Broken iPhone? Call iCracked, the Aspiring “AAA of Smartphones”
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software-enabled company that happens to service hardware. The startup still earns 90 percent of its revenue selling iPhone parts to iTechs and selling repair kits directly to consumers—but Forsythe and Martin think the startup’s real competitive advantage, as it scales up, will lie in the software systems it’s building to make life easier for iTechs and customers. “In the last six to nine months, we have really been figuring out how we can scale a hardware company nonlinearly, like a software company,” says Forsythe. “I think we are close to getting it.”
A case in point is the company’s new mobile website, which is optimized to allow customers to get help fast, even if they’re typing on a cracked iPhone screen. The home page is dominated by two huge buttons: “Repair My Device” and “Sell My Device.” Click the repair button and you get a choice between on-demand repair from an iTech, or mail-in repair; then you just have to pick your device type, model, and network, specify your location, and enter a name and phone number. Everything else happens behind the scenes—either an iTech calls you, or iCracked sends you a DIY repair kit or a shipping envelope.
The iTechs have their own app, which they can use to see open repair requests, track their own jobs, and order parts. (When Forsythe demonstrated the app for me, it showed that there was somebody 15 miles away with a white iPad 3 with a cracked screen, and somebody 5 miles away with a cracked iPhone 4S.) From the app, an iTech can call the customer, schedule a job, run through diagnostic steps, set a price, and get the customer to sign off on the estimate.
On the back end, separate apps help iCracked keep track of parts orders, buy-back requests, and the like. The point is to make the process seamless for both the iTechs and their customers. “We want to make it easy for our technicians to make over $100,000 per year repairing these devices,” says Forsythe. And many of them do, he says: “There are a lot of techs making way more money than anybody working here.”
Revenue at iCracked is growing 20 percent per month, Forsythe says. But he and Martin want to grow even faster, so they’re thinking hard about how to recruit more iTechs, and how to turn the repair business into larger ecosystem.
The “900 pound gorilla” for the company, Forsythe says, would be the ability to upsell iCracked repair customers on an insurance plan that would help cover their next iPhone repair bill in advance. For roughly $3 per month, Forsythe says, iCracked could insure anyone’s iOS device against loss, theft, damage, or failure, with a $50 deductible. That would be a much more attractive deal than the extended-warranty plans sold by many smartphone retailers, which cost four times as much and have $200 deductibles, according to Forsythe.
“What’s cool is that you can say to these customers, ‘You broke it once. You had to come see me. This is a $99 event for you but next time it could be $50, and in one repair it would cover your costs.’”
The high-level concept—going back to Paul Graham’s idea—is to turn iCracked into “the AAA of smartphones, where we can buy it back, fix it, sell you a new one, insure it against damage at any one of our thousand locations,” Forsythe says. “That is what we have to prove we can do.”
Meanwhile, Martin and Forsythe admit they’re profiting from design decisions in Cupertino. Apple could have made the Gorilla Glass on the screens of its mobile devices thicker and more resistant to breakage, but over time the company has chosen to make the screens thinner and lighter, and therefore more vulnerable. “It’s hard to have your cupcake and eat it too,” says Forsythe. “As these things get smaller and lighter you are going to sacrifice structural integrity.” (The iPad mini, by the way, turns out to be much more breakable than the iPad, for exactly this reason.)
“But in no way are we trying to step on Apple’s toes or take any market share from their repair operation,” Forsythe hastens to add. “At the end of the day we only exist because Apple has created this ecosystem for us. We are trying to thrive inside of it.”