UP010: Upsie // a cheaper way to protect your stuff

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Clarence Bethea: 00:00:00

I have to prove more just to get that same coach. I even had an investor in silicon valley. Tell me if you were white and in Silicon Valley, he told me this to my face. If you were white and in silicon valley you would’ve raised $100,000,000 by not going after a $40,000,000,000 market and there’s not really much like keeping you from going after it, so there’s no regulation, right? Like your license. You’ve done all the hard work and I just kind of laugh. I was like, wow. Like you just told me you’re racist. Like that’s actually what you just, Oh, why don’t you give me $100 million?

Jay Clouse: 00:00:31

The startup investment landscape is changing and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside.

Eric Hornung: 00:00:58

Hello. Hello. Hello. Welcome. The upside podcasts, we’re finding upside outside of Silicon Valley. I’m Eric Hornung and I’m accompanied by my cohost, Mr. Breaking into the charts himself. Jay Clouse, Jay. How’s it going, man? Congratulations. We got number one on breaker.

Jay Clouse: 00:01:16

I love it. I love that you’re congratulating yourself by congratulating me. You’re congratulating us.

Eric Hornung: 00:01:21

It’s nice because I can always just say that you did it and it makes me feel good about myself because we’re putting this together, but it’s, it’s like a way to give compliments that I don’t have to really think about feeling narcissistic.

Jay Clouse: 00:01:35

Yeah. Yeah. That works. Uh, excited to break the number one trending podcast on breaker yesterday. Breaker is a social podcasting APP, or how do you describe breaker to your friends?

Eric Hornung: 00:01:47

I think it’s a better way to listen to podcasts. I’ve used overcast, I’ve used apple, itunes, I really liked the functionalities that breaker and I think that there’s going to be some really cool features getting added as they continue to develop because they’re thinking with a list with the listener first, not the podcast or first. So it’s a great way to listen to podcasts.
Jay Clouse: 00:02:08

Yeah. Early in the life of breaker yc company Y, 17, 15, 16, 17 years, somewhere in there. Yeah. So pretty early on for the life of breaker, but it’s fun to see the upside podcast up there with the likes of revisionist history. And the MEB faber show and the daily by The New York Times

Eric Hornung: 00:02:27

and we jumped right over Andreessen Horowitz. So take that a 16. Z, we’re coming for Ya. We’re currently not really. Please don’t. Please don’t take that as a threat. So Jay, why are we here? What are we doing here at upside?

Jay Clouse: 00:02:44

Well the chart topping upside podcast is here to highlight entrepreneurship outside of Silicon Valley. We talk to founders and startup companies that we believe are not only as intelligent and opportunity seeking as their valley counterparts, but in a lot of cases even more resilient, which seems to be the case with our guests today. Clarence Bethea, which we’ll get to in a minute. So Eric, how does this, how does the flow and format of our podcast work?

Eric Hornung: 00:03:11

We’re going to break our podcasts down into three steps. First, we’re going to look at the market as a whole and kind of talk about some research that we did independently. Second, we’re going to dive into an interview with Clarence, as Jay alluded to. And then third, we’re going to do a verbal deal memo slash debrief. We’ll get to that a little bit later and we’ll walk you through more about why we’re doing that when we get to the end. So Jay, you mentioned we’re talking to Clarence. Can you tell us a little bit about them?

Jay Clouse: 00:03:41

Yeah, I jumped the gun a little bit. Clarence Bethea is our guest today. He is the founder and CEO of Upsie. Not to be confused with upside though. It is just one letter difference. Upsie is a mobile APP platform that provides you an easier and better way to protect your stuff. You get the same warranties and coverage offered by other companies, but at an affordable price. It is reimagining the way warranties are done for electronics and appliances.

Eric Hornung: 00:04:07

When you were doing your research, what did you find in terms of market size?

Jay Clouse: 00:04:12

So my data came from an article I believe was in the Minneapolis Star Tribune. Is that an article? I believe that uh, put the, put the market at $40,000,000,000 for the warranties industry if what they were looking at. Did you have something similar?

Eric Hornung: 00:04:29

Yeah, so I was, I used a source called warranty week. They seem to be an authority on warranties, authority on warranties. I like it upside upsie. See, we got one rap chat episode and all of a sudden we’re just spitting lyrics on the show. Anyway, I saw the same. It’s about $40, million dollars, 44 if you count jewelry or something like that. And when you break it down, about 20 percent of that is in the mobile phones, 15 percent is in consumer electronics, 10 percent is in pc oem and 3.4 percent and isn’t appliances. And I think that covers the see spectrum

Jay Clouse: 00:05:12

and you’re saying your math adds up to somewhere between 40 and $44,000,000,000 using that?

Eric Hornung: 00:05:19

So the entire warranty market, which includes vehicle service contracts is somewhere in the 40 to 44 million range. So if you take out vehicle services and you take out jewelry and you take out furniture, you’re going to pull out something like 47, almost 50 percent of the market. So the real market size may be something closer to a 20 to $22.

Jay Clouse: 00:05:41

Million billion, billion with a B, right? A B. Yeah. All right, I was about to get off the show and say we got it. We got to find. You’ve got to find a bigger market before we get into any deeper research on up. See in the market specifically. There are a couple of things I wanted to note just as an order of housekeeping ups. He was founded in 2014. It’s based in Minneapolis, Minnesota. They’ve raised a little over $3,000,000 to this point. One point 3 million in 2014 from what I saw one point 7 million early this year in 2018 and 150,000 from a convertible note in the tech stars retail accelerator in August of 2017.

Eric Hornung: 00:06:17

So obviously there’s some venture capitalists who see this market, this 20 slash $22,000,000,000 market and say UPMC has a really interesting pitch and a really interesting play and I’m excited to hear more about that in the interview, but I want to kind of pivot real quick to competitors. So when we’re looking at who is up, see competing against, who do you find?

Jay Clouse: 00:06:39
So I think upsie is competing against the retailers themselves and a lot of ways, from what I’m reading, they are using the same insurance companies to provide warranty coverage on these products, but the market that they’re attacking is saying that these retailers are putting a drastic upcharge on top of the insurance company’s rates when they sell warranties directly to consumers. I’ve seen numbers ranging from 100 percent to 900 percent in different places at Clarence has spoken. So the competitors in this space seemed to be the traditional retailers who offer warranties now, which is one of the concerns that I’ll touch on if you asked me about concerns, given that they can just kind of squeeze their own margin down if, if they find that they’re losing the. Did you find something similar?

Eric Hornung: 00:07:25

Yeah, I believe that the oems or the original equipment manufacturers, if we mentioned that word a few times, so that’s the apples and the samsungs of the world. They’re offering their own kind of insurance. So think about apple care for example, and then you also have the retailer. So the walmarts, the best buys of the world. And I was just looking at a chart about mobile phone protection plans and between apple care and US mobile phone companies, they make up approximately 10 of the $13 billion dollars sold in warranties and warranty premiums between 20 2009 to 2017.

Jay Clouse: 00:08:07

That’s interesting. So it’ll be interesting to hear if he’s attacking that same kind of large segment of the warranty market, mobile phones or if he’s trying to focus on the other aspects. Something that I saw in an interview with Clarence that I really, really liked because someone just told me a quote along the same lines. He says he likes the Jeff Bezos quote of your margin is my opportunity, which is pretty much core to his business model here. Something else someone told me just this past week that I really, really loved. You said, crumbs are bread to love that. I liked that a lot. You just got to take up all the crumbs. It’s still bread. It’s just smaller pieces of it.

Eric Hornung: 00:08:44

That kind of leads me into this idea of shadows and I think you foreshadowed a little bit with your concerns earlier, but in 2008 I was surfing in Hawaii. Really cool sentence right there. Humble Brag about schools. My Life gets a surfing in Hawaii and I had gotten. I was on Waikiki Beach, which for any surfers out there, not the, not not the greatest beach to surf on right now, great waves and I was probably 100, 200 yards out in the ocean, just loading really purposelessly and underneath me a big shadow appeared and I pulled my legs up on the board and I was so scared because the first thing I thought was shark. and I looked down and it was a giant sea turtle and I think that when we dive into some of these interviews, we have a lot of shadows so they could either be sharks and something that we really want to avoid or they can be sea turtles where they’re not. They’re not dangerous. For me with Upsie, it’s really hard to compete just on price. Amazon is a great example on Bezos is his quotes are amazing, but it is extremely hard in the long run to compete just on price. So I want to hear about the other differentiating features which upie has.

Jay Clouse: 00:10:01

Yup, Yup. I hear you. And so that is going to be a recurring theme here on upside is talking about shadows. Are they a shark or are they a sea turtle? A turtle.

Eric Hornung: 00:10:10

We don’t need to say sea turtle, you know,

Jay Clouse: 00:10:13

but I’m with you. Competing on price is often a race to the bottom. So is Upsie triggering a race to the bottom with these retailers or will they continue to innovate in the sort of gingerbread man fashion of. Catch me if you can, if you’re a Evan Spiegel fan,

Eric Hornung: 00:10:33

did you watch another movie last night?

Jay Clouse: 00:10:34

No, no, no, no. Evan Spiegel, the CEO of snapchat.

Eric Hornung: 00:10:38

Oh, let’s cut that, cuz thats embarrassing

Jay Clouse: 00:10:42

Evan Spiegel, for the. For the listeners, if you’re not aware of founder and CEO of snapchat and when he was asked about his competitive advantage, I think pre ipo, he basically said that innovation was. His advantage was, is something we’ve heard on this podcast before and that was called the gingerbread man approach by Ben Thompson because just kind of running ahead as fast as they can, hoping that other people can’t catch them. So is Upsie triggering something of a race to the bottom where they are just trying to lead and innovate and, uh, protect themselves that way. You ready to jump in?

Eric Hornung: 00:10:42

Let’s do it.

Jay Clouse: 00:11:22

Clarence. Welcome to the show.

