HelloTech raises $2.5M to bring on-demand convenience to in-home IT support

By Michael Carney , written on January 27, 2015

From The News Desk

It’s not just transportation and food delivery that are going on-demand today. Increasingly, most service categories can benefit from the friction-reducing effects of modern, smartphone-powered booking and the flexibility of a dynamic workforce.

The latest category to join the revolution is home IT support, thanks to the launch of Los Angeles-based HelloTech. The company today announced $2.5 million in seed funding from a Upfront Ventures, Accel Partners*, Crosscut Ventures, Amplify.LA, Ron Burkle, and other angels, as well as plans to launch its alpha service in West-LA in April. The company was founded by Richard Wolpert, a former Apple, Disney, and RealNetworks executive, co-founder of the accelerator, and a venture-partner at Accel.

HelloTech is the smartphone era’s answer to Best Buy’s Geek Squad, which is a highly profitable operation but the very opposite of a beloved brand among consumers. Cost is a major factor, with GeekSquad service typically running between $100 to $200 per hour, depending on service type – not that these prices are clearly listed on the Geek Squad website. Rather, consumers need to call and speak to an agent to book a service, as if Best Buy thinks it’s 1997. This pain of booking and lack of transparency is another major issue for consumers, and an opportunity for HelloTech.

“With there being no good solution providers for technical support other than Geek Squad, which has a so so reputation, and the demise of technology stores – Circuit City is gone, CompUSA, gone, Radio Shack, about to go bankrupt – HelloTech is going to provide a solution that addresses both of these opportunities,” Wolpert says. “We see ourselves as the future of retail for new technology products. If you’re middle-aged and you want a Nest, a Roku, a Sonos, who do you turn to? We are going to solve that problem.”

Like Uber has done to taxis, HelloTech will rely on a distributed model to reduce costs to the end consumer, offering its service at $49 per hour, approximately one-third the price of legacy competitors. But without the infrastructure requirements, the company’s service techs should make the same or more as they could elsewhere – a promise we’ve heard before from other startups that can prove difficult to deliver on. The company will offer installation, trouble-shooting, and repairs, and will target consumers of 40-years-old and above, according to Wolpert.

“We are looking to change the way consumers get tech support for and purchase new technology,” he says.

As other on-demand services have proven, sourcing quality talent at scale is far and away the biggest challenge in building these next-generation businesses. In HelloTech’s case, the company not only needs warm bodies, but individuals with technical skills and reasonable levels of customer service ability, a not-altogether common combination. Wolpert is playing coy about where and how he plans to build up this workforce, but he insists that his team has already identified a large and accessible talent pool that fits these criteria.

Because HelloTech will be sending technicians into people's homes, the company will be forced to confront safety and liability issues that have tripped up giants like Uber and AirBnB. All HelloTech workers will be background checked prior to joining the company, Wolpert says, and will receive preliminary training in both IT support and in the company’s proprietary methods and culture. Techs will also be fully insured and will show up wearing company-branded apparel.

HelloTech will do more than just unleash a fleet of IT fixers into the homes of struggling technology users, according to Wolpert. He believes his company can out-compete GeekSquad and other service providers by building its own proprietary technology platform for troubleshooting IT issues and to allow its workforce to collaborate on and crowdsource solutions to particularly thorny issues. Wolpert gave no indication of the status of this platform, but it’s a fairly significant undertaking that I’ll have to see to believe. If done well, it could certainly give HelloTech a major lead in the marketplace.

While Wolpert is keeping the broader playbook for HelloTech close to the vest, it seems like there is an major opportunity for the company to augment its services revenue with commerce as well, selling physical products from HDMI cables to wireless routers and smart thermostats. With a captive audience of in-home customers who just want their technology to work, this could be a massive opportunity. Managing inventory of these items may present a new set of thorny issues, but should not be insurmountable.

It’s obviously very early for HelloTech. Wolpert and his team just closed a preliminary round of funding and are in the process of recruiting and training their first batch of technicians. The company will roll out its service slowly, with plans to expand from West-LA to the greater LA area by this summer and then eventually to other major markets in the second half of this year and beyond.

Moving slow and delivering a great customer experience is no doubt smart as HelloTech sets out to build a brand based on trust and service. But the company is extremely likely to face fast follower competition, adding motivation to capture market share quickly.

The company isn’t just competing against legacy businesses like GeekSquad and local IT service technicians. There are fellow startups like iCracked – an iOS-device focused Y Combinator alumni company that has hundreds of franchises in a dozen countries – that offer a similar enough service for Wolpert to worry. Additionally, Ron Johnson, the man credited with building the Apple retail store empire – and the Genius Bar service therein – just raised $30 million for a stealthy “future of online retail’ venture that could conceivably bleed into HelloTech’s market.

The consumer IT market is worth an estimated $21 billion today and is totally broken. That opportunity will only continue to grow as smartphones and the Internet of Things become a more significant part of our everyday lives. With no great solution in the market, there’s a major opportunity for someone to step in and build a trusted brand based on convenience, transparency, and great service. Wolpert’s HelloTech just threw its hat in the ring.

[*Disclosure: Accel Partners is an investor in Pando.]