Product addition, evolution grow Duck Creek's revenues

Duck Creek Technologies

Address: 1807 W. Aldrich Road, Bolivar, MO 65613

Top executives: Doug Roller, CEO; John Roller, VP; Brent DeRossett, chief financial officer; Andrew Yohn, VP; Ken Toler, information technology; Barry Tate, engineer; Wendy Corman, head of Connecticut office; Sean Murphy, VP-professional services; and Larry Axon, VP-engineering

2003 revenues: $2.9 million

2004 revenues: $6.4 million

2005 revenues: $10.7 million

Employees: 150

CEO Doug Roller has experienced fast business growth before, but nothing like what’s occurred at Duck Creek Technologies in Bolivar.

Recently ranked No. 63 on the Inc. 500 list of fastest-growing companies, Duck Creek employs about 150 people in Bolivar and Farmington, Conn.

Duck Creek can trace its roots to a company called Micro-Magic Systems that Roller established in 1981 to provide rating services to independent insurance agents. The basis of the business was insurance rating software he had written for his own agency in 1979.

Micro-Magic was acquired by Agency Management Services in 1986, and Roller became CEO of the AMS rating division which grew rapidly through acquisitions to employ 500 to 600 people.

After 10 years with AMS, “I decided I was going to go back to my original passion, which was writing and teaching,” Roller said. After the intensity of AMS, teaching high school was pure rest and recreation.

But in 1999 AMS was acquired by Marsh Capital, which began to restructure the business.

“They were going to move a lot of the development work back to the East Coast, consolidate some operations,” Roller said. Members of the AMS management team who had previously worked with Roller were concerned about the company’s future in Bolivar. They met with Roller, and the result was Duck Creek, which opened in January 2000.

The startup didn’t want to compete directly with AMS, “So, we decided instead of selling to the independent agent, to sell to insurance carriers, the big guys that actually define and create and support the policies that are sold by the retail agent,” Roller said.

By May 2001, Duck Creek had a product in the market – the xml-based Example platform – and sales momentum was building.

Until Sept. 11.

“Then all the insurance carriers in the world sort of crawled in a hole,” Roller said. “For the next six months, we really survived on some investment dollars that came to us through our community investors.”

But the company did survive, and by early 2002, business picked up and has climbed steadily ever since.

In 2003 Duck Creek brought in $2.9 million in revenue. By 2004, annual revenues more than doubled to $6.4 million, and in 2005, revenues hit $10.7 million.

“This year, the number’s around $25 million,” Roller said. “We have some new products going out this year, which are part of the reason for the revenue jump.”

Duck Creek’s flagship product, Example, started with two components – a design tool and a server. The design tool lets carriers design insurance products for the marketplace. “It lets them define the rating and the rules and the screens that they want for the input process, the rules for policy administration, the rate tables, even the documentation,” Roller said.

Once the product is designed, the carrier needs a way to run it in the marketplace. The Example server acts as a sort of “insurance operating system,” Roller said. “It’s got a rating engine, a rules engine; it’s got some data management services and security services that allow carriers of any size to deploy the products that they build.”

Two years after its initial product rollout, Duck Creek added Example Express, a Web-based application mainly for small and mid-size carriers that provides “a turnkey solution for doing rating, underwriting, policy issuance and policy administration.”

Duck Creek is in the process of adding billing, claims and other components.

“Our big project last year was to take all of the industry standard commercial lines insurance rating and turn that all into content … that runs on our platform,” Roller said.

Duck Creek will sell the product and provide updates for a maintenance fee.

Roller credits three company vice presidents and founding members with defining Duck Creek’s future via its products: his brother John, Andy Yohn and Kerrick Tweedy.

Professional services to insurance carriers are another revenue item, which should bring in about $12 million next year, Roller said.

The rest of Duck Creek’s revenues come from software license fees, maintenance fees and training fees.

“I would say an average price for a customer for the software licenses this year will be between $350,000 and $450,000,” Roller said. “We had our first $1 million license sale last October and we’ll have a few more of those this year, as well.”

Duck Creek entered a new phase in its development in January 2005 when it brought a New York City-based venture capital firm, Pequot Ventures, on board.

Bringing in venture capital meant making a commitment to continued growth. But growth and the constant change it requires doesn’t faze Roller and company.

“There’s always a level of chaos that I think for some people doesn’t suit their personality, and this is not a place for the faint of heart in that sense,” Roller said. “But it is a place for people who enjoy creating things and like working with a lot of really good and really intelligent people.”