Ep - 153 With Adina Eckstein, COO at Lemonade

It's great to be here. Thank you for having me.

Wow, that's a big question to start with. Yeah, I'll interrupt you in a second, don't worry. Okay, what does it feel like? It feels great. I think I have the best job in the world. Why? I think Lemonade is the most interesting company in the world to work in. It's really prime for having a COO, as in, I have to think about the intersection between the organization, its phase in its development, what it's trying to achieve during these years, and what a COO is destined to do. It's a very good match. I joined the company when we were just a few hundred, and now we're over a thousand employees. We had one product at the time, and now we've got multiple products in the market in multiple geographies in the US and throughout Europe. And my job is to scale the organization, and that's the COO's job, to scale the organization. So it's perfect, it's absolutely perfect.

I think they are two completely different roles, even though some of the skills and competencies of individuals filling these roles could be the same, they could be transferable. As Chief of Staff, you revolve around somebody, you're serving this person, you're amplifying what this person delivers. So at the time joining Lemonade, I was Chief of Staff to Shai Wininger, who was the COO at the time of Lemonade and co-founder, and my job was to make sure that Shai could extend his impact on the organization by extending his reach. So that's one job. As COO of Lemonade, I'm not revolving around any particular individual. I'm thinking about our stakeholders, namely our shareholders, our customers, and our employees. I'm thinking about the objectives that we have for all of these different types of stakeholders. I'm thinking about what the business is trying to achieve, and I'm doing whatever it takes to achieve that in organization, in technology, in processes. So I think they're definitely different roles, but some of the characteristics, as I mentioned, that are needed are very similar. You need to be a multitasker, you need to be multidisciplinary, you need to be able to read people very well, you need to be able to understand motivations in both of these roles. You need to get dozens, thousands of people swimming in the same direction on their own desire, so that requires really reading what they're interested in and thinking about how what they're interested in can align with what the business needs. You need to be willing to roll up your sleeves and be very tactical, but you also need to be able to resurface and think strategically. You need to be able to distinguish when to do either of those. You need to be a leader, you need to be somebody worth following. So I would say that you can transition from both of these roles, but it's a very, very different role.

I think actually you worded that very well, that that's what I'm supposed to be doing. Shai and Daniel have a vision. They want to do this, they want to fivefold that. Sometimes the mission is extremely forward-looking: we want to be the most loved insurance company in the world, or we want to be there for all of our customers' needs, we want to be there for their timing needs, we want to be an insurance company that's going to be there for our customers when others have let them down, when they're least expecting us to. That's sort of very forward-thinking. But then also the objectives and goals could be: we want our top line to be such and such next year, we want to hold cost this way, we want to become more efficient by X%. Then we have to think about all the different parts of the organization and how they're going to deliver in order to achieve those objectives. Just to correct you slightly, now Daniel's the CEO of Lemonade and Shai is the President and co-founder of Lemonade, although the roles are still very similar, their relationship is still very similar. We are a public company, so I'm just making sure to make sure everything is by the book for the correction. But they are very complimentary in how they see things and in their skills. Daniel's very business-driven and Shai is obviously much more focused on the product and the user experience. And also the way they think about organizational design is interesting and complimentary, and that's also a relationship that I get to navigate, that I have the privilege to navigate. But it starts from organizational design, so I'll maybe answer your question through an example. When I joined Lemonade, as I mentioned, we were just a single product line, we had just launched, we had a few hundred thousand customers. But now we want to be multi-line, we want to be multi-geography, we want to have different types of areas of focus. But we were organized, we had product engineering, CX, claims, etc. And then you started to have these bottlenecks where it was very difficult to prioritize and determine whether to do this or that. We started pivoting, too many pivots at any given point in time. So one of the first things that we had to think about is what is the organizational design that's going to service us being a multi-line company. And that's when we established what we call the company model, where we have multiple business lines. Each business line will have a GM, they're autonomous, they have their own budgets, they have almost like a P&L, and they get to operate their business. They get their goals from the founders, from leadership, based on our financial goals, based on our business goals, and they have to execute. They have to execute and they have to think through what initiatives they need to put in place, but they have the resources in place in order to do that in an autonomous way. And that's just one example of, okay, that's what you want to achieve, you want to become multi-line, okay, so first of all we're not set up to do that as an organization, etc., etc.

