Arity President Gary Hallgren
welcome to ovation a weekly conversation with people. Who are shaping the technology landscape? I'm Peter Hi. President of Meta Strategy Advisor Technology Technology Executives Forbes columnist book author and Your Host Each episode of Techno version features insights from top executives thought leaders at the intersection of business technology and innovation. If you like what you hear we'd be grateful that you give us a rating on itunes or through. Whatever other sources you use for podcasts? Please subscribe so you. Don't miss a thing thank you. My guess is weakest Gary Haugen. Gary's the president of parody a mobility technology and data analytics company. The grew out of allstate and is focused on helping organizations through the changing pace of transportation in two thousand sixteen allstate recognize its unique ability to identify and quantify risk driving rather than keeping the technology to itself. The company recognized the strategic asset had had forming already in the process prior to joining already. Gary was the president of connected car at allstate in this this interview. He highlights the three main issues in the transportation industry. Most importantly driving is extremely inefficient. As the average cars used for four percent of the day. Furthermore forty thousand people die on the roads each year and driving his extremely expensive both in time and money to make a difference in these areas areas working with shared mobility companies insurance companies openings and automobile companies to solve these issues. We also discussed why Gary believes fully autonomous vehicles or further away than many think how the company mixes the stability strength and resources of a fortune one hundred company with the entrepreneurial spirit of a startup however the attracts talent and a variety of other topics Gary Haugen welcomed attack negation. It's great to speak with you today. Thanks for having me now. It's a pleasure. Gary you're the president of already role you've had for a bit more than three years now and I'm wondering for those who might not be familiar with already. You talk a bit about the background into the company. What is it that you orgnization does sure air is A? The company was founded about three years ago and it grew out of the allstate corporation Gosta Corporation. Everyone knows as being a very large property and casualty the insurance company but there's a variety of other businesses inside of it as well. An airedale is a technology company data analytics company with the focus on ooh helping companies through the changing face of transportation in what y. a. m.. It's a very interesting structure founded by all states. I'm curious can. Can you talk a bit about that. Process you know in terms of this large organization developing an idea seating it developing a startup of sorts within a bigger organization organization. Can you talk a bit about the genesis from that perspective shirt. The way the company was founded was in two thousand ten. There was some thought process around how transportation was going to change and how insurance pricing was going to change around with it. Insurances is actually really interesting industry. In that you don't know what it is going to cost when you sell it. So people generally have to come up with other sorts of variables other sorts of of ways to to accurately price insurance and typically and traditionally. This has been done more around. Who you are it's It can be everything from how old you are and how long you've been driving. And even in some states that can be around gender can be around other factors during the end of the nineties. Company started to use credit variables to score insurance and want to be very predictive so it really transformed the insurance industry and as company we started to look for what is next allstate started thinking there must be something that is better than what is about you which is kind of how who How you drive? How you actually and the car? So they started to put devices into cars and giving people a discount for sharing data along with that with the assumption and the hypothesis that this was. WHO's GonNa be more predictive than other variables? It turned out over the course of years and collecting this from millions of drivers that the assumption was true. That not only. Is it predictive. But the fact is the most predictive so now it is a it might be. It could be we think maybe it's we know that this is the most predictive variable that you could use to most accurately assess the risk of a of a driver so when I think about the secret sauce of areas like we have this unique nick. Ability to identify and quantify risky driving in the quantify part is probably the most the most important that to truly understand that if you have these behaviors saviors. It's going to lead to two losses. So that's the premise of the the company from the technology standpoint from the insurance standpoint then came your question question of low y y already and the company based two choices they could either tried to keep the technology for themselves or what they did is they looked in the the industry. And because there's variable so predictive believe that every insurance company will price insurance in this way in the future and and as a corporation we have a strategic asset that could be valuable to the rest of the industry about Suardi was formed in two thousand sixteen very interesting. And can you talk a bit. About how how you interact with customers and what the value proposition given back to them is the way in which they opt in. You know how the this is model works in that perspective. Yeah I'll go up real high. I will come down to that specific question. Do you think about the main problem that we are that. We're trying to to solve. While the average car is utilized four percent of the time like nobody would ever design a system that had vehicles used four percent of the time even during rush hour the numbers and the a small double digits utilization. So that's that's one problem is that it's inefficient. The next problem is that it's it's relatively