Clarence Bethea: 00:11:24

Thank you so much.

Eric Hornung: 00:11:25

Yeah, we’re really excited to have you. You’re our first company. Oh no, sorry. Our second company from Minneapolis and that’s exciting because it’s so easy to get companies from Ohio and we found that Minneapolis has one of the most exciting startup scenes outside of Silicon Valley, so we’re glad to have you on.

Clarence Bethea: 00:11:44

Awesome. Thank you so much for having me on your right. Minnesota is our growing. It’s a vibrant community. Feel super fortunate to be a part of it.

Eric Hornung: 00:11:52

Yeah. We want to start with kind of view the founder. Can you tell us about the history of Clarence?

Clarence Bethea: 00:12:00

Nothing special about Clarence, grew up in decatur, Georgia in Atlanta. You’re always try to just tell the real story. I come from a, like an abusive background, wash my dad, beat my mom for the first 15 years of my life, so, you know, grew up doing whatever I had to do to feed the family, put clothes on my back, you know, make sure my brothers and sisters had what they need. So grew up in decatur, Georgia is one of the rougher parts of the country. Um, so there, that’s not where I put my teeth.

Jay Clouse: 00:12:28

Is that common with other people who were in your neighborhood or your friends? Did they have a similar experience in that part of the country?

Clarence Bethea: 00:12:36

Yeah, I think I grew up in a neighborhood where, you know, as kids, we all were kind of going through the same thing. Um, and we found each other as just an opportunity to have an outlet.

Eric Hornung: 00:12:46

How did you get out of decatur? What was Kinda the next step there?

Clarence Bethea: 00:12:51

Yeah, so I was also a pretty good basketball player, so I was all stayed in Atlanta, Georgia. I was fortunate enough that coaches gave me an opportunity to get a scholarship in and leave Atlanta. So my, my first school was in Kansas, you know, dropped out or got kicked out of my second school was also in Kansas. got kicked out and dropped out. I just had no discipline. Right. So I went right from the life I was in to like, hey, we want to put you in college if you want to. Like, it was the first time I ever met a white person was in college in Kansas. Yeah. And so I was like, wow, there’s white people in the world. That’s awesome. Yeah, I thought it was just TV thing, right. They don’t really like dinosaurs. Right. And, and, you know, I just didn’t have any discipline. Right. So it was like they put me in a situation where you have to have the ultimate discipline. I hadn’t done finally, you know, one of the coaches that was in Kansas took a job in Minnesota at a d two here up north and gave me another opportunity and said, hey, I think you could figure this out. Um, it gave me the chance to go there.

Jay Clouse: 00:13:53

Did you look at basketball as or in sports in general as a way to get out of Georgia? Or was that just sort of happenstance?

Clarence Bethea: 00:14:01

I think it just happened, to be honest with you. I don’t think I had any aspiration to leave Atlanta. I just kind of went where I fail and I was really fortunate to end up in Minnesota.

Eric Hornung: 00:14:13

What position did you play in basketball?

Clarence Bethea: 00:14:13

point guard

Eric Hornung: 00:14:17

How tall are you, we can’t see because you’re not standing up.
Clarence Bethea: 00:14:17
6’3

Eric Hornung: 00:14:21

Ok, taller than me and Jay probably combined.

Jay Clouse: 00:14:24

Yeah. If we go much deeper on basketball, I’m going to quickly get over my head and watched, watched game six of the cavs last night and had fun doing it. But uh, I texted a friend of mine. I’m like, dude, did the cabs have a point guard or is it just Lebron too.

Clarence Bethea: 00:14:24

There’s just Lebron.

Jay Clouse: 00:14:42

Nice. So this, this coach who you say kind of gave you a second chance and brought you up to Minnesota, what was your relationship to him? Like how, why did he decide to take that second chance or pull you up there?

Clarence Bethea: 00:14:55

I think we have a decent relationship. You know, I was really, really good and you know, he had a history of taking my kids that really, really good and giving them shots, you know, that was kind of his history. A lot of coaches wouldn’t touch me with a 10 foot pole was simply because they like door got around it. I was on discipline and you know, I, I just, I wouldn’t listen to coaches. I’m just wanting to do what I want them to do. Then I think he thought like, oh I can, I can kind of change this. And I still went there was on discipline but him and I fought back and forth to come and get me in line. And it was, it was, it was a good experience for me.

Eric Hornung: 00:15:28

Did he change anything about, you ?

Clarence Bethea: 00:15:32

No, probably the real answer. No, I don’t. I don’t think he’s changed much about me. I think the opportunity I think wouldn’t deal with giving me the opportunity to lead the state of Atlanta and kind of see the world in a, in a different way. I think by that time I had realized that I didn’t want to go back to Atlanta because at least when I was gone, like life was decent. Like I have food to eat. Um, I had decent friends. I didn’t have to worry about looking over my shoulder, you know, when I was doing something somebody shouldn’t been doing so, so I’m thankful to him for just giving me the opportunity to get out of Atlanta. And that’s kind of like he played a, played a part of my life.

Eric Hornung: 00:16:08

So you get to Minnesota, you graduate, you don’t graduate and match here. What happened there? What, what was next? You didn’t want them back to Atlanta.

Clarence Bethea: 00:16:17

Didnt wanna Go to Atlanta, So I don’t graduate. My junior year ended up kicking me off the team for missing the assignment. Uh, we’re jumps. Do pissed off about it, honestly, the Jew. And so I ended up working. I’m a big people person. I’m a guy that I knew that played football at Murray state was running like a home care, like for disabled adults and so he gave me an opportunity to work for him and I was like, Ay, I can do this full time. So I did it full time for him. He had a friend that ran another one. I was like, hey, why don’t I just work 16 hours a day and make money? And it just stopped in me where cost of living was so low. So I was working 16 hours a day everyday. I just love being around those people and just like helping them in any way I can. So I would work afternoon shift or the night shift, which was basically just sitting in a house, you know, listening for the person in the house not to get up. And I did that for about two years and many just made a ton of money. And then I was like, hey, I really liked this profession. I got a job down in Minneapolis to my offer me a job to do with down here, making twice the money, just doing one job. And I was like, Hey, let me move down to the cities, end up moving down to the cities. It was still a knucklehead was still just like not disciplined at all, but I was making this money and have on apartment finally. And I felt like life was going in the right direction and then it was still unDiscipline is still trying to figure out like who I was. Fortunately I met, I met a guy that had a trucking company. He was like, hey man, you can make six figures a year if you come work for me. And I’m like, holy crap, that’s like six figures. Like we didn’t even talk about that where I was from, but nobody made six figures. Right. And so he was like, Hey, I can teach you how to drive. I’m sure you guys know what a boom truck is, what I put sheet rock on the second floor. And he was like, Hey, I can teach you how to do this. I can teach you how to drive these trucks. I have four trucks right now. Um, do you mind come working for me? I think my, I think you have a chance to make a lot of money. Started working for him, wrote with him for about six months when it took my, uh, my um, cdl license test pass on the first try at and he taught me how to do the boom and I went from making 40 grand a year, it’s like $120,000 a year, like literally overnight. And I was like, wow, like you’re talking about financial freedom. This is financial freedom. And so I did whatever’s, you know, every stupid young man does. I went out and tried to ball out and drop in like $2,000. It was just like stupid stuff that I’ve never experienced growing up. Right. And so in 2008 the market went down. Nobody was building houses anymore. So nobody needed sheet rock or stuff to go on the second floor. At that same time, I met a guy through basketball that was a former NBA player that was opening a gym. He was like, Hey, you know how to talk to people, you want to come do sales for me. So I left the boom truck, I have built that business up from $1,000,000 a year. It’s over three and a half million dollars a year in revenue. I did a market hit. I went and worked for this guy at the gym. We went from zero to one point $5,000,000 in less than eight months. And I was, I was the only guy doing sales, but I was still like, honestly I was still just, I think it was just still want wondering, so to speak out about. I don’t know if that makes sense, to you guys. But I was still just wondering, just trying to figure out like who I was as a person and so I knew I could make people a lot of money. I didn’t know what was my thing that was going to take me to the next level. Fortunately the gym I was working at was a very expensive gym, so to train for an hour it was like $60 an hour per kid. So the only people who could afford that was executives. And I don’t know if you guys know this, Minnesota has the most fortune 500 companies per capita here. So there was a lot of executives that walk through our jam. So ceos of fortune 500 companies, ceos of big private company, you know, we have cardio, that’s the largest private company in the world. And so everybody that would come through our meat, just unbelievable people. I didn’t know who these people were like job wise, but I knew that had to have a lot of money to do what they’re doing. So just by chance I met this dude, I didn’t know who he was and he, he was coming into the gym to force kids to train and he says, I say to him, I said, hey, just so you know, like you’re, you’re behind on your kids bill because we need to get a credit card. And I still remember it today. He walked in the office and I’m sitting there writing up his bar and I was like, Hey, you owe us 760 bucks for your kids for the last couple of weeks. And he pulled out a wad of money like this big, like it was all hundreds and a kid that comes from the hood, like when somebody has that kind of money that you’re instantly thinking, am I a man? This dude to be like a king pen, like the biggest Cartel in the world and he has a black car so he has a black card inside of the cash and he kills off 800 bucks. He throws it to me like, Hey, just give me the change when you get a chance. He throws it on the desk and I remember thinking like, who is just do like, what is he doing now? I walked out and I wanted to talk to the CEO at the time and I said, who has it? Who is that dude? Don’t worry about it. But he just, he’s an executive at some companies here. Well you end up being the future CEO of a fortune 500 company here in town?

Eric Hornung: 00:21:40

And did you. Did you end up having a relationship with him after this just made a really pivotal impact on you with the large wad of money?

