I'm also very bullish on LMND. But when LMND launched its new car insurance, I thought like: "Yeah, that's the right move. And it's going to be their 'proof of concept'. Since renter and pet are more like small markets, it really seems like car insurance is a huge and very competitive market. If they succeed in the car insurance market, the management really is top." But now I feel somewhat disappointed, because now we are not able to really judge them on their "own" work if they buy Metromile. Also, why spend millions in building the IT infrastructure, and a week after launch, buy a competitor that already has a (probably slightly different) IT infrastructure? Now they have to spend money on integration and data transfer...
Also I read the Metromile Q2 report. They started to build a distribution system with 600 independent insurance agents. How are they going to deal with this investments (sunk costs?) and people? Also, Metromile started a cooperation with Hippo (LMND competition), how are they going to deal with this?
As you mentioned, this acquisition raises - for me - more questions than answers.
Hi Jordan,
I love your analysis and I could not agree more.
I'm also very bullish on LMND. But when LMND launched its new car insurance, I thought like: "Yeah, that's the right move. And it's going to be their 'proof of concept'. Since renter and pet are more like small markets, it really seems like car insurance is a huge and very competitive market. If they succeed in the car insurance market, the management really is top." But now I feel somewhat disappointed, because now we are not able to really judge them on their "own" work if they buy Metromile. Also, why spend millions in building the IT infrastructure, and a week after launch, buy a competitor that already has a (probably slightly different) IT infrastructure? Now they have to spend money on integration and data transfer...
Also I read the Metromile Q2 report. They started to build a distribution system with 600 independent insurance agents. How are they going to deal with this investments (sunk costs?) and people? Also, Metromile started a cooperation with Hippo (LMND competition), how are they going to deal with this?
As you mentioned, this acquisition raises - for me - more questions than answers.
Any thoughts?
Kind regards.