JD Ross's Coverage hits $10M revenue and profitability using AI-native insurance platform for startups

heard uh I heard at least one company that uh a portfolio company of a of a fund M&LP in. It's just a hot trend right now with the AI thing is like pull forward by your investors legacy thing. JD, it'd be great if you could figure out us a way for us to give you another $50 million. I do not like how profitable you are.

This is a big problem for us. Yeah, literally. I think that's part of it. I think people are chasing opportunities with dollars before understanding the opportunities. Sure. Look, insurance is a very like inquisitive space these brokerages because it's been the only way to grow.

I think we might be the only one I know of who's doing purely organic growth where you're saying, "Hey, you know that guy you golf with every weekend? Forget him. Come on over to us. " And having that work and I think it's because the whole industry is broken. Like everyone kind of feels fleeced by their guy.

Uh but no one in that space actually wants to innovate because they're it's the most one it's the most boring industry on earth. like no one wants to talk about this or think about it. Even if it's your job, you generally don't want to think about it.

And now with AI, it's finally like right for disruption on a platform side. But if you're acquiring brokerages, you have to convince this 50-year-old golfer, whatever to change their operations. Like, no way. Uh I noticed you don't have the words AI agents anywhere on your website. Is that intentional?

Even had a website until like a month ago. Yeah. Yeah. But no, no, but it feel but it feels intentional where there like other people building this business would say would have would be selling this as like we're bu we're building AI agents for finding and insurance and risk management.

But it feels like businesses don't really care. They're not used to using agents that are awesome yet. And so that's not really a selling point.

I'm curious how you think about how software is evolving and how you think about like integrating AI for the user as well as kind of back office and actually to to deliver value. Definitely I I think right now the storyline for AI on the foundation model side is really obvious, right?

It's just increasing general capabilities and I think the AI software pure kind of play where you're just saying hey we're selling AI into businesses to make them more efficient isn't working as well as people want in certain areas it's really going gang busters like engineering um software engineering others it's and content you know generation things like that in others it's just not performing as well our view is that you it's much easier to build an AI native business than it is to build the software and sell it into people who don't know how to even adopt this stuff yet.

Um, over time, I think maybe it'll get easier as the the uh the entry points make sense in each of these businesses, but it's very experimental right now. And so, we're very very focused on from the ground up, how do we build a business where it works from an AI native way, right?

Like where our clients can just say, "Okay, I'm buying something I already understand. " And behind the scenes, yeah, when you request a certificate of insurance, an AI agent does that, right? It reads through this 200page PDF and says, "Are you qualified to get this data or not? " Okay, great.

We're going to email your insurance carrier, blah blah blah, and it comes back and works to the customer. It's just magic. They just get what they want. They don't need to know how. Like, it's like explaining. You don't want to know where the the sausage meat comes from. You just want to get your sausage. Last question.

Do you have any mattress companies that you're working with? We work with this incredible business called Eight Sleep. Let's go. That's my next ad read. Thank you so much for coming on the show. I'm going to transform. Amazing uh setup.

Well, you're you're our new uh insurance correspondent, so anytime there's some hard-hitting insurance news, just a risk guy. Risk guy. Whatever just call me in. Yeah. Uh uh if something I mean careful what you wish for. I mean the big the big question actually is uh is is the like the how how uh like who is it?

Deutsche Bank is like creating insurance products around the AI data center leases to try and hedge the risk there. That's a fascinating story, but we'll have to jump into it another time because we're we're running late. But thank you so much for coming. Great to finally have you on and come back on anytime.

Yeah, we'll talk to you soon. Have a great How did you sleep last night, Jordy? I got a 76. I still am away from my eight. Oh, yes. I gotta move it over. Um I'm I'm fighting against myself then. Uh let's get to Tyler's cam. Just check in with Tyler. Oh, what? What? What happened to your Oh, oh, what happened here?

