March 30, 2009
999 workers + 1 year = $40 Million in Revenue for All Web Leads
Austin Business JournalA local technology company tripled its revenue last year by refining its automated process of connecting insurance companies with potential customers — via the Internet.
Austin-based All Web Leads Inc. generated $40 million in revenue during 2008, just three years after it launched. The cash flow is unusual given economic circumstances, but perhaps more surprising to onlookers is that the company began the year with just eight employees.
All Web Leads, which now employs 27 people, was founded in 2005 by Jim Waltrip and Ryan Patterson, high school buddies from San Antonio who were developing software before they hit on the idea for All Web Leads.
Since insurance companies, agents and brokers will pay for sales leads, the two developed Web sites that would attract consumers researching insurance premiums. Once on a site, consumers are faced with a 12-question form that’s simple enough to ensure a high rate of completion.
That collected data, which are effectively solid sales leads, are then sold to insurance companies, agents and brokers in a highly automated process.
“Pretty much, from Day 1 we were making money,” said Waltrip, who is now the company’s CEO. “We don’t need a lot of people to do what we do.”
All Web Leads generated 3.1 million completed questionnaires during the last 18 months, representing a 25 percent conversion rate, he said.
David VanDelinder, executive director of the Independent Insurance Agents of Texas, said personal insurance providers have traditionally relied on newspaper advertisements and personal referrals for leads. But he acknowledged that the adoption of third-party lead lists is growing in popularity.
Dozens of companies such as California-based InsWeb Corp. (Nasdaq: INSW) and Utah-based InsurQuote Inc. are competing for such business.
During 2008, 52 percent of U.S. adults who researched auto insurance prices did so on the Web, according to Massachusetts-based Forrester Research Inc.
The Web-based approach to sales leads is so cost-effective that carriers in the United Kingdom commonly operate their own price comparison Web sites in which they offer estimates from competitors as well as their own, Forrester analyst Chad Mitchell said. He expects the same strategy to catch on in the United States.
“Clearly the Web is the strongest channel for initial research,” Mitchell said.
The insurance industry has shrunk due to the economy but is still a sizable market. For example, the U.S. property and casualty insurance industry generated $4.1 billion in net income during the first nine months of 2008 compared with $49.6 billion during the same period in 2007, according to a report by Marsh Mercer and Kroll.
The two friends launched All Web Leads by pooling together credit cards of friends and family. Last year, they collected a $5 million investment from SSM Partners, a Memphis, Tenn.-based private equity firm; Croft & Bender LLC of Atlanta; and Dillon Joyce Ltd. of Dallas.
SSM Partners operated an office in Austin from the late 1990s until 2002 and established contacts that led to several local investments, including Bulldog Solutions Inc. and Active Power Inc., Managing Partner Wilson Orr said.
All Web Leads’ innovative use of technology and potential market attracted the firm’s investment, he said.
“Like many businesses, consumers are now starting online in their searches for financial services,” Orr said. “Those companies that can attract customers via those methods have a competitive advantage.”