Meet Mark Costello, CEO of Hubb

The Eupnea Team: Mark, could you describe what is your role at Hubb and a few key characteristics of
the business today?

Mark Costello: OK, I’m Mark Costello, Chief Executive Officer of Hubb. Hubb are what we classify as broker 2.0. So we are an AI-driven automation insurance broker that allows a streamlining of the whole process of buying commercial insurance.

The Eupnea Team: OK. Well, straight on the first question then about obviously the market that we are experiencing today and the market also we have experienced in the last few years.

If you consider the range of events that have affected many businesses in the last two years, which events have created significant challenges to your business?

Mark Costello: Certainly the pandemic created a huge challenge for us. Right at the onset of the pandemic we were becoming authorised with the FCA because we work in a regulated environment and the FCA, like everyone else, shut down, so that put a huge delay on getting the business up and running which when you run startup work mode and you’ve got a very limited budget to get from A to B and then B to C and C to D, that was a huge challenge for Hubb.

The Eupnea Team: And so it was for many other businesses obviously. You mentioned the pandemic that it was considered by many, one of the most or probably the most extreme disruptive event that we’ve had at least here in the UK for more than a century. Looking back, how would you describe your organisation fared during the pandemic?

Mark Costello: So we bolted down and rode out the pandemic as best we could, reserving cash as best we could. Because we couldn’t trade, we couldn’t bring on customers. We were basically at that point and should have been, you know, transiting from being an idea to being an operational business. So we just had to bolt the door and wait until things started moving again and we got authorised.

The Eupnea Team: OK, well we have left behind the pandemic obviously. Today businesses are called to deal with a different set of challenges. We have, for example, ultra high inflation and as a result higher cost of living and also increase of the operating costs that businesses have. How has the current economic environment affected your organisation?

Mark Costello: OK. So I think the current economic situation is by and large still the hangover of the pandemic. So, we see inflation but it’s supply side inflationary pressures, right? So we live in a connected just in time model world and I think that that economic squeeze and also the flight of talent that has caused problems for our own business. Being honest, we work in 100%, almost 100% home working environment and we don’t see those challenges. I think a lot of businesses also are struggling to attract the right people at the moment, again because I think we are doing something. It’s a bit different that different differentiator between us and the incumbents means that attracting the right talent hasn’t been difficult for us to date.

The Eupnea Team: About your business model specifically, have you had to adapt your business model under the current market conditions?

Mark Costello: I suppose that’s a challenging question that I would need to think about. Maybe we have. So I think that whilst we are completely focused on aggressive growth and you know usually aggressive growth comes with an aggressive expenditure because of the financial cycle and wanting to protect positions. We maybe haven’t been as aggressive as I would have liked, but we’re still pretty aggressive.

The Eupnea Team: In the last two years we’ve seen many businesses switching from defensive to expansionary strategies and back. I’m not sure if also you’ve had to do the same to adapt to changing market conditions. Is your focus on growth this year?

Mark Costello: 100% focused in growth and you know, unless your business is 40, 50, 60 years old, if you’re not focused in growth, you’re focused in dying and that’s my opinion.

The Eupnea Team: What are your most important priorities to achieve growth this year?

Mark Costello: Technology advancements. Currently we have 4 software engineers, CTO, three data scientists and the business, our focus is getting that tech right so that we can really, really ramp up sales, which are, you know, we’re currently converting about 30% the opportunities we get. That technology advancement will allow us to process more and more customers and take them off of the prospect wheel and put them into the customer wheel.

The Eupnea Team: Has technology been a catalyst for your current success?

Mark Costello: A hundred percent, so when we look across the market vertical that we’re in, there’s about 1,800 insurance brokers in the UK. We will be inside the top 100 by volume after 15 months of trading and technology has been massive player in that, a massive catalyst to that growth and just to give you a flavor of what that looks like: The typical broker of our size will maybe have 20 to 25 insurance staff. We get 6.

The Eupnea Team: Some events that are happening today are external and of global scale. Has that affected your aim to expand in other markets or your view of globalization?

Mark Costello: I don’t have any negative views about globalization. I mean, the thing is, even if you do have negative view in globalization, there is no retreating from globalization. Unfortunately, and embarrassingly in my opinion, Britain chose to leave the EU. You know whether the EU is a good or a bad thing, it can only be a good thing. You know, there’s obviously problems with the EU, but leaving it was a huge, huge disaster for Britain. I actually think in a mindset as well as an economic view as well.

The Eupnea Team: Has that affected how you trade with your clients?