It really depends on the task at hand and also on the resources that I have to solve the task at hand. At Lemonade, any company will have a different definition for what a COO is. At Lemonade, it's quite broad. I'm responsible for all the what we call frontline teams, the customer support. I'm responsible for the claims organizations, these are the volume teams. I'm responsible for people, HR, talent, office operations, talent acquisition. Responsible for business operations, which is goal setting, execution, delivery, planning. So it is very, very broad. At any given point in time, I'll have a leader in each of these areas, and they'll have varying levels of competency and experience, and then new in their job or not new in their job, and therefore that will sort of help me think through when I kind of need to deep dive into areas, and that drives my areas of focus. Many times, you decide to set course on a certain initiative and you put everything in place, you got the technology in place, you got the teams in place, they start sailing, but then you look at your dashboards and some of your stabilizer metrics are falling low. So for example, a stabilizer metric could be, I don't know, you want to increase rates but not to the extent that it's going to hurt your retention, that would be a stabilizer metric. Okay, so what do you do there? Then you kind of have to shift your weight to the areas that are not resourced, that are not being thought through. So I can't say that I'm extremely methodological about where I decide to spend my time, but I use data a lot to determine where are red areas and where I need to put some emphasis.

Well, I suppose they're humans. This is definitely, I mean, I really agree with the concept of this podcast and the work that you're doing. Sometimes a problem can be so huge or an opportunity can be so huge, but you know and you're familiar with the humans involved, so that actually taking a step back and letting them shine and letting them be autonomous and letting them think through how they prefer to solve it is a much, much better approach. So it's definitely a combination of the data itself, which we have in abundance, but also who am I working with, how are people working with each other, is that process working well, are they speaking frequently, how much are they speaking, when they speak do they speak in a professional, objective way. So I think that once you have these healthy dynamics and healthy teams, healthy cross-functional teams dealing with challenges, opportunities, risks, you kind of tend to step in where you don't have some of those things.

I think a COO in early stage, to be honest, I think that we call it a COO sometimes, the COO is a title that one of the founders is given because the other one is a CEO or CTO, and then the COO is, you know, run the company, do the thing. What is the thing that the company needs to do? They need to grow, they need to develop a product-market fit, they need to get money, they need to hire employees, they need to incorporate themselves, they need to get business, they need to set up a support function, run the business. And I think that's what a COO does at the beginning. It's kind of what needs to get done, and sometimes it's like really tiny things. At HSBC, which is a huge company, it's 300,000 employees, but I was the COO of a division that started tiny. We started working behind an ATM machine that belonged to HSBC, just because HSBC, the corporation, said that we have to wear suits if we're going to come into the office, and we were building a digital capability. I wasn't going to be hiring iOS engineers that were going to wear ties, so I had to find a different space, and what we had was behind an ATM machine. To the extent that was actually being almost like a CEO of a small company, because I was trying to secure the funds, I was trying to get the space, hire the people, what is it they were achieving, I wanted to get the business, because at HSBC, the countries, the different countries, it's a global organization, they're actually customers, they can decide to opt into global technology or not. So that was kind of like that. I think transitioning into larger companies, I think a COO should be developing, not what's dropped on the floor and kind of pick it up. I think that approach is falling short of what a COO really should be, because the COO should be thinking forward. What are the things we want to achieve 18, 24, five years down the line? What are the types of things that could potentially be a risk to us or stop our process or slow us down or maybe hinder our competitive advantage, and need to start thinking about what are the types of building blocks they need to put in place in order to avoid these pitfalls and make sure that we thrive. But it's always this tension between taking care of the broken things or the bottlenecks, right, versus looking ahead and what can be more impactful and help us in the future. Always to manage this tension.

I really relate to what you've just said. I think that what's unique in it, first it was COVID, now it's a war, then it's GenAI. There will be many changes because this is what it means to be a tech company, right? And if you're not strong with the changes and if you are not ready for these changes, then you won't prevail. But I think that what lies beneath everything that you're saying is to have this mindset and ability to adapt to change and to see what's coming and not to always resist it, but to understand that this is the new reality and how you cope your organization in the best possible way, in the fastest way, in the most effective way to deal with this change and to leverage the change to your needs and to your success. And it doesn't matter what will be the external reason, the idea is as a COO how you embrace this change and use it to grow your organization in a better way.

