we muscled – or muddled, as the case at times was – through our West Coast tour. The summer between our first and second year of graduate school began with days of rejections up and down Sand Hill Road. However, and most improbably, it ended with a big check from Shark Tank star and business maven Mark Cuban who, along with an angel investor named Bob Doris, gave us the seed money we needed to see if our idea of a marketplace for high‐priced business talent might be a real business.
“Careful what you wish for” should be taught on day one at every business school in America. We were still in our second year at HBS when we raised a Series “A” round of venture financing totaling in the millions. Despite the skepticism expressed by some of the visionaries who populate the Bay Area, three of stodgy Boston's best‐regarded venture firms saw the potential of our fledgling company. Beyond our earliest and wildest expectations, there'd be a “B” round and then a “C” and then a “D” round that gave us a paper value in the hundreds of millions, much of that coming from New England. It was fortunate that we were die‐hard fans of the Patriots, now that we were included in the roster of the Kraft family, who owns the fabled five‐time Super Bowl–winning football team. Intuit founder Scott Cook, Rent the Runway founder Jenn Hyman, and several other tech luminaries also jumped onboard.
Luck was definitely smiling on us when we landed General Electric and its $140 billion in annual revenue as a true, paying customer. Going back to our drawing board days, a mere 18 months previous, we had initially thought we were creating a platform for small businesses. But bringing GE on board while we were still in grad school opened us up to a future that we had hardly imagined. General Electric proved more than a marquee customer. Its investment arm, GE Ventures, would take an ownership stake in our company and, more importantly, help champion our cause. Then‐CEO Jeff Immelt, one of the business world's most highly regarded executives, would host a dinner in Boston on our behalf in the fall of 2016. Talk about executive buy‐in! Jeff himself sent the invite emails to the CEOs of 15 of the country's largest companies, encouraging them to learn more about how our company could help them both manage costs and provide access to a wide array of top talent. Multiple senior leaders from the Fortune 100 showed up for our little dinner – a gathering that might have ranked among the more impressive turnouts of corporate firepower in Boston that year. Standing before the group, Jeff encouraged them to use Catalant and told them that our business had the potential to change the world. At the same time, a small part inside all of us recalled that screen grab of our 150th place finish, which Rob still regularly reviewed for motivation.
By 2017, more than 120 of the Fortune 1000 would be using Catalant to supplement their workforce, including GE, Staples, Medtronic, and IBM – to name just a few.
We can flatter ourselves and claim investors and corporate icons were drawn to Catalant because they saw something in the three of us. Perhaps. But we know the primary reason these influential movers and shakers became interested in our small company was our initial idea of creating a marketplace to find side work for MBA students and recent grads, wedded to the needs of a talent‐starved corporate America. In fact, we still pinch ourselves that our classroom brainstorm has morphed into a platform that has the potential to upend the way businesses manage their talent. We had only wanted to prove that our idea wasn't as lame as our fellow students thought. Instead, we had stumbled onto a new way for businesses of all sizes to get tasks done.
In 2015, Rob cowrote an article with Andrei Hagui, an associate professor in the strategy group at HBS, called “The Dawning of the Age of Flex Labor.” It began, “The prevailing paradigm of people working as full‐time employees for a single organization has outlived its usefulness.” The point was that technology was fueling a seismic shift in work – and businesses that chose to ignore this did so at their own peril. The paper continued, “Our vision is straightforward: most people will become independent contractors who have the flexibility to work part‐time for several organizations at the same time, or do a series of short, full‐time gigs with different companies over the course of a year.” What Rob and Professor Hagui were basically acknowledging was that despite our humble beginnings, we were offering a vision that threatened to disrupt the workplace.
We weren't surprised that those on the supply side – the workers – would see merit in a talent marketplace like we were building. The era of Dilbert and a workplace satirized by the comedic and the cubicle had been replaced by Office Space, with its maddening futility and fathomless promise of life married to an unfulfilling job. We weren't just grad students who had lucked out in the VC world. We were also employees who understood that we are fated to spend more time working than we do anything else, including sleep.1 And with that knowledge, we were painfully aware that too many people are unhappy in their work. Polling shows that a majority of us find work a grind; as many as three in four feel disengaged and unfulfilled. Who wants to set off on that cruise?
Our young business was building on the sociological capital that disaffection instinctually numbs us as millennials. The data show that this group – our colleagues – demand more of a work/life balance than previous generations. And if that means receiving 1099s each year from several places of work rather than a single W‐2 from a single employer, so be it. We are the foot soldiers in a generation that insists on more flexibility at the workplace and less constrictive, more accommodating working relationships. A study by Deloitte, a giant of the consulting world (yes, we recognize the irony in quoting the likes of Deloitte), showed that three‐quarters of millennials want the freedom to work remotely. Our generation is clamoring for a different relationship to work. Now that we represent one‐third of the workforce and soon will represent the majority, it's quite possible we'll make it happen. As the founders of Catalant, we just happened to have the good fortune to unearth a missing piece of the equation: a platform that lets people work as free agents. Catalant has given the next generation access to a range of interesting, well‐paying projects to keep them as busy as they need or want to be. Already more than 40,000 experts have found our marketplace, and it seems inevitable given the broader trend lines that eventually that number will swell to 400,000, if not 4 million – so long as we can provide them with a steady river of business that is accessible through the site.
The shock for us was on the demand side – that companies of all sizes were also clamoring for change. We found one study showing that 79 percent of large businesses felt they had an engagement problem with their workforce. And 85 percent, according to that same research, were struggling to retain top talent.2 Since the 2008 Great Recession, corporations have been beggars in the war for talent, we learned from Joseph Fuller, a professor of management practices at HBS, who eventually would serve as a board observer for our company. And given the strategic advantage of a business remaining nimble, not to mention onboarding complexity and the like, businesses might logically choose to shift their mix of permanent employees and free agents. That was the conclusion of an Intuit report predicting that by 2020, “traditional employees will no longer be the norm, replaced by contingent workers such as freelancers and part‐time workers.” The rub, according to the literature, was how the more agile, forward‐thinking businesses would find the talent once they had made this shift. More than one in five businesses (21 percent) identified “finding qualified freelancers” as the single biggest employment challenge, according to a study by Tower Lane.3 Two‐thirds (68 percent) expressed a “strong” or “very strong” interest in a tool that would enable easier and quicker hiring and onboarding of freelancers.
What we've learned in talking to Catalant customers is that even those at the top echelons of the country's better‐known, big‐brand name companies are feeling frustrated. Recruiting and employee retention are huge pain points for just about any corporation located outside of a New York or San Francisco. As lovely as Cincinnati, Peoria, or Moline might be, most of today's most coveted college graduates want to live in a short list of major urban centers. The action, it turns out, is a big draw.
We also heard our share of complaints about the inefficiency of the system under which large, unwieldy companies operated. Sometimes they felt as if they had too many people on staff. At other times it felt as if they didn't have enough.