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Loop launches out of stealth to make auto insurance more equitable

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Car auto-insurance from legacy providers has structural bias built into it. It uses metrics such as credit score, income, marital status and education to figure out insurance rates, which eventually disproportionately hurts low-income individuals through high rates and low protection.

Loop, co-founded by John Henry and Carey Anne Nadeau, hopes to launch an alternative model that is equitable for all communities.

“Structural bias is baked into financial services and institutions that perpetuate and reinforce [it],” said Nadeau, who has worked at Brookings Institute and studied at MIT around topics of mobility. “We can’t just focus on banking, [and] insurance is sort of the overlooked ugly stepchild in the world view of financial services.”

How to rewrite the rules

Loop is a managing general agent (MGA) business so it can act as a broker and a vendor in the insurance space. It markets, acquires and services customers, instead of serving simply as a vendor built atop an existing insurance provider. The startup, also a B corp, is prioritizing profit alongside the environment and social dynamics.

The startup is trying to rewrite the rules of auto insurance by using two key metrics to track, create and charge insurance rates: state of roads and driver behavior. Loop bases rates off of usage, while a legacy provider might base rates off of demographics.

Loop is a mobile-only product that vertically integrates with insurance carriers.

Once a user downloads an app, Loop will find a quote for the user based on their location. The secret sauce is Loop’s tech: Using a database of over 100 million car crashes in 27 states, Loop creates a quote for a user based on their location. Henry, who co-founded Harlem Capital, describes Loop’s data is “almost a God-level understanding of crashes that have occurred on each, individual road.”

The startup also uses data around traffic volume, roadway infrastructure and weather data to set rates. The artificial intelligence capabilities could allow Loop to, say, steer a driver off of a road that has high-risk for crashes. Or it could simply reward them for clearing the road without a bumper scratch.

Image Credits: Loop

The other part of its business is based on telematics technology, which allows Loop to understand how and where a driver is going at all times. While legacy carriers might use lack of accidents to incentivize lower rates, Loop is using data to both set the rate and lower it.

Exchanging data for more flexibility could raise some eyebrows, but the co-founders think their customer-base, largely millennials and Gen Z, are comfortable with the model as it promises fairer prices. Loop makes a gross commission on every policy it sells.

Loop also pointed to Ohio-based Root Insurance as an example of how consumers are growing more comfortable with sharing location data. The car insurance startup went public in what many saw as a successful IPO for a midwestern high-growth tech company. Root similarly uses metrics like driver performance and history with telematics technology.

“They use telematics but they still are largely using legacy insurance models,” says Henry. “We’re kind of replacing that with our own AI based approach.”

Root might be the most obvious competitor, but usage-based pricing has been a rising dynamic in insurance for over a decade through various forms. Flexible insurtech has been on a tear recently, with MetroMile’s SPAC, Lemonade’s IPO and, on the early-stage front, Marshmallow, a U.K. based auto insurance startup last valued at $130 million.

The co-founders are confident that their technology is differentiated enough to survive the hot competition.

A racial reckoning and a tweet

The idea for the startup began in July 2020, when George Floyd, a Black man, was murdered by police. Protests erupted across the world, rallying for change and solutions to address systemic racism. VC firms rushed to support Black founders, and Henry saw a gap in solutions committed to change.

Henry tweeted in reaction:

“It occurred to me that the change that we’re looking for was not gonna just bring itself about,” Henry said. “It takes intentional tackling of systemic issues.” He knew Nadeau had focused on transportation and mobility, and the duo eventually decided that they would “swing big.”

Carey Anne Nadeau and John Henry, the co-founders of Loop. Image Credits: Loop

While the co-founders admit the goal is ambitious, they have secured investors that think Loop could be a big business one day. The startup tells TechCrunch that it has raised a $3.25 million seed round led by Freestyle VC, with participation from Blue Fog Capital, Fontinalis Capital Partners, Concrete Rose, Uprising Ventures and Backstage Capital. Participating angel investors include Kristen Dickey, Steve Schlafman, Songe LaRon, Craig J. Lewis, Gerard Adams and Joshua Dorkin.

The money will be used for hiring and developing its data science infrastructure. It’s not live in the market yet, but is launching in Ohio, Illinois, Pennsylvania and New York (pending regulatory approval, of course).

The team met up with 77 investors, 25% of which were female investors, to get the funding needed to start Loop.

“It was more difficult than we thought,” said Henry. “We knew from the jump that we wanted to raise a larger seed round to signal to the market that we were looking to grow big.”

