Bungalow Insurance wants to be Amazon for the insurance industry

For Zachary Stiefler and Tom Austin, the moment of truth in their startup career came over coffee in Wayne.
The pair, who had left the finance world to get their MBAs at Wharton, had driven out to a coffee shop in the suburbs to meet an octogenarian who held the keys to their future. Stiefler and Austin wanted to launch a super easy-to-use online insurance marketplace, like an Amazon for the insurance industry. But they couldn’t sell another carrier’s insurance unless they got a green light from one of the industry gatekeepers.
The industry, they were learning, was kind of like the Mafia. That’s how people kept describing it to them.
“Insurance is really hard to get into and once you’re in, it’s really hard to leave,” said Austin, 29, of Maine.
Most people in their position, those looking to get “appointed” to sell a carrier’s insurance, would have to pay their dues. Work for an insurance company for a decade or longer. But Stiefler and Austin hoped this octogenarian, a retired industry man whom they had cold-emailed, would take a chance on them.
He did.
“We were like, ‘Oh, thank God,'” Austin said.
(The whole process took nearly a year, they said, and the Wharton affiliation helped, since a lot of industry execs come from the school.)
That was in the summer of 2014. Six months later, they joined DreamIt Ventures and soon after started selling insurance on their site, right around when they got their MBAs.
The startup is called Bungalow Insurance. It’s initially focused only on renters insurance (they only sell Travelers right now but are in talks with other potential carriers), which they say is a largely underserved market and one that’s growing fast. They declined to share sales numbers.

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Theirs is a story that veers from the norm in the startup world.

For one, the barrier to entry is a lot higher than most. Most startups don’t have to get permission to start making sales.
The other difference is that they’re not in that celebrated “move fast and break things” school of thought. They’re trying to disrupt the insurance industry — but not too much and not too fast.
“We wanted to work with the system first,” said Stiefler, 28, of San Diego.
The pair said they realized that they couldn’t just buck the system, the way some other insurance startups have tried (and failed) to. They needed buy-in. Hence the coffee shop meeting in Wayne with that retired industry vet. They also went through the process to get certified as insurance sales agents. (Fellow Wharton MBA insurance startup Abaris also spoke of the difficulties of launching an insurance startup.)
“You have to get [the insurance industry] to work with you,” Stiefler said.
(The question of bucking or working the system is one that all kinds of innovators are grappling with, those in City Hall included.)
Bungalow’s story of getting an industry vet to take a chance on them sounds a lot like how another startup might describe fundraising.
For their part, they’ve raised money from First Round Capital’s student-run Dorm Room Fund and DreamIt Ventures, and won prize money from the Wharton Business Plan Competition (they won first place — $30,000 — this year) and the Duke Startup Challenge (both cofounders went to Duke at the same time but never met), plus grants from Penn’s Weiss Tech House and the Wharton Innovation Fund. They also invested their own money. They plan to start fundraising soon.
They’re currently working with fellow Wharton MBA Nitish Aitharaju as their contract CTO. Aitharaju built the backend of the site, while Austin designed the frontend. Right now, they work out of First Round Capital’s University City headquarters (where Technical.y is also based, full disclosure) but plan to move to a shared space at 12th and Carpenter Streets.
As for staying in Philly, they’ve been mulling it over. They’re definitely here for at least one more year — Stiefler’s wife is clerking for a Philly judge — but they’ll also likely open a New York office because of the city’s fintech strengths (it’s also where Austin’s girlfriend lives). The pair already travels to New York every other week for business, though the affordability of Philly is alluring, they said.
Though they’re dedicated to working the system, there’s one line they won’t cross. No suits.
“We’ll work in the industry but we won’t wear suits,” Stiefler said. (He was wearing a T-shirt when we met.) “I had to wear a suit at my last job.”