen the TV program Shameless? I grew up
like 10, 15 minutes from there. And then it's
a bit of like an icebreaker. And then that sort
of stigma has gone because we're not the poshest
of people. I mean, I can put an accident on to
try to do. But yeah, it's probably preconceptions
as soon as I speak that, oh yeah, he doesn't
know what he's talking about sort of thing. But
yeah, I like to think about the curve of that
one. It's quite interesting because obviously
you're doing a very traditional industry. but
you're also very creative and doing something
completely new to that traditional industry.
But then to even think that they would still
frown upon whatever you're doing just because
of your accent is, it's, wow. It's crazy. We're
competing with London though. I mean, I've especially
in the early days of Frugal when to be honest
with you, I didn't really know what it was when
I was just ideating things and speaking to people.
I had some quite high profile meetings. with
people involved at Lloyd's, though in that obviously
massive arena. Some of which were lovely, but
others were very much 50 -odd -year -old man,
grey suit, answer the call mid -meeting and just
disregarded me on the call. I was like, ah, okay,
is this the world in which we're operating in
sort of thing? But you can't let it get to you
because... At the end of the day, you've got
to look at it from their point of view. You've
got some young Turk on the scene now who's trying
to rewrite the facts of life. And they've been
there and seen that for probably longer than
I've been alive. So this is give and take with
it, but I always think that you take someone
at face value and don't ever disregard them based
on where they're from in the world or how they
speak. So yeah, that would be my... I eat to
them people if I ever came into contact with
them again. But yeah, whether we will or we won't.
Do you think there's a lot of room to grow within
this industry and it's actually ripe for disruption?
Because we were talking a while back about how
complicated renewing your insurance, not redoing
your insurances, but actually getting the best
value for money for insurance policies. It's
absolute nightmare. And I still can't believe
to this day and age where you renew with the
same company, but you might actually get a worse
deal than a new customer. So I need to be on
the market. I mean, that's just literally the
whole system. So you think there's still like
a lot of room to grow overall in the space? Absolutely.
There's a reason why the comparison sites have
grown as big as they have. And the reason for
that is that customers aren't happy where they
are. Otherwise there wouldn't be a place in the
market for comparison sites if everyone stayed
where they were. So this industry, they say that
there has been But there hasn't been really any
change in a long, long time. And it will come.
And I think the pivotal point of a lot of all
of this will be when AI really hits. And I think
that is because a lot of the, again, I'll mention
them as the composites. So the composite insurers
are the ones we've got, the mass market share,
the ones that everyone knows about the vivas
of the world and such. They're making massive
strides, but one thing you've got to realize
is these companies are like cruise ships. So
they're that big, it takes a long while for them
to change direction or do something different.
So there's always going to be a place for them
because they're so big. They command that. They
will be able to take market share while they're
asleep. But the innovation will really, I think
anyway, come from the challenger brands. Same
as what we've seen in the banking industry, where
you've always had your Stonewall bank, banking
companies, and then the likes of Stalin and Monzo
come around and really, really changed the game.
With insurance, it has been that sort of pivotal
shift, but there hasn't been a shift really like
there has in banking. So it will come. And it
needs to come because, like you say, it's an
absolute nightmare for customers that if they
choose and put their trust in one company and
then at renewal, they're worse off to stay with
that company than it would be to go elsewhere.
For me, I think it's the only industry that I
know of anyway, of where loyalty is just disregarded.
It's just something where Alright, you're a customer
of ours, now we'll do what we want sort of attitude.
It's ridiculous. It's completely backward. For
me, it always struck me as something quite, let's
take car insurance for example, one of my pain
points. I have several years no claim. I have
my license for decades now. Never had a crash
thankfully. At least not of my own fault, which
is also quite important. So I think of myself
as a very safe driver. Yet every time I go to
try new insurance, they always ask me, what do
you do for a living? And it's just really basic
questions that can in a way, shape or form determine
what my driving style is. Because I can be, I
don't know, an office clerk and drive like an
absolute moron on the road. And there's no way
for them to track that, right? Unless they put
a black box. But then even the black box actually
doesn't work that well. And then they start,
I guess, how should I put this? They start penalizing
you for driving at 3 a .m. But 3 a .m. is probably
quite safe because there's no one in the road.
