HourlyNerd – From FIELD 3 to First-Round Financing
HourlyNerd began as a Field 3 project in Section F. Like many of our peers from traditional backgrounds, we found the assignment daunting. We didn’t have experience creating companies from scratch — we didn’t even have an idea! The subsequent chain of events has surprised us, educated us, and has truly been a wild ride.
First, what is HourlyNerd? HourlyNerd is the market-leading online platform that connects small businesses with MBAs for flexible, short-term labor. Small businesses have dozens of unanswered business questions, and lack the resources to hire a Bain or McKinsey. Meanwhile, MBAs have plenty of spare time (RCs, if it doesn’t feel like this right now, it will soon), tons of business expertise, and need extra money. We match the two sides.
How did we get started? We went door-to-door to small businesses across Boston and Cambridge, selling individual engagements that we then launched to our small but fast-growing MBA base. Within weeks of launching our improved site in April, we got more than 120 tasks posted by various businesses. And, we quickly signed up several hundred MBAs. We were shocked to see tasks closing and money changing hands with almost no effort from us. The work product was fantastic.
We’ve gotten a ton of help from professors at HBS, and from our classmates. The Chair of the TEM Department, Lynda Applegate, has been a committed (informal) advisor to the company. Very early on, she asked us to present at the opening ceremony of an Executive Education program. We made excellent connections and sourced exciting (and remunerative) projects from these participants. We’ve also been incredibly fortunate to enjoy continuing advice from our RC TEM professor, Frank Cespedes. We (and we hope he as well) find it thrilling to be discussing exact replicas of TEM case situations with real-life implications for us. We couldn’t be more grateful for their guidance and inspiration.
We knew that we needed to meaningfully upgrade our technology, so we set out to raise money from a variety of angels and venture capitalists. As soon as RC year was over we traveled out to the West Coast to meet with potential investors and distribution partners; these were some of the most fascinating and exciting moments of our careers.
In the end, we’ve received document-ready investor commitments well in excess of $1 million but are debating where we should cap the round. We like the valuation we negotiated with our investors (it’s a convertible note), but because we believe the business will continue to generate positive free cash flow, we’re making a concerted effort to sell as little of the company as possible. (By summer’s end, we’d made more than $20,000 in revenue and signed up more than 900 MBAs.)
Along the way, we’ve made many seemingly intuitive choices that we think have made all the difference. We’ve chosen to focus on MBAs from only the top 20 programs — no one else in the market is doing this. And, rather than attempt to target individual small businesses with paid advertising, we’ve focused on partnerships and co-marketing arrangements with larger organizations who can distribute our product in a more leveraged way. We create real value for these companies and will be announcing a very exciting first agreement with a global technology firm in mid-September.
What’s the road ahead? Over the course of the fall, we’ll be aggressively resuming our sign-up programs at the top 20 MBA programs. We fully expect to have several thousand MBAs registered and actively bidding on tasks by the end of our first year. Meanwhile, we’ll be proactively pursuing additional partnerships with leading organizations who can distribute our product in a cost-effective way. We believe we’ve only scratched the surface of this market.
Where does it end? In concert with our investors and board of directors, we’ve begun conversations about the most likely potential exit strategy for HourlyNerd, and for whom it could hold the most value. Reaching even our conservative case forecast for the first twelve months would make HourlyNerd a sizable company with real economic value. We believe that we’d be an interesting fit for several companies pursuing the recruiting and/or outsourced labor markets. And the relative size of our companies would facilitate an easy integration process. For now, we’ll work hard, and hope that the phone rings. If it doesn’t, we can continue growing the business for 3-5 years before it will have reached it’s true potential.
Through it all, we’ve remained friends. Despite the four of us being spread globally across four time zones this summer (Belgium, Boston, Dallas and Denver), we religiously stuck to a Sunday evening call and had perfect attendance. With our professional services backgrounds, we’ve been learning everything on the fly. It’s been rewarding, exhausting, thrilling and tiring. And we’ve loved every single minute.