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Dogging the Data
Class Helps Wharton-Bred Petplan USA with Policy Rollout
When Petplan USA started to ponder the nationwide rollout of its pet insurance, its founders, Wharton MBAs Chris and Natasha Ashton, found themselves facing a knotty data-analysis problem: Which markets should they pursue first?
As a young company with nine employees, Petplan could little afford to introduce its policies nationwide simultaneously or to hire a national market-research firm. And it didn't have the expertise to do the analysis itself.
But the Ashtons had a deep relationship with Wharton Entrepreneurial Programs. Besides taking WEP courses, the Ashtons were part of the grand prize winning team that won WEP's Wharton Business Plan Competition in 2003 (the team also spawned another pet insurance start up, Embrace Pet Insurance). They are also alumni of WEP's Venture Initiation Program.
So Chris Ashton sought the advice of Jim Thompson, a WEP associate director. "Jim's long been a great adviser to us," Ashton says. "Proximity to Wharton is a huge reason for us staying here in Philly," rather than moving Petplan elsewhere. "The fact that we can drop in and discuss stuff with Prof. MacMillan and Jim is incredibly valuable." MacMillan is director of Wharton's Sol C. Snider Entrepreneurial Research Center.
Thompson suggested that the Ashtons seek out Alan Abrahams, a visiting lecturer in Wharton's Department of Operations and Information Management. Abrahams teaches the school's data-mining class.
Chris Ashton did, and their conversations led to a partnership that benefited both Petplan and Abrahams' students. Ashton received the data-analysis help that Petplan needed, and the students had an opportunity to act as informal consultants to an early-stage entrepreneurial venture.
Specifically, Ashton agreed to let Abrahams use Petplan as a "live case" for his data-mining class. He shared information on the company and its industry, and the students—from Wharton and Penn's engineering school—would devise algorithms for analyzing the reams of data relevant to Petplan's marketing campaign. As a sweetener for the class, Ashton offered modest cash prizes for the best proposals—$100 for first place, $50 for second and $25 for third.
After the students completed their proposals, he then used their work to help analyze where his company should focus its marketing efforts. "The project would help us to identify demographically favorable parts of the country," Ashton explains. "The students were trying to identify indicators that would make households more likely to buy pet insurance."
The effort actually began in the summer of 2006, when Ashton first approached Abrahams. Over the summer, Abrahams enlisted a student worker to dig up data on the locations of veterinary surgeons' offices nationwide. That served as a test run of the new partnership, showing the Ashtons that Abrahams' students could deliver work of high enough quality to bet their business on it. "They were really happy with the initial data and started asking what predictions we could make about good and bad areas for them," Abrahams says. "For the class, we used the vet-locations dataset as a starting point."
Abrahams told his students that he wanted them to find whatever additional information seemed relevant and then devise ways to mine it to create a profile of the sort of person likely to buy Petplan's policies. In theory, Abrahams adds, that could help the Ashtons determine whether they should "advertise in Fortune or Cosmopolitan" and "which words they should buy on Google."
As part of the project, the Ashtons visited Abrahams' class, presented their business plan and took questions from the students. Chris Ashton left impressed with the give-and-take. "The students pushed back on our ideas and really tested our assumptions," he says.
Though the students could help each other, each was expected to deliver his or her own report and recommendations. The three best plans were submitted by Daniel Sabido and George Makyriannis, both Wharton students, and Rosskyn Dsouza, a graduate student in engineering.
Not surprisingly, the students found that average household income and average age played a big role in deciding who was most inclined to buy pet insurance. Among the unexpected findings were that race played a role in peoples' willingness to purchase coverage and that the location of pet superstores was a good proxy for promising markets.
The students say the project offered them a greater opportunity for hands-on learning than they'd had in other classes.
"In most, if not all, of my classes, you go to the lectures and do readings," Sabido says. "Then it's a lot of applying what you learned in a test. This class was a lot more practical."
Dsouza says that the project gave him his first real exposure to how his work in computers—he's earning a master's in computer engineering—could apply in the insurance industry. "I learned how to calculate the cost-to-market of Petplan's policies and how to calculate the profits that Petplan or any insurance company could make by selling their product."
Adds Sabido, "This sort of setup should be done again. It was very useful for us as students."
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