Ethos’s IPO: A New Chapter for Life Insurance

As Ethos celebrates its IPO today, our team at Accel has been reflecting on the company’s journey. Ethos now protects hundreds of thousands of American families and has an offering for practically any customer who walks through the company’s digital door. But Ethos looked very different when we first partnered with Peter and Lingke: Ethos was a small team in a barebones office that had sold a few hundred life insurance policies and had strict limits on the profiles of customers who could get approved for policies.

Back in 2016, Peter and Lingke got their start as Stanford roommates who had been developing startup ideas around the underexplored fringes of the life insurance market. Ethos was born when the founders embraced the bigger, harder question: why not reinvent the life insurance industry itself? Life insurance is one of the biggest markets in the world, but because of how frustrating the process has become, there’s a widening “coverage gap” between the right amount of coverage versus the protection that families actually have. 

With this in mind, Peter and Lingke set out to build Ethos. From the start, they knew it would not be easy. In most technology markets, the size of the prize often correlates closely with the difficulty of building an enduring business. In life insurance, that’s especially true. A good percentage of the Fortune 500 is in the business of life insurance; this market is ruthlessly efficient, and mistakes have real consequences for businesses. As the late Charlie Munger famously said, “If you’re offering a bad insurance rate, you don’t have to advertise. You can whisper it in the middle of the ocean, and someone will swim to you to take it.” 

Peter and Lingke understood early on that modernizing life insurance wouldn’t mean cutting corners on underwriting or chasing growth at the expense of discipline. They knew they couldn’t outcompete legacy life insurance companies without finding a different way to compete altogether.

At the time of our initial investment in Ethos’s Series B, they’d only shown very early progress. But we already saw their willingness to ask those big questions. They had a sense for where they could push boundaries and where to respect the industry’s constraints.

Ethos didn’t win by whispering off-market rates to customers. It won by using technology to do the hardest parts of the business better: price risk accurately, make decisions faster, target the right audience, grow the population of customers who would engage with life insurance, match the right policies to the right risk profiles, and deliver a vastly better experience without compromising fundamentals. Ethos is proving that one of the slowest-moving markets in the world could move on startup timelines without breaking its economics.

Today, Ethos has activated more than 500,000 policies. Peter and Lingke’s vision that a technology company could close the coverage gap and protect hundreds of thousands of American families is becoming a reality.

Congratulations to Peter, Lingke, and the entire Ethos team on today’s IPO and on entering a new chapter in your journey to becoming the next great American insurance business.