Mark Costello: It hasn’t affected how we trade with the clients because our customers are all UK based predominantly. However, it does affect you know even the smallest, the small scale stuff like having tickets stamps near passport going through the airport in Amsterdam and taking time at airports causes problems, but I do think that we will see manufacturer in the UK take a hit that that’s undoubtedly losing your biggest customer base is a problem and an insurance is a great bellwether. Commercial insurance is a great bellwether for how the economy is doing because we insured those enterprises that build stuff and make stuff and ship it all over the world and I fully expect to see good businesses going to the wall or relocating to EU jurisdiction because they can’t trade from here anymore.

The Eupnea Team: During the coronavirus pandemic we saw most business leaders of businesses adopting a similar stance to respond to the crisis then. How do you think business leaders need to respond today to the new market conditions?

Mark Costello: I suppose it all depends on what space you’re talking about. I think that the UK needs to start looking towards growth and growth comes by investment. So I think business leaders need to start thinking more about how they take less money off the table and put that money back into businesses so that they can move forward, become modern businesses, become more efficient, more effective and look towards long term profitability as opposed to just taking money off the table in the here and now.

The Eupnea Team: What do you anticipate about the current economic climate with high inflation?

Mark Costello: First of all I think that inflation has became like the boogeyman and I don’t think that inflation is necessarily a bad thing. Obviously, unchecked inflation is. But, as I said when we talked earlier about the pandemic, a lot of the economic pressures on the economy are supply side and I think once those supply chains get back up to full speed then I think that that should start to see green shoots of recovery. So, I actually think this downturn, recession if that’s what it is, I think that will be short-lived as long as government make the right political decisions about steering the economy through that.

The Eupnea Team: Supply chain shocks have created many challenges as we’ve seen to many businesses. Is this actually also an issue for your business?

Mark Costello: Not really but certainly if we’re talking about government you know we are very much a high risk technology play and that the technology we are building has never been built before and it’s very labour intensive and very expensive and if we want to really drive the economy of the future, R&D tax credits need to be beefed up and how government helps companies, I think that Innovate UK and such like who offer grants and competitions and stuff, that’s all very well and good but then what you end up with is civil servants picking who they think the best
business bits are and with greatest respect to civil servants, what do they know about business. I think that out of tax credits being relaxed, especially the very, very early stages, ’cause they’ve been wiped out almost and that that’s a great shame. Because they are, they have been the catalyst for some brilliant businesses, us included. That needs to be addressed and it needs addressed as quickly as the sorting out people’s gas and electricity bills, because that obviously needs sorted out as well.

The Eupnea Team: Do you have a view about how long the current market conditions may last?

Mark Costello: But again, I’m not an economist, but my reading of the runes is that this is a short-lived downturn and I think by the summer of next year we’ll really start seeing green shoots which will then start driving confidence in publicly listed companies. That will then cascade its way down into the private markets and we’ll start seeing private equity and venture capital coming back strong into the market to support young businesses.

The Eupnea Team: Despite the highly volatile market for businesses, are there any growth opportunities that your business is currently focusing on?

Mark Costello: We are growing. You know, we’re in our second year of trading and we fully expect to finish year two about north of 140% growth on year one. There’s lots and lots of growth out there. It’s just about being confident and laser-focused to get there and also making sure you take your team with you to get there and making sure they’re rewarded.

The Eupnea Team: Do you feel better prepared now than before to deal with this crisis and future crises?

Mark Costello: Yes, I think so. We’re still quite a fledgling company, so we’ve only been about for three, three and a half years. But I think we are prepared for. Our response to uncertain economic conditions is to go and win more customers.

The Eupnea Team: There is a lot of uncertainty in the market. I would definitely agree with that.

Thinking of the people who are able to affect the impact of the current crisis, of the energy crisis that we are facing and the increased operating costs that businesses are having today, from politicians to global organisations with social purpose and from regulators to chief executive officers of organisations, what would you like to be done for dealing with the current crisis so Hubb and other businesses can persevere and grow through this crisis?

Mark Costello: I think that there is two options for this. The first one is to tax. The windfall tax, the energy companies’ 170 billion of excess profits across the next 18 months will cover the cost of where we are now. So that would be solution one which should have been taken or maybe it shouldn’t have been taken. In fact, I probably don’t think it should have been taken. I think we should leave that 170 billion with the energy companies but insist that every single penny of it is put into renewable energy and allow them then to control that market, because the other way to do this would be to tax the companies windfall tax and then let government deploy that capital to making into the renewable market. And I feel more comfortable that those large companies would be better at deploying that capital into renewables than the government who to my mind again aren’t business people and would do it wrong.

The Eupnea Team: Is this a sector of the economy you focus as a business?

Mark Costello: Not at the moment, actually, but as in our next few iterations in a renewable space we think in, and I live in Scotland and it’s very tangible and noticeable when you come to Scotland, how much infrastructure investment there’s been in renewables already, you know, get green energy will be the new coal, the new oil, the new thing that drives the economy and there will be lots of insurance opportunities in that and it’s definitely top of mind that we want to be in that space.

