As the rise of so-called unicorn companies like Uber or Airbnb — valued above a billion dollars — has spurred the “gig economy”, for a growing number of MBAs, the flexibility of short-term projects trumps the prestige of Bain & Co, et al.
Harvard MBA Marta Mussacaleca worked at McKinsey and BCG before business school, but turned to HourlyNerd, a freelance consultancy site, to earn cash during the two-year degree.
Some projects were more enjoyable than at established firms. “They have pushed me to become more adventurous,” she says. “Not having an evaluation committee scrutinizing your every move frees up creativity. I basically get to be my own consulting firm and am exposed to every single element in the process.”
Karen Siegfried, executive director of the MBA at Cambridge Judge Business School, says: “The self-employment route can provide students [with] a way into a new sector and a valuable opportunity to develop new knowledge, skills and experience.”
“Rent an MBA” sites like HourlyNerd have proliferated, promising companies top business school talent, but often at a fraction of the cost of a large consultancy firm.
Rob Biederman, HourlyNerd’s CEO, says he has lured a “talent pool ranging from current MBAs to those with decades of experience”. The Boston-based platform has 17,000 consultants, or Nerds, most of whom have MBA degrees. “This has caught like wildfire,” he says.
What attracts both Nerds and businesses to the platform is cost. “Consulting firms have a lot of overhead fees and consultants make significantly less than what the price of the project is at traditional firms,” says Rob, a former Goldman Sachs analyst.
Consultants earn up to $150 per hour. Microsoft, Staples and American Apparel have all signed up. Project examples range from a private equity firm with a $70,000 budget seeking product marketing expertise to a Fortune 500 beverage company with $7,000 to spend.
What all of the sites have in common is that they are founded and run by graduates of the world’s top business schools. Rob graduated Harvard in 2014. Rajeev Jeyakumar, CEO of rival site SkillBridge.co, left Wharton School with an MBA in 2013 after stints at UBS and JPMorgan Chase.
What sets New York-based SkillBridge apart from leading consultancies, Rajeev muses, is that it focuses on specialist expertise. “Where the value will lie is in the matching. They [clients] don’t want to see 10,000 freelancers. They want to see three that are tailored to them,” he says.
Technology has enabled companies like SkillBridge, which has 6,000 freelancers, to attract large user bases. The internet enables consultants to carry out work remotely.
“A lot of what a consultant needs is just a Wi-Fi connection and a laptop,” Rajeev says. “30-40 years ago they needed companies’ physical reports.”
SkillBridge has worked with the likes of SFW Capital Partners, a large private equity firm in the US, but others have focused on the small and mid-cap market.
“Only very rich companies can afford business consulting in the form it exists [in] these days, [but] that model ignores the vast majority of medium and even some large companies,” says Alexander Afanasyev, a former Credit Suisse banker who launched start-up focused bhive, which has since expanded to focus on larger companies in Latin America.
Bogotá-based Bhive was founded in Spain, where Alexander and fellow co-founders Leonardo Marchant and Adriana Peceño formed the idea, at IE Business School, pictured below.
Its MBA consultants, from the likes of Stanford GSB and Columbia Business School, have specialist knowledge of the Latin American region. Their hourly rates range from $10 to $200.
In part, the freelance revolution is driven by increased career insecurity. An MBA is no longer a guarantee of a job for life. The average life of an S&P 500 company has fallen by more than 50 years over the past century, according to estimates by Richard Foster at Yale University (think Lehman Brothers).
“People want to have more ownership of their careers,” says SkillBridge’s Rajeev.
As such, “organizations are increasingly looking for a flexible workforce,” says Sotirios Paroutis, assistant dean at Warwick Business School.
Combined, these platforms and others such as Upwork or TaskRabbit have the potential to unleash a new wave of economic activity, according to the McKinsey Global Institute, which forecasts that online talent platforms could add 2% to global GDP and increase employment by 72 million by 2025.
Yet PwC, the professional services firm, estimates that online staffing holds only 2% of the total recruitment market.
“Despite significant growth in the number of freelancers used to deliver [projects for] blue chip corporates, the majority of the consultancy market will remain with established players,” concedes Daniel Callaghan, CEO of MBA & Company, a freelance consulting site with 20,000 users and clients including Pfizer and easyJet.
But, the IESE Business School MBA expects further growth as more companies realize they can hire the best and the brightest in an unbundled fashion. “[There] remains a significantly pool of nascent potential,” he says.