In 2017, Rafael Recavarren finally got accepted into Ivey Business School at Western University after spending another year at college to qualify. In an environment where “who you know” is half the battle and many of his peers had fast-tracked into banking and consulting jobs, he felt lost. He was in a new class, a year behind, with no connections and no plans.
That all changed when he and a medical school transferee teamed up to form an “Uber for phone repair” called Auxe. They missed tons of deadlines and nearly failed the project because they’d spent so much time implementing it. But fast-forward a couple of years and it’s now generating $4 million in revenue.
Yes, you heard that right. Here’s how Raf and his team reinvented in-home tech installations to build a $4 million business that is quickly taking over Canada and pushing into the US.
Making Home Installations Affordable
It took a couple of chance events for Auxe to even happen. The first was Raf meeting his co-founder, Peter Semkowski.
“I met my co-founder, Peter Semkowski, in my business school,” says Raf. “We were randomly placed into eight sections and he was sitting beside me. He’d done a full undergraduate degree in Medical Science but decided Med School was not what he wanted to pursue, so he applied to Ivey and got in. And me, I got in late. We didn’t know other people there so we just became buddies.”
The two quickly formed a friendship and got a place together in Toronto the following summer. It was here they first envisioned Auxe.
“We had an assignment at the time to take a real-world problem we had or were having and make a business plan to solve it,” says Raf. “One of us had recently had a TV mounted on the wall and it cost $400 and one had just gotten their phone screen repaired for an exorbitant amount. We were thinking, ‘Why is there no affordable option for this?’”
It turned out the rest of Canada had been scratching its collective head about this too.
How Auxe Was Built
The original plan for Auxe was to create a simple “Uber for phone repairs.” An on-demand platform where customers could have their iPhone screens repaired at any time by skilled and affordable technicians. The duo got set up with their business school’s free incubator and started calling cold-calling contractors they found online.
The business idea for Auxe nearly bombed as a class project, however. Raf attributes some of the close calls to them prioritizing the project over class deadlines. “We were constantly stepping out of class all the time to answer calls since we were doing everything,” he says.
They found their first technician in their city’s local buy and sell group.
“We acted like we were a customer and called around until we found a technician we thought sounded good,” says Raf.
From there, Raf and Peter continued to grow their network through cold calls and word of mouth and the method stuck. Today Raf estimates half of all new contractors come through WOM and the other half through job boards and partnerships.
But this was supposed to be a digital solution, not a dispatch center. To “techify” their service they got in touch with a family friend of Peter’s named Nolan Anderson, an experienced software engineer. He built them their first communications app and became the third co-founder.
“We didn’t have one hundred grand to make a custom app,” says Raf, “so it was great to have Nolan’s expertise.”
On a shoestring budget, Nolan built Auxe an open-source communication app based on Slack with channels for different regions. Customers would send in requests and contractors would react with a “thumbs up” on a customer request if they took a job.
From there, all Auxe had to do was build a system for verifying talent. For this, they hired a specialist.
“We hired an ops manager who went above and beyond,” says Raf. “Actually he started as one of our contractors and we really liked him. He helped us implement the system we use today: First, we make each contractor do a technical interview. That’s followed by a soft-skills interview, background check, and a quiz. After that, they need to do a job with a head technician for final verification. That’s why we call it a ‘managed marketplace.’ It’s much more hands-on.”
The Million-Dollar Pivot
They may have had a business model and paying customers, but the path for Auxe was still unclear. Peter and Raf spent a couple of years running the company as a side project without much growth. They both even took on full-time jobs to cover living expenses and nearly quit the project.
Over the next year or so, Raf worked briefly as a capital markets analyst at CIBC before moving over to work in the startup space as an analyst at a company called Clearco (formerly Clearbanc). He claims the skills he learned at both were invaluable for taking Auxe to the next level. Employment also brought some unexpected support.
“I was pretty lucky to work at the companies I did,” says Raf. “Clearbanc was fine with me having this side hustle and would often give me advice. Eventually, my boss even encouraged me to quit to try and make my business work. ‘You’ll always have a job here,’ she said.”
So with the blessing of his previous company, Raf finally did quit his job at the start of 2020 to pour all his efforts into Auxe. Unfortunately, Raf and Peter started building the business full-time weeks before COVID hit the nation and threw all business into uncertainty. “We thought it may be all over there,” says Raf.
But then, Raf noticed something. Home security system installation was labeled as an “essential service” in Canada. Not only that, with so many people staying home there was a huge increase in smart home installations (security cameras, smart doorbells, smart door locks, etc.) as remote workers modified their homes with their extra funds. The team saw a growth area, pivoted, and Auxe made a million dollars in their first official year.
