We recently had the opportunity to interview Dan Preston, CEO of Metromile, a San Francisco-based car insurance startup that offers pay-per-mile insurance and a driving app. The company's most recent funding came to $192M.

Q: How did you get the idea for Metromile? 

A: The idea of pay-per-mile car insurance isn’t a new one -- in fact, the concept has been around for nearly 100 years but the technology to get an accurate read on mileage did not exist back then. Metromile founder David Friedberg was working for a company called Climate Corporation and was doing a lot of research on insurance of all kinds when he stumbled upon pay-per-mile car insurance and he started to wonder, why is nobody else doing this? The concept seemed obvious -- traditional car insurance is unfair as larger carriers have built a book based on low mileage drivers creating a subsidy for high mileage customers. Couple this with the fact that the way people are using their cars, especially in cities, is changing, and it’s a catalyst. OBD-II sensors (a standard on-board diagnostic system introduced in the mid-'90s), traditionally used by mechanics to diagnose car health issues, were reliable and had come down in price significantly and Dave knew that in order to make pay-per-mile car insurance work, he’d have to build it from scratch.

Q: At what point did you realize you had a viable business model?

A: As we started to build our pay-per-mile insurance product, we discovered the OBD-II device was extremely powerful, and could help drivers in a multitude of ways beyond significant cost savings. First and foremost, the data only mechanics used to have access to was now in drivers' hands. We could help diagnose mechanical problems, pinpoint ways to save drivers money, and take the mystery out of the process. Beyond that, we found we could expand it even further to help avoid parking tickets, remind drivers of where they parked their car, and more. Based on these things, the company’s mission was formed - “Empower drivers by creating a more connected and informed car ownership experience.” The first project? Create an entirely new model of car insurance that enables low-mileage drivers to save hundreds of dollars a year.

Q: Where do you see the company in 5 years and how do you plan to get there?

A: Today, Metromile is focused on growth initiatives and advancing nationwide expansion. The company will continue to introduce new updates and features that will make car ownership easy, personal and affordable while providing an exceptional customer experience.

Q: Is there any advice you'd give to other aspiring entrepreneurs?

Surround yourself with people who challenge you to be better. Position yourself around these type of people right away. They should humble you and challenge you, steepening your learning curve as much as possible. Whatever you do, don’t get bored or comfortable.

Q: What has been the greatest award or achievement that your company has attained so far?

A: In 2016, Metromile was focused on two things it hadn’t done since day one: holding risk and handling claims. We wanted the chance to deliver a vastly new experience on the claims front, taking learnings from customer experience, and we were focused on the financial benefit of being an independent carrier. Metromile acquired Mosaic Insurance Company which meant that we could underwrite our own policies and manage the entire claims process from start to finish, providing customers a faster, more fair and seamless claims experience. This was a tremendous amount of work for the team but had a big impact on our business. We still have a lot of work to do on improving these processes and the experience for the customer so we continue to set the bar higher.

From a company standpoint, this year we were on Glassdoor’s Best Places to Work 2017 for small/medium sized businesses. This was humbling because it was our employees who got us this honor.

Q: What kind of traction have you had since you first launched?

A: Metromile is currently available in 7 states- CA, OR, WA, IL, NJ, PA and VA. As discussed above, we’ve gone from being a managing agent to an actual insurance company, which is something we’re proud of. In addition, with the launch of the carrier, we thought it was important that our customers knew we had significant financial backing so we announced our Series C & D funding, plus an additional strategic investment from CPIC for a total of $191.5M.

We see high demand in the markets we’re available in and have wait lists for states we’re not yet available in yet.

Q: How is Metromile shaking up the car insurance industry?

A: Traditional car insurance is unfair to low-mileage drivers. In fact, 65% of drivers overpay to subsidize high mileage drivers. The number one risk indicator for drivers is how often they’re on the road so drivers that drive less, really should pay less for car insurance. Quite simply, Metromile’s pay-per-mile insurance costs less because it’s based on how many miles you drive. Our customers pay a low monthly base rate plus a few cents per mile and save an average of $500 per year!

Q: What new features is Metromile planning to implement to your platform?

A: Metromile’s culture is built around the idea of finding ways in which technology can dramatically improve the experience, which is a meaningful difference and allows us to move faster than traditional insurance players. The biggest change for insurance is the sensors (telematics devices) coming out that allow us to actually understand the variables for risk. We're getting real-time, continuous data about risk as it's happening and with this information, ideally you can build not only better price models but a number of other examples related to health, life or home, or renters insurance. In addition to pricing there's also what the experience looks like. We believe that as an insurance company, we should help our customers manage the risk. We use the data from the sensor to deliver an app which is a first step in the direction of what should be a technology-driven experience. Our customers can already avoid street-sweeping tickets, find their car and get diagnostic information via the app and we’re continuing to build out the claims experience so that people can file a claims directly from their phone.

Q: Is there anything else you want to share with our audience?

A: Metromile is headquartered in San Francisco but also has offices in Tempe, Arizona and Boston. Our website is www.metromile.com.