REAL DISRUPTION TAKES TRUST.
InstaMek sets sights on auto repair shops
Amentor of mine once said no matter what product or service we produce, what we all really sell is trust. And that bromide has never been truer than in the age of Internetbased disruption.
Case in point: Edmontonbased startup InstaMek, which was founded by two chemical- engineering grads from the University of Alberta last June, is more about convenience than chemistry. If your car needs repairs, InstaMek will send a certified mechanic to fix it in your driveway. No more wasting a morning at your dealership.
After just nine months, InstaMek is operating in Edmonton, Calgary, Lethbridge and Toronto, and it is about to launch in Vancouver, Ottawa and Winnipeg. This fast start is no accident. Founders Asem Alsaadi, CEO, and Uzair Ahmed, president, raised $ 500,000 from Edmonton investors to fund expansion. They see themselves as running a tech company and want to grab first-mover advantage based on their ability to connect consumers to customer-focused mechanics in every Canadian city with more than 250,000 people.
“Our goal is to make it simple for people to take care of their cars themselves,” Ahmed says. “So they don’t have to go into dealerships and get ripped off.”
InstaMek wasn’t the partners’ first business. Earlier they launched a business to connect pre- qualified contractors with oil and gas companies that were scouring the world for skills. But they underestimated the regulatory hurdles, and the time it would take to build relationships in the tradition-bound oil patch.
So the pair explored other business concepts involving an “Uber for X” model — using technology to connect needy organizations to resources they have trouble finding for themselves. They considered connecting oil companies with on-demand rental equipment, and students with summer jobs. Then Ahmed recalled his mother’s repair-shop trauma.
Alone at their Edmonton home with none of the family cars working., she had to call for a tow. Ahmed believes the dealer she went to took advantage of her gender and her inexperience in mechanics.
InstaMek solves a number of problems, mainly based on lack of trust, Alsaadi says. First, many auto mechanics working in garages feel underpaid, and moonlight, using their own tools. Some offer a mobile services, but often find the burdens of running a business (marketing, accounting, scheduling, collections, etc.) too big a challenge. Meantime, consumers don’t trust repair shops, and resent the time spent taking their car in. An estimated 70 per cent of common repairs (e.g., brake, cooling and electrical problems) don’t require bricks-and-mortar facilities. But few consumers have the knowledge or confidence to call independent mechanics.
The pair solved these problems with a website that took an hour to build. When a consumer called within a few minutes requesting a brake replacement, they knew they’d found their niche, and a scalable business model.
InstaMek now has 12 employees and more than 50 affiliated mechanics, who have done 2,000 jobs. Selling is handled by search marketing, although the pair are considering providing discounts to consumers referred by wholesale partners such as fleet contractors, employers or apartment buildings.
Financial support from parents and close family helped them secure regulatory approvals. “We did a lot with a little,” Ahmed says. Last fall, the pair let the word out they were looking for $ 250,000 to fund technology and marketing. Former work colleagues and local angel investors jumped to participate, and in November they closed a $500,000 seed round.
As i n many “tech creates trust” business models, InstaMek’s biggest challenge i s convincing consumers it can do the job as well as traditional players. To that end, Alsaadi and Ahmed focus on recruiting talented mechanics with strong work ethics. Their screening process includes telephone interviews, vetting by InstaMek’s full-time master mechanic, and technical tests. Ahmed says only 10 per cent of the mechanics who apply are selected.
Once they’re in the system, though, InstaMek has to work hard to keep them. The company looks after scheduling, collections and warranties. While InstaMek prices its services to match local shops’ lowest hourly rates, its lighter overhead enables it to share more of the pie. InstaMek mechanics can expect to make almost twice as much as their shop-bound colleagues, Ahmed says.
What would prevent copycat entrepreneurs from ripping off InstaMek? Ahmed claims the company’s proprietary technology is a barrier. But the more likely differentiator is customer relationships, which is why the founders are focusing on new distribution partners. “It takes a long time for strategic partnerships to happen,” Ahmed says. “You have to be an established business before they take you seriously. So that’s where our head start comes into play.”
ONLY 10% OF THE MECHANICS WHO APPLY ARE SELECTED.