John Mullen, President and CRO: Guidewire: A view from the top

Yeah, just north of Chicago in the suburbs, just a few short miles as the crow flies, but quite a bit of time as traffic actually. Since we're in talking insurance, of course, just down the road from the Allstate headquarters. And of course, we Brits all love talking about the weather. It's really cold where you are, isn't it?

That's Fahrenheit. I'm not even going to do the conversion. It just sounds very, very cold. But at least the difference is you're ready for it. When we get cold, we just grind to a halt. Anyway, it looks like you're warm. Let's crack on and learn a bit more about Guidewire.

Yeah, I think that's a good summary. I think just a comment on the founding. I've known Guidewire since its original founding in a prior role, and was always impressed with their starting point. People really have come to respect what those founding partners did in search of a really durable, resistant problem in service of a really important industry, starting in claims. And the first claims product that Guidewire rolled out, I think those founders really found a tight connection with the service of society in that. And you mentioned ecosystem, and one of the most important parts of who we are is often referred to as ecosystem, but I'll refer to it through this conversation as community. The community of systems integration partners, technology partners, and customers. I've spent a lot of time in the consulting world prior to Guidewire, and the tight-knit community that is required to both solve these problems and unlock new opportunities is really quite impressive and quite a strategic asset for Guidewire. We are really big on community, and we sort of link the words community, collaboration, and co-creation together. And actually, one other note about Guidewire, as you mentioned, I spent a lot of my career at RMS, and like 15 years ago, we were using Guidewire as one of the comparables when the company was being valued. In those days, particularly 10, 15 years into the business, growing very innovative. So it's been really fantastic to see how that journey has evolved.

So I spent a lot of time leading Capgemini's insurance business, and then 2015 I left that role and took on the CEO of the North America business, which actually was every industry segment other than financial services. That was a really great learning opportunity for me and really kind of opened my eyes to the growing influence of SaaS providers in the industries and industry specification of technology being an interesting next chapter. So when I left Capgemini, I started to do some private equity things and came back across Marcus Ryu, who's now chairman of Guidewire and was CEO in that journey you talked about. We got to talking, and I got to meet Mike Rosenbaum, who was really taking the company from, or in the midst of taking the company from an on-prem software solution to a pure cloud SaaS solution. I was really impressed with the story, really intrigued by the timing of that, which we can get into a little bit later, and really optimistic about the opportunity that opens up with that cloud SaaS platform built behind Guidewire. That was what compelled me to join, and it's opening up a lot of potential where Guidewire thinks about how we serve this community, how we drive innovation into this community. So I'd love to say it was well orchestrated, but the simple fact is it was opportunity crossing paths with great relationships from the past. Honestly, most of us design our careers in reverse. It all makes sense when you look at it backwards, but if you look forward, you never quite know where it's going to end up.

You can look at it from two lenses, and I'll kind of come full circle back to how those two lenses converge upon each other. I think if you look at the recent performance and the macroeconomic condition and the pressure on supply chain and availability of capital from reinsurance, it's going to be cost optimization is what most people are going to say. And I think it's a bit of a dangerous first reaction or a bit of a dangerous knee-jerk reaction, because cost optimization has components to it. It's got an operational excellence component to it, it's got a risk selection and pricing component to it. So I think we oftentimes paint too broad a brush of what's the priority. The second point that you'll get people focused on is this focus on innovation. Maybe it'll come up as agility, maybe it'll come up as speed to market. Most often it won't come up as innovation, but really if we unpack those things and pursue the patterns of what drive those effects for 2024 against the backdrop of really what is a ton of pressure, let's be real, the carriers are under a ton of pressure. Personal lines carriers around the world are under a ton of pressure, a little bit different in every geography of course. But really what I think is most important is that the winners of tomorrow have to think about the convergence and harmony of operational excellence and speed to market as something that's no longer a serial effect. I think if we go back a hundred years, the industry has really taught itself that 'well, I can either focus on optimization of my costs or innovation and speed to market and agility and responsiveness to market.' And I think that is in itself a problem. And I think 2024 and 2025 will prove out that harmony across those two vectors is what we really need to be focused on.

In this chair, it becomes really easy for me to pontificate about what would be the perfect outcome. But this industry's been around for a long time, there's been a lot of success in this industry, and the industry has certainly weathered storms and found out how to navigate challenging times to find the right outcome. I think those individuals who are leading organizations today that are posturing to win long into the future are breaking down the barriers between data, technology, operations, and what I would call pure risk selection and pricing, underwriting, and product manufacturing. What gets me kind of excited when I'm talking to customers is when they start to signal that we don't think there's a line between the insurance professional and the insurance technologist. Those two things have to merge well together so that we can both operate and make decisions, and then make those decisions at scale in the operation.