“I wish I could tell you there was some master plan, but the reality is we got lucky and it all ended up working out okay I guess,” laughs Raf.
Building on that success, this year, Auxe has pivoted yet again into the corporate realm. Since its launch, Auxe for Business has landed large contracts with corporate clients like 7-Eleven, F45, Hisense, KFC, Freshii, and more. Many of these businesses contract with them for digital signage.
“Those are the screens you see on the walls at restaurants with programmable menus,” says Raf, “They actually require a whole installation service to get them up.”
Since many chains have stores all over the country, they would normally need to find a different contractor in each city to go in and perform digital signage upgrades.
“Say you’re in 50 cities,” says Raf. “That’s 50 quotes, 50 screenings, and 50 different invoices. Working with a company like Auxe makes things much easier.”
The business has been so successful that Auxe today is even making inroads into the United States. “The US is next on the list and I’d love to see how far we can go,” says Raf.
“We’re Like Family Here”
While Raf appreciates the success of his business, he also loves the community that comes with it.
“We’re all different but have the same goals,” he says. “There’s a very wide range in age and backgrounds. People in construction, people from business school, software engineers, people right out of university, and people at the end of their careers. Three of our full-time employees today started as technicians who went above and beyond and we brought them on.”
Raf especially likes it when he sees how much Auxe has helped some of their contractors.
“We have one technician from Lebanon who came to Canada two years ago,” says Raf. “He was working a low-paying job, but in Lebanon, he was an electrical engineer and had tons of experience with IoT devices. He just didn’t have any connections in Canada or good English so we gave him a chance.”
Working with Auxe helped the technician turn his life around and even bring his family to Canada.
“I was on the phone with him last week and he told me he’d saved enough money to bring his family from Lebanon to Canada and he hasn’t seen his kids since he came here two years ago,” Raf says proudly. “That personal connection between the founders and management and the technicians builds loyalty and makes them happier. And that translates through to a better service, happier customer, and better reviews.”
Remembering Where He Came From
Raf attributes his fire for success to his parents who moved to Canada from Peru shortly before he was born.
“One thing that always kept me driven and motivated is thinking of where my parents were at my age,” says Raf. “When they were 24-years-old they were brand new to Canada, working around the clock to build a business out of nothing. They had no money, no English, no friends or connections to ask favors of or seek advice from, no technology to help with customer acquisition and bookkeeping. They didn’t have any knowledge of local culture, laws, or business practices. Compared to that, my problems usually seem small.”
Watching his parents come from very little to creating a European mechanic shop that won Best Small Business in Vancouver in 2018 has been a constant source of inspiration for Rafael. He hopes he can one day achieve a similar feat.
“I’ve always had a bit of a chip on my shoulder because I know how hard my parents had to work hard for me to get where I am today,” says Raf.
“We Wanted to Learn the Hard Way”
Like many first-time entrepreneurs, Raf and Peter did reach out to venture capitalists for initial funding.
If we had raised money right off the bat, we would have invested a hundred grand into building an app, not a service.
“We did pitch the VCs early on,” says Raf. “We thought we had a cool idea and figured we could go raise a quarter-million dollars to build it. But we were young guys who were kind of naive and we didn’t have any prior experience. Everybody said it was too early to invest, or we didn’t have enough experience, so we decided to bootstrap.”
Today, Raf believes bootstrapping is the reason Auxe was able to be so successful.
“If we had raised money right off the bat, we would have invested a hundred grand on building an app, not a service,” he says.
As a profitable business, Auxe now fields frequent calls from VCs, but the team feels set on remaining bootstrapped.
“We have enough money in the bank to sustain ourselves and we’re cash-flow positive. We want to learn the right way to build a business,” says Raf. “We’ve proved to ourselves we don’t need outside capital to build a high-growth business, which is hard to do.”
Raf’s advice to other bootstrapped founders?
“I remember this graph I saw on Twitter,” he says. “It was a big curve for emotions when starting a business. At the top it’s excitement, ‘This is so cool. We’re going to take over the world.’ And when it starts going down it’s like, ‘Oh my God, this is not really working.’ Then there’s a pit of despair at the bottom but as time goes on the curve starts climbing back up a little bit. What I want to say is if you get past the pit of despair, you’ve figured it out.”
Raf’s story goes to show that great innovation is rarely borne on the drafts of financial security. It is instead more commonly found on the back of uncertainty and a drive to prove oneself even if it takes a long time to have anything to show for it.
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