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SkillBridge Due Diligence

Ryan Kuhel May 12, 2014

Table of Contents Market  .......................................................................................................................  2  Industry category  .........................................................................................................................................................  2  Market size and growth  .............................................................................................................................................  2  Competitive Landscape  .............................................................................................................................................  3  

MBA & Co.  ....................................................................................................................................................................  4   HourlyNerd  ...............................................................................................................................................................  5  

LinkedIn  ..........................................................................................................................................................................  6  Odesk  ................................................................................................................................................................................  6  Elance  ..............................................................................................................................................................................  6  

Typical  purchase  cycle  .............................................................................................................................................  6  

Company:  ..................................................................................................................  7  Year founded & Head Quarters Location  ............................................................................................................  7  Overview of product  ...................................................................................................................................................  7  Traction  ...........................................................................................................................................................................  7  Differentiation Relative to Competitors  ...............................................................................................................  8  Business Model  ............................................................................................................................................................  9  

Miscellaneous  .............................................................................................................  9  Team  ................................................................................................................................................................................  9  Funding  ..........................................................................................................................................................................  9  

       

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Market Industry category Management consultants advise businesses, nonprofits and public-sector agencies in: organizational design, human resources, corporate strategy, information technology strategy, marketing and sales, and finances and logistics. As the elite firms (McKinsey, BCG, and Bain) move down into implementation and operations, they are meeting big new rivals hoping to move up into the loftier realms of strategy. The most likely candidates are thought to be PwC, Deloitte and Ernst & Young, three of the “Big Four” accounting firms (the other is KPMG). The big accountancy firms now do more consulting than McKinsey, BCG and Bain. Much of this involves manpower-intensive tasks such as technology integration. But their strategy and operations practices are ambitious, too. In January 2013 Deloitte bought Monitor, a strategy firm, out of bankruptcy. In 2011 PwC bought PTRM, a respected operations consultancy. In response to these trends, consulting firms are aggregating proprietary datasets to maintain a competitive advantage. Dominic Barton, a Senior Partner and Worldwide Managing Director, of McKinsey, says: “With the push of a button we can identify the top 50 cities in the world where diapers will likely be sold over the next ten years.” The firm invests $400m a year on “knowledge development”, and Mr Barton touts its “university-like capabilities” to impart it to its consultants. While consulting firms are expanding their offerings, many businesses cannot afford to pay consulting fees (more on that in Market Size and Growth section). Skillbridge aim to make consulting services more affordable and reinvent work. Skillbridge is a two-sided platform that connects freelance consultants to businesses and projects. The platform aims to capitalize on the growing demand for affordable consulting services and on consultants who want more flexible careers.

Market size and growth According to market researcher Source Information Services, The U.S. market for management consulting grew 8.5 percent from 2012-2013, to $39.3 billion. The fastest-growing areas: marketing and sales (25.6 percent), operational improvement (11.3 percent), and technology (10.1 percent). High-growth industry sectors include: health care (18.4 percent), energy (12 percent), and pharmaceuticals (10.3 percent).1 McKinsey, Bain, and Boston Consulting Group command high fees from the world's biggest companies.

       

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Other sources put 2012 revenue even higher. Forbes puts McKinsey's revenue at $7.5 billion, and Boston Consulting Group announced revenues of $3.7 billion in an April press release. The Economist attributes consulting firm’s growing revenues to economic uncertainty, big changes and trends that companies are struggling to understand, for which they look to external experts. Recent and ongoing examples they cite include President Obama's Health Care legislation and the Dodd-Frank financial reform.

Competitive Landscape Skillbridge is not the first platform that aims to connect freelance consultants to businesses and projects. MBA & Company and HourlyNerd are direct competitors offering an identical value proposition. This is not to say that the freelance consulting industry is a winner-take-all market. Skillbridge can capture market-share by building strategic partnerships with businesses and firms around the world. Skillbridge has a talented marketing and sales co-founder, Stephen Robert Morse, who successfully managed and administered marketing campaigns for the food delivery application Seamless. Under Morse’s leadership, Skillbridge will is uniquely positioned to develop strong brand, build strategic partnerships, and connect more businesses to more consultants.

