Research shows that 75% to 80% of startups fail within five years. But what makes for a successful startup business? In this episode, host Ben Baker interviews Ernie Bray, a business strategy, sales, leadership, and marketing expert. Ernie is the CEO of ACD, a fast-moving, preeminent auto claims technology and services company in the auto and commercial insurance industry. Today, he talks growing and maintaining your startup business or company using the bootstrap mentality, how to make people understand new processes in the company, and the relevance of genuinely instilling your company's mission and vision to your employees.
My guest is Ernie Bray. He’s the brains, the heart, the muscle and the strength behind ACD Corp. He and I met and when we were both talking at an event for IA Path. Chris Stanley has been on my show before, he is an amazing individual. Chris hooked the two of us up. Ernie, welcome to the show. I'm excited for us to have this conversation because you and I come from the same cloth and we both get it. We both know the good, the bad and the ugly of business as we were talking about it.
Ben, it's great to be on the show. I'm excited to be able to help and give the audience some insight about my story and some of the challenges to build a business. Thanks for having me on.
First of all, who is ACD? Where did it come from? What was the impetus for starting your company? Where are you now? Then we'll get into the vision.
My background comes back when I was an athlete in college. I played college basketball. I was going to school getting a degree, but at the time I didn't even know what I wanted to do. I come from a family of teachers. My dad, my uncles, aunts and grandmother were teachers. Everything around my family, the origin was about education. The importance of learning and building knowledge. I even thought about becoming a teacher, but I didn't know what I wanted to do. For some reason, I was lost and didn't know what to do and I ended up getting the job ultimately in the insurance claims. I got into auto insurance and I started out as a basic adjuster and I started to work my way up. I did adjusting for a couple of years, then I moved into the field and started doing field auto damage appraisals.
I worked for AAA, Progressive and learned a lot during that time. It was during that time that I felt like I didn't want to be in an office. I didn't want to be working for somebody and I had this entrepreneurial drive inside me. I felt I needed to do something else. Ultimately over time I said, “I see a niche in here.” This is the time when the auto insurance industry was literally doing things with Polaroids, 35-millimeter photographs and everything was so paper-centric. This was the time when things were starting to change and digital cameras are coming out. I knew like if you could take digital digitization, you could mesh that with all this technology. You could streamline a lot of this process and make it very efficient. At around 2003, I decided I'm going to leave the industry. I'm going to go out and take the leap and try to find that niche where I think I can help insurance carriers streamline the process and take this auto damage estimating and adjusting port and make it streamline. That was the creation of it.
Did you have a technology background? We're about the same age and we look at it and we both saw technology rushing towards us like a freight train. My degree is in Political Science. I ran the mainframe at the University of Victoria in the 1980s. I saw the early days of the internet coming at me and moved into the marketing industry in the 1990s. You sit there and go, “I had no idea where it was going to become.” I remember when 486 was a fast computer. How did you have this impetus of saying, “Things are changing and the curve is coming. We can cross this chasm from dial-up to high speeds from analog to digital.” What was the impetus that actually saw you sit there going, “There is this cataclysmic change?”
You started to see a lot of things changing out. This is a fun story. My brother Brian, during this time when I was working at the insurance carriers, he is a big fan of country music. He started a website and he actually built one of the first country music online websites that did country music reviews. This is the era of CDs of music. He started this site and I helped him out. He is able to work with some of the artists and he was starting to play little sound clips and digitized that. He would ask the artist, “Can we just do that?” “Sure.”
We would interview artists and do things. He could see the power of the internet. I started to say to myself, “This is where the future is going. It's not going to be a DVD or a CD. Things are going to be digitized.” I was helping him out during that time for about three years. It's a fun side project for him and I'm helping him out. I started to see, “There's an opportunity where the internet was starting to take off.” If you look back and you see the story of Elon Musk for example. He was starting a company that was like a directory online. That was in ‘96, ‘97, the start of the internet when it started to take off.Saving time saves money. Click To Tweet
It was around that time I started to see while I was working at the insurance companies, “Things are moving to the computer. They’re moving to online.” That was the impetus of like, “There are things moving ahead.” By the time 2003 came along, I've already had that knowledge behind myself, “This is the future right here.” The insurance industry is historically slow to change. I would say sometimes it's behind other industries by 5 to 10 years sometimes because this is a slow-moving industry. I knew there was an opportunity to jump in and take that digitization part and then move it forward. The things that I did with my brother and seeing what was going on with the internet, always speaking in the technology area, I already had an idea where things would go.