So, it's quite a lot of space there. Yeah. It's
these pre... What's the word for it? It's this
attitude towards that if you drive a certain
car or if you're a certain age, you're fundamentally
a bad driver or an unsafe driver. But you could
flip that completely on its head and say... Well,
potentially some of the worst drivers on the
road are over 60, for example, and not the under
20 age category that gets slaughtered on their
costs. Whether it's just by being the age, they
might be driving a one litre car that you probably
couldn't push it off a cliff at a hundred mile
an hour. But it's something where as soon as
you mention insurance, there's a negative stigma
attached to it. And you'd probably be hard pressed
to find. people who love insurance and say oh
it's great that that actually exists because
there's so many negative stories and experiences
attached to it that just shines through. There's
nothing actually that's out there at the minute
that a customer could probably say you know what
this is brilliant this is fantastic and it does
exactly what I need and I'm never ever going
to switch from that insurer even if the price
goes up a few pounds a year each year because
they give me enough value add to say okay I'm
happy with that I'm happy with that transfer
of value to say you get this I get that there's
nothing like that there in insurance it's very
much purchase bought on legality and that's yeah
exactly and then when you're doing them you never
know if it's going to go good like or if you're
going to have a good experience or bad experience
right It's always, let's see how he covers that
bit of the scenario. Yeah, these two trigger
points for insurance, there's your renewal, and
there's an event of a claim. So they're the two
real points that you'll know if you're happy
or not, because let's face it, for 11 months
of the year, nobody wants to think about insurance,
so they put it in a draw, forget about it, until
they actually have to act. but there's no relationship
built in that 11 months so it all comes down
to price or claim experience and if you fall
down on either one of them you've lost the customer
anyway oh i mean you tell me ricardo can you
think of any other industry that doesn't really
speak to their customers throughout the year
and then i meet you for one month of the year
If they're not happy, then they just wave sayonara
to you. It's crazy. It's absolutely crazy. I
was going to say Netflix. I think I'm really
pissed off at the fact that he creates surprises.
Yeah, true. I think they could probably wangle
the customer back though with putting a new show
on or a film. Again, the value of exchange might
be worth it there. For the future, how does he
focus growth? What are the plans for the future?
Yeah, so the plans, I mean, again, it's all going
to come down to how fast we move with this. We've
built the waiting list up to a nice number. I
do want that to increase substantially because,
again, with insurance, that we're not going to
hit every single person on that waiting list
that's going to need us there and then when we
launch. We do need to bump them numbers up. But
yeah, we feel that we are positioned in a way
in which every customer who has a need for our
starting product from insurance and has a smartphone
and use banking app quite easily will have a
place for Frugal. That is my belief. I think
every single person that of them three instances
that I've just explained will be able to effectively
save money on their insurance costs. I want to
tread very, very carefully on expectations to
grow from stuff like that, because again, we
are fully bootstrapped. I'm hoping that if we
do what we say we're going to do, which I firmly
believe we will, the investment will come. the
outreach to customers will just be more and more
vast and we'll be able to really, really explode.
That's the plan. And I think it'll speak for
itself. I think the product is strong. Our USP
really, really does the talking. We don't have
to shout and scream or be the snake oil salesman
to say, this is great. It really does everything
the customer needs by the customer. It's not
really yours. We're just providing the tools
to be able to do it. It's the customer that will
really see their own savings rise based on their
everyday spend and how they act with Frugal.
Because again, there's going to be customers
that save £100, there'll be customers that could
save £500 plus. The beauty of Frugal is that
it's personal to that customer. There's not a
one size fits all approach. and they never will
be it's all based on that customer spend and
obviously customers spend a different amount
that's fine as long as it matters to you and
that's all that we can that's all we can do it's
always good i mean saving on insurance is something
that is so in demand right you talk with anyone
they said do you like say would you like to save
your own insurance cost yes 100 like this is
a no -brainer like everyone who has a need for
it so i think I think the future's got to be
really, really bright, which is awesome. Ross,
if people want to reach out to you and find out
more about Frugal and what you guys are doing,
what's the best way of doing so? Yeah, so the
best way of doing so is following me on LinkedIn.
You can connect with me on there. You can also
email me. That's the other angle. Probably more
active on LinkedIn for anything sort of conversational
related. My emails at the minute are very much
day to day stuff. But yeah, on LinkedIn. Well,
what's the best? You want me to put my handle
or you put it in? Yeah, I can put your handle.
Perfect. Yeah, that's the best way. Ross, thank
you so much for your time. It's been an absolute
pleasure. Perfect. Thank you, Ricardo. The podcast
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