Upsie’s Clarence Bethea Takes A Bite Out Of The $23B Electronics Warranty Market On Mogul Watch
When you have an accident or an “oopsie” with your electronic device, the last thing you want to do is search for receipts, read
Atlanta-born, Minneapolis-based Clarence Bethea found a way to turn things around for consumers and make money doing it.
His solution is Upsie, a mobile app that promises an easier and better way to protect your stuff with the same warranties and coverage offered by other companies, but at an affordable price.
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The market is huge for consumer service warranties and protection plans. In 2017, U.S. consumers spent an estimated $17 billion on vehicle service contracts, and $23 billion on protection plans for appliances and electronics, according to Warranty Week. With steady growth in consumer electronics over the last 10 years, the warranty industry is expected to keep growing.
Upsie is an electronics extended warranty company looking to take its share of the billions of dollars flowing into protection plans. Started in 2015,
A Techstars boot camp participant,
Bethea shares lessons from his first failed startup, the outlook on starting a business in Minneapolis and the importance of good connections for networking.
Moguldom: Why did you start Upsie?
Clarence Bethea: Smartphones and laptops have become a part of our life and not just a want, but a necessity. Years ago, I saw an issue with the consumer electronics warranty industry. Consumers were being overcharged. For example, consumers would go to a big box store and purchase insurance for an item. The store would pay $10 for a policy from an insurance company, but they would charge the customer $150. Consumers were being overcharged, there was no transparency in the industry as you never really knew what the service covered, and the service was really terrible. I felt this was a problem we needed an outsider to solve. Over the last few years, we have been able to do so by working directly with an A-rated insurance company to help our consumers with their claims at better rates than the big box stores.
Moguldom: You started Upsie in 2015 as a solo founder. What is your most memorable challenge starting and scaling the business?
Clarence Bethea: All of it. (laughter) The challenge of scaling a direct-to-consumer business in a town that is primarily a B2B, SaaS enterprise town, has been challenging. Being a diverse founder and raising money has been a challenge. Learning how to scale the company has been a challenge. There’s an old saying about jumping off a cliff and building a plane on your way down. That’s exactly what we are doing. We are learning as we go. We’re listening to our customers, great mentors, advisors, and investors trying to build something great for consumers.
Moguldom: How would you describe the Minneapolis startup scene?
Clarence Bethea: It is awesome. It is thriving. When you look at our community five to seven years ago versus what it is now, I would say we are one of the top 10 in the country. We have had some wins and raised a lot in venture capital. I would say it is evident because a lot of VCs are putting satellite offices here so they can have boots on the ground in the city. It is a big B2B town.
Moguldom: Speaking of raising money, how much has your company raised? And over what time period?
Clarence Bethea: $3.6 million. We closed our seed round at $1.7 in January of 2018 and we’re raising our Series A right now.
Moguldom: How did you navigate the fundraising process?
Clarence Bethea: In 2017, we participated in the retail class for
Moguldom: How do you build a good team?
Clarence Bethea: We employee seven people and a couple of outside contractors. Building a team is tough. Culture is the most important thing to me. So, they have to be a great culture fit. We have a unique environment where we are all pushing in the same direction and you’re trying to push towards the same goal. But it’s not done in a way where I’m a drill sergeant type of leader. I am more of the motivation and inspire people type of leader. You have to have people that can come in and really be a part of that type of environment. When we’re looking to hire, we want to know if you can come in and get work done without us looking over your shoulder. And then, of course, we hire for what are the skills we need at that moment. Also, we let people know that you may be in one position, but you’re also going to take out the trash, and you’re also going to do all these other things. I’m really fortunate to work with unbelievable people who are really good at their job. They really bought into this mission that consumers deserve better in our industry. I’m super impressed with them and what they have done so far.
Moguldom: What do you feel are some of the notable wins you’ve had thus far with Upsie?
Clarence Bethea: Revenue. We have grown revenue about 10 times since launching to the market. I mean, it’s all about making money. We’re here to do business. We’re here to make money. I would also say the rate our customers are coming in (is a notable win). The year prior we wondered if this was still relevant to consumers. It became evident in 2018 it was, and the rate customers were coming in and coming back to us over and over again is astounding. Raising the seed round was also a win for our customers, investors, and team.
Moguldom: How do you keep your creativity flowing or motivation going so that you are making the best products and services for your clients?
Clarence Bethea: It’s about listening to our customers. We’re fanatics about it. I don’t care where we get at from a scale point, that will always be the center of who we are so we will never turn from that. When we talk about our superpower, we know it is listening to our customers. We don’t mind the customer telling us what direction we need to go in and testing it and implementing it into our product line or services.
Moguldom: This is not the first company that you started, correct?
Clarence Bethea: No, it is not. I had a staffing agency previously that failed.
Moguldom: What are some of the lessons you have from your previous company that may have translated over to being successful with Upsie?
Clarence Bethea: There are a lot of things and we could be talking for hours. (laughter) So many failures. It starts with me personally. I was a terrible businessman and a terrible leader. I didn’t understand the game. I didn’t really understand venture. I didn’t understand the process of business. The whole nature of going through shutting down and letting investors down was a big lesson for me. When I look at where we’re at today, and we’re definitely not the leader yet in the industry, but we’re focused on trying to continue to solve this problem at a bigger scale. What has gotten me here personally, is me learning how to do things the right way. If you don’t capture something from a failure, you did it wrong.
Moguldom: What is a lesson you would give to other Black founders trying to start or trying to scale?
Clarence Bethea: Validate your business before you ever get started. One of the things I didn’t do with my last business was to validate if it was a problem people wanted solving, which is what I did with Upsie. I validated this was a problem. We had people do market analyses. We did customer surveys. I mean, we wanted to make sure that this was a problem that people saw Upsie as a solution and would give you their money. I think there’s nothing more important than getting consumer confidence. When people give you their hard-earned money for a problem that you’re trying to solve, you know you have a business. I feel like for me even though we knew the market wanted the product, I would have skipped building an app as the customers are fine just using a website. So even as you scale, you still need to validate features along the way. I would definitely say to founders who look like me, “make sure you validate your business and your services before you build out a full-scale product.”