Let's get into the fear of technology and the fear of change because your clients are not Mary Jo consumer, it's the large insurance carriers. Those are the people that hire you and use your product. You've got a series of customers. You need to have the carriers on-board, the All States. I don't know which exact companies you work for, but the large insurance corporations on your side. How do you get them as a startup entrepreneur in a new field and be able to sit there and say, “This is the way things are going, here's how we can help you, do you want to get on board?” That's a scary change for them. Let's face it, insurance is a heavily paper-based industry. To get them away from that paper must have been a scary challenge and a mind shift change for them.
We even had customers right from the get-go that were telling us, “We don't even have email. We don't allow our staff to use email. If you want to work with us, you're going to have to send us a hard copy, photographs with paper weekly and FedEx documents to us.” I’m like, “That was outrageous.”
That’s counterintuitive to what you were trying to do.
What we did was we said, “How do we get your foot in the door? How do you do that when you're an unproven business and you haven't proven it out?” What we did is we went to smaller and mid-sized companies and we pitched to them. We would ask them how they're currently doing their process. We provide services at ACD. We also provide technology. We go in and we would lead with our service solutions, which was field appraising and IA networks, the vendors that we have in our vendor network. We would lead with that because we knew that's what they needed. We would go with the basic service proposal.
They would see that and they would be willing to try that on a pilot level. When we would do that, that's when we would pop open the laptop. We would pull the overhead projector screen and say, “Here's how we manage the process.” When we pop that thing on the big screen and the claims managers would see that, they go, “You're doing services. We use all these other companies doing services, what is this?” We'd say, “This is actually the proprietary internal solution system we use internally to manage the process. By using that system, we're able to give you faster claims, cycle times and better communication.” They would see it and they go, “Could we use it?” We’re like, “Of course you could use it if you sign up with us.”
We would use that as the lead-in with the services. They would see the technology, they would be amazed. We started to build a following that way with small to midsize carriers who would just join up and we would get them using the technology. Once you're able to do that and you've got a few people on board and they started to see and validate what you're doing, you had people who would be advocates for us, people who would be out there spreading the news. This industry is like any industry, people start to know people within your confined industry. We started to build positive momentum that way.
That's great because what you've done is you created a proof of concept with an easy entry point for them. They sit there and say, “We already know that we need independent adjusters. We already know that we need people to feed on the ground to be able to help us process these claims.” There are a hundred other companies that do that. By opening up the laptop and showing them the backend and showing them how you can make this process faster and more efficient, you differentiated yourself.
The key is like you're saying, Ben, is that differentiating yourself is the key. In a market where it’s commoditized, the differentiator has to be that value, just like in any business value can sell a lot. When we're adding value ads and things beyond what they were expecting, such as detailed data and reporting. The ability to manage large amounts of claims right at their fingertips. Not happen to chase down asking statuses on what's going on with a disparate or a whole group of network by email. They can manage it all in one place and that streamlined their office. You shave off phone calls, time, wasted time, trying to go in there and put a lot of information and that's right at their fingertips that they would normally do through email. When you save time, it’s money and the extra value was something we could sell on top of that service.
Here’s the added catch to this and it's the training and onboarding of software because you have two different things. People are going to sit there and say, “The technology is going to take my job.” That's what I'm hearing more and more. No, technology is not going to take your job. The technology is going to allow you to do your job better. The training must be involved, especially in the early days. In 2003, where computers for the majority of people were still not on every single desktop, still not on every person's mind. Not everybody was trained in Microsoft Word or Excel or how to dance around DOS or Windows. Actually, it would be early Windows at that point in time. How did you move past that chasm of trying to get people to understand this is a new way of being able to do this, a new process and getting the end-users within the company? You might have sold the CFO and the CTO at that time, but how do you get the regular people on board who are actually using your software to make it easy for them?
