Startup Spotlight: UpgradeUSA

Jon Weisblatt, founder and CEO of Austin-based UpgradeUSA, recently sat down with me at Tech Ranch, where he has an office, to discuss his startup. UpgradeUSA has received a lot of press in recent months including a story by PandoDaily that ignited a bit of controversy in the comments section from readers concerned with the prices UpgradeUSA charges its customers. The Austin Business Journal and the Austin American Statesman have also written articles on the company, which launched last December. And even the Huffington Post mentioned the company in an article about establishing credit.
UpgradeUSA provides financing to consumers with bad credit or no credit to buy a laptop or tablet computer. By making timely monthly payments, the consumer can start to build a credit history since UpgradeUSA reports each payment to the three major credit bureaus. The company this week launched a special program for students going back to school who wish to buy a new or refurbished laptop computer from Dell, Apple, HP and others. The computers all come with a warranty and payments start at $55.

Q. What do you do?

A. We offer an online service where we help people build credit by leasing out laptop computers. We’re providing people who can’t pay for a laptop computer access to one.

Q. Who is your customer?

A. Our customers are across the board. We’ve got students, who have little to no credit, and people with good credit, who are on a budget, and people who have moved to the United States. We’ve got people who have filed bankruptcy, divorced or had some other kind of financial problem. Some of our competitors will approve anyone who can fog a mirror. We’re not that type of company.

Jon Weisblatt, Founder & CEO, UpgradeUSA

Q. What sets you apart from your competitors?

A. We’re online only. There are other companies that provide similar services to consumers. They are storefronts. We are focused on the computer business. Customers have demonstrated they are comfortable buying computers online. We’re only online which brings our costs down and we can offer PCs at lower prices. We are really focused on helping people establish credit and build credit. Most companies in this space don’t do that.

Q. Are you bootstrapped? Do you have VC funds or Angel investment?

A. We’re bootstrapped. I left Dell in 2008. I had a consulting business for three years. The last year of that business I focused on socking away money so I could start my own business.

Q. Why did you choose Austin?

A. I’m a native Texan. I’ve been (in Austin) since 1998. Dell moved me here from Silicon Valley. My wife worked at Dell too. We’ve got kids here. We love the community. Austin is a great place to live.

Q. What markets do you serve?

A. We’re in Texas, California, Florida and New York. We have plans to expand into additional states.

Q. What is your biggest accomplishment so far?

A. I’ll tell you what gives me the most satisfaction. I talk to just about every one of our customers. We have great customers. This feeling like we’re actively making a difference. It’s really genuine. We see it in their emails and we hear it in their voices.

Q. What’s your biggest mistake?

A. Very few companies are doing this online. We had to go build a lot of systems. We took pieces on the market and forced them to work together. We were going down the path of getting custom development done. Then we changed course. That set us back. This business doesn’t come in a box. We had to find a payment processor who could handle our unique needs of a lease to buy program.

Q. How does the program work?

A. Customers apply online. They get an approval email. Then they pick out the computer they want. They schedule their first payment. They have to lease the computer for a minimum term. It varies by state. Then they can choose to send it back or keep leasing it. At the end of 17 months, they own it. We report every payment to the three major credit bureaus. (Customers) who make consistent payments over time establish good credit. If they don’t make the payments, UpgradeUSA can remotely turn on a software program that locks the computer until they make payments again.

Q. How do you get the word out about the service?

A. Through Search Engine Optimization techniques, Google Adwords, email marketing and P.R.

Q. What’s the biggest hurdle you’ve had to overcome?

A. Getting the word out. The Internet is a big place. We’ve got a great solution for customers. Making sure they’re aware of it is a challenge. This isn’t Instagram. We have revenue. We provide a service to people who need it.

Q. How many employees do you have?

A. We’ve got three and we contract with Sundram, a local development and design firm.

Q. What other resources in Austin have you drawn on to help your startup?

A. The Hoover Academy. Gary Hoover has been a phenomenal resource. My wife was a manager at Dell in the consumer finance space. She’s helped a lot with site design and advertising campaigns. Tech Ranch provides us with a community of entrepreneurs and a private office with a door that locks. That’s a requirement if you’re processing credit.

Q. What are your plans for the future?

A. We’ll expand into other states. We’re actively looking for a seasoned sales person to complement our online efforts. We’re experimenting with offering tablet computers. We’re excited about the Microsoft Surface Tablet.

Q. What advice would you give to others wanting to do a startup?

A. The biggest piece of advice is to plan. It’s Ok to make a mistake and make a misjudgment. But you need to make a plan of where you want your business to be. Spend hours and hours and hours planning.

Q. What else is there that you would like to make a point of that I haven’t asked you about?

A. You didn’t ask a lot of the questions that I thought you would like have we talked to VCs? I have talked to VCs. They tell me our product isn’t sexy enough. If you like making money, then this is a sexy business. If you like helping people in the process, then this is a sexy business.

Q. Is there anything else I forgot?

A. You didn’t ask me how I came up with this idea. I’d been in the high tech business a little over 20 years in Silicon Valley, Austin and Washington, D.C. My family has a furniture and appliance business in Fort Worth. They know who to approve and who not to approve. I added a little sprinkle of technology to their business model. Taking Gary’s (Hoover) class helped me see that opportunity.

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