Clarence Bethea: 00:21:50

you know, so he, he ended up, uh, about a year and a half to our relationship. Um, so I didn’t know who he was and we still, like, I didn’t even research him at the time and he called me and he said, hey man, like I’ve been watching you for a year and a half. I would love to sit down with you if you, if you got a chance. So now I go research them and I figured out he’s the CEO of best buy at the time is about to become the CEO of best buy. And he’s like, Hey, I would love to have you over. I’m going to have my assistant call you and set up a time with you. So two days later assistant calls me and said, Hey, do you have some time next week, early next week we want you to come over to the corporate campus. I don’t know if you guys know much about that spot at corporate campus. He’s huge. And he says, Hey, come over at 1:00 on, I think it was a Wednesday or something. I go over, he comes out, he doesn’t see his assistant out to get me. He come to give me, gives me a big hug in front of everybody so everybody knows who he is in the lobby. Right? And they’re like, who is this black dude that he’s hiding? Right? That he’s coming out here and get literally like people you could hear them whispering. They’re like, who is this dude? We walked through the campus and every person that he meets, he knows her name, he knows there’s something like, this dude is like the most powerful dude in consumer electronics. And he knows every person named walking through the office. It gives a janitor 10 bucks and was like, Hey man, lunch on me today. And I’m just like, wow, this is like, this dude is like the most powerful dude in the world and treating people with respect. I’ve never seen that before. Right. That’s normally people are. I grew up with, when they were empowered, they treated people like crap because they were in power. We go sit in the cafeteria, we sit down and he’s like, hey man, he’s like, I’ve been watching you for a year and a half. There’s something about you that I can’t put my finger on it because I’ve been doing this for 25 plus years. I’ve seen executives all over the country. Um, you know, I’m about to become CEO here. He’s like, you have something that I haven’t seen in all the executives that work here at our company. And he was like, I would love to mentor you. I think I can help you get to the next level. He’s like, I know about your background because I know the mistakes that you’ve made. I’ve already done my research. I had our investigators looked at you, but I know you’ve made mistakes in your life, but I got a feeling you’re gonna be able to come back. No, sorry. I’m crying. I’m a grown man. You know, I’m 28 years old. I’m balling. The cafeteria is looking at me like I’m crazy. And I’m just like, wow, this dude was about to become ceo of best buy is telling me there’s something special about me. And that was Kinda the, the, the pivotal moment in my life.

Jay Clouse: 00:24:17

That’s wild in he had investigators look at your background before this meeting.

Clarence Bethea: 00:24:22

Yup. That’s what he knew. Everything you know, I’ve been in juvenile. He knew I’d been locked up. You knew every mistake that I already made my life. So it was probably like the one in a trillion chance that a person has that I got.

Eric Hornung: 00:24:35

I know we’re going to jump into kind of what happened at best buy and how that gets into ups, but I just want to kind of pull back for a second. You’ve had to my account, at least for people who’ve kind of stuck their neck out for you today. Is that right? You had the two coaches in Kansas City, the coach and Minneapolis and this guy from best buy almost like mentors.

Clarence Bethea: 00:24:56

So say the last one is probably a realistic. My mentor relationship, I probably say the rest of them was just like I was a talented kid in basketball. So kind going didn’t have any choice but to want me arrogant, cocky, but I was really good. I think coaches think I can be the one that turned this kid around and, and that’s, I don’t, I think when I look back now like hindsight is 2020. I think when I look back now, like basketball was a great thing in my life and it propelled me to new levels and if I wouldn’t have got here to Minnesota, I would’ve never met you. I would’ve never met this guy. Right? So I think like God made things happen in your life and in and he kind of puts you in places so you can meet the next opportunity. The question is are you going to be able to see it? And I have to like God put me here in Minnesota so I can meet him so I can do what I’m doing. Now

Jay Clouse: 00:25:45

you’ve put such an emphasis emphasis on the idea that you were pretty undisciplined up to this point. Is this the turning point where you started to see, okay, I’m no longer wandering. I see a path for myself. I’m going to buckle down or, or am I projecting?

Clarence Bethea: 00:26:00

No, I think you’re right. I think this is. This was a point in my life where I felt like, you know, I’m going to turn it around and be disciplined and truly live in my purpose or I’m going to be a bum and I didn’t want to be a bum.

Eric Hornung: 00:26:15

Let’s walk down the. Let’s walk down the purposeful route. You, you meet this guy, you’re crying in his office. What happened in between the two?

Clarence Bethea: 00:26:24

He, yeah. He says to me, if you just listened to me, I can help you become a great businessman. I can teach you the intangibles that you have. I can sure help you become a better person. He’s like, just, you know, just listen to me. So about a few days later I get a call from his assistant and he was like, Hey, I need you to meet me here at this address. Bring a bag there. We’re going to be overnight. And I’m thinking like, what? What do you want? Like, what is this place where I go? And so at the time, just so I can like put context on this, I’m driving a 1998 buick, something that the passenger door got hit by a car so you can’t even get out the passenger door and I had no air conditioning so it’s like in the middle of summer is 800 degrees, no air conditioning and it’s like this, I think it was like a c or something like that and I drive up to the address and he tells me and I ended up being like a private jet place and there’s like escalades and there are robberies and all this stuff and I’ll drive and I don’t even want to pull in a parking lot. So I pulled all the way to the bag and like parkway beyond the last escalate by doors, cars in the parking lot was escalated right. When I walk in with my bag and do it, comes with me and said, hey Mr dealer, we’ve been waiting for you. He’s waiting for you. This is what this whole red carpet, white glove type deal. And I’m just, I’m floored, right? I’m like, oh my God. Like what is happening right now? Hop on a plane and Brian’s like, hey, you ready to go? Let’s do this. And I’m like, where are we going? He’s like, just just roll, just sit down in this roll and the pallet turns around and says, Hey, are you ready? And he was like, yeah, let’s get out of here. Literally I had only been in a plane once at that point and I know how long it takes the taxi and do all that work. I Bet I bet you it was 20 seconds later we were in the air going. I felt like we just hopped off the ground and went in there and I remember sitting there like holding on and he’s like relaxed. It’s all good like this, this is what happened. And we’re sitting there and smiling and playing and serving as fruit and vegetables and sandwiches and I like, like I said, a kid that come from Atlanta that only seen that stuff on TV. I’m like, holy crap, this is awesome. Like this is the coolest thing ever. Went on the plane and why we’re in the plane has me a book. He was like, Hey, I want you to check out this book. It’s about emotional intelligence and listening to your gut and you, I want you to take some time to read this. So I’m reading the book, we’re talking, we landed in La. We hop off the plane and literally like there’s a red carpet leading to an escalated and I’m like, I go to grab my bag. And somebody was like, no, no, no, no, no. I got your back and I’m just like, I can carry my own bag. Two pounds, dude. And he looks at me and he’s like, man, just let him do his job. Right. That’s his job to do that. We hop in the car. We’d go and sit or we drive to the place. We walked into the office building and he’s meeting with Jimmy. I’ve been from beets before. It even happened. So beats hadn’t even hit the market yet. They were just negotiating the contract. So I’m sitting in a room with Jimmy. I been from beats and I’m just sitting there listening. I am in a room with like probably the biggest dude in music right now. They’re going over the holes. My, what’s going to happen would be to get into best buy and you know, I say I tell that story because I think what he was trying to do was give me experiences he was trying to like, let me see a whole different world I didn’t even know existed. We went from there to um, what’s the show with the Italian guy that fixes up celebrities cars or what’s been good about getting the name of it? It’s not my ride. It is. I’m west coast. Exhibit is in, is in Italian. I’m pretty sure I promise. Oh yeah. West Coast Customs. So we leave there. Then we go, we fly to west coast customs office and we spend a day at west coast customs looking at cars and stuff and then we go and we stay at this hotel where we’re staying in the 6,000 square foot penthouse at the top of a deal. It was just like all these experiences, but at the same time we’re talking business and we’re talking. Yeah. Like Clarence, what did you notice in that meeting? And he’s just like educated me. And that happened for about four or five years straight where he was just like Clarence, steve bombers coming to town. I told them about you. He wants to meet you at the time. Steve Balmer, CEO of Microsoft, we’re sitting at a basketball game talking business. And it was just like amazing experiences like that where like five years straight, I know like I know now, like after the fact he was trying to give me those experiences that you were trying to give me that network. So whenever I wanted to do what I wanted to do, which ended up being Upsie today, I will understand how to do that on. When we got out that trip, his assistant called and was like, Hey, he got your setup with body language classes, speaking classes. I had a real, real hard southern draw because I’m from Atlanta and I used to say shouty or what lie. I used to drop a lot of words a lot and he said, hey, we need to fix this because if you’re going to do real business you can say shawty 800 times in a sentence. And so I just Kinda went through this progression as a young man just to fix my house spoke and how I carried myself and how I was in meetings and now obviously I would, I would study him and how he wasn’t meeting his and how he would change the leverage in a room even when he didn’t have leveraged. And I think what that did was allowed me to add a staffing agency before upsie where it failed. I raised a little bit of money, but it was like training ground. This is how you raise money, how you start a business. These are things you need to have in place. And again, coming from a kid that was out of decatur, Georgia, those are not things that we were talking about as we grow up like raising money and starting businesses.

Eric Hornung: 00:32:04

So let’s Kinda dive into Upsie bit. You’re there for four to five years studying under this guy. You go out and you try to launch a staffing company. I think we can come back to that in a bit, but I want to go into upsie and what is the problem that Upsie is solving?

