METROMILE

David Friedberg and Steve Pretre started Metromile in 2011 in Redwood City, California. Friedberg kept circling the same annoyance.

Most car insurance ignores how much you actually drive. A retiree who drives to church on Sundays pays roughly what a delivery driver pays.

Metromile flipped that. You install a small device in your car's diagnostic port.

It counts your miles. You pay a low base rate plus a few cents per mile.

For people who barely drive, the savings were real.

Metromile sold pay-per-mile car insurance. You pay a low base monthly rate.

Then a per-mile charge gets added on top. A device called the Metromile Pulse plugs into your car and tracks distance.

Drive less, pay less. The company made money the way any insurer does.

Collect premiums, pay out claims, keep the difference. It also tried to license its software to other insurers as a side business.

Here is the catch. Low-mileage drivers are cheap to insure, but they also pay small premiums.

The margins were thin from day one.

The core product was pay-per-mile auto insurance. The Metromile Pulse, a small gadget that plugged into a car's OBD-II port, measured mileage and fed driving data back to the app.

The app added handy extras like street-sweeping alerts and a find-my-car locator. Beyond consumer insurance, Metromile built an enterprise software platform.

It licensed that platform to other insurance companies so they could run their own digital policies and claims.

Metromile leaned hard on a single message. If you do not drive much, you are overpaying.

That hook worked beautifully during the pandemic, when millions of people parked their cars and watched their mileage drop. The company also treated its driving data as a weapon.

It had records from half a billion trips. It pitched that data and its claims software to bigger insurers.

The plan was always part insurance company, part tech company. Investors liked the tech story a lot more than the insurance one.

Metromile never solved the money. In 2021 it pulled in $104.9 million in revenue and lost $197.7 million on operations.

That is losing almost two dollars for every dollar earned. It only operated in eight states, which capped how fast it could grow.

Pay-per-mile is a niche. Niches are hard to scale into a profit.

The market noticed. By the time Lemonade agreed to buy it, the stock had collapsed and Metromile was worth a fraction of its SPAC debut price.

Metromile raised money from a long list of backers over a decade. Early investors included New Enterprise Associates and Index Ventures.

Later came strategic insurers like Tokio Marine and Intact Financial. In September 2016 it raised about $192 million, which let it buy a carrier called Mosaic and start underwriting its own policies instead of partnering out.

The final act was going public in February 2021 through a SPAC merger with INSU Acquisition Corp II. Chamath Palihapitiya and Zynga founder Mark Pincus each backed that deal through a private placement.