HOWARD TULLMAN JOINS LISA DENT ON WGN RADIO TO DISCUSS HIS LATEST INC. MAGAZINE ARTICLE

 LISTEN TO THE SHOW HERE

LISTEN TO THE SHOW HERE

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

If Your Customers Aren’t Brand Ambassadors, You’re Doing It Wrong

As a new business builder, you learn sometimes that it’s not just your competition that stands in your way, but your own customers and their agendas.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Dec 9, 2025

 

Many years ago, when I was starting my first business helping insurance companies do a better and more accurate job of settling their vehicle loss claims, we began to acquire national brand-name clients. Initially, we would deal only with their local offices or branches, either as a pilot project or because other parts, locations and divisions of the same companies were handled by different managers or administrators. The plan was “land and expand” and we were anxious to grow. But the insurance industry is composed of a million different fiefdoms.  

When you’re an entrepreneur trying to expand your revenues, especially once you’ve demonstrated the real economic value and operational benefits of your products and service, you want to go after the biggest volume opportunities within the given organization. We started our company in Illinois working with State Farm and Allstate, but we knew from the beginning that the home run volume states were California, Texas, and Florida. New York and New Jersey also had great volumes, but they were hyper-regulated and rife with fraud problems. Even back in the 80s when we started, there were only a dozen or so giant insurers that mattered, and everyone knew who they were. State Farm and Allstate were among the top five by any measure, and their claims, volumes and customers were matters of public record. They were the biggest fish in the pond, and you always want to fish where the fish are. If fishing were easy, they’d call it catching.  

In our case, we were delivering—speeding up claims’ operations, eliminating adjuster errors and fraud, and, most importantly, saving the companies serious dollars on each and every claim. Once we started to process large claim volumes, the savings were so substantial that the insurers were actually worried about negative media attention and asked us to change the terminology on our monthly results reports from “savings” to “variances” so it wouldn’t appear to an outside reader that they were shorting their insureds and claimants by settling their claims for less than they were entitled to receive. But by every measurement, using our service was a win-win (more accurate settlements completed more quickly) and we found local supporters and sponsors in all of our customers. We were, however, in for a rude awakening. 
 
We assumed that our local champions would be interested in and excited about our plans to expand to their other offices across the country in the major markets. Expanding the financial benefits we were delivering locally to some of their largest offices would create even larger and more dramatic savings and other efficiencies for their firms. But they weren’t remotely interested in anything other than expanding within their own areas of responsibility and benefiting their own bottom lines. Their bonuses and promotions depend on the results in their own regions and on their own turf. Plus, they loved the service and attention they were getting and didn’t want that diluted by our focusing on our expansion elsewhere. And they made it very clear that going over their heads to pitch the decision makers at the corporate level would be really bad news for us.  
 
So, it was all about Decatur and forget about Dallas. Peoria was fine with them, but Pasadena was a hard pass. As a new business builder, you learn sometimes that it’s not just your competition that stands in your way, but often it’s your own customers and their own agendas as well. It’s easy to find people who will say “no” but difficult to figure out who within any given organization can say “yes.” Our champions often turned out to have cotton in their mouths when their peers from other regions called for references.
 
I encountered another somewhat less obnoxious, but no less costly, version of the problem where the left hand had no clue what the right hand was doing when we worked with a company starting in 2015 called Knowledge Hound that built systems to help large organizations manage and keep track of their own information. CPG companies in particular did countless customer surveys and focus groups over the years and literally didn’t know that some group, division, client or other partner had spent substantial sums of money on research like this and then buried the results in the bottom of someone’s drawer never to be seen again. It wasn’t deceptive; it was just that the various players didn’t understand the immense value that even older behavioral data and time-lapse results could have for ongoing and new projects and products. These businesses didn’t know how to find and employ expensive and important information within their own organizations or how to bridge the data gaps and silos that existed in their own companies.  

It’s going to be very interesting to see how well and how quickly A.I. tools are going to address and remedy this particular kind of problem. It should be one of the most appropriate and easily implemented applications, but the businesses are going to have to understand the critical need to share data and to build small language models of their own rather than getting sucked into costly attempts to boil the ocean with LLMs.
 
Smart companies don’t silo or sequester their information assets; they share them broadly for the greater good. Spreading the word – like lighting one candle from another – doesn’t diminish the first, it just doubles the illumination for all. 

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

How to Fire Your Customers

Not all of them. Just the ones you don't need. Recently, insurers State Farm and Allstate demonstrated how that's done by dumping longstanding clients in California. Love'em when they're profitable; leave'em when they're not.

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

Mark Twain said that a banker is a fellow who lends you his umbrella when the sun is shining but wants it back the minute it begins to rain. I'd say his view was a little narrow, since plenty of investors are certainly charter members of the same unreliable club. The overnight run on Silicon Valley Bank and that institution's ultimate collapse -- which most of us believe was driven by the panic of a few key, well-connected, and cowardly VCs with social media megaphones -- is just one of the latest cases in point. As my old friend and mentor Bill McGowan, the founder of MCI, used to say: These guys have great loyalty to their businesses, but their No. 1 loyalty is to their own tush. When the heat is on, they're hard to find and you'd be a fool to depend on them.