Loop eventually closed the goal round and valuation. As for the tipping point that got investors to back a company disrupting a $256 million industry with around $3 million in seed financing?

Mission, Henry says.

“I literally have goosebumps right now because the mission will open doors that profit cannot,” he said.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Ars online IT roundtable today: What’s the future of the data center?

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Ars online IT roundtable today: What’s the future of the data center?

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If you’re in IT, you probably remember the first time you walked into a real data center—not just a server closet, but an actual raised-floor data center, where the door wooshes open in a blast of cold air and noise and you’re confronted with rows and rows of racks, monolithic and gray, stuffed full of servers with cooling fans screaming and blinkenlights blinking like mad. The data center is where the cool stuff is—the pizza boxes, the blade servers, the NASes and the SANs. Some of its residents are more exotic—the Big Iron in all its massive forms, from Z-series to Superdome and all points in between.

For decades, data centers have been the beating hearts of many businesses—the fortified secret rooms where huge amounts of capital sit, busily transforming electricity into revenue. And they’re sometimes a place for IT to hide, too—it’s kind of a standing joke that whenever a user you don’t want to see is stalking around the IT floor, your best bet to avoid contact is just to badge into the data center and wait for them to go away. (But, uh, I never did that ever. I promise.)

But the last few years have seen a massive shift in the relationship between companies and their data—and the places where that data lives. Sure, it’s always convenient to own your own servers and storage, but why tie up all that capital when you don’t have to? Why not just go to the cloud buffet and pay for what you want to eat and nothing more?

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Transforming the energy industry with AI

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For oil and gas companies, digital transformation is a priority—not only as a way to modernize the enterprise, but also to secure the entire energy ecosystem. With that lens, the urgency of applying artificial intelligence (AI) and machine learning capabilities for optimization and cybersecurity becomes clear, especially as threat actors increasingly target connected devices and operating systems, putting the oil and gas industry in collective danger. The year-over-year explosion in industry-specific attacks underscores the need for meaningful advancements and maturity in cybersecurity programs.

However, most companies don’t have the resources to implement sophisticated AI programs to stay secure and advance digital capabilities on their own. Irrespective of size, available budget, and in-house personnel, all energy companies must manage operations and security fundamentals to ensure they have visibility and monitoring across powerful digital tools to remain resilient and competitive. The achievement of that goal is much more likely in partnership with the right experts.

MIT Technology Review Insights, in association with Siemens Energy, spoke to more than a dozen information technology (IT) and cybersecurity executives at oil and gas companies worldwide to gain insight about how AI is affecting their digital transformation and cybersecurity strategies in oil and gas operating environments. Here are the key findings:

  • Oil and gas companies are under pressure to adapt to dramatic changes in the global business environment. The coronavirus pandemic dealt a stunning blow to the global economy in 2020, contributing to an extended trend of lower prices and heightening the value of increased efficiency to compensate for market pressures. Companies are now forced to operate in a business climate that necessitates remote working, with the added pressure to manage the environmental impact of operations growing ever stronger. These combined factors are pushing oil and gas companies to pivot to new, streamlined ways of working, making digital technology adoption critical.
  • As oil and gas companies digitalize, the risk of cyberattacks increases, as do opportunities for AI. Companies are adding digital technology for improved productivity, operational efficiency, and security. They’re collecting and analyzing data, connecting equipment to the internet of things, and tapping cutting-edge technologies to improve planning and increase profits, as well as to detect and mitigate threats. At the same time, the industry’s collective digital transformation is widening the surface for cybercriminals to attack. IT is under threat, as is operational technology (OT)—the computing and communications systems that manage and control equipment and industrial operations.
  • Cybersecurity must be at the core of every aspect of companies’ digital transformation strategies. The implementation of new technologies affects interdependent business and operational functions and underlying IT infrastructure. That reality calls for oil and gas companies to shift to a risk management mindset. This includes designing projects and systems within a cybersecurity risk framework that enforces companywide policies and controls. Most important, they now need to access and deploy state-of-the-art cybersecurity tools powered by AI and machine learning to stay ahead of attackers.
  • AI is optimizing and securing energy assets and IT networks for increased monitoring and visibility. Advancements in digital applications in industrial operating environments are helping improve efficiency and security, detecting machine-speed attacks amidst the complexity of the rapidly digitalizing operating environments.
  • Oil and gas companies look to external partners to guard against growing cyberthreats. Many companies have insufficient cybersecurity resources to meet their challenges head-on. “We are in a race against the speed of the attackers,” Repsol Chief Information Officer Javier García Quintela explains in the report. “We can’t provide all the cybersecurity capabilities we need from inside.” To move quickly and address their vulnerabilities, companies can find partners that can provide expertise and support as the threat environment expands.