The platform we built, if people in the insurance industry are used to a lot of common terms, fields and systems. They're used to using some of the basic core systems in their own insurance company. A lot of times these systems were green-screen systems, AS400 or those types. They were basic systems but what we were able to do is make it very intuitive. A lot of people when they talk about our product out there, they say, “It's intuitive, it's easy to use. The learning curve is almost zero.” You get right down there and you start using it and you know exactly what to do. We've been very focused on making it very easy for the adjuster. Keep it simple but get the information right at their fingertips. Another way we would do it too is adjusters have a lot of work on their plate. There is no doubt. Adjusters are busy. They're hip from every angle. They have to take recorded statements. They have to make liability determinations. They have to be able to take an enormous amount of phone calls. They have so many things going on besides just the auto physical damage portion of the claim that we focus on.
For us, when I told you about the small companies, we would go in and we would do the pilots with a group of maybe three to four adjusters. We would get them set up, we'd be there for the training. What would happen is they would see how easy it was. Before you know it, they would tell their fellow adjusters in cubicles next to them, “Try this out. This is making my job easier because now I don't have to call up. I can cut and paste or I can just transfer this data right into my core system. I get updates and it saved me so much time.” The key is we’re like a laser on getting adjusters to enjoy using the system and make their job easier. If you can make somebody's job easier every day, they're going to be happy.
I want to take a little detour and it's a detour that I talk about anybody whose business transferred through this and that's 2008. Because every single business was affected by the economic downturn of 2008. How did that economic downturn affect you? For some companies, it was extremely positive. It allowed them to differentiate themselves, build relationships and solidify stuff where their competitors couldn't. A lot of people hurt because businesses and relationships they had gone away because companies went away. How did you whether that whole 2008, 2009 and 2010? What did it teach you and what are the lessons you learned moving forward from that?
For us, in some ways, we're in a business and in an industry that if people are driving, there are accidents that happen. You're still going to have a client base out there because there are claims that need to be handled. Even though then there were fewer miles being driven. There were concerns about that and also, a lot of investment into businesses wasn't happening at that time. It was harder for a lot of startups to get out there and start launching with venture capital and all that. We being a bootstrap company that has been focused on from the beginning being a profitable company, running the business correctly and building a solid real business. We kept our nose to the grindstone and just focused on, “What are we going to do that's going to keep pushing forward our mission, which is a great product, great services and great technology?” We heavily went out there and kept going to the carriers and marketing. With our services, we were that company that companies would go to. For us, we're in an industry that needs what we offer. By offering that compelling product, we grind through it. We continued to grow even during that time by offering what we do.
You touched into venture capitalism and startups. The startup community, 75%, 80% of them fail within five years. I don't know what the exact number is but the numbers are huge. A lot of these failed startups are funded by the venture capitalist world. Do you think that because you did not get into the venture capitalism, because you bootstrapped it, because you were focused on your own dollars and cents and not reliant on capital coming from an external source, do you think you were more careful? Do you think you were far more vision-oriented and far more focused on the success of the company or do you think that that's a fact?
I look at it this way. There are two philosophies out there. You can't say one's wrong or one's better than the other. It's how you want to build your business. There are businesses out there that are heavily funded. As you could see in the news, there are companies that got valuated super high and then the valuations come down because, are they software companies or are they just tech-enabled services companies?If you can make somebody's job easier every day, they're going to be happy. Click To Tweet
Are they vaporware?
Do they even have a real product? The bottom line is that's the whole game. That’s one way to go that way. I've built it from a bootstrap mentality. You don't spend money you don't have. You would reinvest money back into the company. You focus on your customers. You just build a business. There are people that laughed at me and said, “You're doing it the wrong way. You should go out and do this. Go raise a bunch of money.” There's nothing wrong with doing that. If that's what you want to do. There is nothing with people who go that way.