The Eupnea Team: What you are saying, you favour a reallocation of resources to different sectors of the economy with focus on green and renewables. What could you tell me about your own industry, the insurance industry? What would you like to happen so your business can deal with the crisis in a better way?

Mark Costello: So I think that the insurance industry as far as dealing with a crisis in a better way and just anecdotally one of the biggest insurance companies – it’s in the public domain too, I may well say it –  Royal Sun Alliance actually made that publicity splash. Now this is where I started my career, a company that I hold dear. But they actually made that announcement 14 months after the pandemic started, that they’ve managed to get the phone lines back open. Just complete embarrassment. I think that as an industry, especially when we are the proponents of risk management to business owners, really needs to think about what we’re doing in it as far as how we’re preparing for the future because the industry is way behind so many sectors.

The Eupnea Team: You mentioned earlier about the role of technology to your current success. And obviously, technology has helped many businesses during the pandemic and today in its aftermath for them to find new ways to grow. For example, digitalization has been in the priorities of many businesses in order to achieve change and transformation. How important is it for Hubb to be technologically at the forefront?

Mark Costello: Tech is everything to us. We are a tech-first business, right? With a tech-led business, everything we do is about technology. We see ourselves developing unique technology that not only allows us to transact insurance more efficiently and with less errors and omissions for the customer and the insurer, we think we can use and we’re already starting to use technology to give our customers risk management tools that make their businesses more efficient and easier to manage.

The Eupnea Team: Regarding how efficient you are as a business and how you use technology to become a more efficient business, what is your view about your organisation and other businesses achieving greater business automation, for example, from adoption of new technologies?

Mark Costello: Again, automation is a huge part of what we do, and again, it’s why we’re an insurance business with more tech people than we have with insurance people. Automation is a huge part of what we do, again because it removes repetitive of jobs, taking the computer out the person, right? Letting tech run all of the manual tasks and letting people focus in high value tasks that the customers actually benefit from.

The Eupnea Team: What can you tell about the impact of the current labour market on your organisation?

Mark Costello: That’s an interesting question. So we’ve got staff all across the UK, we’ve got people work for us in Portugal and I think I alluded to earlier, we find it easier to attract talent because of the fact that for something different and a lot of the younger people in the industry want to be part of that which is great. But what I also think and I think this is more future gazing, but a lot of the real technical talent in the insurance industry, you know, a lot of those guys and girls are getting to the age when they’re ready to retire and I think there’s a real void there that the industry hasn’t dealt with and I’d be interested, it’d be great if in 10 years from now you asked me that question because I think where my answer now is I think the industry isn’t in alright shape as far as that’s concerned. I don’t think we are future-proofed.

The Eupnea Team: Are you looking to increase your headcount this year?

Mark Costello: Always. So, as of April last year, we were 3 full timers. Today we’re 24. I would imagine by April next year, ’cause I run year end to year end, I would imagine will be 40 by April next year.

The Eupnea Team: What decisions have you had to make about your workplace since 2020 considering that many employees amongst UK businesses have had to work remotely? Was it also the same situation with your business?

Mark Costello: We’ve got two office spaces that we basically don’t use. We have got a completely homeworking policy, work from where you want policy actually. Not work from home, work from where you want and one of the things that we’ve done is we have regular face to face meetings, but we’ve also built a virtual office in Horizon Workspaces, which is part of the Metaverse, which gives us that sense of being in a room working together collaboratively without actually physically being together and that’s been hugely beneficial for us.

The Eupnea Team: And this has helped the people that work in your business to continue working during the pandemic and today also where different challenges are there for employers to deal with obviously?

Mark Costello: Yeah, 100%. It just gives you that. Because I think the thing is having let the conversation I am having on teams feels entirely natural and fine, but I think once you get over four people in teams, zoom or other brands that are available I think it becomes not a proper conversation. The Horizon environment allows us to have those proper discussions with 5, 6, 7, 8 people.

The Eupnea Team: Based on our market research for UK employees in December last year, a hybrid workplace was the most preferred work environment by employees then and remote working as a component of it widely more favorable than working in the office. Do you expect organisations, at least in the UK, will transition their workforces back into the office gradually or some changes in the workplace will be permanent?

Mark Costello: I don’t think, well I don’t know about other organisations, I don’t think we will ever have significant real estate that we have people working from. We’ve got virtual real estate where people can work collaboratively. We’ve got teams, we’ve got full electronic suite of solutions for working collaboratively. I don’t see us ever doing that. I also think and I’ve heard people talk people, friends and whatever about organisations where. The company might want to put people back in desks, especially in our industry right, when all of the office spaces in the square mile, some of the most expensive real estate in the world, long lease, seasonal and all that stuff. But when you’re coming up against, you know that can we force really talented people to do an hour and a half commute either way every day when they were just as productive working from home? That’s a difficult sale.

