Startup to Enterprise Ops: Lessons for Serial Entrepreneurs with Greg Tacchetti, CIO at State Auto Insurance

Greg Tacchetti on Co-founding an Insurance Startup, Leading a Digital Transformation at State Auto, and the Case for Cloud-Native DevOps

Greg Tacchetti, CIO, State Auto Insurance | Interviewed by Mark Matta of Atolio

Greg Tacchetti is the Chief Strategy and Information Officer at State Auto Insurance. After nearly a decade at GEICO, stints at Safeco and Fireman's Fund, and an MBA from the University of Washington, he co-founded a direct-to-small-business insurance startup before joining State Auto in 2015 to lead a full digital transformation. In this episode he talks with Atolio co-founder Mark Matta about what it means to actually build a company from scratch, how State Auto moved from quarterly software releases to continuous delivery, and the philosophy behind their cloud-native approach with AWS.

From Navy Pilot to Insurance Executive: A Career Built on Wearing Many Hats

Mark Matta (MM):  Can you give us some background on your career? You've moved from operational roles to founding a startup to becoming a CIO.

Greg Tacchetti (GT):  I planned to fly for the Navy. My eyes went bad. So I ended up at GEICO after some nudging from a family friend. I spent ten years there, seven of them in the motorcycle division, which was small enough that you got to wear a lot of different hats across the whole business. Then I ran operations for a two and a half billion dollar region in New York.

From there I went to Safeco in Seattle as part of a leadership team turning around an insurance company that wasn't healthy. That gave me real experience in both a stressful environment and in working with independent agents. I got my MBA at the University of Washington in 2004, and that scratched something in me I didn't know was there about wanting to do something more entrepreneurial. After Fireman's Fund, where I had a broad portfolio as Chief Administrative Officer and gained a lot of international experience, I left to start the company you asked about.

Building a Direct-to-Small-Business Insurance Startup From Scratch

MM:  Walk us through what it took to actually start a new insurance company.

GT:  Our former CEO at Safeco had moved to XL Capital and asked if we could build a startup around a high-frequency, low-severity commercial product. We did primary research, recommended building a direct-to-small-business insurance company from a blank piece of paper, and pitched that plan. XL eventually chose not to invest, but we shopped the plan and within a month were deep in conversations with American Family. They financed the startup. We launched in February 2013 and had the BOP product live in all 51 markets, including DC, four or five months after going live.

The experience taught me things you can't learn in a big company. HR, legal, vendor relationships, every function has to be thought about differently when you can't just rely on a large department. You have to be creative about what your value levers are and how you use people capital deliberately. I brought a lot of that thinking to State Auto when I joined six years ago as part of a new leadership team, this time to lead a digital transformation after ten years of shrinking policyholder counts and profitability issues.

Fourteen Statutory Lines on a Green-Field Platform: State Auto's Cloud Transformation

MM:  What did the digital transformation at State Auto actually look like?

GT:  In record time we put 14 statutory lines on a new green-field platform, heavily leveraging AWS. We then matured that platform to heavily use microservices and began building our own cloud-native applications. We went from not being on the digital path at all to being, in my opinion, significantly ahead of many competitors.

The philosophical shift was moving from a monolithic application-run department to a focused product team structure. We had quarterly software releases when I arrived. I said that's crazy, let's get to monthly. Six years later we are in full CI/CD, releasing code all day, every day. We now have 60 product teams and we're continuing to grow. The oldest team is a year and a half old.

The moment I'm proudest of: four engineers, one of whom was a senior engineer and two of whom were apprentices from our community college program, built a self-service application for our agents. We had zero customer self-service in State Auto's history. Year over year call reductions of 35 percent followed. People are using these assets because they are good and because, frankly, nobody wants to call anyone if they can avoid it.

The Independent Agent Relationship: Personalization as a Competitive Advantage

MM:  Where do you want to take the platform from here?

GT:  I want our platform to be flexible enough that if an agent wants to present their storefront, their team photos, their branding, they can tailor our product to that degree. Independent agents have choices. They place business with many carriers. I want them to choose us more often, and personalization is one step on that path. Think of the difference between Shopify and Amazon: one lets you build your own experience, the other provides a generic one. I want to give agents the ability to create the experience they want for their customers without it being cost-prohibitive.

Making the Case for Cloud Transformation in a Regulated Industry

MM:  For a CIO in insurance or another regulated industry trying to make the case for this kind of transformation, where do they start?

GT:  I was lucky in that State Auto was already in rough shape, so I didn't have to fight as hard. But projecting myself into a normal CIO's situation: the debate isn't really about cost. If you've already spent hundreds of millions on data centers, you're in a hybrid world no matter what. The real debate is about what do you want to be. Do you want to be an IT shop with monthly releases and incremental improvements? Or do you want to be a high-velocity, dynamic shop that can really move the needle for your customers? If your leadership team is aligned that the answer is the latter, then you're having a conversation about how, not whether, you move to cloud. And if I had to pick a cloud partner, I'm biased: Amazon. They are very attuned to what customers actually need. They're a company that says yes to learning and yes to trying new things, and that's a culture we want to be partners with.

MM:  Greg, thank you so much. This was well worth it.

GT:  My pleasure. Always fun to talk with you guys.