Having a kid encourages a lot of families to start thinking differently about their finances. Sure, life insurance is a part of that discussion, but so is creating a will and getting your financial info secured in one place.
Adam Erlebacher is co-founder and CEO of Fabric which provides sort of this organic experience around getting a new family’s finances in order. Adam joins us on the podcast to talk about his own personal experience with life insurance and how that inspired what Fabric is building.
Adam was formerly COO at Simple, an early digital bank, and we discuss how that experience influences the way he looking at fintech and digital finance.
Fintech and entrepreneurial experience
I started my career at JP Morgan doing leveraged finance, so I do have some legacy banking experience. After that I worked in a number of startups. After business school, I got introduced to Josh and Shamir, the founders of Simple. I was really excited about the mission of that company which was to make banking worry-free.
That was about 2009 in the depths of the financial crisis. There was an opportunity to reinvent personal banking with a modern experience. I think we banking has become a better human experience. Simple helped usher in the age of modern banking, leading new banks challenging the status quo and pushing incumbent banks to make changes. Incumbents have responded in many ways, bringing a more modern approach to the public’s benefit.
The personal inspiration for Fabric
When we moved back from Portland to New York, we got an apartment and my son turned two years old. I went to go buy life insurance. I was shocked how arcane and odd the process was. It took me three meetings with an insurance agent, 10 weeks overall, and a health exam to get covered. The agent was upselling me the whole time to buy whole life insurance. My co-founder was going through a similar situation and hit the same wall. We ended up deciding to start Fabric.
Not just about buying life insurance
We realized it’s not just about buying life insurance. People don’t wake up every morning thinking about how to buy life insurance. But when you become a parent, everything changes for you. You have to think about financial and legal services you never had to think about before — life insurance is one of them. So is getting a last will and testament put together. And you need to start thinking more seriously about your finances and how they map with your partner’s. Fabric is this one-stop shop for financial financial protection.
We hear from consumers that life insurance isn’t a high consideration product. What we’ve done instead is take a more orthogonal approach by offering free services like a will and a vault for personal financial information. With Fabric Wills, for example, users can invite a will in a few minutes and invite all their important people in their lives so that everyone knows where everything is. We’re creating a digital map of the family — the executor, guardians, etc. — all on the same platform.
Bringing in new customers
We do invest in the usual suspects — digital channels like Instagram and Facebook. But the bulk of our focus is on this product-driven distribution. We’ve created these free products which are easily accessible and easy to use and through that process, we can deliver real value and trust with our audience. Over time, our customers can decide to upgrade to our paid products.
Reflecting on the insurance business
In many ways, the insurance industry is kind of sleepier than retail banking. It was designed to be that way, to be stable. As a result, professionals in the industry have a different worldview than the banking world, where the industry has shifted to fee income for profits. Those fees are concentrated among 10 percent of the banking population. So, you may have a more adversarial relationship than in insurance.
Insurance’s challenges as a product
People who go through all the hassle of writing up a will and not signing it — that is a product failure. That’s true in the offline and online world. It’s really up to product designers to figure out practical ways to make this experience provide real, and not just theater, value.
One of the main ways we do this is by creating this family network around Wills. In a way, we’re creating a network of nudgers — everyone in that family can provide social pressure to get the will signed and executed. We want to make our products procrastination-free.