The Exchanges

Q And why is it easier, Kevin? It's because the ads are cheaper.

A Yeah, exactly. So, I mean, if you're trying to do it in a major Metro, um, and you're competing in San Francisco for like computer repair keywords, I mean, those are going to be incredibly expensive. And so if you can just go to Google and start, um, you know, raising the, the keyword price just a little bit at a time, you start getting maybe some of the less competitive areas, but people that are still willing to pay the same amount. And the nice thing that Geek Squad did was they proved the market out and made it kind of like a, you know, standard price across the country. So, Even if it was in a smaller town, it was the same amount of revenue coming in. And that's kind of how we built it out initially. Um, and then just kind of took it nationwide where now we have over 7000 providers nationwide.

AI assessment note: “Yeah, exactly. So, I mean, if you're trying to do it in a major Metro”

Q Yeah. Okay. So, so what I'm hearing from you is a lot of your revenue, especially when you sold 205 grand per month, this is more like a SAS model or, or is it really a marketplace? You're taking some percentage from the supplier per job or something like that.

A Yeah, exactly. So we take a percentage, um, you know, for, for every job that comes through. Um, I think also that the key kind of, you know, we started out as a direct consumer in-home computer repair, uh, TV mounting computer, um, TV mounting a company. And then, um, we switched to something that was more about instead of solving kind of the, the end users problem, we started trying to solve these large, uh, whether it's smart home manufacturers or computer companies, um, real estate companies, really, there's a whole lot of verticals where they have a ton of customers that if we can be that last mile installation option for them, it's going to make their lives incredibly easy. Uh, so, so once we did that kind of switch and we created an API for it, um, and we started to sign up some, uh, a decent amount of partners, I think that's when we really start, started to see, um, not just a product market fit, but a, a, a way to acquire customers, um, at scale for, for very little cost.

AI assessment note: “So we take a percentage, um, you know, for, for every job that comes through.”

Q Yeah. Yeah. Okay. So let's talk about that. What, why did the, tell me, why'd you do it? Why'd you, why'd you?

A Um, so I, I would say the main reason is, uh, you know, Richard and HelloTech, um, they come from an amazing pedigree. Um, they're, you know, Richard and his co-founders, they, I think they've done a couple companies. Richard has three successful exits. Um, very, you know, uh, I think he's from Excel as well, um, VC. So, um, they started up last year and, uh, because of that pedigree, they were able to raise just like seventeen million almost right out of the gate. Uh, and so, um, They were only in a kind of like half of LA where we had this nationwide network. Um, but because they had that pedigree, it would help going after these, uh, large companies. And so, you know, we started, uh, you know, talking in January about, you know, how that would work out. And then, um, you know, until, like I said, about a, I think about a month or two ago now, um, when it all went down. But, um, the nice thing about it was just, we are both fighting after the same partners, hardware companies. And after the merger, um, And we did kind of a PR push for it. We had so many of those partners come back to us just kind of proactively from their side, um, saying now that you guys figured it out, now we want to kind of, you know, move forward, work together. And so we've just had our hands full now. Um, so I think that really was kind of the hypothesis going to the merger is that consolidate the mark…

AI assessment note: “I would say the main reason is, uh, you know, Richard and HelloTech”

Q Yeah. What is the, let's go back a second. You said between 20 10, 20 13, you didn't really do any revenue, any revenue until you did 20 grand. Is that per month in 2013?

A No, that was the total. So, I mean, the very short story is just, it took us a year and a couple of months to get the product out, which was way too long. Um, if I could tell my 20 year old self, uh, you know, just Don't try to build a perfect system. Try to get something out early, quick, using methodology, get customers to see it, and then try to iterate outwards. Um, but you know, we took, you know, like I said, a year and a couple of months just to get a product out. And then we were this kind of bidding model where, um, you know, we had a decent amount of people come in and try to sign up, but almost none of them would actually convert to selecting a geek. They just kind of move on to the next result on Google. So I mean, literally.

AI assessment note: “No, that was the total.”

