How iCracked Went From MVP to Scalable Product - Hustle Con 2015

Hey guys, how you doing? Let's all, let's all stand up. Everyone get up. You guys have been sitting for about an hour and a half or 2 hours. All right, and find someone you don't know and give them the best hug you've had in the last couple days. Hey, you're not hugging. Let's get this. Alright, alright, that's enough hugging. You guys can find each other on Coffee Meets Bagel if it was, uh— Alright, so I'm gonna talk to you guys about our company, how we started, how we've messed up an incredible amount, and then kind of what we're building. This is a picture of me drinking a gin and tonic. I don't know why it's on there, but it was a, that was an awesome wedding. All right, so, so raise your hand if you've ever broken a smartphone before. All right, so that's, it's a pretty big market. So I'm one of our own best customers. I went to Cal Poly with my brother Chip, who presented last year. Raise your hand if you were here last year. Oh, come on. Alright, well, his talk sucked and mine's gonna be way better. Alright, so he's a winemaker, but what happened is in college we got cut off by our parents and they're like, "Hey, you guys need to figure out a way to make money." So we started a beekeeping operation 'cause the margins in honey are actually pretty high. And then, so he started, we started making wine 'cause we couldn't afford alcohol. So we're like, "Why don't we make it?" And then I kept breaking my phone and I'm like, we're spending all the money that we're making from selling wine to kids in the dorms on fixing our phones, so we need to figure out how to make some more money and not pay Apple $229 to fix an iPhone 3GS. So on the 5th or 6th time breaking my phone, I ended up ordering some parts online and then it took about 4 hours to fix. I broke the phone more than it was broken before taking it apart, but at least I didn't have to go wait in line, set up an appointment, and have a painful experience. And then my roommate was like, "Hey, can you fix my phone? It broke." And I'm like, "Yeah, I'll order another $15 part and then fix it." I didn't charge him, but I should have. And so I was like, "This is a really cool business, but I don't have any customers." I'm just fixing my buddies' phones that go to parties. And so I ended up going to a career fair. And I was walking around, and I paid $20 to buy 10 sheets of paper to print my resume on that read like— it was like high school education. There was like nothing I'd done. I worked at a couple of fish stores. That was really fun. And actually, I worked at fish stores because I've always kept saltwater fish tanks. and corals were really expensive, and I got an employee discount, and I worked for $5 an hour, and I got corals for next to nothing, so that was cool. But, um, and this is actually going to be a— this story gets better. So I'm walking around, and I remember looking at a Clorox booth at a career fair at Cal Poly, and I remember thinking, like, I'm going to spend a summer working on, like, marketing or social media for Clorox, It's probably not the best use of my time, and I end up bumping into one of my friends who actually just started a company that went through YC, which is awesome. But I bump into a guy, and he's like, "Hey, you're the guy who fixes iPhones." I'm like, "Yeah, what's going on?" He's like, "Can you fix— I broke my phone yesterday. Can you fix it?" And so I was like, "Yeah, actually I have parts in my golf cart," 'cause I had a golf cart in college, and I drove it to and from class. So there's another story about how we acquired the golf cart, which find me after and I'll tell you. We painted it so you could never guess that it was someone else's golf cart. So I end up, I was like, "Yeah, I can fix your phone." And I ended up throwing out all my resumes before I'd handed out any one of them, went and fixed his phone, and then I was like, "Hey, this could be a cool business, so I'm gonna need to figure out how to," how to make more customers, so I actually skipped class and I went to the library and got on Microsoft Paint, for those that remember it, and made the most terrible-looking flyer you've ever seen that's like, "Broken iPhone," and I made it in neon colors. And then the cool thing about Cal Poly, I hope they never watch this, but they subsidized color printing at 5 cents each, so it was very cheap. And so I printed 200 or 300 flyers and then handed them to my friends and my roommates, and I was like, "When you're going to class, hang these up." and on the first day, I got a phone call being like, hey, can you, this is actually, there's a funny story behind this. So I dated two girls named Courtney, and it gets good. So I dated two girls, not at the same time, but so I dated two girls named Courtney, and the first person that called me was like, hey, I broke my phone. I saw your flyer. Can you fix it? I'm like, yeah, absolutely. What type? She's like, I have an iPhone 3GS. And I'm like, alright, that's awesome. What's your name? And she's like, my name's Courtney. And I'm like, this is a sign. This is awesome. And so I gave her my address and I said, hey, yeah, bring it over. I'll fix it later. And she walks in and she's like, hey, I think I've been to your house before. And I'm like, I don't think you have. And she's like, no, Mike lives here. I'm like, yeah, Mike's my roommate. She's like, oh, my brother's best friends with Mike. His name's Anthony. and I was like, Anthony Martin? She's like, yeah. I was like, oh yeah, I'm good buddies with him, and that actually became my co-founder is, let's give a round of applause for Anthony and his sister. So that was our first, my first customer was my co-founder's sister, which was crazy, and so I ended up hanging, the coolest thing about flyers is you can hang them anywhere, and there's, and if you staple them high enough in the room, the janitorial staff or the teachers can't tear them down. So we'd go, we'd like go in at night or after 6 PM and then like staple flyers up towards the clock where it was like 10, 12 feet high, and they'd never get torn down, but every time when you're in class, you'd look at it and you'd be like, oh my gosh, I have 2 hours left, and there's an annoying neon flyer next to the clock that's telling me to fix my iPhone. And so