Oh, you can't see it. You can't see your desk. He He He backed down. He backed. You can see that the c the microphone is moving upwards because he he uh lost the strength to stand at his standing desk and put his standing desk down. I didn't lose the strength. You lost the strength. You I like to move around.

Sometimes I like to sit down. Okay. Well, you can sit down then. That's No problem. No problem. Our next guest is Josie Zer uh who is uh building a literal unicorn using DNA editing to I will be right back to modify horses. Is this correct? I mean welcome to the show. How are you doing? Good to see you.

Hey, what's up John? How's it going? Yeah, I mean we're gene editing animals. I think animals are kind of like the, you know, software of reality. Fantastic. And uh software of reality. What a turn of phrase. I love it. Uh what like what does this actually mean? Uh is it I know.

Especially nowadays with all these people. Sorry, there's a little bit of a delay. No, it's not theoretical. Here's the thing. Yeah, I know. Okay. Where am I? I'm in my lab in Austin, Texas. Oh, fine. Doing is the delay still there? Can we go? Yes, it is.

uh why don't you give me uh an introduction on the company kind of where you are and I'd love to know uh how what your actual timeline is for building this actual you literal unicorn that going through yeah so you know the company I run is called Embryo Core and we're working on gene editing animals I'm kind of just like I'm tired of people investing in AI note-taking apps And I look at universities and how science isn't going forward.

So I'm like, [ __ ] it. I'm going to build a startup company that people actually care about and like and I'm going to science that I can invest my blood, sweat, and tears in. And to me, that's gene editing the future of life, you know. Amazing.

Uh I think we have some Is there anything we can do about the delay or or should we come back to this? I I think we might need to have you back on the show another time. The that the delay is just a little crazy right now. Um but uh uh but I'm I'm glad we got to check in a little bit and talk about the story somewhat.

Uh I'm sorry we couldn't get it figured out. Somehow we can edit animals DNA and yet we can't get the the the Wi-Fi to work. It happens. Um but the chat is loving you and uh they're they're very excited about this. Uh but I'm sorry.

I'm sorry that we uh that we ran into technical difficulties, but we will check in with you soon. Have a good rest of your day. We'll talk to you soon. Um let's bring in our next guest after I tell you about public. com investing for those that take it seriously.

They got multiasset investing industryleading yields and they're trusted by millions. Our next guest is Scott Shapiro from Coinbase. Let's bring him in from the reream waiting room into the TBP Ultradom. Scott, how are you doing? Great. How are you guys? We're doing fantastic.

a little uh recovering from some technical difficulties, but hopefully there haven't been any technical difficulties in your life recently. Uh give us the update. What uh what what is the latest news in your world? Probably our token sales announcement from yesterday morning. I think that was in the Wall Street Journal.

Correct. Can you give me Can you give me the full story guys got in the journal the sacred text? I I think so. is is Coinbase launches site for so for token sales. Blockchain startup Monad will be the first to sell its digital coin on the new platform.

Coinbase Global is launching a new platform to allow individual investors to purchase digital tokens before they are listed on its exchange. You tell me, is this fake news or is this the truth? That is probably the realest news in the whole journal yesterday.

We are for the first time bringing token sales to the full US retail community since 2018. That's fantastic. Okay. So, yeah, break down the different levels because I know you guys just acquired Echo. That serves a different use case, but what what are the different types of offerings?

Yeah, you know, we're trying to go full life cycle when we think about asset issuers, right? We have a great exchange. It's been around for a long time for secondary trading, but we announced yesterday introduces primary issuance right before it starts trading on the secondary market.

Echo and a related company, Sonar were acquired by Coinbase a couple weeks ago. Coincidental, we were playing this token sales product working with Monet already. That is even further upstream what Echo is doing kind of pre-sales before a token is even ready to be traded or used. Awesome.

So, so this new product you could compare to uh uh certain you know companies like Robin Hood and Public will take an allocation in different IPOs and give an allocation to everyday investors, people that are non-investment banks or sort of established uh investment firms. Is that like a good comp?