Q Um, well, let me ask you a different question. I mean, you guys raise a bunch of capital, so it's totally reasonable for you guys to actually be losing money every month as you're investing in growth. Were you losing money each month?

A Yeah. Um, so we were losing money as a company, uh, definitely, especially when we made some of that, um, investment in, in having the overseas center, which, you know, we, as a per agent basis, we were doing pretty well, but you know, there's, uh, A lot of, uh, extra overhead costs. But, you know, one thing that we really wanted to focus on was trying to get at least positive unit economics. I feel it's, that's kind of an ethos that gets lost a lot, um, in, in companies in Silicon Valley where just, you know, grow is kind of like the number one thing without kind of coming up with some sort of positive unit economics. Um, I think we did achieve that where if you look at the amount of transactions and, and on a per transaction, what that cost was, um, we're definitely in the positive, but, you know, If we had kind of scaled that out to, you know, like, 500 K or a million per month, for example, um, I think we had some very good early indicators that, um, you know, we would have been, uh, profitable at that point. Uh, so, so we, there definitely was a focus to not try to just grow at the cost of not having a workable business model that actually had profit. Um, but it's just a matter of, of, we were trying to get to the volume that, that would, um, you know, dictate that.

AI assessment note: “Yeah. Um, so we were losing money as a company, uh, definitely”

Q side. So on the consumer. So just be clear. Oh, hold on. On the food truck side, on the revenue, you process a million, right? You're taking 10% of that five out of 50, right? So 10% of that, you made a hundred grand there, 2017. Let's switch to consumer side. How many of them are paying three, four or five bucks a month for this, uh, you know, convenience?

A So that's the new, that's what we're launching. And as we, uh, we're in pilot right now in LA, we have nobody yet. Exactly. So it's still in pilot for that. Um, but we, we've done about 400 orders right now, um, via that. And, and, um, it's growing pretty, pretty quickly in terms of how many, uh, trucks that we are, sorry, how many trucks that are system. We went from kind of like a, a handful to about 60, um, in just November, December. Uh, and then now we have one lot, which is going to probably Expand by the end of this month to about, um, somewhere between like a five and 10. Great. Uh, so yeah, so just, and then that's where we'll implement the paid, the actual, the, the convenience plan, everything like that, or the convenience fee, um, in the next two, three weeks, and then start actually charging for it.

AI assessment note: “we're in pilot right now in LA, we have nobody yet.”

Q Yeah. And how much, so if you do three or four million top line, how much of that flows through? What are your biggest costs?

A Uh, well, you know, it's, it's, that number gets immediately discounted, because that's just kind of the, the money that we're processing, so then it's, you know, the, the 20 to 35%, uh, average about 30% of the, um, the take that we get per job, uh, and then after that, uh, so, uh, imagine like a 99 dollar job, you'll pay out 70 to the provider and keep 29, but then there's a, you know, some small costs that go into that, um, so, but the biggest, uh, Cost in terms of besides provider payout. Um, you know, we have our own, uh, outsourced, uh, uh, Philippine center that we built. It wasn't like kind of going through a outsource company. We had those people actually that are employees. Um, so yeah, I mean, that's kind of a relatively larger cost, but allows us to scale, allows us to do, um, remote support, extremely cheap. Uh, so yeah, I mean, those are kind of the primary cost drivers. And after that, it's, it's, uh, just like tiny little charges here and there.

AI assessment note: “average about 30% of the, um, the take that we get per job”

Q So what percentage you said when you sold about a month ago, you did about turn to five grand to like in the month and in terms of MRR, how much of that, cause I see on your site, are people actually paying these plans, right? You have, Home plans and business plans, green, gold, platinum, et cetera, versus paying per project or per fix.