       

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MBA & Co. MBA & Company was founded in 2009 as an alternative to traditional consultancies and as a new way of having small project work delivered to high quality standards at a low cost. Like Skillbridge, MBA & Company platform aims to provide better deal for both corporations and consultants. To-date MBA & Co.’s network of consultants have successfully delivered projects in over 50 countries and 40 industries. Completed projects have ranged from 2 hours to 2 years and each one has been delivered with the same level of care and consideration for our clients. MBA & Co. has 16,000 consultants in their managed marketplace, covering more than 100 countries worldwide. Consultants are available to conduct a wide range of services covering a vast array of industries, sectors and roles. Typical projects include: content and whitepapers, e-commerce & digital, financial and quantitative Research, market research and data analytics, operational analysis and implementation, strategy & business development research, and supply chain and procurement. Clients Clients include Hammerson, Sharp, Syngenta, Atkins, SPI, Augean, Ascender Capital, Britax, TUI Travel PLC, Prgoressive Digital Meida, HG Capital, GAS, UK Trade and Investment, HWM, and UK INDIA Business Council among others. Vetting Consultants To sign up as a freelance consultant, professionals need to have at least 5 years’ experience that are aligned with the project’s requirements. All consultants must have an MBA, PhD, or MSc from leading academic institutions. Typical Project The smallest project so far delivered through the platform was 2 hours of work whilst the largest so far continues at over 2 years using a global team of consultants. Projects are typically based around strategic research, subject matter analysis, business development, marketing (online or offline), financial analysis and operational or organizational improvement. Companies looking for an IT programmer, developer or website designer are advised to look elsewhere for talent. Funding Rounds (2) - $1.60M

• $1.2 million o Investors: Piton Capital, Cabiedes & Partners, and MMC Ventures o Date: April 24th 2013

• €300k o Investors: Finaves S.C.R. and Cabiedes & Partners o Date: October 1, 2010

       

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HourlyNerd HourlyNerd is an online marketplace that connects MBAs from the top 20 business schools with small and medium-sized businesses. The platform connects alumni of premier firms (McKinsey, Goldman Sachs, etc) with businesses looking for a flexible, cost-efficient way to address business challenges. HourlyNerd is a direct competitor to SkillBridge. Both platforms connect businesses to a network of talented consultants. A customer service representative reported that, to-date, HourlyNerd has 5,000 MBA alumni and MBA candidates, who are looking for projects while in schools. Projects Business projects on HourlyNerd include: market research and data analysis, strategic advisory, business plan creation and modification, marketing and branding, finance and financing strategy, accounting, and social media and PR. Payment Process Once the business selects an MBA consultant for the project, payment is securely transferred to HourlyNerd. HourlyNerd holds on to the money until all milestones have been completed and the project has been designated as complete by the business. HourlyNerd then transfers the funds to the MBA consultant. MBA consultants bid effectively with an hourly rate of $30-100. This depends on project type, experience, time sensitivity, etc. Commission: 15% Milestones The consultants and businesses must agree to a clear set of deliverables to be completed by an agreed-upon date. The milestones have proven to be very helpful in clarifying expectations. Funding Rounds (2) - $4.75M

• $4M Series-A o Investors: Highland Capital Partners, Greylock Partners o Date: Mar 26, 2014

• $750k in a Seed round o Investors: Accanto Partners o Date: Jun 1, 2013.

       

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LinkedIn LinkedIn, the social networking platform, can also serve to connect consultants to businesses. Quantcast reports LinkedIn has 65.6 million monthly unique U.S. visitors and 184 million globally as of October 2013. Consultants from top firms, especially millennials, are using the platform to network and—in some cases- find work. A business could find a talented consultant on Skillbridge and then contact the consultant via LinkedIn. If Skillbridge finds out about this transaction, they might ban the consultant and the company from the platform. LinkedIn may be able to leverage the network effect to allow people to post projects and recruit talented to complete the projects. LinkedIn has the largest network of professionals and businesses. The company could develop a solution that allows companies to recruit talent as contractors.

Odesk oDesk is an online workplace that enables businesses to find, hire, manage, and pay talented independent professionals via the Internet. Businesses can hire these online freelancers for any type of work that can be done in front of a computer — from every tech skill imaginable to project management, customer support, marketing, design and even legal services. Access to a large, global pool of skilled contractors is especially powerful for startups and small businesses with limited resources, businesses seeking a very specific skill that’s difficult to find within commuting distance, and businesses located outside a metropolitan area. oDesk's unique model provides transparency and protection for both the business and the worker, guaranteeing and tracking that an hour paid is an hour worked. Projects include web design, content writing, SEO, coding, data wrangling, and mobile development. While these projects are different than what businesses are looking for on Skillbridge, oDesk could expand its offerings and become a more direct competitor in the future.

Elance Like oDesk, Elance is an online workplace that enables business to find, hire, manage, and pay talented freelance professionals. Freelancers include programmers, mobile developers, designers, writers, and marketers. Microsoft, Cisco, CareerBuilding, The Motely Fool, and the Walt Disney Company have used Elance. Again, while these projects are different than what businesses are looking for on Skillbridge, Elance could expand its offerings and become a more direct competitor in the future.

Typical  purchase  cycle  Skillbridge can send a business candidate within an hour of posting the project. The business decides, generally after interviewing candidates, when they are ready to hire the candidate as a contractor and create the project milestones. The payment is put into an escrow account and is paid to the candidate upon the completion of certain milestones.

       

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Company: Year founded & Head Quarters Location Skillbridge is headquartered in New York City.

