PowerScout, the company I founded with Kumar Dhuvur, found itself teetering on the edge of a precipice in 2017. With a mere five months of cash reserves remaining, the capital-intensive clean energy technology marketplace we were creating was in peril. Our once-buzzing phones had gone eerily silent. A new administration in Washington had pulled the rug out from under us, pledging to drastically curb funding to clean energy projects. The lifeblood of capital had dried up overnight.
While our talented machine learning engineers had created remote-sensing AI models that accurately estimated how many solar panels could be installed on each rooftop in the nation and the energy that would be delivered by them, almost overnight the demand for this technology had collapsed. Our investors, our dozen passionate employees and our families needed us to make a critical choice: pivot into a new industry or close shop.
With a mere five months of cash reserves remaining, the capital-intensive clean energy technology marketplace we were creating was in peril. Our once-buzzing phones had gone eerily silent.
Kumar and I first crossed paths at McKinsey & Company, where our synergy was palpable. Kumar has a deep background in risk management and data analytics. He led Capital One Bank’s credit risk analytics teams in the US and the UK. He also served as a consultant at McKinsey & Company and advised financial services institutions on risk management and data analytics strategies. His mastery in risk management and engineering was the perfect counterbalance to my sales and marketing prowess, a dynamic duo in the realm of sustainable energy and clean tech.
A few years after I left to head up a division of SunEdison, a high-growth renewable energy company, Kumar joined me to lead product and market development. We grew this business to $330M in annual revenues. In 2014, I joined C3 AI, an early AI company founded by Silicon Valley technology pioneer Tom Siebel. I led worldwide sales of C3 AI’s enterprise AI software solutions and that’s where I learned about the tremendous potential of AI long before the current AI boom. Kumar and I stayed in touch, bouncing around the idea that eventually became PowerScout, which we launched in 2015.
An image from an early PowerScout presentation; the company that would eventually transition into ZestyAI.
While there were many sleepless nights in 2017 as we explored our options, our investors and employees understood the stakes and worked with us to make the right decision. We knew we had a treasure trove of data and were certain that there must be a valuable new home for it.
We embarked on a quest, exploring many industries to find the perfect home for our extensive reservoir of unique property insights. During this exploration, we conducted countless interviews with people in numerous industries, including mortgage, commercial lending, property management, and insurance. We started to zero in on the latter. Leaders in the property and casualty insurance industry were captivated by the wealth of insights we possessed about every rooftop in the country having mapped out 120 million of them with three-dimensional accuracy leveraging AI on high-resolution aerial and satellite imagery for our original clean energy use case.
We embarked on a quest, exploring many industries to find the perfect home for our extensive reservoir of unique property insights.
But it wasn’t until we examined the data from the devastating wildfires of 2017 that our epiphany finally arrived. The Tubbs Fire, among others, had wrought unprecedented havoc on California's communities and insurance companies. Risk maps and other tools the insurers relied on hadn’t been updated for decades. In the case of the Tubbs fire, more than 90% of the $10 billion in claims that eventuated from the disaster were outside of the “high fire hazard zone” of the map (see below image). Only 600 structures of the more than 6,000 that were damaged or destroyed were in the high-risk zone.
The above map shows the area determined to be a high risk wildfire zone by the state (pink), overlayed with actual losses from the Tubbs Fire (blue). Only 10% of properties fell inside the high-fire hazard zone.
Preventing wildfire risk is akin to decoding the hidden variables that have historically fueled such catastrophic losses. Knowing what things looked like pre-fire and knowing the post-fire outcomes allowed us to produce incredible wildfire risk insights. Our company had the roof size, roof material, vegetation density in multiple defensible zones, vegetation overhanging, and more for every property in the nation. We had all that because this depth of knowledge was necessary for our digital clean energy marketplace for commercializing solar panels and batteries for energy storage.
While the data we could offer insurers was far more accurate, our goal was never to simply be just data providers. Rather, we set about helping property and casualty insurers make smarter risk decisions. The peril models we were building combined data on properties and their surroundings, climatology, topography, and loss data, allowing us to be even closer to the decisions these customers want to make. This allowed us to avoid becoming a commoditized data vendor and created a competitive moat. We decided to zoom in on perils that have often been neglected (even dubbed as “secondary”), such as wildfires and storms, despite the fact that losses by those have far outpaced losses by perils once considered “primary,” like hurricanes.
While the data we could offer insurers was far more accurate, our goal was never to simply be just data providers. Rather, we set about helping property and casualty insurers make smarter risk decisions.
In just eight months, our internal KPIs revealed a meteoric rise in traction with our newly minted focus. Securing our first major customer, Metlife Auto and Home, felt like catching a gust of wind beneath our wings. Having a major player place a bet on your business is a tremendous vote of confidence. Further validating our decision to pivot were accolades we began receiving from the industry.
Over this period, PowerScout’s original products were in maintenance mode. Given our success in the insurance space, it became clear we had to shut down our old line of business and rebrand the company to align with our new mission.
The property and casualty insurance industry is over 600 years old and was already served by traditional data providers with long history in the industry. We sought a name that encapsulated the fresh breeze we brought to risk assessment in a centuries-old industry, often viewed as conservative and resistant to change. Zesty captured this essence perfectly and it didn’t hurt that we were easily able to obtain the .ai domain name for it.
We sought a name that encapsulated the fresh breeze we brought to risk assessment in a centuries-old industry, often viewed as conservative and resistant to change.
Thus, over a weekend, we rebranded as ZestyAI, and our talented employees proudly became Zesties. Flash forward to the present day, and about half of the top 100 insurance carriers are now our customers. Our models have gained approval from the most rigorous Departments of Insurance in the nation. We've raised approximately $50 million in capital to push the pedal to the metal on innovation. In 2023, we were honored to be named one of Inc. 5000’s fastest-growing companies and one of America's Best Startup Employers by Forbes. There are days I need to pinch myself to believe how far we've come, like the day when ZestyAI was featured on the Nasdaq Video Tower in Times Square as one of the San Franciso Bay Area’s fastest growing companies.
ZestyAI shines bright over Times Square after being recognized as one of the Fastest Growing Companies by Deloitte.
Today, ZestyAI stands at the forefront of innovation in the property and casualty insurance industry, having made strides at revolutionizing the world’s understanding of property and climate perils. We have not only survived a high-risk pivot but thrived through it, thanks to the unwavering dedication of our Zesties who embody resilience, adaptation, and forward-thinking vision. Our journey from PowerScout to ZestyAI exemplifies the spirit of reinvention, showcasing our ability to pivot in the face of adversity and emerge stronger than ever. As we continue to partner with top insurers and also with mortgage banks, our commitment to driving innovation remains steadfast, empowering our clients with cutting-edge AI solutions that redefine risk management. The story of ZestyAI is just getting started; it's a continually evolving narrative of growth, impact, and the relentless pursuit of excellence.