Teo Tijerina talks about Cherry Fusion
What is the idea behind your company?
90% of consumers do not purchase extended warranties. The electronic products have become a necessity in a modern lifestyle and the price of replacement is prohibitive for many. CherryFusion is reaching consumers via retail kiosks in high traffic areas, repairing 80% of products in less than 30 minutes. The company’s e-commerce site also allows folks to mail in their product to a repair depot for more complicated diagnosis and repair. CherryFusion also plans to test an on-site repair model in the El Paso area in response to consumer feedback desiring maximum service and convenience.
How did you come up with this idea?
The CEO of CherryFusion, Hector Leon, came up with the idea several years ago when his expensive iPod broke, discovered it was a simple repair, and he couldn’t find anyone to repair his device.
How long have you been in operations?
1.5 years as a standalone company
How did you get the company up and running?
We have not previously solicited investment into the company. It has been funded by Innovei International and another co-founder group, EDCO Ventures.
The first version of CherryFusion was a bootstrap model within Innovei International LLC. Drop off repairs at the manufacturing facility were steady, but not sufficient to reach critical mass. The company partnered with Blockbuster to work on a regional and national expansion, but the project never went beyond pilot testing because Blockbuster’s financial problems resulted in shutting down the market testing of kiosks inside of Blockbuster stores.
EDCO Ventures, a community based venture development organization, invested $500,000 in 2011 to spin off CherryFusion into a standalone company and to implement an e-commerce expansion strategy. The e-commerce plan was yielding results, but reaching critical mass was too expensive and taking too long. In Nov 2012, CherryFusion Board shifted course and implemented a retail kiosk-model that was launched in March 2013. We have seen immediate results from the retail model, and are ready for next stage expansion. We strongly believe we can reach a sustainable and profitable model via retail-kiosks, and then plan to revisit e-commerce and other strategies when the company is in a stronger financial position.
What is the next step for you and your business?
We wish to expand to 6 kiosks immediately, which will take 7-8 months to implement. A 6 kiosk company will generate over $1M in sales per year based on historical and test marketing results, and this revenue will result in a break-even scenario. The company wishes to then immediately expand over the next two years to as many as 40 total kiosks across the Southwest and West Coast, yielding attractive returns to investors in the form of revenue sharing.