The Eupnea Team: Yes and obviously many of the working arrangements that employers had to adopt favored their employees to work from home for many reasons then but even today there may be a case where employees are productive when they work from home and probably more productive than when they are in the office. But there are I should say also advantages when employees work in the office.

Mark Costello: OK, so there is always pros and cons to any decision you make. What are the cons of working remotely? But I think we addressed that by giving people that collaborative space in horizon and I think that really helps us. I think it’s better for building those personal relationships face to face. I have no doubt about that. But you know if you’ve got a team and you’ve got people with kids and you get people with other obligations outside of work, giving them that flexibility, that they can work from home or whenever they want. As I keep repeating that ’cause it’s work from where you want, that’s a huge, huge thing.

The Eupnea Team: Recently there have been various organisations echoing their need to reskill their workforce and that as a result, for example, of the increase in remote working and acceleration of technology innovation that have created both of these a new requirement in various sectors for workforce reskilling. Do you have or expect to have a skills gap in your business?

Mark Costello: No, because we’ve started as a digital-first business. We don’t see that as a challenge for, well maybe the only person it’s a challenge for is me actually, but everyone else I think it’s fine.

The Eupnea Team: What are the most important steps that you are taking today or planning to take in the future about the development of the people who work in Hubb?

Mark Costello: Yeah, that’s another thing that’s top of mind. What we really want to do is sit down and build a 360 development package for all our stuff. But we’re a startup still so that’s something that well it’s top of mind but we’re not executing that at the moment, but it’s very much our view as we hire the best person we can afford for each role. Because we’d rather have one good people than two average. But upscaling people is absolutely top of mind and I think having worked in Financial Services all my life, there always seems to be a broad brush approach to that. We really want to tailor packages for individuals because we don’t have lots and lots of people doing the same tasks and we really want to have a tailored program per person that them and HR sit down and with influence from their peers help build that out for them.

The Eupnea Team: You mentioned a 360 professional development view for people who work for Hubb, which is obviously great and I can see from what you’re saying also that you have a number of other initiatives specifically for the development of your employees. How are the steps that you are taking aligned to your future growth plans and your vision for Hubb?

Mark Costello: Yeah. So, again that’s very interesting. For the more senior people in the insurance part of our business, we need to teach them about letting go of stuff and letting technology take over the mundane which for some of them can be difficult and challenging. I get that but we just need to let them believe in what we’re doing with the technology and then upskilling them so that they have more technical knowledge because a lot of the maintenance of an insurance contract with commercial customer becomes automated and we don’t need people to do that.

The Eupnea Team: Undoubtedly the pandemic challenged various organisational cultures while many businesses had to maintain a highly dispersed workforce and adopt new working arrangements with their employees. How would you describe the role of your organisational culture to what your business is accomplishing today?

Mark Costello: Well, we’ve got a very, very simple culture, which is we get stuff done. That is the culture within the business. We get a strategic plan that we execute by getting stuff done. But the pandemic affects that? No. Do I see that culture shifting soon? No. I think culture is something that evolves so and culture is massively important because we work in a highly stressful environment, right? We work very, very, very hard as a team and we all look each other in the eye and make sure that each is doing their part of what they said they were going to do. But we also support each other as much as we can. I think culture does evolve and when you go from 3 staff to 24 staff in 17 months culture becomes organic. As we move into the next phase of development, I think we need to really grasp how we want to articulate what culture is so that we can get people to buy into it.

The Eupnea Team: That sounds very good and obviously it’s very good to hear that your organisational culture is going to evolve and it will be from what you’re saying probably the cornerstone of what you’re achieving as a business going forward?

Mark Costello: Mindset is everything. A lot of them we speak, especially the venture capitalist world after a few people asked why don’t you just build this technology and sell it into the incumbent market? Because tech only works if you’ve got the mindset that you’re going to be a leading tech-driven business. It’s a bit like buying a treadmill and putting in your garage. You need to get out in the garage and actually do the stuff, right? That’s my view in tech.

The Eupnea Team: As a business, from what you’ve said, you are focusing a lot on technology innovation and how new technologies can support your growth today and in the following years, but also it’s in your plans how you can balance how your organisational culture can involve also to support in your journey as well to grow your business over time?

Mark Costello: Yeah, that’s the top of mind as well, evolving that culture as the business evolves, ’cause, as I said, we’ve got a core of 24 people now who really work closely and hand in glove with each other day in, day out. But once you start going from 24 to 40 and then from 40 to 80, making sure that we retain those values as we know it’s going to be a challenge and we might look to outside help to help us really crystallise what that looks like.

The interview with Mark Costello was conducted by Panagiotis Dimitrelis, Founder of Eupnea, on 13 September 2022.

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