Fintech, Climate Tech, and What They Mean at Sensible

Mark, our VP of Product, discusses fintech and climate tech with Paypod.
March 19, 2022

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Interview Transcript

Heather: Hi, everyone. Welcome to “PayPod.” I’m your host, Heather Bodie. And today, we are going to be discussing the weather. Yes, you heard me right. Joining me to help explore this topic is Mark Bruno, the VP of Product for Sensible Weather, a climate risk technology company focused on helping people understand and mitigate their climate risk. Mark, welcome to the show.

Mark: Thank you for having me.

Heather: Absolutely. So, to get us started, tell us a little bit about you. How did you find your way into fintech?

Mark: Yeah. So, I’ve been working in early-stage and growth-stage companies for most of my career with definitely a focus on fintech. I’ve worked in health insurance, and small business lending, and consumer insurance products. And as a VP of product at Sensible, I’m very focused on the intersection of strategy and experience design. And so, strategy is where are we in the market? What is our competitive advantage? How are we thinking about the industry as a whole? And experience design is about taking that understanding of the market and developing insights that let us put together a product that drives real value for our users.

Heather: I am very impressed by your willingness to take on the unpredictability of mother nature in doing so. So, give us a general overview of Sensible and how it came to be.

Mark: Sensible Weather, we’re a climate risk technology. The original concept actually came when Nick, our CEO, he’s a Ph.D. climate scientist, was working on climate platforms at hedge funds and he recognized how useful this data could be for consumers in a number of markets. And so, what we’ve built is this climate platform that gives a subsecond performance and the opportunity take climate data previously reserved for these big insurance or financial institutions and provide it to individual consumers. And so, our first product is actually what we call a weather guarantee, and it’s for consumers of travel and outdoor events, and it’s a B2B2C product. And so, in the most basic sense, you can think of Sensible as people that pay you back when the weather makes your outdoor experience less enjoyable. We do this through our climate engine and our parametric fintech platform. And essentially, we’re able to understand climate risk for any type of weather anywhere in the world and our platform designs a custom weather guarantee for our users that gives them useful coverage that matters for their experience at a price that makes sense.

And so, being a B2B2C company, we work with travel brands and travel suppliers to offer their customers the weather guarantee option at the point of booking, whether it’s a hotel stay, theme park tickets, or a music festival. And weather guarantees are not cancellation insurance. And so, there’s this fintech product, cancellation insurance, or cancel for any reason, but instead, a weather guarantee is actually for your experience. So, you still get to go, you still get to have partial experience that you wanna have, but if that experience is diminished by bad weather, then we reimburse you automatically.

Heather: Okay. I’m a huge travel fan, huge adventure, especially when it comes to outdoor activities. And I just wanna make sure I heard you right. So, if I go to an event where I purchased this additional coverage and it drizzles for part of my outdoor event that I’m attending, I can cash in the insurance?

Mark: Yeah. And actually, we would text you in the morning. So, we’re always watching the forecast for all of our users who have weather guarantees. And we text you in the morning and say, “Hey, it’s gonna rain this afternoon between 2:00 and 4:00. Click this link to get your reimbursement.” And you still get to go and enjoy the day while it’s not raining, but it’s not the experience that you paid for, and you shouldn’t have to pay for bad weather.

Heather: And is that an entire reimbursement or a partial reimbursement?

Mark: We do both. Sometimes it’s a partial reimbursement for a certain number of hours. Let’s say if it’s only gonna rain for 1 hour, that might be 50%, but if it’s gonna rain for 3 or more hours, that’ll be100%. But our goal is primarily to do 100% reimbursement.

Heather: So, does your platform then essentially have… Have you developed sort of a risk assessment that allows for the calculation of the percentage of reimbursement for those particular events based on the amount of impact the weather had?

Mark: Yeah. So, our product works with the combination of our climate engine and our parametric fintech platform. So, our climate engine is able to look at a number of different factors and determine the risk of a weather event, and what that weather event is might be different for one person versus another person. So, for example, we work with a lot of ski resorts, and the weather that a skier in Utah is worried about versus the weather that a skier in Michigan is worried about is a very different weather. And so, once our climate engine has identified the risk of certain factors within weather, our parametric fintech platform actually looks at, what is this user’s experience? What partner are they purchasing tickets through? When are they going? How much are they spending? And algorithmically designs a custom weather guarantee. And so, like any risk product, climate risk comes down to the probability of adverse events. And so, in our case, that’s just the predictability of weather in time and space. And we actually have a white paper published on our website that Nick published in 2022.

