Putting Consumers First in the Retail Warranty Market
Upsie’s creation story is simple: "I had a laptop. I needed to use the warranty, but I could not find my receipt or the warranty. By the time I did, it had expired."
That first-hand experience sparked an idea for Clarence Bethea. "I said, 'There has to be a better way to do this.'" The result is Upsie, an award-winning Minneapolis startup that is focused on making it easy and affordable for consumers to buy, find and use their product warranties.
"We wanted consumers to be happy about protecting the things they love," says Bethea, 37, Upsie founder and CEO. "We wanted to build a consumers' solution, and not a retailers’ solution."
Upsie sells extended warranties for thousands of specific brands, makes and models in dozens of product categories including smartphones, laptops, pcs, TVs, home theater systems, wearable tech, camera and video equipment, major appliances such as dishwashers and refrigerators, small appliances, and outdoor equipment such as grills, snow blowers and lawn mowers.
A $40 billion industry
Its prices are 50 to 90 percent cheaper than the warranties sold at big box stores, says Bethea. Extended warranties on consumer products (including vehicles) are a $40 billion a year industry. Retailers work with insurance companies which underwrite the warranties, but each retailer decides how much to mark them up. Too often, says Bethea, retailers have been "greedy."
"This has been an industry about taking advantage of the consumer," he says. "You’re being pitched at the register, and it’s difficult to see the terms and conditions before you say 'yes.'"
In addition to lower prices, Upsie offers transparency – the ability to see exactly what is covered – and convenience, says Bethea. Customers upload their receipt to Upsie when they purchase a warranty, so they never need to look for it. "You have all your warranties and receipts at your fingertips – on one platform that you have control over," Bethea says. “It makes the claims process simple.”
Like Sezzle, Upsie is one of a growing number of startups expanding Minnesota’s financial technology – or “fintech” – sector. Increasingly, startups and well-established financial firms are using digital technology to change the way business is conducted – in areas related to mobile payments, money transfers, asset management, loans, insurance and fundraising.
Growing quickly; a boost from Techstars
“Today, we’re protecting almost $4 million worth of devices for consumers – and growing revenue about 25 percent month over month,” says Bethea.
Upsie put out a beta version in 2015 and had its official launch in June 2016. “We now have thousands of consumers in all 50 states,” says Bethea. “In 2018, we’re looking to expand to Puerto Rico and Canada and eventually to go global.”
Like larger retailers, Upsie’s warranties are backed by an insurance carrier. Upsie works with Centricity, a St. Petersburg, Fla., insurance and risk management firm.
Upsie’s growth has been helped by Techstars, a worldwide network that helps startups succeed through mentorship-driven accelerators and through its venture capital arm.
This summer, Upsie beat out about 3,000 other startups to become one of just 10 companies – and one of only two from Minnesota – selected to take part in the 2017 Techstars Retail Accelerator in partnership with Target Startups. Now in its second year, the intense three-month program ended in October and included mentoring with business experts in technology, hiring, business strategy and development.
“We worked with eight lead mentors through Techstars, and it changed the course of our company,” says Bethea. “It was very valuable to us.”
Upsie has six employees, including Bethea. Startups in the Techstars Retail Accelerator are able to work out of offices at the Target City Center complex in downtown Minneapolis.
Minnesota now home
Bethea grew up in Atlanta, but came to Minnesota in 2002 to play basketball at Bemidji State University. He’s married and has two small children.
Bethea notes that Minnesota is a good place for startups, particularly those having to do with retail. “We’re fortunate to have the Targets and the Best Buys of the world here – two iconic brands that understand the retail space,” says Bethea. “We have the local talent, great minds and visionaries here.”
Fundraising has been a challenge. “Raising money is tough – and can be tougher for an African American who doesn’t necessarily look like most tech entrepreneurs. Fortunately, being in Techstars has increased our chances to raise a round of funding.”
In 2015, Upsie won the Startup category of the Technke Awards, which are presented by the Minnesota High Tech Association to honor innovation across numerous industries. And, he was named “Tech Hustler of the Year” in 2016 by TECHdotMN.
But Bethea says that he’s not focused on winning awards. “The greatest award is that I work with some of the most talented people,” says Bethea. “That’s an award I get every single day.”
– Published December 2017