Clarence Bethea: 00:32:22

Yeah, so I think we’ve all been in that moment where you like, you’re out of best buy and you get to register. Somebody was like, Hey, did you get, can I give you this warning warranty for a bajillion dollars depending on the product that you’re buying? And what I started to see was that because I had behind the scenes knowledge at best buy that is retailers are charging as high as 900 percent more for warranty. So to give you an example of you’re buying a new laptop and the company that says, Hey, for $200 to protect that laptop for two years, we’re really going to cost like 15 bucks. So that’s how companies make all their margin off of this product. Um, so for me it was about solving a problem that was threefold. One to price, right? Like consumers, you know, the Fed in 2016, he said that 50 percent of consumers can’t afford if something breaks or needs to be repaired over $400. This country is only getting worse on that statistic as we go. You know, when I’m buying a new laptop that my chat needs protecting it, if I don’t protect and it cost $2,000, it did breaks. I’m done, right? I can’t afford to replace it on. The second problem is transparency. So if you’ve ever been in that situation before, you know that they’re not telling you this is covered and this is not covered is normally do you want to buy yes or no. And so what we wanted to do was offer transparency right out the gate so you know before you buy it. Then the third problem is, you know, we all buy that warranty and then it goes into a shoe box or drawer at home and we never know what’s going on with it. Two and a half years later we need it and the receipt is, is so messed up. I can’t read the numbers or I don’t even know where it’s at because I got 100 more receipts that are bought since then. So we always say we’re, we’re, we’re making a warranty more affordable, more transparent and servicing a lot of our customers.

Jay Clouse: 00:34:01

Yeah. Before hearing and reading into upstate a little bit, I was trying to think when I’ve purchased electronics in the past, I don’t think I’ve ever considered like a third party warranty as an option. Like I figured, you know, you’re in that high pressure situation with the person in front of you saying, do you want to buy this? Yes or no. This is completing your transaction right now. It feels very high pressure. And like, Eh, you know, that’s your only op, like your only time to do that. So was that something when you’re at best buy, you know, when did that moment click for you? When did you see, oh you’re charging 900 percent the margins on this or did you have an experience where you were buying something and you were considering buying the warranty? What was the click for you that you put those pieces together?

Clarence Bethea: 00:34:45

So because of my relationships at a time inside of best buy, I had an insurance company reached out to me and said, hey, if you help us get the best buy business, if you make an introduction and we’ll pay you millions of dollars a year, the numbers that they threw at me, it was like $12,000,000 a year. If you just help us get the contract, you don’t have to do any work, we’ll pay you $12,000,000 a year. So I was like, how can you make this? Literally asked the CEO of the company, how can you pay me $12,000,000 a year for this business? And he just, they just taught me the business and say hey, these things are marked up like 900 percent, a thousand percent. I mean there’s some thats so grotesc where you’ll pay $450 for warranty and it costs $5, but because of the price of the product, but they could charge that much because you think I’m buying a $2,500 product and they’re charging $450. That makes sense. When really I wanted to go. I was like five because they’re low claims and the actual numbers are low, so that was a moment where it clicked for me. I was like, Hey, we could solve these problems for consumer. It’s a $40,000,000,000 industry and everybody does it the same way, like why can’t somebody do this differently and make it a 100 percent customer focused business

Jay Clouse: 00:35:55

and so what was the decision process for you to say I’m going to start a business to solve this versus I’m going to take this $12,000,000 a year and try to hook this guy up?

Clarence Bethea: 00:36:06

Well, I wouldn’t be doing this business that have gone through because I’ll be making the $12,000,000 a year. So that ended up not happening. The company ended up not wanting to move to a different company, but that motivated me more to say, you know what? Like this is not going to happen. Somebody needs to solve this problem for consumers. For me, the genesis of our business has always been about the customer and solving problems for our customers. So it just felt like the stars were aligned to do this.

Eric Hornung: 00:36:33

And where do you get that customer orientation from? Is that from your time at best buy or did you develop that?

Clarence Bethea: 00:36:41

I think I am a people person and I think if you look at my history, even from a kid, I’ve always been the one that wanted to help. Um, so when I was a young kid, like if I saw another kid get bullied, I would have got out and walked in. And what would fight the bully? Not your two cents about it. Like obviously now as a grown man, I can’t be fightin people, but especially kids, you probably don’t stay away from kids, but I think it’s my nature and it’s in my bones that want to help people. And I think now it’s just a little bit differently than what it did when I was a young man. If you think about my history with disabled adults, that was a history of wanting to help people. And I really enjoyed that and I think I just. This whole customer focus is about empowering other people, right? Even when you’re going to power other people, I think there’s an opportunity for you to do good in the world and make a lot of money.

Jay Clouse: 00:37:30

Can you walk me through the customer journey using upsie from the point of I realize [inaudible] and option while I’m going to buy something too. Now I’m covered by Upsie,

Clarence Bethea: 00:37:41

so we made it really simple. So we have an APP in both Ios and android store or the Google store. And then we also have a website that 85 percent of our customers originate on. If you have a smartphone, you go to our smartphone page, tell us the pricing tier that your phone falls into once we know that you select your two year plan, um, and then it just walks you through and tell us the brand, give us some credit card information, give us your address. And then after you buy, we asked you for information like the imbi number on that specific phone. We actually put a model number on. We actually for the serial number and then a copy of the receipt on which you didn’t take a picture or you can add a pdf. I want you to do that. You’re done. The system will alarm us if you give us information that is not valid, but for the most part, our customers, you know it takes a few minutes to do and then Once you’re in the system, all of your uploads to your myself area, which is where all of your warranties are stored. So if you need to make a claim, you literally go to master area, you press on that warranty is a specific number there that’s waiting for you. You press that number, you call out, give me your name and your email address. They already have your receipt, they already have all of your information sitting in there and then you just go through the claim process.

Eric Hornung: 00:38:48

So how do you drive traffic to your app and website since that seems to be the gate that everyone needs to get in? Customer Acquisition Strategy?
Clarence Bethea: 00:38:58

Yep. So it’s three of three pronged strategy, right? So Google ad words or digital, we know that 87 percent of consumers before they make a purchase of a product, they no longer walk into the store at best buy And say I want to buy this TV and it’s sort of people now like as comparing online and search and research and price compare to Amazon versus target versus best buy. Um, so we start to put ourselves in those moments through keywords and through really digging into like, what is the hot product right now? What are people searching for, what are they price comparative. The second tier is influencer marketing. It works really well for us. So we work with top influencers around the country, the tech, um, and we just had a really big one with unbox therapy where, you know, he’s doing a review on the new s nine and he talks about upsie during that review. So he’s like, Hey, this is asinine, but don’t go to a sprint or t mobile and paid $12 a month. You can go up for $80 for two years and it works really well. And because those people have an authoritative voice in a text base on that worked really well. And then we just remark it right? You hit our link on the video of we get you into the funnel. And then we just started to push you down a photo, um, through ads. And it, third is our referral program and word of mouth. So about 12 percent of our customers come from word of mouth or referral program. What works really well. So for every, every dollar that we spend on our referral program, we make $10. Um, so we really try to push people into our referral program so they didn’t share and continue to help the company grow. So those are the three main things that we do today to get customers.

Eric Hornung: 00:40:29

And what is your customer acquisition costs look like?

Clarence Bethea: 00:40:32

I won’t say that on the podcast, what I can say We have about a three and a half to one CAC LTV ratio.

Jay Clouse: 00:40:38

If you get $10 for every dollar you spend on the referral program, what’s the, what’s the limit? What’s the thing that prevents you from just throwing everything into the referral program?

Clarence Bethea: 00:40:48

Were we continue to scale up? So we just hold it around a funding on late January. And so we continue to scale that up. So there’s a lot of things that’s worked with for, so digital marketing was working really well, so we have a really healthy cac to Ltv if you think about companies in the consumer space, so you think about group conferences, you know, we have an investor that invested in them when they started and they were growing at a one to one cat to LTV ratio, right. And B to c today is really hard, right? Investors looked down on it because they don’t think if your cat to LTV is not in place, they just hate it. Right. And because ours is so healthy, we try to pour more money into digital. We try to pour more money into influencer marketing. So we do campaigns, you know, that costs $100,000, $200, $300,000 to really push that to our customers. So we were already pouring tons of money into those things already.

Jay Clouse: 00:41:39

Yeah. I would imagine that the biggest hurdle is obviously getting someone in to try it the first time because if they go in and they try it the first time and have a good experience, so they would, they would come back. Do you have, do you have any data to support, you know, the average person has more than one device on updsie or what does that look like?

Clarence Bethea: 00:41:55

Totally. So we have very strong for repeat rate. Fifty percent of our customers have already bought two plans and more. Um, we have customers that have been with us less than a unit. Eight plans are more, I’m 33 percent of our customers make their second purchase within 77 days. So we can almost bank it that we don’t make our customer acquisition cost back on the first one. We’re going to make it back on a second one. And then what we try to use is, you know, our data to predict what is your next purchase or the profitability of you’d like to purchase. And so we have interesting stats like we know if you buy a washer first and next part is probably gonna be a dryer, but we know you protect the dryer with us first. There’s a 75 percent chance at your next purchase is going to be a laptop, which is like one of those weird things that everybodys like How. And we’re like, hey, this is what the data say. So when you buy a dryer pairs with us, we’re instantly putting you into the laptop pool to try to push you in that direction because we know three out of four chance that you’re going to do that.

Eric Hornung: 00:42:49

And what is the breakdown of your different kind of segments? So you have mobile phones, laptops, washers, dryers, appliances, what’s, what’s the breakdown look like at upsie?

Clarence Bethea: 00:42:58

Yeah. So we break it down into four categories, smart loans, um, which we call our gateway drug or because every person has a smartphone. And my gateway drugs, like you start with weed and then most people would do something else, right? So, um, we, we, we use the same thing in our business. We say let’s get people in on the gateway drug is actually our lowest margin product that we sell, but it’s very on purpose like that because we know we could solve that problem because normally as the most important product to customers, their smartphone because it keeps them connected. If we can solve that problem there then everything else they’re going to come in with. So it’s smart phones and then we group all consumer electronics together. So every laptop, tvs, everything goes in one bucket and then we have appliances. So all appliances that you could think you could protect down to vacuum cleaners on both large and small. And then we have lawn and garden. So grills, lawnmowers, different things like that.

Jay Clouse: 00:43:52

And what’s the product mix look like at Upsie?