Heather: I read it. Yes.

Mark: Yeah. And it’s very interesting. And I encourage anybody to go take a look and read it. But at a high level, what Sensible’s uniquely good at is understanding the risk of weather events on various timescales. And so, as consumers, we can open our phone and look at any number of weather apps to see what the weather will be in the coming days. What we’re actually looking at is called a deterministic forecast. But the reality is that weather is much more complex than the view we’re given by these apps. And so, a good example would be like a summer storm. Your weather app might say 40% chance of rain, but what does 40% chance of rain mean?

If a summer storm is forecasted, it’s either going to rain a lot or it’s not gonna rain at all, but it never rains only a little bit. Versus 40% chance of rain in a different season or a different climate may have a completely different set of possible events. So, this is one example of why we find weather apps and weather forecasts so frustrating because they’re deterministic. But deterministic forecasts are dependent on the idea of having 100% accurate knowledge down to the molecular level for the entire world, which is clearly impossible, which is why forecasts can never be 100% accurate. But then another area of consideration in our scientific and data approach is the impact of climate change, which is obviously a huge topic for everyone. And if we’re talking about the probability of weather events, then we also need to consider the fact that the weather events we’ve experienced in the past are not necessarily the weather events we will experience in the future. All of that is to say, we’re doing some really cool scientific work in the background, but in the end, a family of four going to a theme park for the day doesn’t care about the ins and outs of probabilistic forecast, which is why we also spend a lot of time working on our experience design for our end users.

Heather: Who are your ideal partners? What is your company’s top priority in establishing those partnerships and relationships?

Mark: Our top partners or the partners that we’re working with are really anybody that is providing an outdoor experience. And so, obviously, I mentioned ski resorts, I mentioned the water parks, theme parks. There’s a lot of moments that consumers have throughout the year with different types of travel suppliers that are all impacted by weather. And so, we view our product as universally applicable to many different types of markets. What it really comes down to, and this is true for many fintech companies, particularly embedded fintech, is it’s really about identifying partners that have the technological capability to create the end-user experience that we’re looking to create. So, partners that are using a platform that were already fully integrated inside, or partners that own their tech stack and are able to actually work with our publicly available API to access the quote information for weather guarantees and create and manage weather guarantees. And this embedded fintech world is so dependent on the idea of partnerships and identifying those right partners, not necessarily by their business model or by their end customers, but it really comes down to the tech stack and understanding the pipes that are involved in being able to find your way in that ecosystem.

Heather: Let’s say I am a prospective partner and looking to receive a competitive margin on these weather-guaranteed bookings, which also, I learned from your website, but feels pretty exciting, the idea of this higher conversion rate. I might be hesitant to book such and such activity until the last minute because I wanna wait and see how the weather turns out. So, this encourages consumers to book faster and more often. How does the margin on your risk product compare with, say, other travel or activity brokerage or booking apps?

Mark: Yeah. So, if you’re a travel partner and you might have a cancellation insurance product, or you might have ancillary, you know, you could have an affiliate revenue, it’s very much in the same vein of pretty typical margins. It’s a little bit better than typical. And the reason we’re able to offer a little bit better than typical to our partners is that we’re in a position where the integration being seamless is much more important to us than necessarily trying to squeeze economics out. The reality is that nobody is even close to being able to do what we’re trying to do. And so, working with partners and creating that really sound foundation of partnerships is much more important to us than necessarily the economics. But there’s also so much [inaudible 00:09:49], as you pointed out, some are storms that can come and go quickly. And people in that area are used to dealing with after domain. And so, this water park in Mississippi, we actually saw in the summer of 2021 season 49% conversion at the point of booking when offering a weather guarantee. And that’s a pretty wild number when you think of traditional travel insurance or ancillary revenue products being happy with 10% conversion.

Heather: Yeah. Absolutely.