it's unsafe. There's forty thousand people that die on the roads every every year and that number had been going down and now it's been going back up again. There's a safety problem album. That is that is their that their opportunities to fix and then lastly it's just really expensive. It's expensive time of the amount of time that people spend in traffic vic trying to get from eight to be and the other part is just pure dollars three trillion dollars a year are spent on transportation just in the US so you think about that macro problem. People don't like it. Everyone complains about traffic. Everyone is frustrated by but there were a lot of options so really what changed was when the the rideshare companies started coming into the picture. They gave people options for that and people gravitated towards those. There's a lot of Push back from lots of people ecosystem whether or not the insurance companies or airports or the the taxi industry that but this was a change. We did want to be disrupted but the reality is. It's good for consumers. They like it and they want to. They want to use these services so what we did it air de we started to look at whereas this disruption occurring and do we have a role that we could play to help improve it and part of that we decided was Insurance companies for sure because they're being disrupted as to historically you just have one car you drive it to and from work. Well well now sometimes someone is going to be sharing your car. Sometimes you're in a car with somebody else. Your kids are going to be driving with somebody else. We want to assess risk in a in a different way so for or shared mobility companies. There's actually as interesting of a proposition as there is for insurance companies and then the automobile companies as well so those are the three vertical markets that we talked our solutions or with the goal of just making transportation safer smarter and more useful so getting down to specific question is it really depends upon the use case for example shared mobility driver. I personally want my driver to have five stars because they indeed are good driver and not just. The car didn't smell and they gave me a mint when I got out so there's opportunities or for consumers to better understand that me personally. I split my time between California and Chicago I have to have a car in both places so my utilization. My cars are actually even less. So so what grade future for me to have somebody using my car are in each of those locations when I'm not there but I'm gonNA WANNA know. Are they look good driver. And how do we identify that. So if I can identify and quantify hi that love literacy driving. I'M GONNA WANNA know who's going to be using my car. And lastly on the on the insurance side whether or not. It's for me as an individual. Aw I wanted to get the most accurate price. I think that the idea that Just because I'm young I should pay more or just because I've had credit issues using the past. I should pay more. I think it should be more about how I drive. So the value proposition for them is shared data with our customers who are insurance companies ladies so the end-consumer shares with them and then we can more accurately price that insurance and from bad personally. Just believe it delivers more transparency. Eighty and more control to the customer than some of these other variables. That are very hard for you to change interesting. I I'm curious can. Can you talk about the team that you have developed and I recognize the organization's been around for a while as you noted but was it largely built from people within allstate was on the net more people hired from the outside In brought in given some of the special skills necessary that you to deliver what you've described From a people people perspective at school perspective. How is that all it? It's been a really interesting Continue my guests that we that we went through when we originally started it was people that that across the allstate corporation because the company had been building this connected car telematics solution for some period of time but we started to bring in more from the the from the outside as well and interesting as you're part of a large enterprise and then you're recruiting and competing against others so I I never felt like I was competing against against typical allstate competitors. I'm competing I've next to me on the floor here is braintree. I have Google and facebook. That aren't too far away. Ah There's other telematics companies that are that are nearby and downtown Chicago as well. So you're in this war for talent of creating somewhat of a startup but also bringing being in the kind of legacy of the large corporation so I think it's actually a a great value proposition or employs that they're able all to have the stability and the strength and the resource that a fortune eighty company can bring but at the same time we're able to operate largely league independent in how we In how we operate and then how we grow so it's a little bit of the startup culture when the together with a little bit of the the strength of a of a very A very stable in a large company and then to start to tie that the innovation along along with it so bring blending. Those two types of cultures together isn't easy and it's always a journey to try to make a great opportunity for for employees to innovate debate than do amazing things. But that's what we're striving to do you reference the fact that you're In a innovative corridor of Chicago You mentioned earlier in the merchant in March a building just north of the river and clearly not in allstate's headquarters of presumably. That was intentional. Creating in your own space and develop into space that's particularly conducive to you know some of the millennial talent that is necessary in a business just like yours to us to take just one of many factors that determine where somebody puts a puts the headquarters of a business. I am curious. How how do you think? Think about the interaction with The parent company all States. At how often do you interact with technology with executives rather there You so as opposed to