Clarence Bethea: 00:43:55

We’re probably, you know, 50 percent of smartphones is what we see right now. And then probably 30 percent is consumer electronics and then another 15 percent is probably the, the appliances and then five percent lawn and garden stuff.

Eric Hornung: 00:44:10

So you mentioned making money earlier and you mentioned margins. What, how does upsie make money?

Clarence Bethea: 00:44:17

We make money on every product that we sell, so we make on average of 49 percent margin on our product, across our book of business. And if you think about the, you could think about as the same way you think about lyft or uber. They don’t own a driver, they don’t want a car. They just make a spiff on every time that transaction happens. And we worked the same way every time the transaction happened. We worked with an, a rated carrier. They take the liability and so we are just, you were just kind of a marketing company that were just, uh, the highway that makes it happen, makes the connection happen. And our customers love that about from a transparency standpoint that when you buy a plan from us, you get an email that says you bought this plan from x carrier, here’s their number, heres their inflammation? And then you also get a week later you get targeted conditions directly from them. And the reason why we do that is because a lot of times in our industry, when people go away, like so a lot of businesses come and die. In our industry, what happens is when you think about circuit city, when they died, there was $2,000,000,000 worth of warranties there that people don’t just die with cercuit city. So every customer who bought a warranty thought, well hell, I guess I’m done there. I guess my I was not protected and we try to flip the script there and say no, no matter what happened with upsie, if we die, your plan is still good through the duration and here’s all that information up front.

Eric Hornung: 00:45:37

And how does your business model differ from a competitor? Maybe like squaretrade?

Clarence Bethea: 00:45:42

Yeah, so it is a huge competitor to us. We think that there’s still stuck in the ninety’s would their business model, which is they work with retailers, so if you go into a target or you go into Costco, squaretrade is there, right. Most of our business comes through those transaction and then they have online work order where they still charge the high prices because they can’t compete against our retail partners. Right? So they deal with upsie did. Now I’m competing issue target and now I’m probably going to fire you have from target, so that’s why you see their prices online, artificially higher mind the rest of the industry because they can’t compete against their partners. Now you’ll say from a business model standpoint, we weren’t very similar on what we’re doing is trying to cut up the margins and and and offer more transparency and offer better service. I’m in an industry that’s never had those three things up front.

Jay Clouse: 00:46:29

Can you play the script forward some number of years? Up C is just crushing this market and becoming one of the preferred vendors of warranties. What happens when a target or a best buyer, these major retailers to decide to pull their own margins down on these products?

Clarence Bethea: 00:46:46

That’s a great thing about our industry. I would love to use best buy example, right? Because the largest seller of warranties and consumer electronics in the world. So if you think about it, they have an attachment rate. We’ll make up a number here. Let’s say 10 percent at the register. So 10 percent of consumers say yes at a registered. They do well over a billion dollars to price match upsie they would literally need to drop their prices like 90 percent some crazy number. There’s no way from a mathematical standpoint that even if they price match, if they could make that billion dollars back. So from a map standpoint, they could never like price match us, which is why they don’t do it today. Also, the market is in this place where that’s why it doesn’t make much money on a product. They make all of their margin on the service and so unless they’re willing to take the hit on the margin, which will then take a hit on their stock, they’re just not willing to come down to us. So to move out five years, let’s say ups, these crushing the market, we think we’re acquisition target, right? Like, because if you’re best buy you off, I have to tell that story. Well, why are you screwing me for four years by why now? Because I don’t think they want to tell that story. Right? Which is why they’re not telling their story today. And they’re doing, you know, a lot of uh, oh, you get 10 percent off, what? It doesn’t solve the problems for consumers. So we think in three to five years the story is either you acquire, acquire us or you gotta be able to eat all of that margin. I just don’t think they’re willing to do that.

Eric Hornung: 00:48:14

Sounds Very Amazonian

Clarence Bethea: 00:48:14

Amazonish.

Jay Clouse: 00:48:21

So what, what about like a square trade or some new competitor that comes in and says, I don’t have that baggage, that best buy has, I’m just going to take the same model and do the same thing. What, what prevents them from doing that or what protects you there?

Clarence Bethea: 00:48:35

Right. So, so square trade is in the same position. So most of their business comes from retailers. So they can’t control what margin to retailers the retail is going to make what they want to make. Right. So unless again, that retailers willing to cut their own throat a little bit. I, I just don’t see that happening. Right.

Eric Hornung: 00:48:53

I think Jay’s looking maybe more at something like a pure copycat of UPMC.

Clarence Bethea: 00:48:56

Yeah, totally. So this is the great thing about an industry, if you think about all the knowledge and the background and everything I had going into it, there’s been people who like I know without a doubt has called our carrier and we’re like hey, we like you to do and do you mind partnering with us? So first first thing I did was get our carrier under a five year exclusive so they couldn’t work with another upsie if they want it to. The second thing is to three and a half years where I went and talk to all of the major carriers who work with auto companies and the reason why they didn’t want to work with us because they’re like, hey, I’m doing $400 million dollars with this retailer and you want me to partner with you to disrupt them. You blindly pouring $2,000,000 first and then we can talk about that. So the market, there’s only a small number of players that can do this in the first place. And when you think about those guys already working with big retailers and if you’re a small company, startup company like this and if you don’t know this industry backwards and forwards to understand the players understand the dor was only what by that’s why you see certain companies, I won’t name any names but I don’t want like I’m not the bash and dude, but there’s certain company who’s trying to get out industry that’s like been a Europe and other places and it still hadn’t walked into the United States because they can’t get a carrier to back the liability because if you don’t know what you’re doing from a loss ratio standpoint, life. I just want to start up guys saying what? Let’s let’s do this. I was going to ask you to do the business. So when I walked into those rooms, I was like, Look guys, I understand how important loss ratio is not understanding where it needs to be for you to feel comfortable to even do business with me. Like that knowledge and then just my bull dog attitude, we got that opportunity, but it’s really hard for companies like literally, I bet you I can name 10 companies right now who I know have tried to get into our business and our carrier, one partner with them because they need to work with a retailer or we have them under lock and key.

Jay Clouse: 00:50:44

What I’m curious about the product itself, when I go to the Upsie APP and I am saying my phone is under this price point as this, this, this, uh, model. Is that available in real time from some API from the carrier or you having to pull down rates from them on some period of time and update that?

Clarence Bethea: 00:51:03

Yeah. So we, we partner with the carrier and then we pull their rates from them and every rate that you see as locked in for six months. And then depending on how loss ratio go, um, then we can negotiate change. So we actually just had a price reduction like six months ago, Mark Cross our products because our lost ratio has been so positive. So that’s kind of reviewed on an every six month deal and then it’s fed into our system and then you see it in real time.

Eric Hornung: 00:51:30

For the listeners, can you explain what a loss ratio is?

Clarence Bethea: 00:51:34

So it is the, for every dollar that goes in to make a claim, they expect a certain amount of that to come out, right? For clients, right? So we make our money that comes to us, then we send our money, the carrier money, their premium to them. They take a large portion of that and put it into a big bucket. And then let’s say there’s $30 in there, they expect $29 and ninety nine cents to come off for claim after they take their portion. Um, so all loss ratio is how much of this bucket is coming out. So what percentage of that is coming out and you have a percentage?

Eric Hornung: 00:52:08

and what is a fantastic top line over the top amazing loss ratio.

Clarence Bethea: 00:52:14

So I’m going to give you a different answer to that. The industry expects for every dollar to go in ninety eight cents to come out over time. Right? So like how do you continue to sell plans? More money goes into it, but they respect over time for that because remember they’re taking this money, they’re floating it in the market, they’re making three to five percent off of it, so they make money off that and a fee that they charge on a warranty today, upsie is running at about 27 percent loss ratio. So every dollar that goes in, only 27 percent is coming out, which means they have more money to flow and made more money off of what we’re taught.

Jay Clouse: 00:52:48

So play this forward. Five years from now I’m going to future cast again. I’ve been acquired. I have made it. I’m back on my own private plane mentoring somebody else. Is upsie still playing purely in warranties or do you see the data that you guys have aggregated based on correlating these purchases as something that can help push products and sell products or is there something else entirely?

Clarence Bethea: 00:53:15

Totally. I think the data that we use to empower our customers are really important. Right. But I’m also super sensitive about the data that we know because we so much personal stuff about people and wants in their homes and where everything that’s going on in this country. Like I’m really, I’m really focused on making sure that we’re using things to help our customers and not to enrich ourselves and I don’t believe like you have to be nasty and dirty with people data in order to improve your business. So the data portion, while we know there’s a ton of data, they’re like, we use it to improve our customer’s lives. Where we think upsie, when we look out three years from now, you’re gonna start seeing some of this. Towards the end of 2018, we think upsie should be like everything, protection in your life. So which means not only the consumer electronics and appliances and smartphones, but when you go on a trip and you rent a car, they want 17, 90, $9 a day to protect the Land Rover that I’m sure you’re protecting in New York. Why should you pay that? Insurance costs a dollar a day. So we want to charge, you $5.99 a day and we want to be a part of that transaction. If you’re buying a plane ticket and started paying Delta, that huge price that they charge you at the end. Like, Hey, do you want to protect this trip for, you know, a hundred bucks or $700 ticket and insurance really doesn’t cover anything. We should be the company that you come to and say, Hey, I just bought a $700 a delta ticket. Hey for $20 you can protect that. If something happens or flight, we’re going to reimburse you. That’s who Upsie should be to customers. You think about going and buying a car at a car dealership and they, they walk in the room and then take, you get a whole auto warranty spill and then charge you $2,000 to protect your car. We should be giving you that same warranty for $500. Right? So we feel like upsie is moving into this. Everything in your life we’re going to protect for you and we think that’s the most realistic path for us. We want to be, no matter what you’re doing and you need protection, you’re going to come in to upsie to do that

Eric Hornung: 00:55:11

as someone who flies a lot and has had to pay his fair share of change fees, I would love if there was a better alternative than the delta current protection out there because I never buy it. It’s too expensive and it doesn’t actually work a lot of the times. So that would be great. Uh, looking at your business, you mentioned all these kind of new verticals, I’ll call them. What are some of the kpis that you track very closely? at Upsie besides loss ratio?