Yes. I should say the business insurance professional versus the technology insurance professional, and those lines, in order to be optimal, being blurred and being in tight partnership with each other. We oftentimes talk about the digital interaction with the marketplace. So what do producers want and what do customers want? How can we be more agile to that? That's often a really interesting constraint between speed and operational excellence. That's one vector that needs to get tight focus. The other vector is risk selection and pricing. Pricing agility, rate making, entering and exiting markets, market management. The agility required now because the speed of the shelf life of product profitability is diminishing every year. So the ability to shape new products and offers, get them to market with the right price construct, is going to be an ever-increasing pressure. Getting the right information to product manufacturing to underwriters is absolutely critical. If we think about those as serial events, we will be missing opportunity.

And if you kind of keep going one level beyond that, if you think about your clients' clients, so the insurance clients ultimately, companies are successful because they make their clients' clients successful. How does that play out with what you're doing with Guidewire with your clients? I don't think the vectors have changed. I think the demands are ever-increasing from distribution partners and customers. Coherence of products, price, and solutions is an ever-increasing demand, but the pressure and therefore the impact on the commercial relationship is ever-increasing. The most important signal to take from that is really the efficacy of the claim experience. At that moment in time when the claim occurs, how is that brand showing up? How well is Guidewire every day thinking about posturing our customer's brand for those moments that matter most, to really show up as they really want to? I think it's a great galvanizing force for all of us at Guidewire as we think about our prioritizations.

Yeah, and those moments are existential for the customer, no matter the size of the customer, no matter the size of the event. So we have to be very granular in the way we think about those singular events. It's not just a severity or frequency issue. It's existential to the claimant or the business owner. In the case of some large commercial, it's a balance sheet issue that is existential to their publicly traded stock price.

Where Guidewire is spending a lot of our time and focus right now is the cloud platform, providing a very durable, scalable, secure platform upon which the applications run. It really opens up a new chapter for us where we can think more about higher-order problems to solve with insurance. Digital is one area, and product manufacturing is another. The externalization of product manufacturing and thinking about product manufacturing as an enterprise capability, bringing both filed products and bespoke products to the market in a much more rapid fashion on a foundation that can scale for the enterprise, is a tremendous opportunity. It starts with the idea of can we go faster. With the right tooling and the right visualization, which we've built through our Advanced Product Designer, can we go faster? The answer is yes, and we're really excited about that. But the outcome and the information to feed into the decisions that fuel going faster, but also going farther and better, is really important as Guidewire goes forward. We have every day more and more visibility to the data that flows through the industry. Getting that data to the table, getting our customers' first-party data to the table, allowing all third-party information to get to the table so that those design decisions can be made with the absolute most information, is critically important to us and fundamental to the way we think about solving higher-order problems, helping support the decisions that go through insurance, and then landing them on the operations in the screens that enable carriers to do their work every day.

I'll say that the destination, more and more in conversations with customers, the destination of cloud is... I don't use the term inevitable, I'll be careful not to use that, but very clear. The value of being there is very clear. The journey to get there is still an effort. Right now, we've got over 100 customers that have moved towards cloud, are in the process of going live on cloud, and more and more every quarter. The first cloud release for those customers is proving to be a much more predictable and cost-effective event. So that gets us to where we're focused now on how can we ease that pattern, that path, that project towards that first cloud release. And the real measure of success is not just that first cloud release, but the ability to update, take in that first update post-first cloud release. That is proving the curve at which that acceptance is hitting in the marketplace, and the predictability of that I think is quite impressive and gives us a great story to tell to those customers.

So if you think about Guidewire and if we take it down to the basic components of it, what we offer to the marketplace is a platform, we think a very mature, market-leading platform, the applications that sit on top of it, affectionately referred to in the industry as core systems, and then the content that sits on top of that, whether it's digital content or geographic content or line of business content. That's really the construction of how we provide a backbone for this community. But now multiply that by the world that we serve. There's a vast world out there of insurtechs that our customers want to access, of geographies that our customers want to operate in and are important to the insurance world market. So our ability to cover that is really important. We don't want to constrain that. So we've thought every day about more open, more innovative, more enabling of our community to access each other, such that we can continue to drive innovation and stability. If we have an ambition, and we do have an ambition, to continue to provide the standard platform upon which the industry can run, if that's part of our ambition, then we have to be really serious about unlocking accessibility of that community so that that standard persists and so that that standard adds value to the pace of innovation rather than constrains the pace of innovation. That's something that was fundamental to Mike Rosenbaum in the way he thought about building the cloud platform, and it just really resonates for me. I think it resonates for our customers, because if we were to say we're going to cover all things across the world and all points of innovation, that would not be an enabling factor. I really like the insurtech world of where the investments are going. I think the investments are coming ever more practical every day in driving the decisions that drive insurance, rather than just the transactions that enable over the top of the industry. So I like to see where that's going, and I think that adds a ton of value to the community.