And the heat is on, literally, as well as the water, which is why State Farm and Allstate are abandoning the California market for homeowners’ insurance. You're apparently no longer in good hands and it's not exactly neighborly, but if you live in the land of wildfires, floods, and mudslides, you're really up a creek.

We've all experienced versions of the disappointment of fair-weather friends, in both our business and personal lives. They're there cheering you on in the good times but bail the moment that the going gets rough. They have wishbones where you thought they had backbones and they disappear without a trace when you really need them most. And then -- down the line and after the fact -- the ones who utterly lack the courage to contribute always seem to find an explanation to justify their cowardice. If you really want to do something, you'll find a way; if you don't, you'll find an excuse. 

This painful recurrence is part of every entrepreneur's journey. Where there's always an uphill part of the path, where promises that seemed so solid go up in smoke, and where sometimes you feel that you can't tell your courage from your desperation. They should print t-shirts saying something like: "count on self-interest, not self-sacrifice, and you'll never be surprised" along with the rest of each startup's swag. No one enjoys the process when friends and even family flee, and the pain and heartbreak don't get any better when you've been part of that particular movie too many times yourself.

But there are unavoidable times when the shoe is on the other foot - where you've got to disappoint people and leave them hanging. Then it's your job to break the hard news to some of your own customers that some changes are necessary and that it may even be time for you to part ways entirely. Especially these days, you're going to have to get ready to say "No" and it won't be easy. Not easy or simple, but simply necessary. The reality is that you're not required to burn down your own business just because you feel the need to be a good sport and try to be there for everyone else.

And, as the triage begins, you're going to need to carefully pick and choose which clients, customers, partners, and vendors you can stick with and help, and which are going to have to be "fired," because these choices will ultimately determine the course of your own firm. There are some basic rules in these cases that can help, but in the final analysis, the process is very often seat-of-the-pants. These discussions turn out to be far more emotional and confrontational than you would imagine and there's often a lot of sad and bitter talk about loyalty, values, and trust.

That's why it been very interesting to watch as both State Farm and Allstate have announced that after decades of doing business in California and making boatloads of bucks as the economy and the population there dramatically expanded, they've both decided (separately, I'm sure) to stop writing any new homeowners insurance policies in the state.

They have plenty of explanations and justifications - climate change and associated weather risks, higher repair and material costs, increasingly challenging regulations, overbuilt and insecure geographies -- but the real bottom line is that they have no loyalties, customer commitment, or empathy. They only have "interests" and for now at least they're no longer interested in insuring California homeowners. Love'em when the dollars are there and leave'em in the lurch when things go south. It may feel painfully personal to you, but it's just business to them. And don't think that because the big guys have moved on you can expect to see a herd of other insurers rushing in to fill the void. Quite the opposite: they'll get out of town just as quickly as they can. They have about as much courage as the last tackler jumping on the pile in a football game.

Commercial real estate is next. This has serious implications not simply for downtown skyscrapers, but also for strip malls and smaller buildings nationwide, which house many startups and SMBs. Borrowers, and especially smaller businesses that have taken loan renewals and rollovers absolutely for granted for years as they've been loyal and regularly paying customers, are about to get some very rude awakenings when their loans are pulled, accelerated, or not renewed. These situations are a lot like pouring too much cream in your coffee. Easy to do, hard to undo.

When the prime borrowers collapse and the banks grudgingly have to take over these properties, you can bet that basic tenant services, ongoing maintenance, and promotional support will all take a huge hit.  Needless to say, in the midst of all the crap we've gone through over the last three years, having to quickly repay a line of credit or retire some revolving debt (or having to quickly relocate from a mall or a building that's falling apart around you) couldn't come at a worst possible time especially when any spare funds you might have had were going to be critical to bridging any remaining revenue or inventory gaps as the economy started to grow again and customers returned.

And it's not like there are a bunch of other banks waiting in the wings to offer you some alternatives. If you sensed that draw requests, fundings, and paperwork processes were slowing down before, these days you're looking at a timeframe between forever and never. Even the biggest banks such as Chase are slowly and steadily (and somewhat stealthily) stepping away from their commercial real estate portfolios and hoping at the same time that they'll get out of most of their positions, even with a haircut, before the true deluge begins. The people running these operations may have virtues, but courage is not one of them. They may be smart, but they're scared as well. Staying the course and partnering with longtime clients and customers isn't the kind of risks that make sense today for middle managers who are frankly worrying about their own positions as well.

There are no easy answers, and the current financial climate is unlikely to improve for another year or so as the waves of cancelations, foreclosures, repossessions, and shutterings rise, crest, and hopefully start to subside by next fall. In the meantime, the smartest and safest things to do are fairly simply: conserve and save your cash, don't rely on renewals or new borrowing, hunker down and don't make any big financial bets at this point, and hope that the MAGAts in Congress don't make things much worse.

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