Clarence Bethea: 00:55:42

Yeah. So we’re. So CAC to LTV is really important to us. We have a running cohort analysis that runs every week and every month, so asked for us to understand what our customers are doing. Um, so it’s really important for them obviously to buy from us, but I need to be knowing like, what are you purchasing next, how long is it taking your purchase, how long from account creation to purchase are you doing with us? Because that really informed this about our ads. Like how quickly can we get to create account versus buying a product. So you know, kpis is always behind purchase. And then how long did you purchase from the first time? The second one. And then how long from the second one? Your third one. So we know you, it takes about 77 days to get you into your second one. Well you know it takes half of that time to get you into your third one. So like we, we continue to try to figure out like how do we shorten those windows, you know, when you’re making purchases with us and also what’s happening between the second and third purchase that we could use to get you between zero to one to move that up, you know, from seven to seven days to 25 days.

Eric Hornung: 00:56:47

And I kind of want to chain transfer over to like market size. Right. So you mentioned at the beginning of the interview that it’s around $40 billion dollars. Is that if we assume that that’s at something like a 500 percent premium to what we were talking about earlier, that means the market’s actually much smaller for upsie or does it actually mean to the market is much bigger because people just aren’t buying as frequently. Well, what kind of thoughts do you have on that?

Clarence Bethea: 00:57:14

Yeah, so that the average, the average at a retailer is a five percent conversion rate at the register for warranties. So we think, wow, this industry is a $40 billion dollar bloated industry. We actually think the industry should be 80 billion, a 100 billion dollars because if you lower the price and you lower the barrier, more people by industry become bigger and we become more valuable player. So I think it’s a little bit of both actually. I think the market is probably a little bit smaller than what we think it is or what the industry says it is, but I actually think there’s more opportunity there because of moving the price down. What customers

Eric Hornung: 00:57:53

you kinda gotta trim the pie before you grow it.

Jay Clouse: 00:57:56

Do you have any data from customers that said I would not have bought a warranty if not for Upsie?

Clarence Bethea: 00:58:03

Yeah, so we have a thing called a feedback loop inside of our purchase process where people can tell us like how they heard about us and then we just allow them to give us feedback about 59 percent of our customers do it today. So we get a lot of feedback from our customers and we hear that pretty often. Like I’ve never bought a warranty before. But your price, it was, it was. It turned it from. Should I to. I will be stupid if I didn’t. If you think about the new s nine, they just came out. It’s between 750 and 950 depending on what you did. So if I got a $900 phone, you want $12 a month, you just start doing the math. Well that’s about $264 over two years. Then you want $200 deductible. If you’re a sprint or, ATT I’m like, God, I could buy that phone on the market for that much money. Right? But when you talk about $80 for two years with the $75 deductible, you’re about a 155 bucks for 155 bucks. I get a $900 phone. That makes sense. Right? So we hear that pretty often from customers, but it would just, if I didn’t do it, I would feel stupid, you know, to fix a cracked screen on snr today is almost $400 today. Can you ballpark pretty often for how often you hear that out of like 10 who give you a feedback on the feedback loop

Clarence Bethea: 00:59:24

I’d probably say in our business, I’m probably have 25 percent of the time.

Eric Hornung: 00:59:27

What are your personal like big hairy audacious goals for the next three to five years?

Clarence Bethea: 00:59:36

I think that we are running quickly towards this problem with consumers still wanting to buy the things that they love but not being able to afford. Right. And you see the different verticals. Um, there’s a company called joy mode. This guy who was the CEO and founder of clout started Joy mode where he feels like people are starting to not want to have ownership, so was like, I want to play x box. I can, I can rent the exmark from him, you know, for our dollar a day or whatever, and then give it back to him when I’m done playing it. Right. And I think what we’re starting to move into this vertical where people are not wanting to own stuff and they only wanted to own the stuff that has tremendous meaning to them. So I’ll give you an example. Insurance companies right now, and I actually talked to the assured insurance exec told me this is that clients. We are seeing customers that the millennials and the next generation is saying, I’m not going to buy auto insurance because I take uber everywhere I go, I’m not going to buy renter’s insurance because I just don’t care. I think my place is never going to burn down. Right? Or airbnb around the country, I don’t care. But what they care about more than anything is that $900 smartphone, that $2,000 laptop, that $500 tablet, you know, these things that keep them connected. I’m sure you both have ever, have you ever gone a day without your smartphone is amazing. It is. But it is. I’ve done it. It is like the most terrible feeling in the world. Like literally, I felt like my leg was gone. Is that important to my life? And so this, these next couple of generations, they care nothing about that other stuff. But the things that keep them connected, they want to have, even if they can’t afford them, right? So we think that we play an awesome part in that. Like you can afford these things and you can afford to protect them too. Um, and we’re going to keep you connected. And, and even now we look at our business, we’re moving from this break fix model. Like just like, hey, scaring you into buying from us because you might break your phone and not have it. We actually think the most powerful thing is like when you break your phone is not the, the, the or breaking your phone that has you ticked off is actually Man, I’m missing out on texts from my buddy. Right? Like Jay’s texted me and I’m missing it. Right? Or judges just posted something on facebook and I’m missing it, right? Because I can’t see it anymore because I don’t have my device. So like when we look out for upsie in, when you talk about these goals, we want to be the company that like empowering people to stay connected and if we can do that by serving people this way, I think we did something cool. And so like when you’re talking about my goals, like money is cool, but that don’t wake me up every day. Right? Like money doesn’t wake me up because I know like that’s like water in your hand. Like you could, you could lose it just as quickly. You can have it. What’s, what’s powerful is watching your customers get their phone fixed and saying thank you because you did it quickly, efficiently and you didn’t. It didn’t take her arm and a leg to do.

Jay Clouse: 01:02:36

I think this is a good segway. Couple of things I want to talk about. I want to talk about being a founder in the Midwest. In on the note of customer experience, there was a. There was an article in fast company with the headlines, something something like customers love this, this company’s product. Whereas the love from investors, is that a factor of being a minority founder or a founder in the midwest where. What do you attribute that fundraising reality? You had to.

Clarence Bethea: 01:03:06

I probably think it’s a little bit of both. I would say 80 percent being a black founder and then 20 percent being in the midwest because the Midwest is actually, if you look across the whole Midwest, we’re growing, right? Like investors are starting to recognize that there are great founders and great companies being built with lower costs of living, lower labor costs like the midwest is to me, is it becoming that place where you want to go to build a company, but I think being a black founder has been one of the most challenging, but also more one of the most rewarding things that I’ve been able to do

Eric Hornung: 01:03:39

talk a little bit more about that.

Clarence Bethea: 01:03:42

Yeah, so I mean you guys get the great pleasure of being white guys and that’s awesome. It’s pretty cool, right? I think as a, as a diverse founder, I don’t get the benefit of a doubt maybe as much as you do. Right? So like I have to prove more, have to understand my numbers more. I have to. I have to prove more just to get that same wish. I even had an investor in silicon valley. Tell me if you were white in a silicon valley. He told me this to my face. If you were white and in silicone valley you raise $100,000,000. By now you’re going after a $40,000,000,000 market and there’s not really much like keeping you from going after it. So there’s no regulation, right? Like your license. You’ve done all the hard word and I just kind of laugh. I was like, wow. Like you’re, you just told me you’re racist. Like that’s basically what you just told. Why don’t you give me a $100,000,000? So I think just being a diverse founders, tough but i also will take the opportunity is like when I did techstars with you guys, I think you guys know Vibe, right? Like bar guys are awesome. I was in the class with those guys and I think I got a chance to prove that I was not just as good, but I was probably better than all the founders that they were meeting around the country and I think that gave you. That propelled me to the next level where people buy. My joke is man, after I came out of techstars, I felt like a 22 year old white boy. It was awesome. It was so cool. I was just like, wow. Like this is better. Actually cares, right? This is so cool. And I think that’s what techstars did for me personally and for our company.

Jay Clouse: 01:05:16

So did that Article Fast Company, did that help your efforts at fundraising or did that hurt them?

Clarence Bethea: 01:05:23

It was perfect timing, right? Like I think what it did was it put out my past, it put her out right in front of everybody so you can no longer use that as an excuse of why you didn’t want to invest in me and then it totally you get the headline was what it was like. People like fast company, he talked to 100 of our customers. It was, it was, it was very clear that people liked our product when they got to know us and that’s why they did the hell. I was like, people love these guys, but this dude like investors wanting to talk to this guy.

Jay Clouse: 01:05:50

And did you. Did you reach out to them what that story idea or did they find you,

Clarence Bethea: 01:05:55

oh, they found us. We’ll reach out for pr epr that you see with us is never me reaching out.

Jay Clouse: 01:06:02

that, that headline. I mean, so many founders would say, yeah, I fit the profile of that headline and some of them would and some of them wouldn’t, but it’s such a powerful story that I feel like a lot of people would, especially if it works, you know, you’d want that to get out there

Eric Hornung: 01:06:17 .

So you got into tech stars and you dominated it and yeah, you’re decent. Just 22 year old white boy decent and then you went out and you actually raise some money. What did, what did that look like?