Cybersecurity, AI, and digitalization

Energy sector organizations are presented with a major opportunity to deploy AI and build out a data strategy that optimizes production and uncovers new business models, as well as secure operational technology. Oil and gas companies are faced with unprecedented uncertainty—depressed oil and gas prices due to the coronavirus pandemic, a multiyear glut in the market, and the drive to go green—and many are making a rapid transition to digitalization as a matter of survival. From moving to the cloud to sharing algorithms, the oil and gas industry is showing there is robust opportunity for organizations to evolve with technological changes.

In the oil and gas industry, the digital revolution has enabled companies to connect physical energy assets with hardware control systems and software programs, which improves operational efficiency, reduces costs, and cuts emissions. This trend is due to the convergence of energy assets connected to OT systems, which manage, monitor, and control energy assets and critical infrastructure, and IT networks that companies use to optimize data across their corporate environments.

With billions of OT and IT data points captured from physical assets each day, oil and gas companies are now turning to built-for-purpose AI tools to provide visibility and monitoring across their industrial operating environments—both to make technologies and operations more efficient, and for protection against cyberattacks in an expanded threat landscape. Because energy companies’ business models rely on the convergence of OT and IT data, companies see AI as an important tool to gain visibility into their digital ecosystems and understand the context of their operating environments. Enterprises that build cyber-first digital deployments similarly have to accommodate emerging technologies, such as AI and machine learning, but spend less time on strategic realignment or change management.

Importantly, for oil and gas companies, AI, which may have once been reserved for specialized applications, is now optimizing everyday operations and providing critical cybersecurity defense for OT assets. Leo Simonovich, vice president and global head of industrial cyber and digital security at Siemens Energy, argues, “Oil and gas companies are becoming digital companies, and there shouldn’t be a trade-off between security and digitalization.” Therefore, Simonovich continues, “security needs to be part of the digital strategy, and security needs to scale with digitalization.”

To navigate today’s volatile business landscape, oil and gas companies need to simultaneously identify optimization opportunities and cybersecurity gaps in their digitalization strategies. That means building AI and cybersecurity into digital deployments from the ground up, not bolting them on afterward.

Download the full report.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.

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Soci raises $80M for its localized marketing platform

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Soci, a startup focused on what it calls “localized marketing,” is announcing that it has raised $80 million in Series D funding.

National and global companies like Ace Hardware, Anytime Fitness, The Hertz Corporation and Nekter Juice Bar use Soci (pronounced soh-shee) to coordinate individual stores as they promote themselves through search, social media, review platforms and ad campaigns. Soci said that in 2020, it brought on more than 100 new customers, representing nearly 30,000 new locations.

Co-founder and CEO Afif Khoury told me that the pandemic was a crucial moment for the platform, with so many businesses “scrambling to find a real solution to connect with local audiences.”

One of the key advantages to Soci’s approach, Khoury said, is to allow the national marketing team to share content and assets so that each location stays true to the “national corporate personality,” while also allowing each location to express  a “local personality.” During the pandemic, businesses could share basic information about “who’s open, who’s not” while also “commiserating and expressing the humanity that’s often missing element from marketing nationally.”

“The result there was businesses that had to close, when they had their grand reopenings, people wanted to support that business,” he said. “It created a sort of bond that hopefully lasts forever.”

Khoury also emphasized that Soci has built a comprehensive platform that businesses can use to manage all their localized marketing, because “nobody wants to have seven different logins to seven different systems, especially at the local level.”

The new funding, he said, will allow Soci to make the platform even more comprehensive, both through acquisitions and integrations: “We want to connect into the CRM, the point-of-sale, the rewards program and take all that data and marry that to our search, social, reviews data to start to build a profile on a customer.”

Soci has now raised a total of $110 million. The Series D was led by JMI Equity, with participation from Ankona Capital, Seismic CEO Doug Winter and Khoury himself.

“All signs point to an equally difficult first few months of this year for restaurants and other businesses dependent on their communities,” said JMI’s Suken Vakil in a statement. “This means there will be a continued need for localized marketing campaigns that align with national brand values but also provide for community-specific messaging. SOCi’s multi-location functionality positions it as a market leader that currently stands far beyond its competitors as the must-have platform solution for multi-location franchises/brands.”

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