Mark: Yeah. Exactly. But more important than the conversion number is actually this guest satisfaction number. So, we saw where guests, regardless of if they ended up being reimbursed or not, we talked to all of the guests who had purchased a weather guarantee after their day at the water park. And for them, just having the weather guarantee was a useful option because the perception of the unpredictability of rain and their climate is so high. And so, this is a key for many businesses, but particularly embedded fintech, again, is this idea of being able to drive value beyond your initial core value prop. So, we also saw is that the park on-site saw, when there was a rainy afternoon, significantly less people lining up at the customer service desk asking for refunds because people had weather guarantee.

Heather: Yes.

Mark: Yes. Exactly. And because you have this operational problem that you can solve, it creates this partnership that is so important to us and it creates these aligned incentives across all three parties within our ecosystem. So, it’s pretty cool to see and it’s really what people should be striving for when they’re thinking about their product growth.

Heather: You just touched on it, but I have to reiterate, I can’t help myself as a Chicago and native Midwesterner, discussing the weather and adjusting our plans accordingly, I mean, it’s honestly like our favorite pastime. Every day is, how did the weather show up today? And it’s always wildly unpredictable. It can change wildly throughout the day. Have you found sort of quicker adoption in clients, consumers, specifically, in areas with a riskier climate behavior?

Mark: Yeah. We’ve seen a lot of interesting patterns in terms of where people are traveling to, where they’re from, the time of year that they’re traveling. But really what we’ve seen is that weather can impact any outdoor event. Southern California maybe doesn’t have as much weather impacting as Midwesterners might, but Southern Californians travel to the Midwest and they learn that weather can impact their day. And so, we’re seeing this sort of universal appeal in the idea of weather being unpredictable. But you also touched on something really interesting, is that people love talking about the weather.

Heather: We do.

Mark: And so, it’s a really cool opportunity for our product. And think about when you go on a vacation. Let’s say you’re going to Hawaii for seven days. You come back from Hawaii and you’re checking in with your coworkers and, “Oh, how is Hawaii?” “It was great, but it rained on two days. But it was okay because Sensible reimbursed us for that.” And so, that’s a really cool moment that we’re excited about. And we love seeing when people are able to talk about how we were there in the moment that they needed us.

Heather: In an unpredictable space such as the weather, adaptability must be absolutely key to the success of your business. What are some early learnings you experienced at Sensible, and how has the product evolved?

Mark: Yeah. There’s many things. We consider ourselves a learning organization and we really base everything we do on identifying the right questions to ask and the right assumptions to test. But one concept that really stands out and is applicable for any business is being able to speak to your customers in their voice. And so, for us, that’s all about active listening to the words that our customers are using. How do they describe the weather themselves? Right? We have a team of climate scientists. We think about the weather all day. Our words that we use are extremely biased. And so, we have to actively listen to our customers to stay ingrained in the way that they think about weather, the way they describe weather, but then also, how do they think about planning a trip? What are the words that they use? What are the words that they use to describe traditional travel insurance versus the different words that they use to describe our product?

And so, this active listening is a key skill. And for any product that’s working with consumers, because you need to be able to use the words that your customers naturally use in order to make your product accessible and easy to quickly understand. And you can see this manifest in both product marketing and the product experience. So, it seems like an obvious statement to speak in your customer’s voice and actively listen to what they’re saying, but you see it all the time where, particularly in consumer fintech, the marketing material out there is less about what a consumer needs and it’s more about explaining how their technology works. And I said this before, but our technology is fascinating, but a family of four going to a theme park doesn’t care about our technology, they care about their experience, right? And so, those are the words that we have to use, and that’s how we have to think.

Heather: Talk to me a little bit about your team at Sensible, values, culture of your company. What is it like working there?

Mark: Very cool. I absolutely love it. But one thing that is really interesting at Sensible is that we are a very blended team of climate scientists, Ph.D.s who have spent years studying climate of weather, engineering, data engineering, product engineering, and experience design. And so, we view our ability to blend these diverse backgrounds and skillsets together as a competitive advantage when it comes to building our platform and our weather guarantee product. And so, when you talk about blending diverse backgrounds together, it can be really difficult. People are coming from different experiences, they’re coming from different understandings, and most importantly, they’re coming from different methodologies. And so, if you can take these diverse backgrounds and these experiences and find a way to ingrain the team together, you can actually create the best of all the worlds. And so, what we’ve found a lot of success doing is focusing on the idea of autonomy and cross-functional teams to really own a problem and a result.