I ended up graduating and was thinking about dropping out. I still don't know if that was a good idea or a bad idea. I think the jury's still out on that. But ended up like the more customers I would meet and service, the less important education and school got. And I was like, well, I'm a psychology major. I can probably get by with graduating. So ended up graduating, and I was talking to my dad, and I'm like, hey, what are you— he's like, what are you doing after graduation? And I'm like, I don't really have a plan. I think iCracked is going pretty well. And he was like, well, why don't you do that full time? And I remember thinking that it had always been just like a really cool college job. It had never been something bigger than that. And I think one of the coolest things a parent can give to their children is, permission to explore, adventure, and like go out on their own. And so, and like something switched in my mind. I'm like, oh my gosh, I just got permission to essentially max out my credit cards and start an iPhone repair company, which sounded crazy at the time. And so Anthony ended up calling me and he's like, hey, what are you doing for— what are you doing for money? And I'm like, you need to fix phones. And he's like, all right, cool. He was running a textbook rental and exchange company. And so I just sent him the flyers. We changed his phone number on it. And I sent him a YouTube video on how to fix iPhones. And there's actually still a flyer somewhere on Santa Barbara's campus that he gets a call every 2 weeks. And someone's like, hey, do you fix phones? And he's like, where is that flyer? And they're like, oh, it's in the Poly Sci building. And then we're like, tear it down. They're like, it's way too high. And so that, it became like the absolute coolest job I could imagine. And after graduation, we're like, well, we need, well, I'll go back to a Chip story. We can integrate those quite a lot. He's my winemaking brother. So he calls me and he's like, hey, what are you doing for money? I'm like, you need to fix phones. He's like, all right, yeah, I'll just print it on my business card that I, is it cool if I say I'm an executive? I'm like, yeah, of course. We have 3 people in the company. You can be an executive. So he prints like business cards that say like winemaker and I cracked executive on it. And I sent him up some screens and he goes to a party and he was trying to impress a cute girl and he hits her phone out of her hand to break it because he's like, oh, I can fix this. And so, so he hits, he hits the phone out and and she's like, "You're an asshole, it's a 3GS," and he's like, "I only have 3G parts." If you remember, there was two iPhones. So he calls me in a panic, I'm like, "Oh yeah, we definitely don't have parts for those," and he ended up having to buy her a new phone, which was, uh, and so it started, but it was like what worked on one campus started working on another campus, started working in San Francisco, And what it started as, I put on-demand iPhone repair. I think what we'll get to is it's actually not about repair at all. It's not even about iPhones. It's about building a network that you press a button anywhere you are around the world and someone comes and solves your technology needs. But it started as on-demand phone repair, and the cool thing is we believe that your iPhone is actually the remote control to your life. And if you can insert a brand and a service in between you and that phone, you can get into other verticals quite easily because you've already gained consumer trust, and you've already solved their deepest need, which is connection to the world. And so what we decided is like, how do we create the AAA for your devices? And the cool thing is, is we think that repair is a Trojan horse into our consumers' lives, and it's going crazy. I think I have like 20 slides, and I'm on slide 2, so this is gonna be good. Here's a picture that I don't know why it's on there. We can go to the next one. Cool, so how it started, I was my own customer, I still am. I fixed my iPhone 6 for the 4th time this year, yesterday actually, and I don't like it 'cause the 6 parts are actually expensive so it costs us a lot of money to fix it, but whatever. So where we are now. So we're at about 115 employees, we have 6 offices, which is insane because at graduation day we packed my co-founder's truck and we're like, hey, let's go up to San Francisco, there's no way we can build a, massive company in San Luis Obispo and ended up driving up and crashing on my brother's couch. Another Chip story. Um, so he— winemakers are the best. So he— I'm, I'm working with Anthony and we're at our computers and it's like 9:40 AM on a Tuesday and Chip like comes out and we've been living on his couch for 2 months and he's like stretching, probably hungover, and he's like, ah, how much do you guys work? We're like, Chip, it's 9:40 in the morning. You need to get up. And so we were like, hey, it's our time to leave. So we end up Craigslisting a place in Sunnyvale and moving into a basement in Sunnyvale. And then ended up hiring a graphic designer. Her name's Leslie. She saw my MS Paint flyers, and she's like, these are terrible. Can I make you better ones? Because I have to look at them all day in class. And I'm like, this is annoying. I'm like, oh my gosh, absolutely. And then I paid people in $2 bills. That's a life hack, pay people in $2 bills. People love $2 bills. And so the whole idea is like, how do you scale? Well, it was working in these 3 cities, how do we do that around the US? And we came up with this model that we call the iTech model, where we have, well, just some numbers. So in the last 30 days, we've had about 10,000 people apply to be an iTech. We say no to 97 to 98% of them, either based on like where they are, skill, do they fit our model, are they going to treat our customers better than any, any person than the other 98%. And so we take the top 2% of people that apply to be an iTech and we try to equip them with all the tools they need to be successful. So this is supply chain, marketing material, training, backend support, regional management, but most importantly, a brand and customers. And so we built a dispatch platform where anywhere you are around the US, you can put in the problem you're having and it goes to