It's a it's a fair comp. I'd say the two biggest differences these are not IPOs. These are token sales. Purely crypto, no stock exchange involved. Second difference is it is only distributed to retail investors on Coinbase. So there's not a little IPO allocation for retail and then a big allocation for institutions.

This is 100% just focused on a sale to the retail community and then post sale the real float that comes will be from these folks who bought uh tokens on Coinbase in that primary sale. That makes sense. uh what uh why why was now the right time to bring something like this to market?

I know I mean if you look back through the history of crypto, there was an era where these kind of offerings to retail were much more popular and then there was a lot of pro you know kind of like problems and regulatory gray area from that uh time that uh is starting I feel like to be a bit more clarified but you know maybe you could talk about the timing.

Yeah, there's a couple things here. One is just our ambitions have gotten much broader in terms of becoming what we call the everything exchange. So being able to offer every asset class at every stage of its development and what I focus on is really making that tailor made for the retail community all around the world.

Second thing is the regulatory environment is much better.

And so where a company like Coinbase was being uh not not so favorably looked upon by the SEC a couple years ago um that regulatory environment has improved to the degree where we feel much more comfortable offering this type of product not just to the US community but in dozens of other countries around the world and that's a really new thing uh for crypto.

Yeah, it makes sense. Uh what about uh what do you expect the volume of offerings to look like? Monad is is going to be the first. Is this something that's happening on a on a weekly basis? You know, monthly basis. What are the plans there? What can you share? Probably more like monthly than weekly.

We're really not trying to maximize volume. This is definitely a quality over quantity play.

So it really depends on the types of issuers and the depth of those teams involvement and really their willingness to do this in a way like the Monad team has agreed to where they're not just going to turn around and sell all of the you know insider allocations right away but they're looking to develop long-term incentives and hold themselves to a standard of longerterm lockups and longerterm vesting schedules uh that really puts control in the hands of the retail investors.

uh and you know you look in the past a lot of these token sales on backwater types of markets have not done that um and so we think that if issuers are willing to do that we'll we'll engage with them. How does how does pricing work?

Is it is it a function of supply and demand or is an issuer you know setting a valuation uh and and a specific allocation amount like what can you say around that front? It's it's exactly the latter we described. So the issuer sets the token price, they set the allocation to uh what goes in into this primary sale.

Uh we make sure that it's a team of high quality and that they're willing to be transparent about their unlocks investing schedules and that they're really committed for the long term. Um and then it's really up to the retail audience.

They can invest as little as $100 um or six figures uh paid in USDC, of course, stable coins uh to be involved in the sale. If I'm doing if if I'm starting to sell tokens through this through through this process, uh are there like ad units around this?

Like we when we go to an IPO in New York, we'll often see uh taxi cabs will be wrapped with we were at the Clara IPO for example, there were pink taxi cabs everywhere. At Figma, they really like went all out. There was like a DJ outside.

there was a lot of celebration big uh like you know massive canvas that gets hoisted and there's a lot of attention that comes to it and the New York Stock Exchange and the NASDAQ too to some extent uh sort of offer effectively like marketing packages to celebrate the moment.

Uh is that something that you'll have like an analogy to in the digital realm at some point? I love that idea. I I worked in ads for a decade uh in Silicon Valley before coming to Coinbase. Follow my crypto passions. Thank you. Honestly, powers modern American economy.

Yeah, Cheryl Cheryl Sanberg used to say, "It's the Lord's work. " It is the Lord's work. Back in Facebook, finally, um, we do not have that today. I think that's an interesting idea. This is something that if you go to the Coinbase app, you will see it pretty prominently.

And right now, so the sale actually starts on the 17th. Right now is the time when people can come learn about it and get reminded so that we can notify them. Um, but there's no paid media involved and that's something that we might consider longer term. Uh, I think that'd be fun.

What uh has any details released on on pricing? Yeah, the price is 2. 5 cents per token. Um, the FD FTV, the fully diluted valuation is 2 and a half billion. So,