The Zebra CEO on business model: 'We really leaned into focusing on the user experience'

The Zebra has raised $150 million after doubling its revenue in 2020. The Zebra CEO & Former KAYAK President Keith Melnick joins Yahoo Finance Live to discuss.

Video transcript

ZACK GUZMAN: Welcome back. In this week's startup spotlight, I am going to be talking about a truth that we all know to be true. That is insurance can be tricky to navigate. There's no shortage of platforms out there to help you navigate which premiums, which insurance policies might be right for you, and what prices might be best.

But one of those platforms, The Zebra, just raised $150 million in a new funding round to hit a valuation north of $1 billion. So the Mark Cuban-backed company, The Zebra, is now also the unicorn. So for more on this mythical zebra-unicorn, we're joined by Zebra CEO and former Kayak president, Keith Melnick joins us right now. And Keith, you can call it a zebra, you can call it a unicorn, but whatever it is, business is booming right now because you guys said your revenues doubled, more than doubled over the last year. So talk to me about what's working right now.

KEITH MELNICK: We actually call it a zebracorn now, so we figure it's the new mythical animal. No, what's working really well is, when I took the company over 3 and 1/2, almost 4 years ago, we really leaned into focusing on the user experience and being the consumer first. Most of the stuff that was in the market before we really dug into this didn't really focus on that user experience. And users want that. We're positioning ourselves as an insurance advisor to really help consumers find what they're looking for. They need somebody on their side. This is, as you said, it's it's tough to find insurance.

AKIKO FUJITA: Keith, you started with auto insurance, but of course, you've expanded into more since then. I'm curious what kind of growth you've seen on the homeowner's insurance side, largely because there has been so much focus on the home, whether it's from new buyers or those who are looking to potentially reassess their situation, especially during the pandemic.

KEITH MELNICK: We've seen good growth there, although it's the law of small numbers in that case. We've seen more than 100% year over year growth, but starting from a small base. There's definitely demand there, but people typically look across all of their P and C needs, so across both auto and home. Auto is also a wonderful market. You know, it's a mandatory product. As you mentioned, coming from Kayak, I'm thrilled to have gone from a discretionary market, like travel, to a mandatory market, like auto insurance. So we've just seen great growth across the board.

ZACK GUZMAN: Yeah, we had the CEO of Select Quote on last year during their IPO day, another one of those kind of shopping platforms to help people navigate the insurance decision. That stock's up by about 13%, I think, since they went public. But when you look at competition in this space, what is The Zebra doing to kind of separate itself right now or maybe avoid what maybe critics might point to as a potential race to the bottom or margin compression when you think about competitors out there?

KEITH MELNICK: But in this-- this is not a commodity industry. This is not just price comparison. There's this notion of value. So not every policy's the same. Not every policy-- a policy that's going to be right for you is not going to be right for me, for example. So, again, I'll go back to what's really important here is all about focus on the individual user.

We have so much information and we can do such a good job in terms of personalizing the experience and really helping the consumer find what's right for them. And nobody else is really doing that and not doing it in the comprehensive manner that we're doing it. So that's really what differentiates us. That's what creates long-term value with the consumer. And that's really what drives our current growth and is going to drive our future growth.

AKIKO FUJITA: Keith, we're talking about a billion dollar valuation to unicorn status for the company. But I wonder what you have seen in terms of a pick-up on the private funding side. We've talked so much about growth in the public space, but it certainly feels like there's a lot of incentive for startups to remain private, given how much capital is swirling around.

KEITH MELNICK: I mean, I fully believe that. You know, I got called for SPACs about once or twice a week while I was going through and doing this. And I was lucky enough to be a part of Kayak when we took it public. And being a public company is not a fun thing. And I think it actually sometimes can-- as a smaller, growth-oriented, more aggressive company, it can sometimes limit what you're doing. And there's plenty of demand out there for investors looking at good growth companies that are built on a solid foundation, have a good path forward. So we had a lot of demand. And I definitely looked at it and would far prefer to be a private company at this point.

ZACK GUZMAN: Yeah, I wonder, too, how much of that decision stemmed from the idea that maybe some-- I don't want to call them shadier operations, but if you have the growth like you guys have and you have revenues more than doubling year over year, I mean, it sounds like eventually, you probably want to go the public route, the traditional IPO route. But I mean, was that mostly why you turned down SPACs right now, aside from being the less fun side of being a publicly traded company. But--

KEITH MELNICK: No-- yeah.

ZACK GUZMAN: What about the recent past?

KEITH MELNICK: No, I mean, we definitely considered it. It was something we looked at. Look, I don't think we're ready to be a public company yet. And I think there's probably quite a few companies that have gone public before they were ready to because of the opportunity with SPACs. I look at things like predictability of revenue, the flexibility in terms of managing-- not having to manage quarter to quarter growth. I just looked at it. And all of the things that being a public company would bring us, whether it's access to capital, liquidity for investors, liquidity for employees, that all can still be managed in the private company without some of the downside that goes along with being public.

As you mentioned, at some point, you know, I try not to get locked into a predetermined output or outcome. I feel like if we just build the best company and execute on our plans, the opportunities will come. And as soon as I get locked into something, we'll start to make bad decisions. I have to keep my eyes open. I know at some point, the public markets may be the best opportunity for us. But we're not locked into that.

AKIKO FUJITA: Keith, I wonder if you can put your former Kayak hat back on to take a look at where you think the travel industry or how the travel industry is likely to emerge. It feels like things are looking a little more optimistic. Planes, flights picking up again. You've got more and more people getting vaccinated every day. And yet, a lot of these travel names are still digging out of what has been such a significant hole over the last year.

KEITH MELNICK: Yeah, I mean, gosh, it feels like there's such a pent-up demand for travel. At least, I know that at my household, we can't be-- we can't wait to travel again. And I think there is a lot of optimism. But it's going to take some time. They took a huge hit over the last year. Certainly, I watched, having a lot of former colleagues and friends that are still in that industry, and it was a tough year. I do think you're going to see a lot of demand. And very strong companies that were able to weather the storm and probably were able to clean up their houses a little bit are going to be in great shape. But I don't think it happens overnight. It's going to take a while for them to catch back up.

AKIKO FUJITA: Keith Melnick, The Zebra CEO and former Kayak president, it's good to talk to you today.