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July 20, 2011

Big Impact: Colby Thomson

Colby Thomson

Colby Thomson

When a fellow high school student handed Colby Thomson ’04 a packet about the University of Nebraska-Lincoln Jeffrey S. Raikes School of Computer Science and Management, Thomson was intrigued. The program included a full scholarship, a unique combination of business and computer science with practical leadership skills, and close proximity to his girlfriend and sick grandmother who lived in Kansas City, Mo.

A Lake Lotawana, Mo., native and former professional water skier, Thomson is now the chief executive officer for Allied Strategy, a company that focuses on improving the insurance experience for consumers. Thomson’s first insurance claim started with two insurance companies fighting over who should pay for the costs related to his birth. Later, he watched as his mother battled with insurance companies related to a life-threatening illness.

“I wondered if new customers would like to know how poorly the insurance company treated my mother. I later experienced a house fire and received very good service from another company. There was no good way to compare prices. As an economics student, I saw a market badly in need of information,” Thomson said.

After taking an internship in a traditional corporate job his sophomore year at UNL that he found “terrible compared to the adventures I had in startup companies in high school,” Thomson decided to start his own company with college friends during his junior year at UNL. He was 21.

He and two fellow Raikes School students - Jeff Runyan and Britton Nielsen who are cofounders of Allied Strategy - had worked on a project for Mutual of Omaha, which provided in-depth insight into the insurance world. The three friends then took the business planning course and won national business plan competitions.

“Terry Sebora, the professor teaching the business plan course at the time was amazing. He went out of his way to help us make the class work on our own terms and to produce a real outcome. He was willing to take that kind of risk and spend that much extra effort to be relevant,” he said.

Thomson pooled his savings to buy servers and other equipment and found an investor for $30,000 to hire six students, including Runyan, Nielsen and himself for a Design Studio project. Design Studio is a unique component of the Raikes School, where companies hire students to develop software-based solutions to real problems.

“The faculty was not very pleased that we were our own clients, but they let us do it anyway, which I consider visionary. It was a little strange to hire our own time, but it worked well,” Thomson said.

The trio went on to earn their MBAs at UNL and hired another group of undergraduates for a second Design Studio project. In 2006, Allied Strategy opened a small office in downtown Lincoln and began preparing for launch.

Today, they work with more than 300 insurance companies and thousands of insurance agencies, and the products are sold across the United States. They have also spun off and invested in new companies with some big plans underway.

“Our total employment from these companies is somewhere around 40. We had 30 employees six months ago, and I would not be surprised to see us grow to over 50 soon. Fifty is getting outside our comfort zone though, as we really believe in small teams,” he said.

Not all ventures in the last four years have been successful. They had to abandon selling directly to insurance carriers until they had more leverage and credibility to overcome monopolies. They had an ill-fated product launch in Italy and closed down development operations in Tanzania after an IP leak. During the economic downturn, employee salaries had to be cut by 50 percent or more.

“I went off salary for the better part of two years. One of our key people took a break to get a master’s degree in Ireland and another to do physics and philosophy research. They all came back. I almost couldn’t believe it worked. I feel so fortunate. In Silicon Valley, this would have been a dead startup,” Thomson said.

Now independent personnel are “scattered around” in Omaha, Denver, New York, Kansas City and San Francisco, but Thomson believes Lincoln is the best place for Allied Strategy Headquarters to be located.

“Places like New York, Los Angeles and San Francisco provide essential access we need and I spend a lot of time there, but Lincoln beats those places in startup budget lifestyle, hiring access and team loyalty. Those things make us hard to compete with,” Thomson said.

Allied Strategy is located in Turbine Flats, a business incubator located adjacent to UNL. The incubator has had full occupancy since day one and is currently completing the first of two expansions.

“The difference between the success at Turbine Flats and the outcome at other incubators in town is community. We host community events and you can find parties and bands playing after hours, beer on tap, late night and early morning brainstorming sessions. It’s inherently creative, innovative, radical and non-conformist – and lots of fun,” Thomson said. With a distillery, installation art, café and fitness center soon to be added, Thomson believes Turbine Flats is going to be one of the most interesting incubators in the nation.

The 25-year-old Thomson has a list of goals to accomplish before he turns 30 that includes getting his pilot’s license and recording music. He also hopes to see “major steps in a radical transformation of the insurance industry in the U.S.”