Overview of product SkillBridge is a marketplace for elite business talent. On SkillBridge, businesses post, find, and execute short-term finance, strategy and marketing projects at low price points (compared to paying an elite consulting firm to work on a project). Projects can last a few days or a couple of months, and can lead to full-time work with the right match. Value Proposition for Businesses and Organizations Businesses and organizations have access to a talented, experienced network of candidates who can help accomplish various projects. Hiring a consultant on SkillBridge is more affordable than hiring a consultant through a professional service agency. Value Proposition for Consultants Consultants can monetize their professional skill set without the partner, manager and corporate overhead. They can use their spare time to build experience and develop working relationships in other industries and markets. Consultants can also validate and advertise their skills using ratings and feedback from actual paying clients. Projects Projects on Skillbridge focus primarily on finance, strategy and marketing. Some examples of projects on SkillBridge include:

• Business plan and pitch deck development • Financial analysis & modeling • Competitor profiling • Pricing strategy • Portfolio evaluation and prioritization • Summary of industry best practices • New market report

Algorithm to Match Talent to Positions Skillbridge has developed an algorithm that is designed to match the best candidates with the companies that require their services. The algorithm evaluates candidates based on their academic accomplishments, employment experience, interview data, referrals and past project feedback and match candidates based on their availability, geography, specific experiences, and other factors.

Traction Skillbridge has 4,000 consultants from around the world and partnerships with various companies that post projects. SkillBridge charges a 20% commission. The minimum price for each freelancer is around $50 per hour, but it can go as high as $250. I was unable to find out exactly how many projects are on the platform now.

       

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Differentiation Relative to Competitors Skillbridge is very different from Elance and oDesk because of its focus and screening process. Elance and oDesk focus on web development, mobile development, marketing, and design. Projects on Skillbridge focus primarily on finance, strategy, and research. Both firms do have some overlap in regard to marketing. The main difference is the types of the projects and the rigorous screening project. Only people with graduate degrees and relevant work experience can be accepted to the Skillbridge platform. This attracts a very unique type of a candidate. Consultants on Skillbridge can charge more, per hour, and Skillbridge’s commission fee will be greater. At the same time, Elance and oDesk will process more transactions. Skillbridge is a direct competitor to HourlyNerd and MBA & Company. While all three services have almost identical value propositions, branding is a differentiator, to some extent. MBA & Co.’s name would suggest that the company only lets MBAs unto the platform; however, this is not the case. On the “how it works” page, MBA & Co. clarifies that is recruits MBAs, PHDs, and MAs with at least 5 years of work experience.2 HourlyNerd’s name might suggest it recruits PHDs and Master students. However, HourlyNerd only accepts current MBA students and graduates (from select schools).3 HourlNerd’s customer service agent said that HourlyNerd may accept PHDs and Masters students in the future. Skillbridge is the most flexible platform, in respect to degree requirements, and does not require candidates to have MBA, PHD, or MA as long as they have relevant work experience. The branding on HourlyNerd and MBA & Co. is confusing enough to possibly deter some professionals from signing up. That being said, all three platforms are competing for talent and for business project postings. SkillBridge HourlyNerd MBA & Co

Transaction Fee 20% 15% 20%*1

Professionals 4,000 5,000 20,000+

Types of Professionals MBA, BA, MA, and PHD. Skillbridge is the most flexible company in terms of degree requirements. They are more focused on work experience.

MBA and MBA students

MBA, PHD, and MA students with 5+ years of experience

                                                                                                               1  MBA & Co. charges 20% normally but only 10% for Venture Capital funds  

       

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Business Model Skillbridge takes a 20% commission fee from each consulting project. In the case that a company wants to hire a consultant full-time, Skillbridge takes 15% of the consultant's salary. Skillbridge only disburses money to the consultants once the client approves their work. This typically happens in a number of stages throughout the project. Until then, Skillbridge hold the money in escrow account.

Miscellaneous Team  

• Raj Jeyakumar /Co-Founder and CEO at SkillBridge Education: University of Oxford, Wharton School of the University of Pennsylvania

• Stephen Robert Morse / Co-Founder and Head of Marketing at SkillBridge Education: University of Pennsylvania

• Regina Portillo / Head of Talent at SkillBridge Education: Columbia Teachers College

Funding Skillbridge has been backed by First Round Capital’s Dorm Room Fund, the firm’s student-run investment arm that offers mentorship and $20,000 in funding to each company. Skillbridge was also part of Highland Capital’s summer incubator and the MassChallenge accelerator.                                                                                                                1  http://www.businessweek.com/articles/2013-­‐06-­‐13/where-­‐the-­‐growth-­‐is-­‐in-­‐management-­‐consulting  2  http://web.mbaco.com/web/how-­‐it-­‐works#  3  http://hourlynerd.com/FAQ