Clarence Bethea: 01:06:32

It was unbelievable process. Right? So again, like being this guy that, you know, the only money I upgraded in kind and, and my friends and families that trusted me. So like now I’m being on the other side of techstars, showing the metrics that we were showing, showing the growth that we were showing and then I think with texts idea would validate me. Right. So it’s like, like networks talk to networks, right? So it was like people were like, Hey, you’ve been, he’d been in Techstars for 13 weeks. Yo, Hey Ryan brochure. What do you think of Clarence? And when he says, hey man, I was with this dude for 13 weeks, one of the best times I’ve ever been around. That credibility just lends itself to raise. We got when we got into raise, there was a lot of like, okay, one you been at tech star Just having, having that gray shirt on pulls a lot of weight for a lot of people. So like conversations were a lot easier. It did when we started talking about metrics and start talking about growth and we were at the time we were growing 25 percent month over month and like all this positive stuff was happening. So I raised. It took nine weeks exactly from the time we started our race to the top money hit the bank was nine weeks. We could have probably raised twice the money that we raised. But we stopped because I was just like, man, like I don’t have to give away this equity, I don’t need this much money. I think there’s a day, there’s discipline and taking the money that you need versus the money, you know, boxes over that. And so we took exactly what we needed.

Eric Hornung: 01:07:53

And how did you decide who to take on if you had a potential surplus in terms of vcs?

Clarence Bethea: 01:07:59

Man, it was all about a relationship, right? So two investors actually told me no a year ago that ended up investing in our round. And I think once they got past the fact that I was a black founder and they just gave me credit for who I was. They were two of the first people that came in to the round. It did, it was just about like relationships, man. I was like, you know, you do your due diligence as a founder and you’re talking to other founders who have taken money from certain people. You know, we had a guy with a half a million dollar check that I call one founder and he was like, man, if you take money from this dude, like you’re going to hear from them every week, it’s going to be that type of relationship. I was like, nope, no thank you. I don’t want your money. And so I think if you trust the network to founder network, I started listening to. And there was a lot of money that just wasn’t good money for us to take.

Jay Clouse: 01:08:43

Well that’s all the questions that I had. Eric, did you have anything else on the Midwest founder front or any final questions?

Eric Hornung: 01:08:50

No in general That was an awesome interview. I had a lot of fun.

Jay Clouse: 01:08:55

Great Clarence, If people wanted to learn more about you or want to check out upsie, where should they go after the show?

Clarence Bethea: 01:08:59

Yeah. So they want to learn more about Upsie. They can just go to up to upsie.com. We also have an instagram and twitter and the facebook page that just upsie HQ. And if you want to, you want to chat with me and learn more about me, just go to my twitter page. This way you can reach me at, um, its just clarence_bathea on twitter and also on instagram. We’d love to hear for anybody that wants to chat.

Jay Clouse: 01:09:22

Great. Thanks for joining us.

Clarence Bethea: 01:09:23

Thanks guys. I appreciate the opportunity.

Jay Clouse: 01:09:28

Alright, Eric, we just spoke with Clarence, but they are the CEO and founder of eat. What are we about to do here? In the third segment of our show,

Eric Hornung: 01:09:36

so this is our verbal hypothetical deal memo, a deal memo is something that if Jay and I had a venture capital company, you are an angel investment fund, we would write up a deal memo to look at what’s the upside, what’s the downside of this particular opportunity? We use that to crystallize our thinking and communicate with potential investors. Jay and I don’t have an angel fund or a venture capital firm, but we want to utilize the same process to understand what we just went through with the research and the interview. Jay, what am I missing?

Jay Clouse: 01:10:14

Yes, this is made to make us smarter. This is how we can learn about the process and get better at this. As we go and talk to more of these founders outside of silicon valley and learn about their businesses. We want to get smarter as potential investors. You know, this is a way for us to calibrate our own thoughts. We refer back to these notes and these ideas six to 12 to 18 months from now and say, okay, what has Upsie gone on to accomplish, how close were we in our assumptions and our thoughts and you know, how do we approach this opportunity now where the things that we thought were good opportunities, really good opportunities, did they transpire where the things that we were a little worried about those things rear their head. Yes. Yeah. So this is a, this is an opportunity for us to get smarter and we, we are at trying to answer four questions either implicitly or explicitly through this process and those are one, how committed as this founder two what are this founders chances of in this business and in life. Three, what does winning look like in terms of revenue and my return as an investor and four why has this founder chosen this business? So Eric, I’m going to let you start off. Anything that stuck out to you about Clarence, the founder or upsie the opportunity that you want to start with.

Eric Hornung: 01:11:31

Well, I always like starting with the founder, so clarence has the most unique story that we’ve had on the upside podcast thus far. He came from decatur, Georgia. He somehow ended up in Minneapolis just playing basketball. He was driving boom trucks. Next thing you know, he was on the red carpet. It’s just like such a crazy story from beginning to end and through that there was a really nice thread of kind of personally developing and caring about others and I really liked those two threads as they pertained to upsie. See what did you like about Clarence? The founder?

Jay Clouse: 01:12:12

Yeah, and besides caring about others, there was a constant threat of others caring about him. You know, we. We’ve spent a cumulative hour, maybe a little close to an hour and a half of our time with Clarence, but as you can tell, as people spend more time with Clarence, they seem to take an interest in him and see potential in him there have historically leading to jobs, as you said, on boom trucks or working with an elder care facility and then the incoming ceo of best buy kind of taking him under his wing and the literal private jet wing to some of these places to, you know, foster his development as an individual in business. There’s, there’s a pattern here. And I know he kind of wrote off his coaches, uh, saying, well I was really good at basketball so they wanted to be there, but I, I’m sure they saw something too. So it’s, it strikes me that clarence is a caring person. A lot of what he talked about was empowering individuals and giving them a better life through his work. He said at one point, you know, obviously the money’s cool, but that doesn’t wake me up in the morning. I liked this quote of money is kind of like water in your hand, just as quickly as you have it, you can. You can lose it, so that’s not what he’s after. I think that there is, and this is obviously the thesis of Arlene at backstage capital and our friend Brandon with Harlem capital partners, folks who have had a rough go of it. Normally minorities, people come from diverse backgrounds, have a special resilience to them that has been necessary to adopt to get this far and I think that’s very clear from Clarences story and what he’s accomplished to this point

Eric Hornung: 01:13:50

and I think generalizing here, there’s also a level of what he called bullheadedness in that he’s willing to, and maybe that goes with the resilience, but he’s willing to charge ahead almost full steam ahead. Spending three and a half years to court these insurance companies to make them sign five year exclusive deals with these carriers. That is, to me, extremely impressive, especially because they’re so used to dealing with retailers

Jay Clouse: 01:14:23

I saw a strong thread of salesmanship that goes off that bullheadedness and you know, when we’re talking about what are the founders chance of success in business and in life, I think the more skilled you are in selling yourself and your company and your product, the more likely you are that you’re gonna be successful because you’re showing both resilience through the rejection and an inability to position something in such a way that, you know, it’s a win for both parties. I think that’s huge. You know, he said it early on. He learned that he could sell just by speaking to people both at the gym and at best buy. So I think that’s a good sign for Clarence. I want to turn my attention to the opportunity here, unless you had more on Clarence.

Eric Hornung: 01:15:08

No, I think that the opportunities where we should go next. Let’s do it.

Jay Clouse: 01:15:12

So in our initial research, we found that there was about a $40 billion dollar opportunity here in the warranties industry and Clarence sharing with us, he had spoken with an investor who said 40, 48, sorry, $40, billion dollar opportunity. Small difference. Small exponential difference, $40,000,000,000 opportunity in the warranties industry and as an investor shared with them a $40,000,000,000 market opportunity. Nobody else really playing in this space. You could raise $100,000,000 on this if you were white in silicon valley. Right? So one that investor seems to see the market opportunity to, despite not investing in being explicitly racist and two clarence spoke to Upsie, unlocking a larger pie with the way they lower the barrier to protecting your goods. He said he expects and believes that the industry could be 80 to $100,000,000,000.

Eric Hornung: 01:16:13

I want to examine two things on this. The first part is this idea of an investor explicitly saying because you’re not white and not in Silicon Valley, I won’t invest. The first half of that is obviously racist as has been demonstrated and said by both Clarence and yourself. I have feeling, and I’m not defending this investor, but I’m doing a lot of reading recently. A lot of silicon valley investors want excessive amounts of board seats on companies that they’re going to make really big bets on and the cost of flying back and forth for board meetings. The cost of getting to the physical locations without recruiting Clarence to move to San Francisco. I’ve seen that on twitter and on medium lately as some real reasons why there is some competitive advantage for vcs in the middle of the country and why maybe was more of a business decision than a race based decision. That being said, there’s definitely a race component that plays into it.

Jay Clouse: 01:17:15

So when you say making bigger bets, are you speaking to the level of risk that is perceived with this company or the amount of money that they’re investing,

Eric Hornung: 01:17:23

the amount of the fund that they’re going to invest in. So if they were. If he was really serious about this being some sort of like large investment or 100 million dollar investment or you know, down the road and that’s the opportunity size that he saw it, they would probably want some sort of board recommends our board representation. And as that investment grows larger in size and becomes more successful, it becomes more expensive to get your professionals out to St Paul or Minneapolis or wherever Clarence’s headquartered.

Jay Clouse: 01:17:53

That’s interesting. Yeah. The cost mechanics are crazy. This is an aside. Did you ever see the headline about the founder of bulletproof coffee who lives in a remote area of Canada because he says he can charter a private jet to fly to silicon valley for his meetings cheaper than living in Silicon Valley.

Eric Hornung: 01:18:09

I did not see that. But that is fascinating. Hilarious. So the second part of that, sorry. So I had two parts about what you just mentioned. The first part was related to that one encounter and I was curious about the weight distribution between race and business decision. The second part is about this, this pie, this unlocking a larger pie. We talk a lot about pie here on upside. I don’t know if you noticed that. I like, are you an Apple Pie guy?

Jay Clouse: 01:18:09

I’m a Pie guy more than a cake guy.

Eric Hornung: 01:18:40

Oh me too. I’m apple over pretty much anything else though?

Jay Clouse: 01:18:43

Not An apple guy. More of a cherry guy. Cherry guy and peach.

