01 Sep 2014
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Innovation: Revenge of the Nerds

A class project connecting small-business owners to MBA expertise becomes a multimillion-dollar startup
Re: Lynda Applegate
by April White

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SMALL-BUSINESS SUPERHEROES: Petitti (left) and Biederman  (Photo by Tracy Powell)

The HourlyNerd origin story could become an HBS legend: The rapidly growing startup, which connects graduates from top MBA programs with businesses that need project-based consulting, began as a FIELD 3 project—one that fellow HBS classmates doomed to failure.

In FIELD 3, teams of six first-year students spend 15 weeks and $5,000 launching a business. Patrick Petitti (MBA 2014), Rob Biederman (MBA 2014), and their teammates started with some zany ideas—manufacturing knitted nose warmers, for instance—before settling on the model that would become HourlyNerd.

“We looked around the classroom at all these students, learning practical business skills every day but not yet applying them in the real world,” says Petitti. “And we saw all these businesses with needs.” To connect the two groups, the team built an online marketplace where MBAs could bid on short-term consulting projects from business owners in need of strategic planning and competitive analysis.

When the team pitched the HourlyNerd model to classmates at FIELD 3’s simulated stock market, which allows peer “investors” to evaluate the business plans, the stock price plummeted from a $100 open to close at a dismal $32.

In addition to the discouraging share price, one other thing from that day sticks in Petitti’s mind: A classmate noted she had explored a similar business model before concluding it wouldn’t work. “What makes you different?” he recalls her asking. “We didn’t have an answer then.”

The team hit the streets of Cambridge and Boston, approaching any independent business owner who might have a business problem the “nerds” could help them address. They also convinced Professor Lynda M. Applegate to allow them to pitch the idea to her Executive Education class, an exercise that helped them refine their proposal.

At the end of FIELD 3, the team—which was by then armed with a better understanding of both sides of the market and how to engage business owners—pitched HourlyNerd again. This time, the mock stock price climbed to the maximum allowed—$1,000—earning them second place in the competition. More important, the team’s hard work and small-business connections attracted the attention of real-world investors.

Petitti and Biederman, now co-CEOs of the Boston-based company, and teammates Peter Maglathlin (MBA 2014) and Joseph Miller (MBA 2014), CFO and head of business development, respectively, raised $750,000 in seed funding from HBS alumnus Robert Doris (MBA 1977) and billionaire investor Mark Cuban.

The HourlyNerd executive team graduated from HBS in May, but the company has already grown to 20-plus employees, including several high-profile hires, in its new Boston offices. In the HourlyNerd online marketplace, which recently received an upgrade, 6,000 MBAs and 3,500 businesses interact, with projects ranging from the creation of a marketing plan for Jenny the Juggler to strategic consultation for General Electric. Recent partnerships will extend the company’s reach into the tech industry, in collaboration with Microsoft and others, and into the Middle East and Africa, and the company reports more than $1 million in annual revenue.

It all feels a long way from the team’s embarrassing faux stock market crash. “I’ll be honest with you,” says Biederman. “If we’d gotten good feedback, there is no way we’d have worked as hard as we did.”

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