I have focused on that bootstrap mentality and focused on being profitable every year, watching what you spend, reinvest in the company and grow it. It’s two different mindsets. There's no right or wrong answer to it. You have to do what you feel comfortable with as a business owner. What's your goal and what's your mission? Some people push more toward an exit or an acquisition or some are focused on a long-term vision. I think here's a thing. This is my personal view, but I think this way. If you get into business and your goal is to start a company and then quickly try to flip it and turn it or sell it really quick.
I feel from my perspective that it would be hard to build it the right way for myself because you'd be looking for that exit. I think when you look toward the exit, you lose sight of what you need to be focused on, which is building that great product and the great service. Because I'm a believer that you build the foundation first, you build the business and if that's something that later on you want to do, then that's great. You've got to have a viable product. You've got to have something that people are willing to pay for. If you're already thinking for the exit, you're not going to focus on the now.
It's that long-term vision that allows you to build products that serves your clients. Let's get into that a little bit because technology isn't cheap. R&D is not cheap. Iterations and innovation are not cheap. When you're a company that is growing and this is an amazing year coming up for you. You're constantly having to iterate. There are constant new technologies. Many years ago, no one was thinking about iPads. Nobody was thinking iPhones, nobody was thinking about mobile-first technology. You're always having to be iterating, innovating, researching and development and all that stuff. None of that is cheap. How do you keep up with it? It seems to be something that you can go wide and deep in these rabbit holes and you can jump into that you're never going to get out of. How you keep focused on this is what we should be doing and what we shouldn't be doing. Do you have a mission, vision statement that anchors you for that and how does that help you?
The key is when you're running a bootstrap company and you're in the technology space, you have to be efficient with your capital and how you deploy it because you could go down rabbit holes. I think there's a lot of trends out there. AI is one of the biggest areas of hype out there. Everybody is throwing the mark AI. In reality, a lot of it is truly just machine learning. Nobody's out there that is a true AI. Here's the thing where the mindset I come from. Industry and insurance is a workflow. It's a process. What we do is we focus intently on what are the technologies that we can add in that are going to add real return on the investment?
What's that ROI that’s going to help that adjuster longer be efficient for the carrier, not try to get caught up in the hype? When you invest in the hype and you spend a lot of money and throw it down the wrong area and in that R&D, you're going to go off the rails. The key is don't get caught up in a lot of the trends. Focus on where you can invest your resources into things that are going to add true value to that user especially when you're bootstrapped like this. You have to be efficient with capital. That's why our tech team and our development team is all about what's going to add value to what we're doing. You're looking several years ahead, but if you don't want to look so far ahead and get to the point where you're using technologies that are not going to help the customer.
That's the big thing. Is technology going to help the customer? That is absolutely critical. Are the iterations that we're doing is the next direction that we're going to go to? Truly apps are going to help the customer better than what we're doing now.
I'm sure you see self-driving cars. They're making progress here and there, but the thing is they're not ready for prime time yet. Some of these things are great but if you read the news, you would think we're almost ready for flying cars the next day because the hype is out there.
My son who's turning sixteen can't wait for the self-driving cars that he could just get in, tell it where he wants to go and just drive it. He doesn't have to worry about it. They terrify me.
With so much technology and many little decisions that have to work almost like the human brain, there are many different points of failure. Overtime, will it get there? Probably. We've got to live in the now and you’ve got to be able to operate in the now and still think about the future.
Healthy enough is for us to be always be looking three to five years out. If we're looking three to five years out, anything beyond that we’re stargazing. That's the what-if type things. Those are the big hairy audacious goals, the ten and twenty years out. In terms of keeping focus and keeping an eye on business, we truly need to be looking at three to five years. Let's get into that in terms of cases and let's bring that back to company culture because that's what culture is all about. Being able to communicate not only where you are, but where you're going. What are the things that you focus on because companies grow? I'm sure you're a far larger company than you were in 2003. The question is, how do you keep that culture alive and how do you keep the vision alive to let the new people know where you were, where you are and where you're going?
