Hedda Båverud Olsson - CEO & co-founder at Lassie on hitting €70m ARR and €1m ARR per employee

0:00Hedda Båverud Olsson:And we are back with a very exciting guest. This is Hedda from Lassie. Why don't you give us a quick intro into who you are and what you've built? Hi everyone, my name is Hedda Båverud Olsson. I'm the CEO and founder of Lassie. We're a super app for pets, for cats and dogs. Today, monetizing with insurance, we just had 70 million in ARR. But in the future, we're building for solving everything for pet health. Right now, I'm based in Stockholm and we're live in Sweden, Germany and France. And I got the inspiration to build Lassie from my mom who's a veterinary. So I realized I had this unique advantage that my mom could always tell me how to take care of your pets.

0:43And that's kind of what we're trying to democratize and digitalize now with Lassie. Wow, amazing. That's such impressive revenue numbers. I mean, we all kind of know that the pet space is a hot one, but really, really impressive what you've built there concretely.

1:01Hedda Båverud Olsson:And also lean, like very lean, because, you know, part of the announcement was a million ARR per employee. And now this is like, this is like the super hot metric at the moment, ARR per employee. And I've had it, I was like to hit the million is a fantastic achievement. Can you talk a bit about how you've been able to not just grow quickly and hit the big milestones, but also do it in a way where you've managed to stay lean. Yeah, I mean, it's funny because we've always been bragging about this, you know, revenue per FD number. And I think two, three, four years ago, no one cared as much, but now it feels like it's very hot.

1:35But it's been a fun journey. We've always been a team that's like, oh, this is time-consuming or this is admin-heavy. Let's see what we can do to authorize it. So we've been super early on the whole kind of AI claims, optimizations, working with LLM from everything from customer success to claims to pricing. But I think our biggest kind of proof point is really where we automated 55 % of all claims were money back to the customers in six minutes. And that's just such a win-win for us. I mean, we're saving lots of money and time in doing that. And also our claims handlers can focus on the more kind of interesting and, you know, challenging cases instead of, you know, the more simpler admin heavy cases.

2:23But also it's such a win for the customers. I mean, it can be quite large bills. You don't want to wait several weeks to get your money back. A vet bill can be easily 10K or even more. So definitely something we will continue to focus more on. And there's so much exciting opportunities right now. And I think sometimes people forget that you can definitely launch new business models with LLMs and with AI, but you can also do your kind of existing business model a lot stronger and better with, you know, just building internal AI agents. Yes. Like not everyone has to build AI. You can also just be the best user of AI ever.

3:04Yeah, exactly. I mean, we do build it in-house for our use case, but you don't need to be obsessed to build with AI right now. it's very accessible for everyone. Can I ask what you were just kind of alluding to? There's so many exciting things you could be building. What's the most exciting thing to you? Were you like, ah, I need to get my capacity on that topic? I mean, right now, I think we're focusing on two things. I mean, for me, we're live in free markets now, Sweden, Germany, France, kind of itching a bit to my expansion fingers to launch a new market. So that's definitely something that would have been keen to explore in the future, but also adding more kind of things in the pet care health ecosystem.

3:48And we're actually right now in the interesting phase where we're sitting down and looking at the different opportunities. There's so much kind of into pet food. And then there's the whole kind of service arena. So we're still kind of looking at it right now. So now we have kind of a crazy doubt per mile in our app. So now we're looking to kind of make the app even stronger and start monetizing it.

4:15Hedda Båverud Olsson:And can you talk a bit more about the app? Because the app is like a very central piece, but of course you've monetized by insurance. And insurance typically has very low engagement. You know, people normally buy it once and then they forget about it. But you've managed to build an app that people keep coming back to. So what's in the app that people are finding so engaging? Yeah, so it's a mix of. we kind of really kind of try to personalize your pet health journey. So for example, if you get a puppy or a kitten, you will get this kind of week by week programs, you know, now it's time to learn your puppy to sit or lie or come when you call them, or this is the food you're supposed to eat.

4:51And then so really kind of doing courses, watching videos, you collect points and these points can be used to getting cheaper insurance or doing other things in our marketplace. And it could be everything from now. we also have a partnership with a tracker company. So if you buy the hardware, you would also track the activity, the right activity per day will get points and you can do street challenges. So a kind of gamified way of learning more about being a really strong pet parent, reminders about vaccinations. So really kind of gamified way of keeping your pet super duper healthy. Like gamifying basically being a good pet parent.

5:29That's genius.

5:30Hedda Båverud Olsson:It's like real life Tamagotchi, isn't it? That's awesome. Where are you based? How big is the team? I mean, 70, I guess, if it's one really. Exactly. Yeah, so we have, our headquarter is in Stockholm, but we have satellite offices in Berlin and in Paris as well. We're in the three kind of capitals that we're based, where we have kind of central marketing team out of Berlin, but otherwise HQ is.com and more kind of customer operations handlers, speaking to customers, local languages, a little bit of local marketing in each market as well. And you mentioned the national expansion, you're thinking about other markets in the future.

