In 2009, Justin Wetherill cofounded uBreakiFix, a cell phone repair service, out of his bedroom in Orlando, FLA. Trained as an accountant, he taught himself to fix phones after he dropped his iPhone and smashed the screen. He first teamed up with a buddy and ran a mail-in repair operation. They then realized customers wanted same-day service and opened a low-rent brick-and-mortar store. Business took off. Within three years, the company had 47 stores and $27 million in revenue. When Wetherill decided to turn uBreakiFix into a franchise operation in 2012, he offered extraordinarily generous terms to store managers who wanted to become owners, charging them only one month’s worth of sales and financing the transaction at 0%. In this interview, which has been edited and condensed, Wetherill, now 29, explains how he grew uBreakiFix to 262 stores in 25 states, Canada and Trinidad and Tobago with expected systemwide store sales of $98 million in 2016 (corporate revenue should exceed $52 million).
Susan Adams: What were you doing when you started uBreakiFix?
Justin Wetherill: I was 21 and I had graduated from the University of Central Florida, where I went to school for accounting. I was a staff accountant for six months and decided it wasn’t for me. I took a job doing database design for outsourcing company Aeon Hewitt. Me and my friend David Reiff, who had a good internship at Lockheed Martin, were convinced that we didn’t want to work in a cubicle for the rest of our lives.
Adams: What other businesses did you try?
Wetherill: Creating custom t-shirts and selling them online but we never even made a shirt. David just built a great website. It didn’t get any traction. Then we started building custom gaming computers and retailing them online. Over one summer we had $16,000 in sales but there was no margin in it. It’s impossible to compete with the Dells and Lenovos and HPs of the world.
Adams: How did that lead to uBreakiFix?
Wetherill: I broke my iPhone 3G. I was walking and typing on my phone like a zombie and I dropped it face down on the concrete.
Adams: Wasn’t the Apple store able to fix it?
Wetherill: The Apple store wanted $200 and I thought that was crazy. So I went home and looked around online and found some parts and decided to do it myself. And I broke it worse. Rather than get discouraged, I bought a bunch of broken phones on eBay and got good at fixing them.
Adams: How did you learn how to fix them?
Wetherill: Trial and error. Then I told David and he started building a website. We retailed the repairs on eBay. For $79.99 you could mail in your phone and we could fix it and mail it back to you.
Adams: How did that go?
Wetherill: It got really busy. We started fixing seven to ten phones an evening. I ended up hiring my roommate at the time, Carlos Marmo, to be our first employee. I taught him what we learned and he started fixing phones in my bedroom. I paid him $10 per phone.
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Adams: How expensive were the parts?
Wetherill: Like $30. At that point we were only fixing screens.
Adams: How did you grow from there?
Wetherill: We moved the business from my bedroom to my living room and then we started meeting people at Panera and fixing phones there.
Adams: Panera didn’t mind you using it as your repair shop?
Wetherill: I would always buy something. It only took us 10 minute to fix a phone and we were out.
Adams: How did you make the leap from Panera to your own store?
Wetherill: A friend of mine, Eddie Trujillo, came over and said, you’re driving yourselves crazy driving everywhere. You’ve got to open a store and have people come to you. We’re like, that’s risky. He’s like, I’ll put up the money for the store, and he did.
Adams: Where was the store?
Wetherill: In a not-so-nice part of town. The rent was $800 a month and we hung the drywall, we put the floors in.
Adams: How did the store do?
Wetherill: The second month the store was open, it eclipsed the website’s sales. That’s when the light bulb went off.
Adams: Why did the store do so much better than the online business?
Wetherill: People wanted to get their phones back the same day.
Adams: How did you advertise the store?
Wetherill: We barely did any advertising. That was the magic of it. We did some pay-per-click, we made a Google Places page.
Adams: What was your revenue in the beginning?
Wetherill: It was $18,000 in the first month and $28,000 in the second month. I quit my job the third month.
Adams: How many employees did you have?
Wetherill: It was me, David, Eddie and Carlos.
Adams: Didn’t you get bored doing the same repairs over and over?
Wetherill: Figuring it out was really exciting to us. First we just fixed the screens. Then we fixed water damage. It just grew and grew. In 2009 we had the one store in Orlando. Before the end of the year I opened a second store in Pembroke Pines.
Adams: How difficult was it to hire and train people?
Wetherill: Not very difficult. I hired every friend I ever knew.
Adams: How much did you pay people?
Wetherill: Ten bucks an hour. That’s hard to live on but we said, if you work really hard for six months, you can own a store. In three years we went from zero to 47 corporate stores, with revenue of $27 million.
Adams: How did the ownership work in the corporate stores?
