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Monday, Mar 27, 2023

Smart Strategy

A cornhole game partially blocked the hallway entrance to the headquarters of SmartFinancial.com on the top floor of its colonial style office complex in Costa Mesa, not too far from the beach.

Charlie, a midsized white boxer-lab mixed dog, greeted a visitor while a white Pomeranian, Mochi, trotted over to see the excitement.

The pet friendly environment and the cornhole game were two immediate examples of SmartFinancial’s office culture during a recent visit to the company, which counts revenue of more than $100 million and is considering going public.

To keep its employees in a good spirits, the company also offers annual Ping-Pong tournaments, March Madness contests, summer barbecues and virtual Friday happy hours. It has parties to celebrate Halloween and July 4th.

“My favorite is the annual chili cook-off at the end of November,” co-founder and Chief Executive Lev Barinskiy told the Business Journal during a visit to his office.

“We work hard, play hard. It resonates well with our team.”

The strategy appears to be paying off.

The 9-year-old company has reported adding nearly 70 workers over the course of the year, boosting its base by some 40%.

That level of worker growth comes as SmartFinancial has been doubling its sales annually, and now makes in excess of $100 million, officials say.

An initial public offering is under consideration, according to execs.

While a party to celebrate a Wall Street listing may not be imminent, SmartFinancial has plenty to celebrate already.

The online provider of personal, auto and home insurance services made the Business Journal’s latest edition of the Best Places to Work, placing No. 29 on the midsize company list for firms with between 50 and 249 U.S. workers.

The list, the result of months of surveying workers and management at hundreds of local employers, represents those that scored highest on a proprietary ranking done for the Business Journal by Harrisburg, Pa.-based Best Companies Group, which produces similar lists for publications across the country.

The Benefits

SmartFinancial—which partners with insurance carriers to distribute its products, and powers thousands of insurance agencies through its online marketplace—touts its competitive pay compensation that includes health and 401(k)s, as well as plenty of room for advancement.

“There is nothing more gratifying than hiring someone, training them and giving them the keys to the car and they come back successful,” co-founder and Chief Operating Officer Nate Kropp said.

One of the company’s benefits is “unlimited growth,” by which Barinskiy explained that employees can quickly get promotions because the company is enjoying “hyper growth” that is doubling in size annually.

“What unites this team is the mission we’re on—to help people save money on insurance,” Barinskiy said, adding that 30 million  drivers in the U.S. don’t have insurance.

“Our ability to bring insurance products to the masses and allow people to save money—everybody can feel and touch the benefits of their labor.”

Ohio Connection

The co-founders have deep ties to Ohio where they grew up.

When Barinskiy was 13, his family fled Uzbekistan, arriving in Columbus in 1996.

He’s always been interested in entrepreneurship, selling anything from refurbished computers on Ebay to hot dogs to “inebriated students” at the Ohio State University.

At 16, his first summer job was as a clerk at a local insurance agency. By 18, he earned a license to start selling insurance. By 20, he was the youngest operator of an agency at Allstate. However, the insurance giant wanted its operators to work within a geographical area.

“My vision was much bigger—to go national,” Barinskiy said. “How do we tap into this massive market?”

He knew buyers of insurance were trying to compare prices online so in 2004, he began an online lead generator for not only his firm but other insurance agents as well. His first hire at the company was Kropp, who built the platform for the firm that eventually became known as Insuranceagents.com.

Within a couple of years, the firm had grown to more than 100 employees and was on several fast growing lists, as its sales approached $20 million a year. In 2012, he sold it to Bankrate LLC.

“That was our first big exit,” Barinskiy said. “It was definitely good to get that validation.”

New Venture, OC Move

The pair was nowhere close to retiring, thus forming SmartFinancial in Columbus in 2012, funding it with their own money.

“In very simple terms, we help insurance shoppers find insurance coverage at more affordable rates,” Barinskiy said.

“We partner with insurance carriers and agencies across the country. We’re able to match consumers with these insurance providers.”

Eventually, the pair decided to move their headquarters to Orange County, which they knew well because Barinskiy’s wife is from the area, while Kropp often visited his uncle and aunt who live in Costa Mesa.

They also knew that Orange County wasn’t as expensive for employees as Silicon Valley.

“It’s like a perfect middle ground,” Barinskiy said. “You have access to some of the best talent in the state, but it’s more affordable.

“We wanted to tap into a bigger pool of talent. We knew that California is a great place for us to grow a technology company.”

They enjoy their headquarters, located at the southern end of the 55 Freeway in Costa Mesa.

“We love the proximity to the ocean. We’re surrounded by great restaurants,” Barinskiy said. “There’s so much to do around here. I love this area.”

IPO Possibility

If the company makes the Business Journal’s Best Places to Work list next year, it won’t be in the midsize company sector.

SmartFinancial recently blew past the 250 employees mark and plans to have 300 on staff by the end of this year.

It’s generating “north of $100 million” in annual sales, and the company bills itself as one of the fastest growing tech-enabled insurance distribution companies in the U.S.

The team is focused on building out its core business of personal, auto and home insurance. Eventually, it may expand into other insurance areas like Medicare, health, life and commercial.

“We’re just scratching the surface,” Barinskiy said.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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