Yeah, absolutely. As you mentioned, Swiss Re has great brand, great experience, and great reputation, and just a world of data professionals and products to serve primary carriers. So really, the work with Swiss Re is we want to facilitate, we think we're in a position to facilitate greater interaction between the primary carriers and their trading partners. Swiss Re being absolutely paramount amongst those kind of marketplace and trading partners. One of the things that I hit on earlier is the pressure on portfolio management is very real now. Whether it's a reinsurance relationship with a primary carrier or primary carriers thinking about their portfolio management, it's a very real pressure point and problem to solve, and a distinct advantage for those that get it right. Really, the goal with the relationship with Swiss Re is to make sure that we can work with them to get their products and services and models to our customers as efficiently as possible. That has both the plumbing to get their information to our customers, but it also is the ability to pre-integrate such that those decisions that are enabled by Swiss Re products actually show up on Guidewire screens for our customers in the flow of their operation. That is fundamental and in tight alignment with our strategy, and I think supports a great partnership with Swiss Re.

I think let's talk about the data that drives portfolio decisions. So we have, we'll go a little bit into our data and analytics conversation here, Matthew. Our strategy in data and analytics will remain to build. We will have a thrust that will be to building primary products to support the decisions that discrete products that support the decisions that insurance carriers make. Okay, but there will also be a thrust that is to continue to develop and mature the plumbing such that points of data from the community, from the ecosystem, can find their way into the operations of our customers. Whether that's customer data or whether that's third-party data, it's really important for us to be wide open in that agenda. And why? Because with the visibility that exists inside of our customers on a cloud platform, and one of the primary reasons why you should be on a cloud platform is if you want to make better decisions, you have to be able to tap your data in a meaningful way at all moments in time. So mapping that against coverages, zip code coverages, geographic coverage against different perils to make better portfolio decisions and portfolio management decisions is fundamental in driving greater speed to market. Are we there yet? We've got products that can get parts of the business there, and we're really pleased with the trajectory of our portfolio management products. Organizations are there yet? Not yet. And that's okay, because they're going to continue to make decisions on tighter time cycles with as much information as available. The pursuit of perfection is fundamentally a very dangerous process, because getting better every day is going to be the way in which organizations can test and learn their speed to market assumptions and their portfolio management assumptions. That to me is what's most exciting, because I think the industry has certainly started that journey, and more and more it's pervasive in organizations. If I compare that to five years ago, I'd say we've really gone leaps and bounds as far as it becoming a primary thrust of activity. The question really is how then can we optimize that?

That's a good question. As Guidewire thinks about kind of next horizons on this foundation, the responsibility to navigate the space of what we should build, what we should buy, and where we should partner is absolutely critical, and it's very much a focus for our strategic intention over the coming years. I think the most important thing, Matthew, is for those partners we have in the marketplace, absolute transparency. Very much as we bring in partners to the ecosystem, it's important that we share with them what our roadmap is, it's important that we understand their roadmap. So far, from the Vanguard process of starting out, helping ensure tech startups through the ecosystem marketplace that we have, all the way through relationships with Swiss Re, it's just a simple matter of sharing with them our intention and opportunity, being clearer every day on our product roadmap and our development roadmap, and then sharing that information with those partners well in advance so they can make the decisions of how they want to participate.

What it is is really just a lot of high-touch alignment for helping insurtechs think about how to access the market, with the primary focus of being the market defined by those that are Guidewire customers and prospects. But really working with our team, our engineering team, our go-to-market team, our evangelist who runs that process, and our marketplace and ecosystem teams, to really think about how they want to mature in the space. So incubation is probably a little bit aggressive, but I would call it really kind of facilitation and kind of hands-on navigation. That's been a fun and strong learning experience for us. We've met some great technologies through that and some great people through that.

As an insurtech, it's actually quite easy. There are degrees of involvement. If you think about proving out that the technology is relevant to the marketplace, the cost of that entry is actually quite low, and the accessibility of the professionals who kind of run that for us is very straightforward. They spend all day every day doing that, so that's a very easy entry on-ramp. What starts to become more interesting is when you start to build the integrations, either built by the partner or built by Guidewire. Those integrations that stay current with the releases is critical, and then it starts to become much more of a more involved decision, a tighter partnership. And then there are partners where we have kind of resell and co-sell agreements with, which is very few, but certainly a big part, an important part of our future, and that obviously carries a different level of commercial relationship with it. But I would say that the on-ramp to learn and navigate and understand how to operate with Guidewire is actually quite simple.

