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Lemonade Ad Hanging off the NYSE

Lemonade Inc. went public last month, reaching a $3 billion dollar market cap days after opening to the public. Now, a month later, the property and casualty insurance company has hit the $4 billion mark, an amazing accomplishment given the current economic climate. Named on CNBC's "disruptor 50" back in 2019, Lemonade has been making headlines for a long time as an innovator in what has long been a fairly traditional economic space.

Founded by Israelis Daniel Schreiber and Shai Wininger, the company certainly has leadership of a high pedigree. Shai founded Fiverr (which went public on the NYSE last year to a respectable market cap of almost $3 billion) while Daniel founded Powermat Technologies, a privately owned company that develops and licenses intellectual property in the growing field of wireless power.

In true Israeli entrepreneurial fashion, Daniel and Shai are attempting to take on a large and established marketplace to disrupt it with technological innovation. Lemonade cuts out a lot of the middle management, using chatbots and algorithms to assign policies and handle claims. Rather than taking that extra savings and turning into additional profit, however, Lemonade sets a hard cap on its portion of any given customer's premium to 25%, while the remaining 75%, if unused in paying out claims, goes to a charity of the user's choice.

In a world where companies like Disney, Nike, Netflix, and even Ben & Jerry's have inextricably tied their marketing strategies with social justice, it appears that there is a definite business incentive to go down the road Lemonade has taken. However, some have been perturbed by what at times appears to be an extremely cynical and overtly manipulative take on many social issues. In many cases, such attempts to connect with current events have backfired, such as when users on reddit discovered that popular game company Bethesda's usage of the pride flag on their twitter account did not extend to the middle east and the resulting content went viral.

In Lemonade's case, it appears Daniel and Shai want to prove that there is a market out there for something more genuine: a company where a commitment to making a positive impact and not profit gouging goes beyond marketing and focus groups, and involves an actual exchange of money. In 2019, Lemonade gave back $631,540.70 to over 26 charities, nearly six times more than what they gave the previous year, showing that their strategy appears to be generating growth.

Despite the hype and high valuations, there have been some misgivings. Lemonade has yet to turn a profit. Given that it is an insurance company, many find it off-putting that paying out claims is essentially being guaranteed in many respects only by the company's ability to continually raise investor capital. However, this is definitely a space that Israeli entrepreneurs are comfortable operating in, and with seasoned veterans at the helm, Lemonade looks to be another Israeli success story in the making.