6:14Hedda Båverud Olsson:Do you have like a target list of like, this is the next market we're going to go into, and then the next one? What is next on your kind of your map of domination? yeah we were actually our end goal is world domination but our first goal is european domination so the next market would most likely be european market um and we haven't decided the full order these are 10 markets and in this order so we do one decision per time and then we kind of come back to the markets when it's time for a new one and you know refresh our view on you know has there been any changes which markets are growing quickest which are biggest What's the competitive landscape in?

6:54So we always kind of redo this analysis when it's time for a new market to see which one looks most exciting and could be most relevant for us. So we haven't decided yet, but several strong European markets to look at. We're only three markets so far, so several more to go.

7:10Hedda Båverud Olsson:Yeah, there's a lot to go after, I guess. I want to just go back to some of the stuff you mentioned about the AI agents, right? Because I think this is super interesting. and I was working to a lot of companies who were just trying to build AI agents for insurance claims. You seem to have built one in-house. Would you ever think about, I don't know, licensing it out, selling it out? Is that a bit of a distraction or could that be a SaaS platform in itself? I mean, right now I think it would be a distraction because we still have so much more we want to do with it. We haven't built it out in all markets at the same scale.

7:46We want to go from 55 to even higher so i think being successful running a startup also means you need to be focused and running kind of two different companies at the same time i don't think it's focused but i would we wouldn't rule it out for the future but right now definitely not the focus and also it's a competitive advantage for us so let's see uh how much you want to share it uh but right now very much focus on building it for our own customers amazing super cool what do you think about like the pet market more broadly, right? I mean, I think there's like, at least as an investor, there's like a common story around people spend sort of ridiculous amounts on their pets.

8:30It's, you know, they're almost more careful with them than with their children and so on. Is that something like, are you seeing that trend continue and increase and like the baskets are getting even bigger? Do you see a geographic difference that it's maybe, you know, worse, or it's getting even crazier in Europe, where it used to be more of a US thing? What are you seeing like in that segment? Yeah, definitely seeing as you also mentioned that a lot of people see their pets as family members. So we have this saying that pets are the new babies. There's a lot of, especially in the younger generation that first get a pet before getting a baby or only getting a pet skipping getting the baby part um but definitely seeing that that's a trend that continues it's not very kind of sensitive to different macroeconomics you know it's your baby so it wouldn't be if you were to reduce spend on something it wouldn't be on your beloved baby pet so definitely seeing that's very strong sorry we do see it varies bit by countries, so more kind of Western countries, that trend is higher there, but it's spreading as kind of socioeconomic factors in groups.

9:44Hedda Båverud Olsson:Interesting, yes, there's definitely a growing market across the whole world as countries get richer and people turn to, I think in the UK, it's something like there's one pet for every two people or something. Millions and millions and people are trading it for children these days. I wonder if there's like a, you know how like affordable luxury expensive soaps and stuff are a trend because people know they're not going to be able to afford a home yeah whether it's a little bit like maybe i can't afford a kid or i can't afford two or three but like a dog yes i can afford yeah and then i have a similar experience can't afford like daycare but i can afford like a dog sitter yeah yeah yeah interesting yeah Yeah, I heard it's kind of sad.

10:27A lot of people get their pets instead.

10:30Hedda Båverud Olsson:Yeah, absolutely the trend. Absolutely the trend. I want to talk about fundraising as well. You raised, I think it was 20 million, 23 million euros at the end of 2023 from Balderton. Since then, you've obviously seen amazing success, huge growth. Are you thinking about fundraising? Is that something you're actively pursuing? Or are you still, you know, given that you've stayed lean, Are you good for cash at the moment? So we're in a very good position that if we continue to stay in the three markets we're at, we don't need to fundraise. But if we are keen to kind of go to more markets pretty soon and not wait until we kind of gather up cash ourselves, then we could potentially look to fundraise.

11:10So it's all about that international expansion topic. It always costs a bit, you know, launching a new market, upfront investments. you don't have any customers you need some people on the ground uh investing kind of legal compliance all those things so it's always an upfront investment to launch a new market yeah that

11:28Hedda Båverud Olsson:makes sense and when we talk about your growth and the success that you've seen the three markets that you're in can you touch on where that growth has come from like what kind of what kind of strategies or channels are you using to it to acquire your users in those markets yeah so i I mean, we are actually, Germany is now our biggest market. So Germany is more than half our revenues, even though it was the second market we launched. And I think we've had similar growth kind of strategies across all markets where we focus a lot on kind of the direct marketing. And thanks to our app, we're seeing that our unit economics are kind of better than all our competitors.

12:06So that's why we kind of very quickly win each market and continue to grab market share, because since we have this app that's kind of free of charge for all our users and it's created such kind of like an organic flywheel that really kind of helps both groups. So we we are kind of very much digital marketing, direct marketing with organic being our biggest channel.