A very clear activity right now is in the Gen AI space. So we've got a number of experiments, both internal to our own shop and in service of the industry, and also in service of the conversation with Charles on interoperability, in service of risk transactions across the industry, not just inside the carrier but with carrier trading partners. So there's a number of categories right now where we're doing a lot of experimentation in the Gen AI space, and I'm really optimistic about what that will yield. But the aperture is quite wide. We're very specific on what we say about how we'll enable that, so the experimentation aperture is quite wide, we're pretty measured in our commitments to how we think that will show up in the carrier space because we want to be a responsible steward of that. That's one area of great investigation right now. Another one would be the digital space. As we think about digital, what we released in the last release was the Jutro digital platform. There's a tremendous amount of opportunity for us to continue to experiment with customers, to continue to experiment with how that digital platform matures. But really interestingly, the opportunity to navigate with our customers on how they might experiment, so A/B testing on different digital experiences with their producers and with their customers, becomes quite interesting. More and more, that co-development, early access, and co-development relationship with our customers is yielding great results and great pressure. We welcome the pressure that comes from our customers as we take signal from market of where we need to innovate, because it keeps us really well connected with what's most important to the industry that we serve. So that portfolio of experimentation, test and learn, is something we've gotten better at every day, but it's starting to extend more and more in collaboration with our primary customers, which I really like.

Yeah, and amplifying signal from market. Making sure that every person inside Guidewire thinks about the problem, not always just the problems that Guidewire is trying to solve, but the problems that our customers are trying to solve in service of their customers. In that, there is a tremendous source of innovation. First, signal from market, then figuring out what are the sources of innovation that we should responsibly play in, and then going after that with some vigor. I think it not only drives us to a more innovative outcome, but I think it gives our own team a higher purpose and context under which the work we do, which is a responsibility we take very seriously.

Happy to be a part of the work that we do with you, and really appreciate the opportunity to refine our signal to market with you and really connect with the community. As it pertains to Google, certainly as a data partner, more and more we're spending time with Google in the data partnership and how we can, as we exist as part of the ecosystem of carriers, Google's an important partner to many of them, so that becomes critically important to us. I'd be remiss if I didn't comment that AWS is our platform partner and has been a phenomenal partner for us on this journey. I really have learned quite a bit from our engineering team about how we can serve the industry and really stretch the bounds and the performance of the AWS platform. AWS has rode that journey with us really effectively, and I think to great outcome for our customers. And then you mentioned Azure. Azure certainly, as many others, is important in the ecosystem that we serve. One of the things that Guidewire as a SaaS provider, we really have to think about not just how we show up inside the estate that we manage for our customers, but also the customer total estate and the relationship that we have with all those customers. That's a responsibility we take on. Certainly Microsoft is critical in that, but really the partnership with Google in data is gaining traction, the partnership with AWS is really quite solid and fundamental to what we do.

Well, number one is just continuing to double down on services as community in pursuit of providing what can be the standard platform upon which the industry operates. Continuing to mature this cloud platform and these applications in service of that is the primary thrust. The second one is opening up this world of higher-order decisions and higher-order insurance problems to solve. Guidewire every day showing up much more in the decisions that drive insurance carriers and the decisions that drive the relationship between carriers and their trading partners. In that interoperability, those are the two primary thrusts for us. That's what the world should expect from us, and we welcome the pressure that comes as a market leader to put more pressure on us to operate and innovate on those dimensions.

I guess the only thing I'd add is, as we think about the future of the industry and the opportunities that exist in innovation and speed to market, and you mentioned cloud infrastructure, I think it's important that the industry understand that back to that harmony point, the harmony of operational excellence and speed to market does require operating on a mature cloud platform, mature SaaS platform that allows for speed and standardization in those things that are best positioned for, but also unlocking continuous innovation, but also points of high differentiation in higher order for each carrier to focus on. That to me is a message that I think the market is getting more and more ready for. Yes, the market's under a ton of pressure, and I recognize that, but the winners and losers and differentiators are being created right now on their ability to strike that balance and understand the importance of that destination. So that's the thing I want people to think about as they take away from the conversation: how to participate in that.

Points of innovation, relevance, and service of the industry is absolutely critical. We can't, it would be irresponsible for us to consider that we will build all things that are important to the carriers that we serve. So points of differentiation that we can help navigate path to market by being pre-integrated and also tight relationship with Guidewire is absolutely critical. And then the message to the carriers, which is absolutely critical, is keep the pressure on us. Keep the signal white hot on what things we should be building for.

All right, thank you Matthew, appreciate it. Take care.