So, you like specific methodologies? Well, we're kind of married to the OKR framework.

OKRs are Objectives and Key Results. There's a big difference between objectives and key results. Objectives are objectives that are long-standing, they're usually business objectives, financial objectives. They could also be objectives related to the internal side of the company and the things that you kind of want to work towards. They don't have to be very number-specific. Key results have to be very, very measurable, very, very number-specific, and they relate to those objectives. For example, an objective could be that I want my loss ratio to improve, I want the profitability of the business to improve. Therefore, in this Q, I'm going to reduce my loss ratio by two points in this specific line of business. And the key results that you set forth, and they could be quarterly, the objectives could stay actually the same for a multitude of years, and the key results will get you towards those everlasting objectives until the objectives become obsolete and you can decide on different ones. Like the small steps that we need to walk through and achieve in order to get to this objective.

Underneath the key results, you have initiatives. Some people actually call them key initiatives, where they would be, okay, so in order to achieve this key result of reducing the loss ratio by X% or by improving growth or retention or churn, or they could also not be business results like that, they could be improving non-voluntary departures of employees in the company. You could also decide to put a people-related objective. So the initiatives you put in place, okay, we're going to invest in this product release, we're going to do that, and that's the thing that you kind of commit to throughout the year. So that's what Objectives and Key Results is. It's two main comments about it: first of all, it has to be aligned within the whole organization to be set and aligned, otherwise we're going in different directions. And the second point, which is where many startups fail, is that someone needs to own it and to make their organization commit to it and do it, because otherwise it's just fancy numbers on Excel or whatever, but no one is executing it. So as a COO, how do you see those things and what is your ownership about it?

And not as a traded company already, but as a growing startup, sometimes the objective changes along the year. So you have this OKR plan, and how do you expect your leaders, like the GM for example, that now when you change the objective, how they should adapt to it?

Yeah, 100%. If you change it, then you lose that. That's a very important data point that you don't want to get lost. It's like to sell a stock, you know, when it's low. It's like you lost it already.

So we have an annual planning cycle and then we have a quarterly planning cycle. The annual planning cycle is pretty heavy and the quarterly planning cycle is quite lightweight. And then obviously there are big events that happen throughout the year that trigger some sort of mid-period event as well. And during the annual planning cycle, we do something quite similar to what I described. We kind of look at, you know, we always remodel. We have a five-year model and we remodel it every year. So we remodel the five-year plan and then we look at the different levers that we have that are going to impact our key business results the most. And we ask ourselves, okay, so what are the types of objectives that we need to put in place to make sure that we actually deal with these levers? But we also look at the tension between these levers. So some of them are contradictory to one another. You want to grow, growth costs money, but you also want to keep your cost flat. So you have to discuss the different tensions and you do also sensitivity tests to sort of see if this improves by one point, that will achieve that impact. If this gets worse by one point, it will achieve that impact. And then you can really order the list of things that you could do in terms of what impact they could do to the business. And then that turns into this is what the business wants to achieve for the year. We always distribute the OKRs to the different business leads and we say, okay, hypotheses, this is what we'd like you to achieve in your business line for this year. Go work it out. They've got a lot of people they need to talk to. They need to talk to the product leads in the organization, they need to talk to the customer ops people, they need to speak to business development, they need to speak to revenue, they need to sort of bring all these things together. They need to speak to the insurance groups to see, okay, what are we going to do with our rate filings, etc. And they need to come back and say, okay, this is what we can contribute. And then the operating team or bizops team will go and take a look at, okay, do we have gaps? Do we have any overlaps? How do we resolve these conflicts? And then that eventually morphs into what we call operational plans, which then cement the OKRs. We publish them, we celebrate them, we talk about them in town hall. We also talk about our quarterly OKRs in town hall as well. And we glorify our fuckups. Like I say, if we make a mistake or we don't meet an OKR, that's a very important thing to discuss very publicly as well. It's a main learning that you need to do. We didn't do this because of that, and this is what we're going to improve.