And so, when you can have a climate scientist, a UX designer, a data engineer, product engineering able to work directly together and seamlessly together towards solving a problem, then you’re able to create these shared unique understandings and unique results and outsized results. And so, it sounds great and it sounds utopian, but a prerequisite for this concept is trust and respect. So, we have to trust each other’s intentions that we’re working towards shared goals and we have to respect each other’s skillsets and knowledge to enable each other to bring our best value to the problem that we’re working on. Sounds easier said than done.

Heather: Isn’t that always, though?

Mark: Exactly.

Heather: I can feel like the concepts are strong, and then those thousands and thousands of tiny steps to sort of actually make that concept a reality is, to me, the differentiator between a company that has a really strong culture and is a really respectful and all-inclusive place to work versus something where the culture sort of struggles and has those gaps.

Mark: Exactly.

Heather: So, on your website, I felt like… I was, like, looking through the different profiles for everybody who works for you and just noting even the tiniest bit, even though it’s right in line with the product, but noting how someone likes to spend their time outside or spend their time in travel, I felt was just that extra added element of personality and personal touch that can just add to the relatability and respect that your company shows. So, I love it.

Mark: Yeah. Absolutely. And it’s interesting because, when you talk about culture versus values, it’s an interesting conversation. So, part of our culture today is that we like to adventure. We’re moderately a small team getting bigger pretty quickly, but we have a lot of people who love rock climbing, and skiing, and snowboarding. You can see that on our website. And that’s our culture today, but that doesn’t mean that that’s necessarily what we value. What we actually value is appreciation of the outdoors. And appreciation of the outdoors could be, you know, just sitting by a lake and relaxing. It doesn’t have to be about adventuring. And so, it’s interesting between, like, what is culture versus what is values, and how do you build a successful team without excluding people from that team? And we spend a lot of time at Sensible talking about these concepts and trying to stay on top of our team and our culture.

Heather: What do you see in the future for weather-related tech offerings? I mean, you mentioned it a couple of minutes ago that there just really aren’t very many, if any, other products quite like yours out there. So, what do you see for the landscape of weather technology long-term, say, 5, 10 years?

Mark: Yeah. There’s been a lot of advancements in the last 10 years. Think about satellites and the data that they provide, increased data engineering, increased analytics methods. And these advancements have coincided with the continued emphasis in culture and society on climate change and what that means, and particularly, the recognition from businesses that this is here to stay and something that consumers demand accountability on. And so, what I think we will see, particularly in climate technology and fintech within this as well, is there are many roles that these climate tech and fintech players have when it comes to climate. From enabling ongoing research and innovation to space, there’s accountability on capital allocation and the space Sensible works in, in being part of the risk management solutions to protect consumers and businesses. But, historically, platforms like this have been in-house for underwriters, for traders, and combine a combination of multiple different data providers and analytics platforms to solve a very specific problem.

And so, what I think we’re going to see, because of the advancements and because of the continued conversation on climate change, is that there will be a shift from these bespoke tools for the specific problems to robust SaaS solutions. They can serve a variety of industries and develop more depth into the space. And according to the U.S. Department of Commerce, $4 trillion of U.S. GDP is impacted by weather. And so, you can read that and understand that the incentives are aligned for these SaaS solutions and the cost that it takes to develop these SaaS solutions. And we’re already seeing it as well in the market. And so, as these solutions are developed and as the conversation stays in the mainstream, we’re going to see a lot of new innovation and access, and this is going to increase society’s overall access and understanding of climate, which I think is fantastic and I’m very excited for.

Heather: What’s next for Sensible Weather? Any exciting offerings, or projects, or partnerships? What should we keep an eye out for?

Mark: Yeah. First of all, we are going to greatly expand our weather guarantee offer for consumers in travel and outdoor events in 2022. I’m very excited about it, and it’s our primary focus right now. There are additional markets that we find interesting and we’re exploring conversations in, but for now, focus is what matters for our team. But beyond that, we are really the first users of our own platform. And we’re able to see the extensibility of our climate platform. And we know we already have one of the strongest platforms that could be available on the market and we eventually will enable other innovators to use our platform and bring their climate solutions to market.

Heather: So exciting. I can’t even believe this, but someone asked me this morning if I have any plans throughout the rest of the year and I realized just last week when we counted, we have 7 different trips in the next 10 months.