Wetherill: We had operating partners in some of them. They owned a minority stake. They all rolled up under one parent.
Adams: How much were you paying yourself?
Wetherill: Less than $100,000 a year. But we built the business with no loans, no debt, no investors. We put all the money we made back into the business. That’s how we were able to grow so fast.
Adams: What happened at the end of three years?
Wetherill: We said, we need to continue this growth rate, but how are we going to do that? We needed to do one of three things: borrow from a bank, raise money with private equity, or franchise. We went to the bank and they said, you have no loans, no debt and you want $2 million? That’s not happening. Private equity always talks about an exit and we were trying to build a business so there wasn’t a good match there. We read some books about franchising and talked to a lawyer and decided that was the way we wanted to go.
Adams: How did you get the franchise operation off the ground?
Wetherill: We sold 26 stores to managers and we financed those at 0% for one month of sales. We put them on a payment plan where they paid over 12 to 36 months. They pay a royalty of 8% of revenue.
Adams: You only charged franchisees one month of sales? How much did that come to?
Wetherill: It varied but it was $30,000 or $40,000. It was our way of giving back.
Adams: That seems like a ridiculously low price.
Wetherill. We did sell one store outside the system, for more than a quarter of a million dollars. So we were selling at a big discount. But we didn’t get here on our own. Anybody hired before July 4, 2011, gets that deal. Our business has never been about dollars and cents. It’s always been about, do the right thing and trust the model and the money comes. About 15% to 20% of our stores are owned by former employees.
Adams: What do you charge new franchisees now?
Wetherill: Now it comes to about $125,000 to open a new store. That includes a $40,000 franchise fee, a $10,000 training fee, furniture, fixtures, equipment, inventory, real estate.
Adams: Do you make money on parts?
Wetherill: We have a supply chain operation. We get parts from Taiwan, China and Korea. It’s a service to our franchisees.
Adams: What’s been the toughest thing about building the business?
Wetherill: Clearly conveying the vision to everybody in the organization as we’ve grown. We want to be a household name in electronics repair. We now fix anything with a power button--phones, tablets, computers, game consoles, drones, hoverboards, vacuum cleaners.
Adams: How did your staff learn how to fix all those devices?
Wetherill: We have a training division that buys products and does tear-downs and puts together step-by-step guides. We have a team that puts the instructions together in an easy-to-read format and we continually train associates throughout the company.
Adams: What mistakes have you made?
Wetherill: We have 47 corporate stores and a lot of them have great sales. But some of them didn’t. So we created a metric system that tracks key performance indicators in our stores in real time.
Adams: What indicator do you track most closely?
Wetherill: A big one for us is whether the proper parts are in stock, to allow for timely repairs. We also track how long repairs are taking. There’s a quoted time on every receipt. Are they delivering the repair on time? We also track warranty rates. Is the customer having to come back and back and back?
Adams: What performance problems did you discover?
Wetherill: We needed to make sure employees were opening and closing the stores on time, completing repairs the same day.
Adams: Since Apple has reduced its repair prices to be more competitive, why would a customer use uBreakiFix?
Wetherill: We offer up-front, transparent pricing, so you know what you’re going to pay before you walk in the store. Most of our repairs are done within the hour. At Apple stores it can take days to get an appointment online.
Adams: How do you make sure you have enough technicians on hand to complete repairs in an hour without paying people to sit around?
Wetherill: We have same-day repairs like phones and we have multi-day repairs like computers. In their down time, the technicians work on multi-day repairs.
Adams: How much do you pay yourself now?
Wetherill: I’m on the payroll at $150,000 a year and we continue to invest profits back into the business. We opened 113 stores this year. We’re opening 13 stores a month.
Adams: How much of the business do you own?
Wetherill: Me, David and Eddie own all of it.
Adams: Has anyone tried to buy the company?
Wetherill: Conversations have come up. I wouldn’t say it’s gotten serious. I think we’re just now getting to a size that is interesting to a lot of people. Google just offered us an exclusive on being the walk-in repair provider for its new Pixel phone. They provide us with training.
Adams: How much do you think the deal will be worth?
Wetherill: I couldn’t put a dollar amount on it. It depends on how successful the Pixel is. But it’s invaluable to us as a business. One of the premier original equipment manufacturers has decided to work with us. Not only have they validated us but they’ve validated the customer’s demand for same-day repairs. Hopefully it’s the first of many relationships like that and manufacturers are realizing their products don’t have to go through an expensive reverse logistics system. They can be handled locally.
Adams: What was the most unusual repair challenge you’ve had?
Wetherill: A customer dropped their phone into a deep fryer at McDonald’s. That was in 2009. We were still in my living room and we were able to fix it. We’re capable of a lot more now.