I don't, I really hope that we don't get into a one to three quarters kind of situation. It's too long. Our GMs are the most talented people and the most senior people in the organization. So it's unlikely in our particular situation that I would be in like a mentorship, coaching type of position with these. They know, they work, they'll be the first to say I'm worried, they'll be the first to say, you know, which is an amazing thing that you can also trust your people that if there is a problem, they will stand and say it. We, yes, that's something that I've also experienced in the past more in like big corporate environments. There was this one time at the BBC where I had two teams working in different locations and they both experienced the same blocker. But one of them reported their project as green and the other reported their project as amber, which is a very British word. And I was like, why? You bumped into the same thing. So there's some cultures where you think being green is what's going to get you the points with leadership. And I think that's a very bad place to be. I think that's, you know, things seeming good is probably one of the worst things you could do. It's one of the biggest sort of symptoms that you can see about politicization of organizations, which I think is cancer of organizations. So in Lemonade specifically, it's unlikely that I'm going to be the one that's going to know who reveal it. They will stand up. Okay, so it's usually they will stand up and it's usually because either there's some sort of external factor that was unexpected or is playing out to be different than what was expected, or there is an internal factor that is turning out to be more complicated than expected. And then we have to ask ourselves, okay, so what do we do? Can we fix it? Would it be additional resources? Is it more important to fix it than some of the other things that we have to do? And then again, we go back to the sort of basic principles of what is that going to contribute to the business, what is our prioritization, is there a separate business case to actually change a financial plan and potentially add more cost in order to achieve this? But there'll be a sort of deep dive and there'll be alternatives and the right person. We have a decision-making framework as well, sort of who should make these types of decisions in different areas. So that's also very well known at Lemonade and we're very good at empowering leaders to make decisions in their areas. You can make up to this, up to that, and it will be done based on what's going to be the impact and what's going to cost us and what's your certainty. But specifically with us, and I think that's something that I would, you know, like to replicate in any organization. I will die at Lemonade every day. But let's say one day, someday, this would be something that I'd do everything possible to replicate because not being worried that something's being buried is an amazing luxury as a COO. Everything is like out there.

So I was thinking about that, and when you said about the sort of people side of things as you were asking your previous question, so I'm going to actually go and talk about something completely different, which is we do departmental people reviews. I think that's actually, I'm not sure if that's common. As a COO, I'm also the chief people officer at Lemonade. That was something that was very important to me when I actually got this job because I don't understand the difference between operations and people. You know, we're not running a factory floor where there's like machines. So if I need to make the organization more efficient, I need to do that with humans and motivation. So I really do see this job to be 100% the same. So one of the tools that we look at is sort of what's happening with our people. And we've done a, I think, a really good job at sort of building the data infrastructure for people as well. What's our attrition looking like? What's the satisfaction looking like? We have a tool called Officevibe where we check out sort of how people are appreciating the company. What's our eNPS? What's the participation rate, ambassadorship, relationship with manager? How are we doing in terms of compensation bands? Which departments are sort of giving too much or maybe we need a refresh of the compensation bands? You know, what are we doing with people participating in seminars? Is there a cross-reference between participation in seminars and attrition? So, and I mentioned the companies, that's sort of a vertical view of Lemonade, but the departments are the horizontal department. So if I'm the head of R&D, I'll have engineers in each of the companies, but I'm still line managing these individuals. I need to think about the careers, the development. So I would say another tool that we use quite religiously as well is sort of the health of our people, but from a very sort of scientific point of view.

