AJ Forsythe built iCracked, an Uber-style platform that dispatches repair technicians to fix phones and electronics for insurance companies and retailers. He found a massive, overlooked market by watching gross margins stay high and customers keep coming back, then raised venture capital after hitting profitability.
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Cool. So, so my name is AJ Forsythe. I started this company called iCracked. How the format of this presentation is just I'm going to go over like briefly what we do, and then I'll go over some lessons we've learned, tell some stories, and then we can get into Q&A. I'm generally pretty relaxed and comfortable, so feel free to. ask anything at the end of this. And before, as we get started, so what are we building? So we're building the Geek Squad for insurance companies. So these could be the cell phone insurance companies, the home insurance companies of the world, for the OEMs, so Apple, Samsung, Google, for retailers, Amazon, and for wireless carriers. And so our idea is we wanna build the next generation of tech support where anytime you have a problem with your consumer electronics, smart home appliances, or smartphones, you press a button and we'll send one of our 1,000 technicians to you anywhere in the US, Canada, or Japan and service your device. Has anyone used our service before? Oh, we got, we got a couple people, so that's good. Awesome. And so we, we have a couple thousand technicians in the US and Canada. Our model is a contractor model where We've had about 100,000 people apply to be a technician with us in the last year or 2. We generally accept 2% of those that apply to be a technician. We'll train them, background check them, give them inventory, and then we activate a software service platform that they can run a $100,000 a year business if they want to servicing our customers. It's very similar to like an Uber or Lyft model. Except it's on-demand tech support. We are also opening up stores across Japan right now, so we have about 30 stores. We're opening about 2 to 3 a month, and the whole idea is like on-demand tech support. So that's the premise of it. So now it's gonna be into the story time. So step 1 is finding a big market, and it could be obscure. Our market is about 1 in 4 phones or 1 in 5 phones every 2 years will need our service. There's over a billion iOS devices in use worldwide right now, so it's about 200 million devices that can use our service. One of the things that we learned early on is unsexy markets can be the best. One of my favorite startups right now that they're actually, I think, over at Hero City at Boost VC is an on-demand sewer cleaning robot. Unsexy markets can be massive and the best, so if you find a market that is unsexy, go for it. Raise your hand if you've started a company or are planning on it. OK, awesome. Hell yeah. All right, so now we're going to get into the founding stories. So originally, my brother on the right there with us spilling a bunch of wine, we had started a winery in college. It was a lifestyle business where alcohol was expensive. And so we're like, well, why don't we start making it? And we ended up spilling more on the ground doing that, but it ended up turning out okay. And then so I kept breaking my phone and was paying Apple a couple hundred dollars. I took it apart, fixed it. But you can see it was not pretty at first. This was the kitchen that we started out of. I think there's a bottle of vodka that I had made because I was thinking about starting a distillery. or an iPhone repair company, and I went with the iPhone repair company. It was very crude. One of the things that you'll find out when you're building your company is how ugly your baby seems at times. You want it to seem pretty to the world, but in reality, you're working nights, weekends, and using irons to separate iPhone screens from glass. When you're starting out. And so this was some early marketing we did. We used to flyer the campus, and a trick we learned was if you hang flyers above 10 feet, the janitorial staff can't take it down, and you can get free advertising there for a while. So we have some examples of doing that. And so how do you know your product's working? There's the concept of product-market fit. Some examples of the indications from the market is, are you generating revenue at a good gross margin? Do you have users and are they sticky users? Are they coming back and they want to use their product? We're really fortunate in that 1 in 5 smartphone users can use our product in about a year's time. So that was awesome. Word of mouth. Are people telling people about their product? Are they raving about it? Paul Graham, who runs, or who started Y Combinator, says it's better to have 100 users that absolutely love your product than a million users that just think it's an okay product. So it's like, are people absolutely in love with the product that you're building? And the most important thing is talk to your customers. You cannot talk to your customers enough to validate product-market fit. What are the features they want? And then how can you iterate and improve on that? Once you find product-market fit, people are gonna copy you. This is a screenshot of our first ad, which I made on, I think, MS Paint, and then a couple weeks later, there was someone that started a company that looked exactly like ours and was same colors and stuff. Be flattered and annoyed. Every good company, people are gonna have the cloners or the copiers. But it all comes down to execution, and they might copy your product, but they're not copying your perseverance, your team, your will to get it done. So be annoyed, but it's like we get cloned or copied all the time. We were copied in Europe, Russia, Canada. So it's just something that happens, and just get used to it. There's not much you can do about it. So what do you do if you— now that you have product-market fit? Yell out any ideas. Go raise money. You have to go raise money. So you have to go fundraising. Raise your hand if you guys have raised any seed rounds or capital yet. OK, so you guys are very familiar about it. So we were at a point in 2013 where we were profitable, but we hadn't raised any money. And we were at this path in the woods that it's like, do we want to go raise venture capital? and grow at all costs, or do we want to keep on this slow-growing but profitable branch? We decided to go raise venture capital. The side note to that is one of the early investors, we took money from a dentist. They thought it was a loan, not an equity check, and they tried to call it back, so that forced us to go raise capital. One of the things that we did is we went— We went fundraising. While you're fundraising, one of the cool things is VCs or investors will wine you and dine you. They'll give you tickets to stuff. You'll get invited to stuff that you normally wouldn't go to. So that's part of the fun. But really fundraising is a pretty brutal process. So just stay the course. You're going to hear no a lot. We've been told no, I don't know, 50, 100 times. But it's a numbers game. Keep meeting with people. Stay strong. There's a saying that's like, believe the no. Believe no, they don't want to invest, but don't believe the why. No one knows your product better than you do, and so believe they're not going to invest, but don't necessarily believe why. Fundraising is part of building a technology startup. This is a picture of, I believe we had closed our Series B, and I was like, hey, let's celebrate it. Let's put out champagne for everyone. Let's announce to the company we fundraised. One of the things we've learned is fundraising is just part of growing the company. It's not the— fundraising in itself is not a milestone. It's like island hopping. You have to try to move to other islands before the sea rises, and it's just a way to get capital in and grow the company. You should be celebrating every time you don't need to sell a piece of your company. So our North Star right now is, hey, how do we get to profitability? The good news is we're tracking towards that, and we'll throw a big party that you guys are all invited to next year when we hit that. But the takeaway is celebrate every time you don't need to raise venture capital. That being said, it's amazing that we're in an ecosystem where you can raise money and put it towards growth and grow like hell, which is awesome. Thanks, Tim.
