Picture this: you’ve saved up for months for your dream beach vacation. You’ve cut out restaurant dinners, morning coffees, and those concert tickets you really wanted. You bought your flights and made your hotel reservation. You finally step off the plane in your tropical paradise, only to see that the weather forecast has changed while you were in flight. It’s now supposed to rain for the next 3 days straight…

Source: Peter Cade, The Times of London

Every year, this happens to thousands if not millions of travelers, and, until recently, there was nothing you could do except grit your teeth and “enjoy” sitting in your hotel room reading your mystery novel while your hard earned money evaporates.

Nick Cavanaugh has made it his life’s mission to change that. His company, Sensible, offers the world’s first “Weather Guarantee.” Unfortunately, Sensible can’t literally guarantee the weather will be perfect for your next vacation, but they can insure your trip, such that you get paid a refund if the weather ruins your getaway. Very soon, if it rains on your beach vacation, you can breathe easy because the money you worked so hard to save will go right back into your bank account, and you get a free or discounted vacation to boot.

⛈️ Pre-Sensible

The Sensible story starts in one of the most notoriously rainy places in America: Seattle. Nick Cavanaugh was an outdoorsy kid who loved to ski. Fortunately for him, the Pacific Northwest is full of beautiful ski mountains, but unfortunately for him, the temperatures at many of these mountains hover right around freezing, so rainy skiing was just a fact of life for Nick. Year after year, Nick’s ski trips got rained out, or he skied and got rained on.

Eventually Nick moved out of Seattle to attend the University of Pennsylvania in Philadelphia, where he studied Engineering, with a minor in Environmental Science. While a student at Penn, he came back to the west coast to intern at the world-renowned UC San Diego Scripps Institution of Oceanography where he found the perfect marriage of his passions for math and the outdoors. He was hooked.

After graduation in 2010, Nick returned to the Scripps Institute and four years later completed his masters and PhD in Atmospheric Dynamics and Physics. Nick then spent another two years as a postdoctoral fellow at the Lawrence Berkeley Laboratory (named for Ernest Lawrence, inventor of the cyclotron and J. Robert Oppenheimer’s frenemy in the movie). After 10 years in academia with a hyper-specialized degree and set of skills, Nick had a couple options - he could remain in academia and research, he could work in catastrophe insurance, or he could explore an emerging niche segment of Wall Street, weather-focused hedge funds.

Given Nick hadn’t really made money in his adult life, the hedge fund angle seemed pretty interesting, and he moved to New York to join a fund called Cumulus. At Cumulus, he was focused on predicting weather patterns and inferring their effect on energy and commodity prices. During Nick’s time at Cumulus, the scrappy little fund was acquired by mega-fund Citadel, and Nick looked for the exits.

After leaving Citadel, Nick moved to Los Angeles to get back to the sunny weather, surfing, and outdoorsy culture of Southern California while he thought of what to do next. As he was brainstorming, his mind kept coming back to those rainy childhood ski trips. He was one of probably 25 people in the world with deep experience in both advanced weather prediction and complex financial products, so he decided that he just might be the right person to solve his childhood problem.

☀️ Sensible

To make this happen, Nick needed some initial funding. In 2021, he connected with local LA VCs Dustin Rosen from Wonder Ventures and Josh Diamond from Walkabout Ventures who came together to lead Sensible’s Seed Round and get the business off the ground.

Since then, Nick and team have been building the fastest and most accurate local weather prediction engine in the world. Today, Sensible is constantly ingesting hundreds of terabytes of weather data from NOAA (National Oceanic and Atmospheric Administration) and the ECMWF (European Centre for Medium-Range Weather Forecasts). The craziest aspect of Sensible’s product is not that they are able to ingest the data, but rather that they are able to generate quotes based on a completely personalized, local prediction in less than half a second. Not only can they spit out an individual quote in half a second, but they can spit out more than 60,000 quotes per second across their platform.

So how do you get one of these Sensible Weather Guarantees?

Sensible’s go-to-market strategy thus far has been B2B2C, where the team partners with end merchants (e.g., ski resort Mt. Baldy) as well as infrastructure providers (e.g., ticketing provider Catalate). As a consumer, you find Sensible in the checkout flow of your booking experience, similar to how you find travel insurance in your airline ticket checkout.

For example, when I went to book through Sensible partner Aquarius Boat Rentals, I was shown this screen:

As you can see, adding Sensible’s Weather Guarantee is pretty darn simple - just click yes in the dropdown, and it’s automatically added to your purchase price. Pricing of the policy is algorithmically determined based on the likelihood of rain and a multitude of other complicated factors. Depending on the policy you pay for, you can get a full or partial refund paid out by Sensible’s reinsurance partner (importantly, not the merchant or channel partner).

According to Nick, merchants can benefit from Sensible in two ways: 1. Buyers are more likely to buy if they have peace of mind knowing they will be reimbursed for inclement weather 2. Merchants can mark up the cost of the guarantee and actually make additional revenue from selling the policies.

This all seems like the legendary Michael Scott win-win-win.