We encourage people to be direct and to be forthcoming. And in fact, we encourage them not to use the platforms. But if they do use the platforms, they're anonymous. So in that regard, you know, you shouldn't fear. That's a dynamic actually that I think that we should, instead of trying to do more and more by way of convincing people that it's actually anonymous, we should do more and more by way of leading the organization in such a way that when you give feedback, good things happen and retaliation does not happen. It never happens. It's never happened. That's a myth. Why would you think that? We're encouraging people in large company forums to, instead of have like a Slido, you know, in an all-hands, we have that. But for example, I run a lot of internal communications forums. I would say that's my third tool, internal communications. And I speak to managers on a quarterly basis, I speak to directors and up on a quarterly basis, I speak to VPs and up on a bi-weekly basis. And there's a lot of communication. You have a question, unmute yourself. What's your name? What's your perspective? Thank you so much for saying that. That was really courageous. I'm really happy you said that. And I think that that's kind of the type of, you know, that's the type of culture that we need to make sure is in place. But yeah, they've got the platforms, they can speak anonymously, and we also act upon feedback. But it's much, much more difficult to do that as leadership when you don't know who the individual is, just in order to understand the context in which they're operating and how you can really surgically help them.

I think I didn't have a choice. I was 12 years old when we left Australia and moved to Israel. I didn't speak a word of Hebrew. I read Hebrew because I could read the prayers. I didn't know what they meant. And everything was perfect in Australia.

My parents are religious Zionists and they thought that the country of Israel is the place that Jews are supposed to be.

Melbourne. All the way to the Holy Land, all the way to Jerusalem, the holy city. And everything was great for me. I had the best boyfriend and I was really good in swimming and, you know, everything was working out for me there. And I was top of my class. And I came here and didn't understand anything. And the children were mean. And there was physical abuse. There was like, you know, the girls wouldn't speak to me. And it was really hard. And what are you going to do? You know, you develop thick skin. You start to really, even without language, what are they trying to tell me? What is that body language? Is she angry with me now? Is she happy with me now? Is she going to be kind to me? And you start reading everything about people, their body language. And then, you know, ultimately you start understanding the language and you find a place for yourself and you win. You get to a position that you're okay, I did this, I could probably do anything. In fact, I want to try lots of things and see if I can do them too. And then suddenly fear becomes something that's quite attractive.

I think I learned a couple things. I wanted my life to be like an adventure and I wanted it to be fun. And those things are still true. If things aren't fun, I can say it. If things aren't fun, they shouldn't be. If you're unhappy, you should change your situation. That's true professionally, personally. Things need to be fun and you should take that into the workplace as well. Things should be adventurous. Oh, did that feel like a bold suggestion? Oh, we've never done that before. Let's do it. Let's try that. And obviously, war course correct and failing is okay. But, you know, having a playful environment and being in a situation where you like your teammates, you like hanging out after work, if those things aren't in place, then you're not going to thrive. I find that when people are happy, then other things don't bother them. And when people are unhappy, then suddenly I should get like a raise in salary and that would make me better. But it's not from inside. It doesn't come from inside. Yeah, I think so. That's definitely a main part of my personality and what drives me as a leader and I think what people would comment on if they described me as a leader as well.

I have to say honestly, I really do like change. But if I'm maybe trying to sort of dig a little deeper, one of the other things that really, really drives me is the sort of authenticity and being real. You know, I mentioned that my parents were religious Zionists, so obviously I grew up in a religious family and I was, you know, in a religious environment and myself, you know, kept all of the religious ceremonies and rules until I was 17, 18. And then sort of understanding that there's now a big chasm between my actions and how I'm conducting my life and where my mind's at intellectually, that sort of this lack of authenticity was something that I just couldn't deal with. And I had to come out and say I don't believe in this stuff. And I'm going to intentionally, academically be secular. In fact, I'm going to double down so much on my Bible studies in an academic way that I'm going to go to a midrasha, which is like a yeshiva before the army. I went and studied Talmud for a whole year and then I did a BA in Bible studies. And I'm going to know so much about this stuff so that I can continue to love it and to love the literature element of it and the historical element and the cultural element of it. But I don't believe that and I can't lead my life in a way that I don't believe in. And that's so deep inside me that this change element, if that clashes, then okay, so be it. Because I cannot stand situations in which I cannot be authentic. So as a leader, you know, I'm funny. Okay, so maybe COOs are typically buttoned up. Okay, I'm the COO and I'm not buttoned up. You know, I get the 'you don't look like a COO'. What are you talking about? I look exactly like a COO. This is what COOs look like, at least for all the people that I've managed and then they're going to grow up thinking that's what a COO looks like. So this sort of connection between who I am inside and what I portray, that has to sync with me.

