The foundation of every lasting organization is a unique insight and series of perspectives that forms a thesis. The validation of this thesis, and exploitation of its results if proven successful is the basis of competitive advantage.
Our Thesis
Our thesis is that empowering renters with flexibility will benefit property owners. Owners believe that more flexibility for renters must come at their expense, but this is no longer true. In today’s world, everyone wins when renters are empowered with flexibility, because of three major changes:
Instant, Real-Time Access to Data
In today’s world, where every action you take online and offline is logged, we know exponentially more about you (and every other individual on the planet) each year. At the same time, this data is becoming cleaner and more accessible.
When it comes to renters, this means that we are able to understand and predict the lifestyles of individuals more accurately than ever before, with less bias, fewer assumptions, and less guesswork.
This means that pricing for every individual can be both fair and profitable with little error.
Software Adoption in Laggard Industries
Software today is not improving at an exponential rate, but is being adopted at exponential rates. Laggard industries like farming, construction, and real estate are undergoing a digital transformation, which unlocks new possibilities for financial products.
One of these possibilities is in revolutionizing insurance and warranty claims. The real-time flow of accurate data from SaaS platforms, combined with turnkey digital payment processors, means that many claims can be automatically adjusted in seconds, for pennies, with limited risk of fraud.
This means that brand new categories of protection for low-limit risks are now feasible.
The Asset-Light Fintech Revolution
Financial products, by definition, require a lot of capital. The strength of a bank is in its deposits, and the strength of an insurer is in its capital pool.
However, we are in the midst of an asset-light revolution in financial products. First pioneered by neobanks (or challenger banks), fintech startups starting in the 2010s began delivering innovative, compelling financial products under an asset-light model by partnering with traditional banks and using software to reduce or otherwise eliminate administrative costs.
This revolution is currently sweeping through insurance, with the first generation of digital MGAs (or managing general agents) for existing insurance products — life, home, auto, and more — reaching maturity through partnerships with fronts and reinsurers.
Now that this ecosystem exists, the doors have been opened for new startups to use the asset-light model to cover entirely new categories of risks.
Our Mission and Vision
These three changes:
- Instant, Real-Time Access to Data
- Software Adoption in Laggard Industries
- The Asset-Light Fintech Revolution
Make it possible for us to eliminate the financial barriers blocking renter flexibility and create financial value for owners at the same time, in a way that was not possible until now.
Our vision is a flexible world where renters feel empowered and property owners achieve higher returns on their assets.
Our mission is to bring this vision to reality by empowering renters with flexibility, while creating value for owners, with new categories of financial products.
Our Strategy
We cannot eliminate all financial barriers at once, so we have decided to concentrate on addressing the particular financial obstacles that renters face when terminating their leases early. This segment is specific enough to create a distinct product category and represents the group of renters who bear the greatest financial burden when moving.
Entry Segment
Within this segment, we have identified the student housing sector as the ideal starting point. This is because the pain point is most urgent in this sector, customers are most willing to try a new product, and the problem is easiest to solve on a small scale.
First, students experience significantly more uncertainty compared to the average renter. However, they are also required to sign their leases much earlier, up to 12 months before moving in. It’s also worth noting that most student housing leases don’t include a buyout clause, which exacerbates the pain point making it more frequent and severe.
Second, students are young, open to trying new approaches, and don't have many preconceived notions to overcome. This makes them receptive buyers, and they (or their parents) usually have the financial means to afford new solutions.
Finally, students move at more predictable times and for more predictable reasons compared to the average renter. This allows us to focus on a few specific perils that have the greatest impact on students, such as the risks of academic withdrawal, dismissal, and transfer. By taking this approach, we can build an underwriting model in months instead of years.
Growing Into New Segments
There’s also a long-term advantage to working with students first — they’re trendsetters. The 19 year old students who adopt lease flexibility coverage today are the 25 year olds and 30 year olds of the future who will be bringing our products to the broader multifamily rental market.
Therefore, it’s logical for us to not just start with student housing, but aim to deliver the best experience possible — from the process of signing up, to the price point, to the perceived value when making a claim.
As we do this, we will naturally move into the broader market, and create broader products for more renters. This will be gradual, and we will grow with our customer base, as we move into more profitable (in the realm of insurance this is synonymous with less risky) market segments.
The Long, Long Term
In the long term, we believe that there will not be a need for a separate product to reduce the financial barriers created by current-day leases. The real estate market may move slowly, but it does change like any other industry.
Within the next 10 years, lease flexibility coverage will become commonplace in various rental types, ranging from multifamily apartments to senior living. Real estate players will then begin to realize the value they are missing out on by sticking to rigid lease terms.
With this objective in mind, our goal is to revolutionize the way leases are handled. We plan to provide real estate leaders with the same tools, systems, and frameworks for risk management that we have developed for internal use. Our long-term strategy is to make flexibility an integral part of every lease, ultimately solving the problem in its entirety.
In short, our strategy is simple:
- Eliminate financial barriers to movement for student renters
- Expand coverage to eliminate financial barriers to movement for all renters
- While doing the above, sell the software platforms and systems we create to real estate operators to change the way leases are handled
About Cios: On a mission to revolutionize the rental market, Cios is introducing innovative solutions to make renting more flexible. With Lease Flexibility Coverage, they’re breaking down the barriers that keep renters from moving freely.