Eric Hornung: 01:18:46

Okay, good to know. So if we just do like a little bit of basic math, right? If the Pi is currently, let’s just call it a $100 and that’s made up of $90 of profit and $10 of cost and clarence wants to offer, he wants to eat the whole pie, he wants to take the whole pie. Right? And instead of having $90 of profit, he’s going to have $20 of profit and $10 of cost. Well the Pi has just shrunk from 100 to $30. So maybe that $40,000,000,000 market is much smaller as it currently exists and the value is it has to be greater than the current profit that Clarence is operating in. Plus the cost

Jay Clouse: 01:19:33

Okay, I, you were saying you’re tying this back to the Pepsi business model saying that right now the $40 billion dollar market is that way because people are grossly overcharging for warranties, right. And Clarence and trying to eat the entire pie is actually starting by shrinking that pie.

Eric Hornung: 01:19:46

Correct. And he had the business model to get back to that $40,000,000,000 evaluation for this space is precluded on many more people signing up to have stuff protected on upsie? So it’s a quantity play and I think this gets into Clarences kind of vision for this, which is we want to protect everything in your life.

Jay Clouse: 01:20:08

Yeah, that’s, that’s a good point to bring forward is saying, yeah, that’s an interesting sleight of hand. I almost looked by because he’s saying that there’s sometimes a 900 percent upcharge on these things. Four hundred and $50 warranties for something that’s costing $5 from the carrier. And he’s eating that, that margin. He’s, he’s eating someone else’s pie by existing. Oh Man, this is getting abstract. Yeah, I see what you’re saying. So for him to actually get up to that higher total market cap, he’s going to have to have many, many more people come into this,

Eric Hornung: 01:20:42

which is inherently growing or changing consumer behavior. So he said five percent right now. Yeah. Five percent of people. So you need to expand that incrementally to make this kind of work, which I think it could do because when things get cheaper, I mean just basic supply and demand. The question is what are the elasticity is and inelasticities how much more likely are people to sign up for an iphone protection if it is $80 versus apple care of 450 or whatever it is for two years.

Jay Clouse: 01:21:14

And I think that consumer behavior changes easier to see happen when you’re, when you’re basically saying one service is protecting all of your things so you’re not trying to find all these different services to change your behavior. You’re just choosing this one which is costing a lot of money in marketing spend. He has three buckets in is customer acquisition strategy right now digital with Google ad words, influencer marketing and referral program, all of which costs them capital to get going. But he does say that despite being a B to c company with high marketing costs, their CAC to Ltv is three and a half to one. So it was really interesting because. Sorry, one to three and a half.

Eric Hornung: 01:21:54

Yes. So he calls it CAC Ltv, I’ve always read it, LTV to CAC, doesn’t really matter which way, but throughout the interview I believe that it was CAC to Ltv and he said three and a half, so I think I understood it, but that might’ve been a little bit confusing to the listener. So just wanted to clear that up here. It means the lifetime value of bringing on a customer is three and a half times the value of the cost of acquisition of that customer. So if I wanted to bring Jay on and it costs me $10 to market to Jay, well over the course of time that Jay is a customer of whatever business I have, he’ll bring in $35 of revenue to me.

Jay Clouse: 01:22:34

Yeah. And I gotta I gotta compliment you here Eric. You hit him with a lot of numbers. Questions. We’ve got a lot of good data here. He talked about that CAC to LTV ratio being a major KPI for him. He talked to loss ratio, which you explained a loss ratio to us. I hadn’t really understood that before. Industry averages ninety eight cents per dollar coming out and for Upsie right now they’re running at twenty seven cents per dollar, which is a lot of additional float. Insurance companies make a lot of their money on float. That’s, that’s what our. Our boy warren kind of made his pie on, right?

Eric Hornung: 01:23:08

That is what he built the foundation of Berkshire hathaway on when he bought Geico stock and I want to say 68 or something like that and realized that he could invest the float better than anyone else. So little bit of background here, I won’t take to the sun too much of a tangent, but clarence said that they’re expecting to make three to five percent on their flow. Warren buffet looked at this and said, I can make 11 percent. Why wouldn’t I do that? Obviously a little bit of arrogance there, but it worked out for in the longterm because he did make like 19 percent a year.

Jay Clouse: 01:23:39

Crazy. Crazy. Okay, so let’s try to bring all of this together. These things that we’re talking about, the fact that you would have to change consumer behavior drastically increase the number of people who are utilizing warranties to make this work. Something that I’m looking out for, you know, whether it’s six to 18 months or just in general for Upsie, I think it’s super smart that they have locked her carrier into a five year exclusive. I mean that was our biggest question from the upfront was how do they prevent knockoffs and then also how do they prevent these retailers from slimming their own margins down? Both questions he answered, I thought very, very well with, uh, as a recap for companies like best buy, they’re incentivized not to bring that margin down because that’s where they make the majority of their profits. And if they eat that margin, it’s going to have a hit on their public stock. Squaretrade a competitor to Upsie works directly through those retailers. And so they can’t really offer lower either because of essentially the same problem. So the threat to me would be if a copycat came in and either found a carrier that was willing to offer similar terms. The one that Upsie has, or if that five year exclusive is up and someone else jumps on it and somehow makes it run at it five years behind, what are your. What are your thoughts? Are you concerned about that? Do you think that’s a viable moat?

Eric Hornung: 01:25:00

I think that you are looking at a really deep moat from both the retail perspective and potential copycat perspective, looking just at the sales funnel, it’s going to be very hard and they probably have a three point five year lead time until another competitor gets up to the same level as upsie, so they have the benefit of establishing themselves in the market over those three point five years. One thing that I did want to mention as a awesome opportunity to grow this customer behavior user behavior is the ubiquity of smartphones and the general consumer distaste for smartphone insurance. I don’t think you see very many people leaving positive reviews about insuring their smartphones, about paying for apple care. It’s generally complaints about x, Y, and Z and I think that that’s a really good intro into the market because it’s their lowest margin product. It makes up 50 percent of their product mix and it leads them to higher margin products down the road, such as their consumer electronics or appliances and their lawn garden, and if you’re going to change user behavior, you need to start with a really ubiquitous idea and everyone has smartphones now.

Jay Clouse: 01:26:17

Yep, Yep. I’m with you. So I’d like to transition into our final question here. What are you excited about or looking for from Upsie six to 18 months from now?

Eric Hornung: 01:26:29

The thing I’m probably most excited about with Upsie and with learning about is there data analytics and I don’t know the KPI that I would pick to say this is what I want to see in six to 18 months. If they can sustain aggressive user growth while maintaining the same LTV to CAC ratio, I’ll know that they’re using their data analytics very effectively, so maybe that would be something that I wanted to look at is ltv to cac maybe even divided by user growth or something like that where there’s some sort of compound ratio. Bringing those two together,

Jay Clouse: 01:27:05

I think the opportunity for data is really, really interesting. When he talks about, we know that 75 percent of the time when somebody buys a washer and dryer, they end up buying a laptop afterwards. I wonder how much of that is correlation versus causation in, you know, I think they’ll get better at better at predicting those things and separating those two, but in theory like the data analytics here available to understand consumer behavior towards what they’re purchasing next becomes a very valuable piece of data, very valuable for targeted ads for those brands and retailers. Right?

Eric Hornung: 01:27:39

And for expanding their services. So he mentioned the opportunity to get into airfare, travel. Well you can get someone in the door with a smart phone contract and then make it super easy for them to no matter what they buy, protect it once they have that account on upsie, I feel like the upselling on UPMC is maybe the easier funnel

Jay Clouse: 01:28:03

nerdy product thing I would love for you to integrate with my gmail app so that it sees, hey, you just made a purchase. I read this receipt, do you want to cover it for this amount of money? Could be great because there’s going to be so much stuff that I would purchase that when you would think that upsie could cover if they’re getting a new coverages and so that little reminder would be appreciated and fine with me. I’m with you on all of that. CAC to LTV. I’m interested to see if that 27 cen loss ratio is panning out. I have to think that’s going to raise, but it won’t necessarily raise at ninety eight cents. It could still be a big win, but I want to see, you know, as more time passes, where does that stand? Also interested to see if there are any serious competitors that come in from some angle we weren’t expecting. That’s a threat. I agree.

Eric Hornung: 01:28:49

I’m really bullish on up seat in general and I look forward to checking back in six to 18 months to see if we were looking at the right stuff.

Jay Clouse: 01:28:56

All right. Yeah, me too. Thanks for listening. Guys. If you have thoughts on this episode, you have thoughts on Upsie tweet at us at upsidefm or email us Hello@upside.fm. We would really appreciate a review on itunes. If you’re enjoying this episode, the ratings and reviews on itunes go a long way in helping us bring in high quality guest to the show. So we’ll be talking to you guys next week. Talk to you then. That’s all for this week. Thanks for listening. We’d love to hear your thoughts on today’s guest, so shoot us an email at hello@upside.fm, or find us on twitter at upsidefm will be back here next week at the same time talking to another founder and our quest to find upside outside of Silicon Valley. If you or someone you know would make a good guest for our show, please email us or find us on twitter and let us know and if you love our show, please leave us a review on itunes. That goes a long way in helping us spread the word and continue to help bring high quality guests to the show. Eric and I decided there were a couple things we wanted to share with you at the end of the podcast, and so here we go. Eric Hornung and Jay clowns are the founding parties of the upside podcast. At the time of this recording, we do not own equity or other financial interest in the companies which appear on this show. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinions of Duff and Phelps Llc and its affiliates on your collective llc and its affiliates or any entity which employ us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. We have not considered your specific financial situation nor provided any investment advice on the show. Thanks for listening and we’ll talk to you next week.

Upsie is a mobile app platform that provides an easier & better way to protect your stuff. You get the same warranties and coverage offered by other companies, but at an affordable price. Upsie is an alum of the Techstars Retail accelerator and is based in Minneapolis, MN.

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Clarence Bethea is the founder and CEO of Upsie.

Learn more about Upsie: https://upsie.com/