In any business, culture is so important. This is a high-level of what we went through. When you start a business, I'm still very involved. I'm in the day-to-day. I'm a hands-on CEO. I'm very active and I talk to everybody. I'm a big believer that you want to communicate and be that person who's willing to do whatever it takes and show your team members that you are willing to do that. I'll get on the phones too. I'll answer customer service calls. I could do it just as well and I would do it and no problem. I'm willing to help people out because I believe a CEO needs to have their finger on the pulse.
When we started out, you know everybody. You're working with everybody in a startup situation on a day-to-day level. You're talking to everybody. Challenges that we've experienced is as we grew, there are times when I have to step back and delegate and have supervisors and managers take different positions. The people who were used to talking to me on a day-to-day basis, they didn't talk to me as much. That’s the challenge you have to bridge, that gap. You want to be able to give that culture and that mindset to the managers you hire so they can still run the company the way you want to operate it.
It starts with the leader at the top. You've got to be able to give that culture out and that mindset. I would say at our company, I'm very energetic and enthusiastic. I like people who can transcend that out to the whole entire staff because that's just who I am. I need positive, upbeat people. The biggest challenge we've had when we grew was trying to be able to break away, still be able to talk to everybody, but then have a layer of management in between, which is inevitable as you grow. It has to happen.
It's being able to have the new leaders that you bring on board have the same vision as you do and have that brand story filter through the company. Everybody is drinking the same Kool-Aid. Everybody knows the mission, vision, values and they're not just words on a wall. They're not something that's written on a plaque somewhere. They are something that is lived on a daily basis. I love the fact that you're saying, “You'll jump on a customer service call. You'll sit down and you'll talk to people on the floor.” I've watched the videos of how you walk the floor and talk to people. That's cool. People know they can look at the senior leadership and say they're walking the walk and they're talking the talk. They're not just saying that customer service is important, people are important and then going out and playing golf and they're never showing up. They say, “It's all about bottom-line dollars. Suck it up.” You've got to have a consistent culture.When you look toward the exit, you lose sight of what you need to be focused on which is building a great product and a great service. Click To Tweet
It starts with your people because they're the frontline facing the customer and the clients. It's easy when you're starting out and you are that front line. You can give that service because you're doing it personally. I was taking the phone calls. My wife and I were taking customer service calls. We were doing everything. How do I translate that to the people who work for me to give that same level of customer service? Those are all challenges because if you can instill that enthusiasm among the people you hire, then you're still going to be giving that level of service. I still remember one of our first customers, we were at an event and the customer came up to me and said, “Ernie, ACD, you guys are amazing. Your service is phenomenal. I'd never seen anybody like it. When you get bigger, you won't be able to keep it up.” I was offended. I looked him in the eye and said, “We'll keep it up.” I'm glad that we did. Many years later, I'm proud to say that we do. I take it personally because it's a reflection of me and the company and I embodied that.
It’s because it's important to you, you embody that within the entire company. Because customer service and customer experience are important things to you and that's how you believe that the company should move forward, you’re talking about that on a regular basis. Therefore, people within your company believe that and they live it. That's an important thing. Every CEO needs to have that. It's not only having the vision of, “This is what's important to me.” It’s showing everybody in the company why it's important to you, enabling that, rewarding that and standing behind that these are the hills that I'm willing to die on. These things are important to me.
I take it personally. If I see somebody that indicates they're unhappy with what happened, it may not be our fault, I still feel like, “I want to get involved. I want to know what's going on. How are we going to solve this problem? Is this important?” I don't want to be disconnected. I want to know what's going on.
Let's talk about this Entrepreneur 360 Best Company award because this is exciting. This is something that you get to pump up your chest and you get to sit there and say, “All the hard work I've been doing it all the effort that I've made, people are recognizing this.” What does this award mean and what does it mean to you?
Entrepreneur Magazine goes out and they judge a company on the five pillars. A lot of it is innovation, leadership and growth. We were named for the third time to one of the best entrepreneurial companies in America. They pick the top 360 companies in the country. For us, that's a huge honor because it's all the teamwork and everything that we built in our company. It's a testament to that. I tell people, we get that award for innovation and all that, but that innovation and all that hard work we're doing, we're able to give that to our clients.
