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How will investors value MetroMile and Oscar Health?



Last night, MetroMile and SPAC INSU Acquisition Corp. II completed their combination, putting the per-mile auto insurance startup up for regular trading today for the first time.

In the wake of last year’s debuts by neoinsurance companies Lemonade and Root, it’s not surprising to see others test the public markets. For example, Oscar Health recently announced its intention to go public via a traditional IPO.

How the new entrants will fare, however, is not clear.

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There is something of a tale of two companies in Lemonade and Root, with the pair valued at divergent multiples and sporting very different post-IPO trajectories, at least concerning their value.

While Lemonade has appreciated greatly from its IPO price ($29) to its current value ($155.33), Root’s share price dropped from its debut ($27) to today ($21.75).

This morning, as MetroMile starts its life as a public company, Oscar Health preps its own run at an IPO and other neoinsurance players like Hippo wait in the wings, let’s quickly check the difference between how Root and Lemonade have fared, and then ask what we can learn their different valuation multiples and what they might mean for the next startup insurance players hoping to gov v public while the IPO window is wide open.

Root, Lemonade

Lemonade’s path to the public markets was one that started modestly with its first IPO pricing, improved, and then, after technically going public at a down-round valuation, took off like a rocket. Root’s IPO pricing run involved what we thought of as a strong IPO range and then an above-target pricing.

But since then, Lemonade shares have rallied to several times their original price, while Root has dropped around 20%. Lemonade, for reference, sells rental insurance with an eye on going up-market in time to other forms of home-focused insurance. Root is in the auto insurance market, where MetroMile also works.

Both Lemonade and Root have yet to announce Q4 2020 results, so we’ll look at their Q3 details instead. We want to get a handle for how divergently their insurance incomes are being treated. This should give us a better understanding of how Wall Street values each, then we’ll apply those learnings to our two new companies. What we learn today will hopefully bear on other insurtech startups that want liquidity during the current cycle.

Results via the company, comparisons are Q3 2019:

  • Root Q3 2020 revenue: $50.5 million (impaired from $75.8 million)
  • Root Q3 2020 gross profit: $0.7 million (improved from -$36 million)
  • Root Q3 2020 net loss: $85.2 million (improved from -$100.1 million)
  • Premiums in force: $600.1 million
  • Valuation: $5.45 billion (Google Finance)

This gives us Root revenue run rate multiple of around 27x, and a premium in force multiple of just over 9x. Now let’s observe Lemonade’s data.

Results via the company, comparisons are Q3 2019:

  • Lemonade Q3 2020 revenue: $10.5 million (impaired from $17.8 million)
  • Lemonade Q3 2020 gross profit: $7.3 million (improved from $4.0 million)
  • Lemonade Q3 2020 net loss: $30.9 million (improved from $31.1 million)
  • Premiums in force: $188.9 million
  • Valuation: $9.33 billion (Google Finance)

Looking at the same two metrics, Lemonade has a run rate multiple of 222x, and a premium in force multiple of more than 49x.

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


Facebook will pay $650 million to settle class action suit centered on Illinois privacy law



Facebook was ordered to pay $650 million Friday for running afoul of an Illinois law designed to protect the state’s residents from invasive privacy practices.

That law, the Biometric Information Privacy Act (BIPA), is a powerful state measure that’s tripped up tech companies in recent years. The suit against Facebook was first filed in 2015, alleging that Facebook’s practice of tagging people in photos using facial recognition without their consent violated state law.

1.6 million Illinois residents will receive at least $345 under the final settlement ruling in California federal court. The final number is $100 higher than the $550 million Facebook proposed in 2020, which a judge deemed inadequate. Facebook disabled the automatic facial recognition tagging features in 2019, making it opt-in instead and addressing some of the privacy criticisms echoed by the Illinois class action suit.

A cluster of lawsuits accused Microsoft, Google and Amazon of breaking the same law last year after Illinois residents’ faces were used to train their facial recognition systems without explicit consent.

