Asurion (A): Two Stanford MBAs and a Towing Company

Kevin Taweel, from Prince Edward Island, Canada, and Jim Ellis, from rural Florida, met as case writers for Irv Grousbeck at Stanford GSB. Both wanted to own a business. In July 1995, they acquired Road Rescue, an $8.5 million roadside-assistance company serving wireless carriers, through a search fund. That investment would compound at more than 61 percent annually over three decades and generate returns exceeding 5,275x—the most successful search-fund investment ever recorded.

By late 2000, following the 1999 acquisition of Merrimac Group, a smaller handset-insurance provider, the business had reached $79 million in revenue and $25.3 million in EBITDA. Handset insurance, not roadside assistance, was driving the growth. Both products were sold through the same wireless-carrier channel, but the economics differed fundamentally. In handset insurance, most of the value—underwriting profit, device replacement, reverse logistics—sat with third-party providers while Asurion administered claims and collected fees.

Taweel and Ellis faced pivotal decisions: How much of the handset-insurance value chain should they own? Should they build underwriting and fulfillment capabilities in-house or rent them from partners? Did the roadside business still warrant equal strategic investment?

The case examines the formation of a co-CEO partnership and the early strategic choices about vertical integration, capital allocation, and business model that would define one of the most successful private companies in modern business history.