Mark: Amazing.

Heather: So, I will be absolutely keeping my eye out for any and all opportunities to mitigate my climate risk. I’m absolutely so excited about the innovation of this product and seeing what happens next. All right. It is time for a segment of our show we like to include in every conversation to close us out, five questions, rapid fire. Mark, are you ready?

Mark: I am. Let’s do it.

Heather: Right. Make a prediction about changes in the immediate future of weather-driven technology. What will you expect to happen in the next 12 to 24 months?

Mark: Everyone is trying to figure out how to measure their carbon footprint. And right now, there is a lot of lip service being paid to the concept as corporations figure out what this actually means. And I think in the next two years, we’re going to see that lip service translate into real action. And the reality is consumer and government demand for corporations to be accountable is not going away. So, I think we’re gonna see a pretty big shift there.

Heather: What’s one cool piece of payment or finance-related technology you’ve come across recently that impressed you?

Mark: We’re seeing a lot of emerging fintech going through multiple waves of success and failure. And while trying to find, like, what is the right application for this? And so, for me, the current NFT wave is not sustainable because it’s not built on real-world value that drives adoption. But below that top-level hype cycle, there’s a core concept of NFTs and the intersection with gaming and the metaverse. And I don’t believe we’re gonna see that adoption in the next two years because of just, you know, all the hype, and the noise, and the lack of clarity, but eventually, the pieces are going to be in place and NFTs are going to have real utility that I’m excited for.

Heather: Talk more and more about that, but we’re in our fast five. Okay. Next one. In the next five years, most people will make a purchase with either Bitcoin, Apple Pay, some other product, which one and why?

Mark: I’d love to see an upstart change of the game. I’m all about early companies and small teams figuring things out, but the reality is the incumbents are best positioned. And so, my view is that half of the biggest players will adapt and use their economies of scale and scope and they’ll kind of dominate the next payments wave, and half are gonna struggle and they’re gonna fade. But I think Block and Apple are very well positioned.

Heather: What’s one piece of advice you have for someone who’s considering a financial technology or the financial technology industry as a career?

Mark: Definitely do it because it is the right industry to be in. But second to that is understand all the pipes and how we got here. So, understand the history of why the U.S. has one type of financial system of payment structure versus Asia having another versus Africa having yet another. If you study those histories, and those changes, and those barriers, then patterns are going to emerge, and it’ll let you enter your career in fintech in the direction of the future tech rather than the current tech.

Heather: What’s the best business advice you’ve ever received, and from whom?

Mark: Hmm.

Heather: I know. This is a tough one.

Mark: Yeah. So, the thing that comes to mind, and this advice actually comes from a research study on the habits of founders with successful exits. One finding in the study was that a subset of successful founders with high quality of life scores do not work on the weekends or late into the evenings. And so, for me, you know, I’ve been in early-stage and growth-stage startups for 10 years. It’s easy at startups to be sucked into long days, spending many hours on the weekends catching up because it’s like, “Oh, I didn’t finish this during the week. I really need to do it.” And it goes for everyone at startups, not just the founders. But about two or three years ago, I started putting this advice into practice and I’ve found that my overall output hasn’t suffered while my quality of life has increased. And I’ve thought about this, and the key reason is that I show up in the mornings or I show up on Mondays with so much more energy and so much more enthusiasm that gets lost if we don’t take time off and rest.

Heather: Incredible. And I wish you knew how badly I needed to hear that today.

Mark: Well, I’m glad to have told you.

Heather: Thank you. As somebody who has been in nonprofit management for many, many years, those evenings and weekends, it always feels like there’s never a time to shut it off. And I very much heard what you just said and I’m grateful for it. So, thank you.

Mark: You’re welcome.

Heather: All right. That does it. Thank you, Mark Bruno. It has been an absolute pleasure. If folks wanna get in touch with you or they wanna learn more about your company, where can they find you?

Mark: Yeah. They can find me personally on LinkedIn, VP of Product at Sensible. There’s a lot of Mark Brunos out there, but hopefully you can find me. And then our website is sensibleweather.com. And you can reach out there, you can learn more about our company. We’re ready to talk. We’d love to hear what people think and ideas that they have.

Heather: Great. Mark, thank you so much.

Mark Bruno

VP of Product

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