operating independently as an to yourself. We've been extremely fortunate. And just the way that the structure is created it one of the The struggles I guess. Even just talking about it is is interesting because I we are owned by the allstate corporation. The allstate the corporation owns many companies. They own the allstate insurance company which is the largest company that they own they own insurance which is an insurance company but they also own square trade that does warranties Ortiz and are sold through large retailers. They own a dealer services business that the liver services through ten thousand dealerships ups a roadside assistance program. So if you have a new car Many car manufacturers when he told companies if you call roadside assistance you're calling and allstate companies. Nobody's when I think about that. I think about the corporation and when I think about the insurance company I think about the allstate insurance company so describe that in two ways the allstate insurance company company is my customer so we think of them as a customer there in a regulated industry our corporation is not in the the regulated part of the the allstate corporate structure so we must actually interface with them in a very In the same way that I that vendor and they customer would interface for a whole variety of legal and regulatory reason and then from the allstate corporation then we have a different relationship shipped from there. We can leverage a variety of resources so some of the corporate facilities we are able to to leverage and then one of the biggest ones is around Security and cyber having the the backing of a fortune eighty financial services company that takes security and fiber. You're so seriously. It gives us great benefit relative to others that we compete against better are maybe the same size as airy because we can leverage some of the the infrastructure infrastructure from the big corporation. So we we try to take the the the best from the allstate corporation and then are fortunate to have customers that that are also subsidiaries. Are I guess Siblings to US inside of the corporate hierarchy a while back Gary you wrote a piece about the the need for the the piece was titled a Call For Smart City collaboration and coordination a desire for organizations like yours for for example to to work within the context of broader smart city initiatives and it brings to mind as you've noted in multiple parts of our conversation the the changing landscape of transportation The way in which people think about car ownership or not as the case may be and how that's evolving thing in evolving rather quickly and even now getting to the point where perhaps the cars will will be driving themselves as opposed to the driver doing so I wonder if especially especially with the honing in on the smart city. Point how you think about the relationship between an organization like yours and the broader infrastructure of the cities in which you operate rage in in which the customers that use our drive their cars or driven as the case may be. It's such an interesting problem when you when you think the evolution that we're going to go through to get from one to the other. The system is ridiculously inefficient as we talked about earlier. Just the usage of vehicles and where they are in the parking harking and everything associated with that that if you're running a manufacturing plant you would just shut it down. You would shut it down. You would retool it and you would open it back up and it would be entirely different in far more efficient because nobody's gonNA use assets or percent of the time but you can't do that Myself I grew out of an engineering background background and worked for Worked in the transportation system from the state perspective when I was just out of school and it's even more complicated than just the roads and that's government so that the city because in any given city there are state roads there are county roads. There are streets in each of those are controlled generally by a separate organization so trying to get stopped light synchronized together trying to get construction projects that are synchronized together is is really hard in these different groups that are all funded in different ways and it's hard for them to work together and efficient manner so that the first part of the smart cities is what kind of infrastructure and data can you who provide into that that those groups of companies or groups of Organizations can better work together from our standpoint companies. Like us we have really interesting interesting insights on where accidents happened on. Maybe it's areas. Where accidents aren't happening yet? But based upon our unique understanding of how to identify unquantified risk driving. We actually know this is going to be an area where there will be accident so we believe there's a lot that we can do to provide data to the cities or a pride provide analytics to the cities to help enable them to to make that happen. But as you start thinking about that complex problem problem and you mentioned the Thomas Vehicles Maybe we'll talk about more about that specifically later but the the idea of how long it's going to take to get the infrastructure ready so that it can. You certainly be fully autonomous. But that whole stretch along the way What do you do in the meantime when there's when there's normal vehicles in the same model today they're shared? It'd be that are going to be different. There's somebody autonomous ones. That are doing their thing. And then the fully autonomous wants and the city's need to adapt to to all those us. It's the monumental problem. But it's a great problem because if there is an opportunity to improve One of the stats. We use the convention the three trillion dollars of spend that happens on transportation that if there was just a twenty percent increase in utilization efficiency of the system it winds ends up being three thousand dollars in the pocket of every household in the US which is a huge amount of money when the median income is fifty six thousand dollars a year so we think that at tying these different