your local iTech. They can claim it, then they'll meet you at wherever's convenient for you. So they're all mobile. And Starbucks is actually a huge place that iTechs love to service customers, 'cause a lot of people don't understand that you can, I can drop my phone right now, break it, and in the next 20 minutes have someone here and replace it good as new. And so we've, we have, we just passed 2,300 iTechs in the company and they are just the most incredible service professionals you've ever met. Our average iTech is between 30 to 40 years old. He or she has a family. They're not what we thought college students would be the way to expand. It's not college students. And we're planning on adding about 5,000 more people to the company this year, which is insane because 5 years ago we were living in a basement trying to fix phones. So it started by word of mouth, became a cool college job. Don't know why that picture's there. So becoming bigger, like how do you scale something bigger than just something that's out of a dorm room? And that's been the question we're trying to answer because it— one of my biggest fears is we won't build a big enough company that makes an impact on how massive this market is. So in 2009, about 5% of the world's population had smartphones. At the end of this year, it should be about 42%. Um, Apple sold 74 million iPhones last quarter. It's about 34,000 iPhones every hour, 24 hours a day. We, we know that this market is absolutely huge. Well, what else can you do besides repair? And that is you can buy back old devices, you can deliver new devices, and then the golden goose is actually a membership plan where for $7 a month, anytime you break your device, whether it's your Android, iPad, whatever, you press a button and we fix it for $25 on the spot, which is insane. So become a master of your own domain. A lot of people ask us, hey, why didn't you Why don't you fix this? We have someone who joined our company that the first call they got was someone trying to fix their TomTom GPS unit. And he's like, why don't we fix TomToms? And it's like, well, we actually think we can be the best in the world at iOS and Android repair, and then we can move into other verticals. And it's been an insane uphill battle. So one of the things— I'll give you a fish analogy, because you guys know I worked at a fish store. So when expanding, cast a really big net and throw back what you don't want. We believe this for all the tests we do internally. It's, hey, let's see what works, and then let's get rid of stuff that doesn't work, and then let's keep what does. But let's keep everything on the table as a possibility until it's not a possibility. And that's been crazy. I put slow growth on here because growing fast is actually not always the best thing. We were— we try to grow at about 10 to 15% month over month, which by certain standards is either really fast or really slow. But it took us 3 years to get to a point where we're actually comfortable growing at 15% a month. So don't— great businesses take time. Don't expect to come out with an app or a website or a platform and have like crazy adoption unless you're Meerkat or Periscope. Which was sweet in South by Southwest. You guys all need to go next year. One of the things that we also live by is shoot bullets, not cannonball, or shoot bullets, then cannonballs, in that you don't wanna spend too much resources on something that doesn't work. So if you're gonna change your entire website layout and then you launch your website and it doesn't work, well, you just spent 6 months pushing something that actually has less KPIs. Well, you could've just, Hack something together, move fast. I'm not an engineer. My co-founder's not an engineer. Hug your engineers if you have one or you have a technical co-founder. They make the world a better place and are absolutely amazing. Can we get a round of applause for, I think, all engineers just in general? Because we are all— if we're at this conference, chances are we are not engineers. So I put A/B testing is your best friend for life. So test everything. Analytics, you get better at your job by analytics and knowing what does and doesn't work. There's a lot of really cool A/B testing platforms where like minute changes. So there's a button on our site that is the button that is the difference between requesting an iTech and not requesting an iTech. and we changed it from request a tech to get quote, and it increased conversions by 3.5%. That's insane. And so test everything, and if it doesn't work, then it took a couple hours to make it work. How do we scale? This is just A/B testing, so we run about 25 web tests a month. What I think's really interesting is right now, we get a couple million people to our website a quarter, But right now, half of them don't know that they're getting a completely different homepage than the other half. And that's insane because they're gonna have a good experience, but they don't know that we're actually running a control on a new webpage right now. So, and then always think bigger. One of my favorite things is when I'm talking to people, whether it's investors or specifically other entrepreneurs and other CEOs, one of my favorite things is when they actually have a bigger vision for a branch of our company than I do myself. And it gives me the chills to think about when someone says— last week someone goes, oh, you're building the world's last technical workforce. And I've never thought of it like that. And we're going to add probably 20,000 people as iTechs to our company in the next 18 months. And we literally could be building the world's last technical workforce. And I love the thought of people thinking bigger than yourself. I think founders generally, they get so in the weeds and they're looking at such a micro level, they can forget the macro level. I think Walker at Teespring earlier, he's an absolutely great guy, but it seems— it's crazy to— if you think about, well, what happens if you can actually put a t-shirt on 5%, 10%, 20% of the world's population? It's massive, and it seems silly if you don't— Go back and just think big always about what you're doing. And then make decisions that you would make when you're larger. One of the— so one of the things that I do personally is I think, 5 years from now, if I'm looking