LCD Cycle

Chris Kerner started out running smartphone repair shops while he was a student at the University of Alabama. He grew the business to about three locations, then sold it to a competitor in a deal that combined his stores, brand and URL with the other company's assets. He received about $30,000 in cash and a share of equity. That experience showed him how many repair shops were out there and how hard they were to supply.

Chris founded LCD Cycle on January 2, 2013, and started it as a parts distributor. He put the $30,000 into an initial order of parts from China, which he described as a bet on "a hope and a prayer that I would get some parts back." The parts arrived, and he set up a Shopify site. When the cash ran out, a family friend lent him $50,000, and another family friend cosigned a line of credit. The business later expanded into distribution centers in Huntsville, Dallas, Michigan and Orlando, which were chosen because one-day shipping made it easier to win customers. Chris later closed the Michigan and Orlando sites and served those customers from Dallas and Huntsville.

Chris built his customer list by scraping every repair shop in the country with PlacesScout, a lead-generation tool. He hired virtual assistants to cold call them using a script and a spreadsheet. He said, "I launched the whole business on VA's and a script and a spreadsheet." Paid search was tried in the past but mostly brought in consumers looking for DIY repairs, so the company kept to outbound calling.

The numbers were strong. Revenue was $2.1 million in 2013 and $8.8 million in 2015. Gross margin was about 31 to 32 percent, and net margin rose from about 6 percent in 2014 to about 8 percent in 2015. The reorder rate was above 80 percent, and customers stayed about six months, spending roughly $3,000 to $6,000 a month each. That made a customer acquisition cost of up to $1,000 worthwhile. Not everything went smoothly. Revenue fell in 2016 as the iPhone screen shortage ended and prices dropped, even though unit sales held up. Chris also turned down a $1 million VC investment because the firm moved too slowly, and by the time it was ready, the company had resolved its cash flow issues.

By the time of the interview, LCD Cycle had sold over a million parts and had a team of 12. Its second revenue line recycled broken screens with partners in Shenzhen, who melted off the old glass and fitted new glass and flex cables. Chris said he would sell the business and estimated a valuation of about four times net profit, or roughly $2.4 million to $3 million.