modes of transportation together with all these aspects around the city is to make the system. More efficient is just so good for society. And it's going to make consumers lives better at all of these things are going to happen. It's just a matter of a matter of time and I'm curious what your perspective on that time is there are so many different perspectives offer for people. Who are shaping that future you're going back to Thomas Vehicles and some of the progress Congress that's already been made for semi autonomy as you mentioned and in some cases tests tests that are going on for full autonomy How do you think about that as somebody who clearly has as a greater senate information in reason to think about this on a regular basis those like my general belief is that the is first of all a lot not longer than what anybody is thinking and I think that's been all the companies that have been working on this now I think are pushing out their estimates as they just realized that it's a it is a really a hard problem? I think the technology that the eagles is going to be here faster than maybe what we might might think but even that getting them widely deployed across many cases will be challenging. So I I'm really excited about the idea of long haul trucks. In between large metropolitan. The area is driving in the middle of the night and the tunes that that seems like reasonable sorts of things. I could see shuttles. I could see things on controlled campuses. I could not runs to the airport. I could see anything that it's a little bit more consistent but once you get out of that once you get out of that consistency. I think it's going to be a a much longer tail in order to get to the to the point where it really is the way that people think of the jetsons are people think of That that ended future state. I'm also curious Talking about the the present state more than the future state Gary as somebody who does have reason to pour Through the data and brass make adjustments based upon what you're reading in terms of how when and why people have accidents as an example of one one of the examples that you gave a six color the way in which you drive. I'm curious if if the data has led to any I don't imagine that you're necessarily a a bad driver or have any issues but I wonder if the date is an educational for you as you think about where and when and how Dr I think. What's interesting is the? It's the definition of what what risky driving is People will the person in front of them as an aggressive driver. Or I think the staff something like eighty percent of people think they're better than average so the perception of what of what you do is kind of clouds clouds. All of it One of the things we think about is that what a heartbreaking event is that. There's something that are very binary did the airbag off okay at. That's something that just has has happened in these data threshold for that. But what is heartbreaking or hard acceleration. What does that really mean? And what we've been able to do. Because we have mass amounts of data we're collecting A couple of billion miles of driving data every couple of days. So it's a mass amount of data that we're collecting. And when you're able to tie that to actual claims data. We start to know that. This type of heartbreaking leads to claims or this type of using your phone when you're driving leads to claims that leads to accidents at least cars being damaged or it'll be people getting hurt and and to be able to truly understand that has has changed things. What is what is interesting is what perception when you're driving with with Others than what they feel is a hard break versus. What you feel is a heartbreak is up pretty arbitrary Sort of feeling people's mind but we've been able to put the data science behind that to to really know that. So do I am. I more cautious. I leave more room. Do I try to do all of these things I certainly do but it's it's The the more interesting thing to me is just the differing perceptions that people have just based upon the their experiences. And even people that they'll I would never want onto telematics program pressing mind because I'm gonNA aggressive driver and I think some of those people are and some of those people aren't they just don't have a whole lot of of baseline compared to when when you compare it to seventeen million people as we can today then you get a much better definition of what what aggressive or what is good risk or bad risks really means it's very interesting you've you've you've been involved in so many different aspects of the auto auto industry and the technology centric aspects of bats. You're the president of the connected car allstate prior to your current role. You worked at a organization called Gis Habits Pronounced College technologists colleges. I Beg your pardon Platform for location intelligence You were the CEO. Remote Dynamics Which operates NASA tracking in wheat management solution just to name a few so you've kind of worked in multiple areas at the intersection between logistics six technology associated with a data driven decision making and an automobiles or trucks as the case may be? And it's interesting that you just to see. CBS evolution of your career. And of course the aggrandizing of Of your responsibilities along the way and I'm like what what drew you to the space initially To to make it clearly worth your while to stay in various aspects of it though of course with different areas of focus. Yeah it was. It was interesting in in school. It was always around being an engineer and the idea was bridges and buildings and I did spend Time as a as a bridge engineer. You're right right out of school but then migrated into into traffic and one of the examples I bring up and first of all this is from the mid nineties so it does make me feel old. I am getting old when I describe it in that way but one of the field tests that we did in the mid nineties was we were pulling data from sensors that were in the roads and we were using thing. FM Radio Technology because their cell phone data plans weren't prevalent yet but FM radio technology to transfer this data. That would