back at this decision, would I have made the same decision? And that's— every day I try to get better at my job. I hope everyone on our team tries to do that as well. I want to go to sleep, and when I wake up, I want to be a better founder than I was when I went to bed the night before. And I always try to look back and look back at my decisions and like, would I have made that decision now? Whether it's hiring your best friend, which the jury's still out on it. I've unfortunately had to let some of my best friends go that didn't work out. But it's still— I needed to go through that growth curve to learn that maybe it's not the best idea to hire your best friend. But when it does work, it is. The best idea. So decisions are— make decisions that you'd make when you're a billion-dollar company that you would when you're a 3-person startup in a basement in Sunnyvale. So this is a cool, uh, this is a cool map. So every blue pin is someone that requested an iTech in the last 60 days in places we don't have iTechs yet. Uh, the purple pins are current locations of iTechs. They kind of get covered up. And then, uh, the Left is quarter over quarter iTech growth, so we're gonna add 5,000 iTechs this year. This is a cool thing. So one of the things that we live by is how do we make our customers and our users champions? Our iTechs will do probably about $30 million in just repair, trade-in, and protection plans of the $25. They show up, they fix your device. That's insane. I love that we're building a network that we can take care of our customers, and then everyone wins. This is actually a fun one. So one of the things people always ask us is like, "Hey, have you guys thought of doing this?" And I'm like, "I don't want to spend time and resources validating a completely new vertical. I'd actually rather have a big, slow corporation spend $50 million on something that does or doesn't work, and then I want to study them so closely." So I want to talk to current employees, I want to talk to former employees, I want to talk to the media and press that like released stories on it. I really think that you, one of the, a hack is that you let other people spend their money and then you see what works. If it validates, then freaking charge ahead on it, and if it doesn't work, then you're like, maybe I should do something different. Hire for strength, not lack of weakness. That's a shout out to Mr. Ben Horowitz in one of his blog posts, and that took a long time to, that took a long time to learn because when you're interviewing people for your team and for your company and your culture, you're like, oh my God, Gosh, they are so amazing at this. Yeah, well, they suck at this. And it's like, well, what is their role? And if they're amazing at what they're actually doing, well, you can actually make trade-offs for that person. And so don't think that you want like an all-around excellent person. I'd hire for people in specific domains and verticals and then make them champions in that. Out-innovate the things that kill you. So a lot of times it's like, what are you gonna do when Sapphire Glass comes out? And we're like, We will probably fix sapphire glass because it breaks. But yes, it does. You guys see that call out right there? So just out-innovate things that is going to put you out of business. What keeps me up at night is like, what can kill us as a company tomorrow? And then how can we actually beat it? And whether it's having a contingency plan to pivot, a, actually we're gonna blow out this vertical if this vertical gets shut off. And then you also don't necessarily need to know what you wanna be when you start out. You'll kind of evolve into that. This is the future. That's a really good picture of our team. We have these smart cars. Raise your hand if you've ever seen a smart car in SF, a little iCracked car. Oh man, we need more of them. So we have a couple hundred around the US right now. They're cruising around. So the future is not actually about about fixing a broken Android tablet. The future is about what can you do when you're in your customer's home, and we think that there's gonna be a day where we— well, we actually think that as new technology comes on the market, your life actually gets more inherently complex. So your Nest thermostat, it takes up mental bandwidth when what you had was a mercury tube that just completed a circuit when temperatures changed. It makes your life easier, but it actually adds mental complexity. Your Apple Watch that came out today is actually more— makes your life more complex than your previous watch. Or if you didn't have one, your feature phone was actually easier to use than your iPhone. And so our thing is, is how do you— how does our network actually take away and remove all that complexity? And if you can put someone in every city worldwide that needs to press a button and solve their— I'm going to turn off this little timer. We'll just talk for another 30 minutes. Um, so we want to build the network that solves all of our customers' problems at the click of a button so that you come home and you're like, "Oh my gosh, my router doesn't work," or "My Nest thermostat's off," or "My DropCam, I don't know how to set it up." You literally click your iTech button or your iCracked button, and we show up and solve your problems for you on the spot. That's gonna be very exciting. Email me directly, aj@icrack.com. I get enough spam, so now my email's out there for everyone. And then also, if you're one of our favorite types of people to hire, like my favorite type of person to add to our team are former founders and former CEOs, and people who have started stuff and have ambition. I look at, if someone says, "Hey, I'd love to come work for you guys for a year, and then I wanna start my own thing," it's like, oh my gosh, Come in, learn as much as you can, add value, and hopefully you'll leave a better person. Every job that you have, you should leave that job a better person or more skilled than before. Always try to make upward movements. And then I have email me if you're here with your boss. So we'll go into Q&A. I'm pretty honest with questions, so if you guys want to ask tough questions or weird questions, I can probably answer them. My man. I'm in the middle of the audience, so I'm not going to stand up. I'm not a voice.