The Illinois privacy law has tangled up some of tech’s giants, but BIPA has even more potential to impact smaller companies with questionable privacy practices. The controversial facial recognition software company Clearview AI now faces its own BIPA-based class action lawsuit in the state after the company failed to dodge the suit by pushing it out of state courts.

A $650 million settlement would be enough to crush any normal company, though Facebook can brush it off much like it did with the FTC’s record-setting $5 billion penalty in 2019. But the Illinois law isn’t without teeth. For Clearview, it was enough to make the company pull out of business in the state altogether.

The law can’t punish a behemoth like Facebook in the same way, but it is one piece in a regulatory puzzle that poses an increasing threat to the way tech’s data brokers have done business for years. With regulators at the federal, state and legislative level proposing aggressive measures to rein in tech, the landmark Illinois law provides a compelling framework that other states could copy and paste. And if big tech thinks navigating federal oversight will be a nightmare, a patchwork of aggressive state laws governing how tech companies do business on a state-by-state basis is an alternate regulatory future that could prove even less palatable.


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AWS reorganizes DeepRacer League to encourage more newbies



AWS launched the DeepRacer League in 2018 as a fun way to teach developers machine learning, and it’s been building on the idea ever since. Today, it announced the latest league season with two divisions: Open and Pro.

As Marcia Villalba wrote in a blog post announcing the new league, “AWS DeepRacer is an autonomous 1/18th scale race car designed to test [reinforcement learning] models by racing virtually in the AWS DeepRacer console or physically on a track at AWS and customer events. AWS DeepRacer is for developers of all skill levels, even if you don’t have any ML experience. When learning RL using AWS DeepRacer, you can take part in the AWS DeepRacer League where you get experience with machine learning in a fun and competitive environment.”

While the company started these as in-person races with physical cars, the pandemic has forced them to make it a virtual event over the last year, but the new format seemed to be blocking out newcomers. Since the goal is to teach people about machine learning, getting new people involved is crucial to the company.

That’s why it created the Open League, which as the name suggests is open to anyone. You can test your skills and if you’re good enough, finishing in the top 10%, you can compete in the Pro division. Everyone competes for prizes as well such as vehicle customizations.

The top 16 in the Pro League each month race for a chance to go to the finals at AWS re:Invent in 2021, an event that may or may not be virtual, depending on where we are in the pandemic recovery.

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Free 30-day trial of Extra Crunch included with TC Sessions: Justice tickets



TC Sessions: Justice is coming up on Wednesday, and we’ve decided to sweeten the deal for what’s included with your event pass. Buy your ticket now and you’ll get a free month of access to Extra Crunch, our membership program focused on founders and startup teams with exclusive articles published daily.

Extra Crunch unlocks access to our weekly investor surveys, private market analysis and in-depth interviews with experts on fundraising, growth, monetization and other core startup topics. Get feedback on your pitch deck through Extra Crunch Live, and stay informed with our members-only Extra Crunch newsletter. Other benefits include an improved experience and savings on software services from AWS, Crunchbase and more.

Learn more about Extra Crunch benefits here, and buy your TC Sessions: Justice tickets here.  

What is TC Sessions: Justice? 

TC Sessions: Justice is a single-day virtual event that explores diversity, equity and inclusion in tech, the gig worker experience, the justice system and more. We’ll host a series of interviews with key figures in the tech community. 

The event will take place March 3, and we’d love to have you join. 

View the event agenda here, and purchase tickets here

Once you buy your TC Sessions: Justice pass, you will be emailed a link and unique code you can use to claim the free month of Extra Crunch.

Already bought your TC Sessions: Justice ticket?

Existing pass holders will be emailed with information on how to claim the free month of Extra Crunch membership. All new ticket purchases will receive information over email immediately after the purchase is complete.

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We’re happy to extend a free month of access to existing users. Please contact and mention that you are existing Extra Crunch members who bought a ticket to TC Sessions: Justice. 

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