12:29Hedda Båverud Olsson:And so you're using, I guess the app in itself is a big kind of like preventative piece on pet health, so you're giving a lot of that away for free and you're saying download the app, use a preventive piece and then when it comes to the insurance, the insurance needs that you have, we're right there, we're in the app, just get it straight from us. Yeah because for us it's such a no-brainer to include it right because we are seeing better churn, better customer acquisition costs, we're also seeing better loss ratios because people don't have as much injuries, so it's such a win-win to have it and it's only the first step for us to be super, super, super for pets but definitely something that's yeah can't believe no other companies aren't doing it to be completely honest what is um like the strongest acquisition channel to get people to the app is it like is this a social play is that like what what kind of drives huge you know traffic to the app and then what is sort of the conversion rate into into the insurance products so usually actually people people go directly for the insurance.

13:37They see the app as kind of, you know, a gateway, you know, like, if I'm choosing between several different players, why would I not pick the one where you also get this kind of free app? You can gamify your knowledge. You can even reduce your price if you're a super-gaming expert. So it's more like of a decision factor and kind of a mode of something people talk about. So we're seeing mostly kind of the app downloads coming from kind of our customers. Insurance intent. Yeah, yeah, yeah, exactly. Yeah. That's so interesting. So you're sort of adding it as to the bundle. The app is part of the insurance bundle.

14:19Hedda Båverud Olsson:And on that preventative stuff, you mentioned that if they are super pet parents, they can reduce their premiums. And I assume you're not underwriting the insurance yourself. I'm assuming you've got underwriters who you're partnering with. was that was that quite a new thing was that disruptive to them to be able to say look we actually want to use uh a whole bunch of data around pet behavior pet parent behavior and use that to bring down premiums you know we've seen that model in car insurance and health insurance for humans had they seen it before in pet insurance yeah so we do actually it's a technicality we do the underwriting ourselves which means that we do the price model we do the terms and conditions but we don't take the balance sheet so we are an update so we work with insurance carries um i would say it's actually something that made us really stand out and that i think it kind of came pretty natural to everyone working in insurance that of course you have better risk selection if you can avoid going to the vet so it's pretty natural for them and they really really like the concept but then you know getting them to understand that you know especially the first time when you don't really have the data of your your successes like now we have data from three markets we have 200 000 paths in short now it's easier to prove that but the first time where we were like then they could be like we believe in the mobile but can we see some proof points that it works and we're like we haven't launched yet so you would do them but that's always the trickiest part with getting the first deal getting the same with you know getting the first investors to trust you with only a pitch deck right you don't have any data points everyone can understand that this could be something super big and something super cool but you don't have this data points and actual traction yet.

15:59Hedda Båverud Olsson:Yeah, you've got to sell them on the story, I guess. Yeah, the first market was the hardest, for sure. Speaking about being something very big and very cool, what do you want Lottie to be in five to ten years? Yeah, so we're definitely going for world domination, super app. That's really the end goal. And I think for us, as we talked about before, our pets is such a strong vertical. We are not looking to be home insurance, car insurance, and going that. We're more going into that. We have all the pets. Let's give everything that they want in this app. That's really our end goal. Very cool. That's going to be awesome.

16:39What are the main competitors in the US? Or are there any? Yeah, so Trupan is a list of competitors that does pet insurance, for example. Then there's mothers as well. But I think that's Lemonade also do pet insurance for example. You usually see in pet insurance, the pure play pet insurance plays you usually win because people want to pick who's best at pet insurance because it's a pet passion product. But there's also some normal incumbents that offer it as part of a bundling. Yeah, it's awesome. I mean, that positions you so well to be the super app around pets since you're not kind of just slotting it in next to auto and other types of insurance.

17:20Hedda Båverud Olsson:Less credibility for sure. And how are you thinking about your team structure? Because I think having built AI tools and sort of proprietary AI tools in the claim space, you're probably indexing more on R &D product development than some of your competitors. What does that team structure look like? Yeah, so for us, we definitely put a lot of effort into having a world-class tech and product team. It doesn't necessarily mean that you have to be the biggest tech and product team. It's all about finding the right people. We tend to go more for kind of very senior people that can be self-starters, solve problems for themselves and not maybe looking for here's a job description and this is what you're going to do today and really can work independently with everyone in the team.

18:06And for us, it's been super important also to create, not to create silos. So people in customer success can talk to tech or to claims and really marketing is, you know, we need to solve the problem for the customers 360. and that's when you get when you collaborate so really kind of built um a really kind of flat organization a central team with kind of tech and product mini beast out of stockholm where you sit next to customer says marketing or legal and really kind of be part of solving those problems um from an early standpoint we were also a lot focused on kind of everyone being able to talk to customers and kind of sit in the customer chat to understand what's the issues, what's the bugs to really kind of create that culture very early on.

18:56Hedda Båverud Olsson:I think we're out of time. Bela, thank you so much for joining us. It's been great to really get to know you and the business. And thank you for sharing that news about your revenue and your revenue per employee. It's always amazing. Impressive. Yeah, really impressive. It's amazing. It's been super fun. Yeah. Same for us. Let's stay in touch. I'll keep an eye out for the UK expansion at some point. Perfect. Let's do that. Thank you. Talk soon.