So my question is, as of scale, virtually every company, in my opinion— sorry, my Spence is going off— every company that has relied on on-demand workforce to scale their company has had the quality of that on-demand workforce suffer as we scale exponentially. Transportation providers are a very good example.

For sure. Do you use independent contractors for your techs?

And what— how do you plan to maintain the quality you have now as you add far more this year than what you had last year?

Yeah, absolutely. So the question is, how do you maintain quality as you grow, add individuals to your company? That's a great question. I think as we've gotten— as we're actually growing, we're getting more applicants, so the percentage that we're accepting is decreasing. But what it comes down to is when you're looking at on-demand economy companies, you're looking at— our goal is we want our iTechs to make $30 to $50 an hour. And we look at— there's actually 3 tiers of on-demand economy. So there's your Uber, your Instacart, your Your Shipt, your Postmates, they're at like kind of your entry-level 1099 economy. And then you have your, what we call the semi-pro economy, which we think we fall into, where not anyone, you can't click a button on Handy and have someone come fix your device or install your Nest thermostat. And so we're trying to build this semi-pro economy that you'd be surprised at how, I mean, 56% of our iTechs have college degrees. The last census, 20, I think 28% of the US population did. So we have this incredible technical workforce that is not your regular contractors. And then we layered it once more where actually they're not our contractors. We sell them parts and then they take money from their customers. And so we don't deal with, I guess, contractor issues because we're essentially a lead supplier and a parts supplier. What's up? Oh, I'm sorry.

We're a little over time. So if you want to find AJ after the— sorry, I'm sorry.

Told you I couldn't answer the hardball questions.

But thank you for your talk. Yeah, we're just going to— we have to move on to the next speaker. But thanks, AJ.

All right, I'm out. All right, thank you guys.