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CCC: Customer type expansion, regulatory tailwinds, and network effects

The most successful companies in vertical markets pair product innovation with go-to-market disruption. In this series we explore that marriage, how companies many have never heard of came to dominate their markets, and how they scaled with distinct tactics. These history lessons inform what we look for when investing in vertical markets at Scale Venture Partners, and hopefully provide blueprints for the next generation of vertical market winners. 

Company name: CCC Intelligent Solutions

Founder: Howard A. Tullman

Year founded: 1980

Company vertical: Insurance

Market dominance: Car insurance claims processing

What do they actually do: CCC connects all of the constituencies in a car insurance claim to help provide a seamless experience by selling software to P&C insurance carriers as well as repair garages. When a car owner gets into an accident they will file a claim with their insurance company, a process that is managed through CCC software. The software will estimate the cost of repair or total loss for the carrier, and recommend repair shops to the car owner. Once the car is in the repair garage, the repair garage will coordinate the repair and related costs with the insurance carrier through CCC software, and both will use the software to communicate timing and the process to the car owner.

Product innovation: Founded in the 1980s, the first solution to market was a data product sold to insurance companies. Whereas previously estimates were used on losses and total losses in an insurance claim, CCC used computers to aggregate new and used prices from car dealerships to approximate the value of cars. CCC has slowly expanded its set of solutions sold to insurance carriers, with 27 of the top 30 P&C insurance carriers using CCC software today. Today, they not only provide carriers with data to inform total losses, but have estimating software and workflow to manage the car insurance claims process. Over 50% of revenue comes from insurance carriers.

In the early 2000s CCC acquired a car repair shop management software. This software allows a repair shop to manage all aspects of their shop, including estimating repairs, accessing real-time inventory of parts and supplies, managing their labor and costs, and coordinating with car OEMs for repair procedure recommendations. Because of their relationship with car insurance carriers, CCC was able to build out connections between their two customer constituencies that allow them to communicate estimates, rules, and payments for car repairs paid by car insurance companies. Today over 30k repair facilities use the CCC software, over 40% of market share.

CCC is unique in that it started with mainframe software, then migrated to client-server architecture, and today has a modern multi-tenant cloud SaaS solution.

Scaling magic moment: CCC capitalizes on two common vertical software innovations: a multi-product offering and closed-network-effects. The original CCC product through the 80s and 90s was successful and innovative in its own right, but really just set the stage for what we know as CCC as today.

By acquiring and expanding its solutions for car repair facilities, CCC was able to meaningfully expand its market size. Further, this was the first step in bringing together the  major constituencies in the car insurance claim repair marketplace. CCC was able to use its dominance in the insurance carrier market to accelerate its acquisition of car repair garages. And with each car repair garage they acquired, the network value for all constituencies including the car insurance carriers increased.

While they don’t drive meaningful revenue, CCC has further used this to bring car parts suppliers, towing companies, and OEM car manufactures all on the platform. This makes it incredibly difficult for any other entrant to compete against CCC, and very compelling for everyone to be part of the network.

Where are they now: CCC generates over $900M in revenue and has a market capitalization of $6B as of Q224. CCC was taken public via a SPAC in 2021, interestingly the third time the company has been public. Today they are heavily investing in providing artificial intelligence solutions to their customers to further automate the car insurance claims experience.

 

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