Starting-Up – Staging Feedback for Catchafire

Cathy Clark
Founder and Director, Columbia Business School, Research Initiative on Social Entrepreneurship

 

 

Orient Your Action Around Analytics
An important aspect of the start-up phase is to blend the action and the analytics, to stage your activities to get feedback to narrow your critical questions, and to refine key choices of the business model before you make irreversible commitments.
 
That’s the core issue during any venture’s start-up phase: rigorous and efficient hypothesis testing:
 
  • Operating Model: What is the most efficient operating model for implementing our social impact theory? Are there lower cost ways to accomplish what we are trying to do?
  • Customer: Who is our customer? Who is our target beneficiary? What’s the relationship between them? Who can pay and how much?
  • Profits and Pricing: Can we cover our costs by selling to our target customers? Can we produce a profit that way? What’s the best pricing model?
  • Growth: What pace and scale of growth do we need to be impactful? To achieve financial stability?
  • Resources: What non-financial resources will be required (people, skills, equipment, space, etc.)? What are the best terms we can expect to get in acquiring them?
  • Capital: Who are the best financial resource providers (subsidy or capital) for this work?
 
There are also some questions that tend not to be asked during the start-up phase which seem to become significant later:
 
  • Partners: Who are our best institutional allies and strategic partners?  Who might be able to provide parts of our activities or critical supplies more efficiently than we can?
  • Competition: Who will we compete with as us as we become bigger?
  • Business Model Redefinition: Should we consider fundamentally different operating models?
 
Catchafire
 
Thoughtful and innovative, Catchafire is a startup with a vision to improve the volunteer experience. The organization matches professionals who want to volunteer with nonprofits that need high-quality volunteers in the greater New York City area. 
 
One month after its beta launch, Catchafire had registered 500 nonprofits and 3,000 volunteers and had made 100 project matches. The organization’s technology-enabled customized matching fills a need for altruistic professionals who are uninspired by traditional volunteering options. 
 
It is a clear example of a broker of human capital in our business model typology (see the grid in our full profile).
 
Cathy’s former student Rachael Chong founded Catchafire as a for-profit, with its primary revenue stream coming from matching fees charged to nonprofits, although the organization is pursuing other types of revenue.

Catchafire is young and is testing many of its assumptions. What thoughts or suggestions can you share with Rachael on the following critical issues?

  1. Customers and Beneficiaries: Who are Catchafire’s primary customers? Secondary customers? Are their needs and value propositions symmetric (e.g., does a volunteer need something different from a successful match than a nonprofit)?
  2. Operational Model: As a broker, Catchafire’s business model depends on a continual balance of supply and demand. What kinds of institutional relationships might Catchafire build to increase its pipeline of volunteer opportunities (demand) or its supply of qualified volunteers?
  3. Profits and Pricing: Does it seem viable for Catchafire to be a for-profit company? Why or why not? Are there better ways that Catchafire can price its services?