A Yeah. So, um, it's about 20%. I, you know, in the beginning when we launched, um, it was about eight percent. Um, it's, it's definitely growing. The tricky thing about it too, is that when you have three different tiers of plans, plus we have You know, a sheer, just a lot of, uh, of individual one-off services. It's tricky to try to just explain all that without just kind of throwing it all up on the customer when they, they call you on the phone. So, um, yeah, exactly. So, I mean, you want to keep it simple. And so we've tried to get better in terms of how to explain to the customer that really, you know, you don't want just this one time fix for something. It helps that you're part of a plan that in case something happens in the future, or you buy in your products, or you just want to learn something. That you're covered and, and, and part of that. And so once we kind of explain the benefits of that, um, I think that's, that's where they really convert over the one-off transactions. So, um, but, but directly, you know, it's, it's about 20% and growing in terms of the percentage of, of people that would be, uh, signing up for support plans.

AI assessment note: “it's about 20%. I, you know, in the beginning when we launched, um, it was about eight percent.”

Q That's great. That's really great. Well, hey, Kevin, if people want to follow your journey online as you build now, Helotech, uh, uh, Geekitu is obviously on part of that. Where can they follow you personally online?

A Yeah. You know, that's, that's a good question. I try to, you know, it's, it's a little bit in flux in terms of, uh, moving between all my geek to kind of emails. And I was basically the main one doing the ad geek to Twitter. Uh, so probably that I'm, I'm still kind of the primary person on that, or just, you know, Kevin at hello tech now is a great way. I'm, and I'm super passionate about helping people in terms of if, if, you know, people out there have issues in terms of, uh, you know, how to bootstrap or get to the, you know, uh, I just don't want people to go out and reinvent the wheel.

AI assessment note: “doing the ad geek to Twitter. Uh, so probably that... or just, you know, Kevin at hello tech”

Q and the app is so easy to use. Get started today at getsigneasy.com forward slash podcast. So a thousand of them have paid 50 bucks, right? And you've made five per each. That's five grand in revenue there. Uh, what about on the consumer side? By the way, is that all the revenue that you have right now? Cause you're just launching the other stuff on the food truck side.

A Yeah. Um, so, uh, trying to simplify this and do it as simple as narrative as possible for, um, I, uh, I merged. So my co-founder is like crazy. Like he's the head of the national food truck association. He helped spin up 19 to 21 regional association. So think of any food truck city really across the country. He helps, um, the, the people that, that spun up the market that went out and found the food trucks. So if you go read like New York times, the economist, they'll come quote him for all those stories. So he had that kind of the lot booking process. I merged with his company. So now we're all one, just best food trucks.com. So that's why we've had a lot more. I mean, I've only been doing this for six months, but that platform was around for a couple of years. And that's why, you know, we processed, uh, in 2017, we processed a million dollars in revenue from Uh, the trucks giving money to the organizers. Uh, that's why we already have a thousand trucks in 10 cities and already have a decent amount of traction for.

AI assessment note: “in 2017, we processed a million dollars in revenue”

Q Yeah, that would be bad. Alright, so, food trucks. What makes a good food truck, in terms of revenue? Like, what are you looking for? How do you know if it's a good deal?

A Yeah, um, So, I mean, uh, direct answer your question. So like, uh, the average truck does about 290 K gross, uh, in a year. But, um, I think one of the interesting things about food truck is it's more of the, um, you know, take a brick and mortar restaurant and you, if you get into that, it's, you know, maybe 250,000 or 500,000 and a multi-year lease just to really start, um, a business. But with a food truck, you can do it on a fraction of the cost, uh, where, you know, maybe 75,000 gets you the truck, gets you everything and you can start. So just like, You know, like Amazon Web Services did for startups, right? Where you had like, you know, before AWS, it was like sixty million just to launch a nationwide, uh, nationwide website. And then that's when you got your first customers and try to iterate from there. So for food trucks, it's this way to just like AWS did for startups is for the whole restaurant industry where you can, uh, you know, if you're a good chef, you don't have to go out and find these crazy investors and raise a whole ton of money. You just go right, uh, you know, start cooking, get to your customers and, uh, You can find the different locations as to where your food sells well. So if you're in Los Angeles, for example, It's crazy that you could have the best, let's say Indian food, and you park one place, and you're just not going to get anybody who likes…

AI assessment note: “the average truck does about 290 K gross, uh, in a year.”