Great. Don't be so short. Oh, you want me to elaborate? I'll kindly do so. I was not COO at the time. I was still in the capacity as a chief of staff at the time. And my job was to manage the company while everything was happening. In fact, sort of obviously this is not a very small circle of people that actually know about the IPO until very, very close to it. So it's a combination of, you know, letting the people that are actually meeting with the investors during the testing the waters, you know, getting all the funds and, you know, managing with the bankers and the regulators and taking that all the way to the bell ringing. So letting them do their work, so obviously very, very preoccupied. So you need to just, you know, the company is still running, things are still happening. That was definitely a big part of my job at the time. But the second part was also establishing processes mainly on the people's side that didn't exist that would need to be in place when you become a public company. You know, suddenly you need to have like a hotline or these things that, you know, oh, we don't have that. And, you know, so you kind of realize all these things that as a startup that's okay, but when you become, you know, an SEC regulated company, you're going to have to have all these things. So sort of identifying those gaps and implementing them and making sure that all happens smoothly. So that's sort of leading up to the IPO. I would say my job became much, much more difficult after that. Not because we're a company that sort of looks at the stock performance and has that lead our decisions internally, does not at all. But much more because of the stock price is our employees' compensation. And when Lemonade went public, it popped. That was not the valuation that we thought was appropriate and it just completely popped. And then suddenly, you know, I think at some point it was about 10 times more what we went public with in terms of valuation. 10 times more and nothing had happened besides sort of, you know, people just sort of race buying. And then employees were sort of anchoring themselves, oh, that's how much I'm worth today. And then sort of, you know, where a lot of different growth stocks crashed at that time and for the year after. And then there was, okay, so I don't think anything has changed. I know nothing has changed from a business performance standpoint. So we're going to keep doing what we need to do. We know what our path to profitability is. In fact, we just became cash flow positive this earnings Q. So we kind of foresee this happening. We have a plan. We're going to stick to the plan. The business is healthy. Our unit economics are good. It's going to take time until the street kind of recovers with that and we sort of regain our investor base and the stock comes. But in during this period of time, I need to maintain the motivations of people. Some of that is very technical. You know, you have options, they're underwater. You know, what if we reissue, but dilution and sort of really thinking about the sort of tables of compensation. And that's a whole field of knowledge that I suddenly became an expert in and sort of knew superficially about, but now I feel like I can write a book about it. And the other thing is just sort of dealing with the turmoil of that and sort of just sticking to we know we need to do this, we know we need to do that. Other companies coming in, private companies that can offer you this amount of stock. So that turned into the main challenge of being a public company, the sort of being in the public eye and now the money is real. So how do I continue to motivate the people working for us?

I love people. I really do. I'm really curious about people. Everybody interests me and I love learning from them and I love impacting them. I think in my lowest of lows, there'll always be something that I did in the week that maybe made somebody better because I spent some time with them or gave them feedback or, you know, empowered them or gave them positive reinforcement, some recognition, or let them accompany me through a thinking process that they're going home and thinking, wow, that was a great interaction with Adina and now I'm feeling inspired or empowered or better at my job. And those things really get me going. I'm not saying that just to say that, it's a real thing. I see it, I hear it, I relate to it.

Yeah, and you know, specifically in this job, it's my first job that I have a sisterhood. At HSBC, I was 100% of the time the only female in the room, except there was one more female that she was like the head of DEI or something and she was terrible, terrible role model for women. Now the chief business officer, chief product officer, chief operating officer, head of data, GM of the homeowners company, GM of the pet company, GM of the car company, these are females and they're my age and they're also mothers. And of course, of course, how we can forget your favorite person at Lemonade. And this is amazing to have this sisterhood and strengthen each other. Yeah, and I think it's something that we never aspired to, you know, we never set goals in this regard. I think that when you have more, you have more. And it's great. There's a huge support system and it's fun. I mentioned fun is very important to me and it's good for the business. I think it's good for the business that we're very well connected, you know, professionally and personally. And it's just been a delightful experience.

Appreciate it. Thank you.

They can go to our make page and they can contact me on LinkedIn. Always happy to chat.

Thank you so much. It's a pleasure.