show up inside of cars in in this case it was inside of a Volvo cars. We're doing a research project with that. And what she could see from that. Was that in real time updated every thirty seconds you could see the roads turn red green and yellow based upon traffic and anybody. That was around today. That is just absolute commonplace. Of course you have that Google maps. It's on Apple Apple maps with on. Virtually everything that you use today. You see that data that day that didn't exist. There was no technology to enable it and it was just a a pipe dream back when we started to to create that in the mid nineties at some point along the way that critical mass it and all all of a sudden it just became ubiquitous and to me that was when I talk to people now about some of the what's happening with Thomas or what's happening with pricing. The thing of insurance in this way that is what's going to happen is that it doesn't seem it. Seems very very brand new and then it seems like it's kind of catching on a little bit and then you hit that tipping point once you hit that tipping point whether or not it was technology that enabled it or in this case. Wireless networks are they. The availability of lower cost hardware hardware. Whatever that might be it tips and then all of a sudden it becomes commonplace? So that's been the journey that I've seen a little bit with With the work that I've I've done in automotive telematics or moving data from cars and trucks since the nineties that a lot of the things that I had worked on originally was you. We're doing the hard work of. How do I pull those data out of a truck for example New York to Volvo? Or how do I move data through the the air to the point now where those are very commonplace. Ace but really the the genesis behind. What I've done for these twenty? Something years is all around making transportation better understanding data from cars in trucks and allowing companies to to make better decisions with it or in this case now with consumers make better decisions with it. There's been a dependent unifying theme in some ways. It seems like its head right by but that's the message that I give to the the young people now that are insider organization. Is that what you're working on is going to be the future and you will look back whether or not it's five ten fifteen years from now and it'll just be commonplace that of course people are priced based upon how they drive. Of course I manage my driver coming to pick me up based upon how they drive and it will be it will just be commonplace where today it feels like. We're breaking new ground very interesting. I wanted to also spare a moment if you don't mind talking about Chicago where you're based where you work and the technology analogy community generally speaking. You spoke of some of the innovative companies. That are you know within throwing distance. It sounds like of where you're sitting as a starting point but I'm curious what What as somebody who who has built a team in Chicago who draws technology talent in the area who sits at the center of a one of the areas where a lot of the tech startups are were? They are centered. I'm curious what your perspective is on. The evolution of Chicago is technology the center. Yeah we're we're really a big fan of the corporation ALLSTATE has been banished Cayo Company for a long time. They're out fifteen miles or so into the into the suburbs personally. I've always had a bias towards the guys. I think it's very liveable. It's the right size. It's very level it has a lot of The the wonderful mid the western values I live in California. Spend time here now but I grew up in Minnesota and I. I think there's something that is really good about that. That mid Western work. I think what we see a lot with the the talent that are here. It's either people that have gone to school in their round here and I'm Kinda WANNA stick around. We also see a lot of people that want to go to some of the other tech centers or more specifically to the to the bay area but then relative to cost or relative maybe just being away from from home or other reasons. They want to get some of that experience out there and an experience but then they they wanNA come back so i. I bet you're here being a little bit more mature it's it's a little bit more But certainly a a ton of youth here as well but I. I just think the the environment is that a little bit less chasing the the startup up dream and a little bit more of of creating companies that are creating real real value right here in Chicago. I were a big fan of of this area. There's an incubator called eighteen. Seventy one. That's a A few floors from us. We says a lot of talent in and around the building credit of very great office setting here here and when we finally get people into the office and they realize the kind of data they can be working with the kind of problems they could be solving we are able to to compete with the likes. The biggest tech companies With the value that we bring as a as enterprise and and especially solving these problems you think of data scientists have seventy five data scientists Antezana team and they're trying to solve these problems of how to change transportation and in a lot of places that you go to your job is to try to improve TRUTV click rate by point two percent now that point two percent. Maybe were a ton of money for that for that company. But I think filming of and sense of mission that you can bring to To some of these companies like like ours our our grade and then to rally back in and around this The city and specifically here ear down around the merchandise bartos fantastic excellence. Well Gary Hallberg thank you so much for taking time with be today. It's been great to get to know a bit more about your story To learn more about your organization already and get your perspectives on the future of driving at the same time. It's been a great observation. Thanks I really appreciate your abdomen. I appreciate it. Thanks for tuning in. Please join me next week. My guest will be Michael. Matthias the EP of Customer Experience and Chief Information Officer of Blue Shield of California.