When we’re out meeting with the customer, we're able to say, “We got this award. We were recognized by this, but you benefit from this because everything we do is focused around making it better for the customer.” It’s all through teamwork. Every person in our company from customer service, quality control, accounting and everybody creates that ACD culture image and product that we deliver. To be honored like that, it's exciting for everybody in the company because it's about what we're about, driving innovation. I like to get our customers excited about that because they can understand that we're not sitting back and being happy with the status quo. We're always finding ways to keep moving forward.
It gets your employees, customers and vendors excited. It allows people to know that we're out there doing something and being recognized for it. It's not just us saying how wonderful we are. There are other people out there saying, “You're doing a good job and you deserve to be recognized and kudos for you.” It's not just the award, it's what the award means. The award means that you're keeping your focus on leadership, innovation and customer experience. All these things that are so important to be able to make the company better and to differentiate yourself. I keep using the word differentiation but that's what it's all about because there are so many companies out there that you look at them and say, “They all do the same thing. Pick one, whoever's cheapest that week.” That's not the type of company that you want to be and I applaud you for that. You want to be the company that people sit there and say, “We want to deal with these people because they add real value to our life. They help us out and they make our lives better.” I want to end there by saying, how do people get in touch with you?
They can get in touch with me by email at EBray@ACDCorp.com. If you're in the business world, you can get to me on LinkedIn at Ernie Bray. On the side, I also have a blog called ErnieBray.com. I do that for fun. I write articles about business success. I talk about fitness and health. That’s another place where I’m into is health and fitness. One thing people need to realize is if you're an entrepreneur out there or you're a business owner and even if you're just anybody out there. You’ve got to realize taking care of your health and fitness and getting proper sleep is so important to operate at optimal levels. That’s something in my sixteen-year path of building this company, there's so much stress involved with building a business. If you sacrifice your health and you do that long enough, you're going to have problems. Never sacrifice your health. That's a real passion of mine, to stay healthy and focus on fitness because it gives me so much more energy, keeps you fired up and it's good to be in great shape and be healthy. That's another area I do. My blog is where I write some of my fun articles about general life stuff.
One last question that I'm going to let you go and this is a question I ask everybody. When you get in your car and you leave a meeting and you drive away, when you're not in the room, what's the one thing you want people to think about you and ACD when you're not there to defend yourself?
I want them to be able to say, “That guy is passionate. He's driven and he cares about what he's delivering,” because I embody it. That's what I want people to know. I'm authentic. I'm the real deal. I talk the way I think and I’m being myself. The key is I'm energetic, enthusiastic and I want people to know that we're driven to deliver on what we promise.
Ernie, I see that with you every single time I talk to you. Thank you for being you. Thanks for being authentic. Thank you for being a great information giver to my audience. You have unpacked an amazing amount of material. People are going to want to read this a couple of times to get everything. Thanks for being a great guest and thank you for being on the show.
Thanks for having me on.
Ernie Bray is the CEO of ACD, a fast-moving, preeminent auto claims technology & services company in the auto & commercial insurance industry. ACD works with Tier-1 Insurers, Mid Size Carriers, TPA's, Fleet Administrators & Self Insureds providing a leading SaaS based platform that drives workflow optimization and efficiency. Ernie is a highly sought after expert in business strategy, sales, leadership, marketing & entrepreneurship. He is also a contributing writer to Forbes, Entrepreneur, TechCrunch, HuffPost, TechCo, Business.com and various other publications. He's led ACD to 6 annual rankings on the Inc. 5000, 4x on Deloitte’s Tech Fast-500 and 3x Entrepreneur 360, “Best Entrepreneurial Companies In America" Ernie has also received recognition including 2018 Insurance Industry Entrepreneur of the Year at the American Business Awards and 2X Ernst & Young Entrepreneur of the Year Semi-Finalist in San Diego. In his free time, he enjoys spending time with his family and focusing on optimization in health, fitness, & longevity. He has competed in over 35+ races including 1/2 Ironman triathlons, marathons, open ocean swims and cycling events. Ernie also practices Krav Maga, boxing and is a former collegiate basketball player.
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