300 years of tradition: that’s what Tryg looks back on as the successor of Scandinavia’s oldest insurance company. But the second largest insurer in the Nordics is not as slow-moving as its age might suggest. Just like other big companies, the Copenhagen-based corporation must adapt in a rapidly changing digital age. That is why Tryg, which is trusted by over three million insurance customers in Denmark, Sweden, and Norway, is a pioneer in collaborating with young startups.
“Three years ago, we noticed that something was happening in the insuretech startup world and we wanted to benefit from it,” says Michael Juhler-Nøttrup, Head of Innovation at Tryg. But at first, that was easier said than done. Tryg encountered problems in collaborating with entrepreneurial-minded startups. “Our first experience with startups was that they had a totally different mindset and way of developing,” Juhler-Nøttrup remembers. “We saw that we didn’t have the right setup to engage with them. At that time, we did not have any special organisation for innovation, just developing units within our core business.”
Lengthy decision-making processes conflicted with a fast-pace startup mentality. “I told our executive board, if we really want to do this, we have to create a unit that has the mandate and the resources to actually work with startups and on innovation projects in general.” The executives did not need much convincing. In an ever-changing world, the concept of one-year insurance premiums is likely to be outdated, according to Juhler-Nøttrup. “It’ll be more along the lines of insurance solutions for half an hour, such as for car sharing. The risk landscape is changing and our core business as we know it has to adapt to technical developments.”
To find the right setup to engage with the startup scene, Tryg created “The Camp” in 2016 — a coworking campus in the heart of their Copenhagen headquarters. About 35 tech startups have found a home here, and at least five of them now work directly with the insurance company. For example, Tryg and the smarthome startup AnywhereSolutions are developing and selling insurance-related services to homeowners. Another example is AutoWise, with whom Tryg is working on new insurance models for car leasing. Trial and error is the motto for those relationships. “We partner with startups because they can deliver the solution to a well-defined problem,” says Juhler-Nøttrup. “In the dialogue, it often comes out that it’s maybe not the fix for one problem but for a different one. And also the startups find new ways to implement their product that they had never thought of.”
Years ago, corporates and startups only interacted when a corporation was interested in acquiring an already successful startup. Nowadays, corporations pay closer attention to early-stage startups, and usually, by the time they invest in or even acquire a startup, they have likely already been working together. According to a recent study, 82 percent of corporations see collaboration with startups as “somewhat important”. For 23 percent, these partnerships are even considered mission critical”. In working with startups, corporates expect new ideas, approaches, products, technologies or business models — such collaborations can yield competitive advantages in a hard-fought market.
And what’s in it for the startup? One motivation could be to get financing in the first place. But startups may also benefit from corporates’ market and industry knowledge, as well as from access to new customers and networks. And working together with enthusiastic startup founders can, in turn, have a positive impact on the mindsets of corporate employees, an experience Juhler-Nøttrup knows well. “Some of my colleagues have been very interested in startup culture from the beginning. Others just thought about their three-month targets but not about things like blockchain at all.”
Corporate-startup cooperation can take many forms. Corporates and startups can get to know each other at pitch events, hackathons, innovation camps or workshops, often organised by corporations. An initial way to support startups is simply by sharing resources. Some companies take a more involved approach by having systematic programmes, like incubators or accelerators, that provide startups with coaching, mentoring, and technical expertise. According to a study of the German companies in the Dax-30 by the business consulting firm mm1, 67 programs are in place to support startup founders. The software company SAP alone has seven programs and Telekom follows with six. Cooperation could also extend to joint ventures, co-marketing or licensing deals. The Berlin-based start-up Mimi Hearing Technologies provides an example of the licensing model. Mimi was founded in 2014 and developed a digital hearing test, as well as an innovative way to experience music with personalised sound. “Our goal is to be what Dolby is for surround sound, but for personalised sound at home, in cars, trains, on planes, everywhere someday. The way there for us is software licensing and that doesn’t work without corporates. We are very proud that the corporates like our technology and integrate it,” says Frieder Kühne, Mimi’s Business Development Manager.
Mimi has produced two medically-certified apps, won awards and easily attracted investors, but corporates had to be persuaded to consider implementing their technology. “We were at events like IFA or startups events and came up with PR stunts on World Hearing Day. All that contributed to our exposure,” says Kühne. They are now working with one of Germany’s biggest health insurance providers, BARMER, to raise public awareness for hearing loss prevention. And they have just integrated their technology into headphones made by beyerdynamic, a project they completed in only six months for the nearly 100-year-old company. Naturally, the corporate and startup worlds clashed here too. “Our strategy was initially ‘Move fast, break things’ and their approach was rather ‘Please don’t break things, we make the best headphones, the best studio equipment’. In the end, it worked amazingly well, and it really got us excited, because it’s an indication of great synergy when a young startup handles such product integrations so quickly.”
This is more than a licensing deal for Mimi, it is a learning experience. “We can learn from them how our technology affects audiophiles. And we can experience what it means to build a solid family tradition of high-quality headphone products.” Kühne is enthusiastic about how the business has been developing — the number of employees has doubled to over 40 in the past year — and he has advice for corporates looking to do business with startups. “Be open-minded,” is Kühne’s plea. “Let yourself be surprised by the agile and creative environments most startups operate in. They might not have the long-standing experience, but we surely know how to solve problems.”
The insurer Tryg remains committed to working with startups. They even went as far as creating the spin-off Undo, a digital insurance startup targeting young adults aged 18-28. Founding it independently of Tryg had bureaucratic advantages. Michael Juhler-Nøttrup is well aware that Undo could soon be a direct competitor for Tryg’s core business. “We know that they are going to compete with us down the line, but if we don’t do it ourselves, somebody else will.” With disruptive ideas like this, he’s sure to be on the right path to innovation. “Working with startups has given us a lot of insight into what’s going on in the world.”