Inside MetLife’s Relationships with VCs and the Startup Ecosystem

By Scott Kirsner |  January 18, 2022

You definitely can’t call MetLife a dabbler in the startup ecosystem.

Since 2014, the $68 billion insurer has run more than 160 experiments with startups — 70 of which later developed into contractual relationships. “There is a value proposition” when it comes to sourcing new solutions from the startup sphere, says Vice President of Innovation Terrance Luciani. “People throughout the business recognize it; they’re open to external innovation.” 

Luciani has created a structured process for collecting requirements from around the company, and then working with venture capital firms, accelerators, and other parties to identify relevant startups. He talked about how that process works — and how MetLife sets clear goals for its experiments — in an interview that is excerpted in the research report “Delivering Value Through Emerging Tech and Innovation.” 

Terry Luciani, Vice President of Innovation, MetLife

Why we work with startups and academia. When we think about the work we do with external partners, the key focus is, how can we simplify and create differentiated experiences for customers? 

External capability sourcing is what we call it. If you think about it as a spectrum, it starts at the earliest stage, even with our relationships with academic institutions. You’re talking with them about the big trends — in 5 or 10 years down the road, this is what’s going to happen with data and analytics. Then, let’s bring in early-stage startups and give them a chance to work with MetLife leaders. We can run some experienents. If we find something valuable, maybe we can scale it up. But we’re always focused on the customer, and how we can transform insurance.

The right stage to engage. We’ve learned that we’re probably not the best shot for very early-stage startups. We’re a large corporate, risk manager. We sometimes joke with [entrepreneurs,] “Have you been through Bank of America or AmEx yet?” Their processes are very similar to ours. I would say more of our track records are with companies at the B or C [funding round] stage. They’ve done this before; it’s not just two people in a garage.

Setting up proof-of-concepts. A lot of startups have set themselves up to quickly do proof-of-concepts for little to no money. You don’t necessarily need to integrate to [your] back-end systems, or use real customer data at that point. It could be a really simple POC. Other tests may require budget, but taking a creative approach to testing can be a way to prove out the value.

Why not embrace the disruption and use it to your advantage? That’s how you’re going to create value and serve the customers of the future.

On venture capital funding records. The funding amount in 2021 exceeded all prior years. The volume is incredible. I don’t know how you don’t look at what’s going on outside, recognize the disruption, and embrace it. You could run from it, sit on your leadership position, and expect things to change. You could try to build everything yourself. But why not embrace the disruption and use it to your advantage? That’s how you’re going to create value and serve the customers of the future.

Getting the business on board. I’ve always been a fan of having business-led innovation. That doesn’t mean that you can’t be disruptive or look out in the future. But you need the business on board. I don’t want to go off on a different path.

We sit down with leaders from across the company to do our requirements process. What are their strategic goals, the big challenges they’re facing, the opportunities they see to innovate? What are the things that might be difficult to do internally? These are corporate functions, P&L owners — a collection of people across the enterprise. On average, we collect 130 of these requirements. Then, we summarize them and share them with our venture capital firm partners (there are over 20 venture capital firms that we work with). They come back with a lot of great startups. At the same time, we’re using research tools. It’s all about finding really high-potential startups. 

This interview is part of our December 2021 research project, “Delivering Value Through Emerging Tech and Innovation.”

Investing in venture capital funds. With a large percentage of the VC funds we work with, we’re very fortunate to be limited partners [investors in the fund.] But I don’t believe you need to be an LP; with some firms, we don’t have those LP relationships. It comes down to respect. You have to respect their time. I wouldn’t go to a VC and do “venture tourism.” People used to want to bring their leaders to visit a VC firm, because they have startups doing cool stuff, but you’re wasting their time and their startups’ time. You need to be working with them from genuine needs you have, and trying to find the right solution — a gap that you can’t solve internally.

I think the VCs do appreciate the fact that we’re not coming to them and saying, “Do you have any data companies?” If we can come to them and say, “Global brand and marketing has this specific need; they want to be able to do X in their marketing campaigns,” that gives them a lot more clarity.

You want measurable, really clear, discrete goals. Then, when you’re done with a test, you can really understand the results, and understand how you evaluate and go forward. 

How we test things. We rely on [author and business school professor] Vijay Govindarajan’s methodology. What’s the hypothesis, what are we trying to solve, what do we believe? We break that down into a set of core assumptions. What are the most critical ones, and where do you have the least amount of confidence? We aim to build the right success measures for each of those assumptions…for example, the drone had visual acuity up to four inches. You want measurable, really clear, discrete goals. Then, when you’re done with a test, you can really understand the results, and understand how you evaluate and go forward. 

Our TechStars accelerator. We had a three-year contract with TechStars [to run a startup accelerator], and we did all three cohorts. The last one [in 2020] happened to be virtual. We’re still working with a number of companies out of the accelerator. It was a great experience. We would consider in the future doing it again…but we want to see where we go from here.