US online property insurance company Hippo (NYSE: HIPO) is setting up a development center in Israel and will hire dozens of employees. Hippo was founded in 2015 by Israeli entrepreneurs Assaf Wand and Eyal Navon but its headquarters and development center are in Palo Alto, California. To date Hippo has had a minimal presence in Israel with a small handful of employees. But Hippo recently decided to significantly expand its operations in Israel by establishing its first development center outside of the US.
Hippo began moving forward with its Israel development center in June by appointing Shahaf Shakuf as head of Israel operations. Shakuf previously founded the Israel development center of online education company Chegg. Since June, Hippo's workforce in Israel has grown from 12 to 30 and the company plans hiring dozens of developers, engineers, data scientists and digital marketing staff for its Israel center. At the same time Hippo is seeking permanent offices for its activities in Israel.
Hippo provides home insurance for individuals and apartment management companies in 37 states in the US. One of the company's emphases is a proactive approach to early identification and prevention of flaws and damage to buildings and content by using smart home technology. Hippo's investors include Israeli institutional bodies like Clal Insurance, Psagot, Poalim Capital Markets, and the FINTLV venture capital fund.
Israel is a power in data science"
Hippo has 600 employees at its Palo Alto headquarters and its customer service, sales and marketing center in Austin, Texas. Hippo competes against veteran US insurance companies like Allstate and State Farm as well as newer players like Israeli insurtech company Lemonade (NYSE: LMND), which also provides insurance for homeowners, although its more popular products are for those renting homes.
Earlier this month Hippo began trading on the NYSE after a SPAC merger at a company valuation of $5 billion. As part of the merger Hippo raised $550 million. But since then the company has experienced negative momentum after 83% of the SPAC investors withdrew their money before the merger was completed. Hippo's share price and market cap have since been cut in half to $2.5 billion.
Hippo CTO Ran Harpaz told "Globes," "When you hire engineers in Silicon Valley, you know that you will find employees that come from giant companies like Facebook, Google, Lyft or Netflix. These are engineers who know how to work on large-scale solutions and apply the solutions that have served them in the past. The approach of Israeli engineers is different and they always try to find new solutions that nobody has ever used. I think that the combination of both these approaches will add a lot of value for us."
Shakuf added, "There are areas in which Israel is a power like data science and Hippo faces very large challenges in this field, from giving price quotes to the customer, through predicting snags that can happen and using smart devices to warn before the snag in the home happens.
In the past CEO Assaf Wand has spoken about keeping all the development in one place. What has changed?
Harpaz: To Assaf's credit it can be said that he knows how to change his mind when there is new information. At the start we built a product from zero and it was really important that the development be based in one place and it would be close to the users but at some stage we reached a critical mass. Today we already have eight product lines and we use data analysis for two years ahead, so the place of the developers is already secondary and what is more important is to find talented employees. We have reached such large and broad activities that we no longer need everyone physically to be found in the same room."
Competition with Israeli insurtech companies for employees
In jobs that Hippo has already advertised for engineers in Tel Aviv, experience in the insurtech industry is not defined as a requirement but it would clearly be an advantage. The entry of Hippo to Israel can increase the competition for engineers with a background in the field and attract employees from Israeli insurtech companies like Lemonade and Next Insurance. In general, Hippo joins the enormous competition in the Israeli market for skilled tech employees that has reached new records in the wake of the current tech boom.
Why try to hire engineers in Israel when the demand here is outstripping supply and salaries are climbing?
Shakuf: "There was always money in high-tech but it is not this money that keeps employees in their job. Of course an employee must get what they deserve on the market but beyond that there is importance in development in the job, the challenges that they face in the job and if they feel influential. I want my employees to choose to work for me every day anew."
Harpaz: "Our advantage is that we are still a startup-type company in which the engineer can talk directly with the CTO and chief actuary and they can have a genuine influence on the business. Every employee with us is just a Slack message away from the senior managers. On the other hand, we are no longer a garage company, so we have economic security."
How has the fall in the share price since the IPO influenced the company's employees?
Harpaz: "I'm not an expert in shares but I know that the people who have come to Hippo have come for the long-term adventure. Of course it's annoying that the share has fallen but that is not the conversation that the employees are engaged in. We don't stop for a moment. We are convinced that we know what we are doing and that the customers love us and ultimately the share will also be fine."
Published by Globes, Israel business news - en.globes.co.il - on August 26, 2021
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