Building a Venture Scale Two-sided Marketplace for College Prep to $10M+ in Revenue: Empowerly CEO Hanmei Wu (Part 3)

Sramana Mitra: That’s interesting because you had already validated that there was a market for what you were offering. One of the things that I don’t like about demo days at all is that a company just goes into an accelerator with no validation, and within three months has to go in front of investors and raise money; it hasn’t had the time to do the kind of validation you’re talking about.

You, on the other hand, had done several years of validation before going into demo day.

Hanmei Wu: Yes, and I think that’s one of the key reasons a lot of investors were interested in speaking with us, because we had, of course, more traction than many of the other companies. We had product-market fit. I think investors at the pre-seed and seed stage expect those companies to pivot perhaps multiple times. But we didn’t really have to do that.

Sramana Mitra: Investors can get killed if the company pivots multiple times on their dime.

Hanmei Wu: It’s expensive to pivot. You’ve already spent so much money attempting idea number one, then you have to switch to idea number two.

Sramana Mitra: We don’t recommend pivoting on investor money. We recommend that you bootstrap to validation and then raise money on a business thesis. Investors should not fund a concept; they should fund a business that is already validated.

Hanmei Wu: I agree with that.

Sramana Mitra: So, then you got $1.5 million. What’s the next step? What happens next?

Hanmei Wu: For us, it really was about continuing to get more leads and making our first few big key hires.

Sramana Mitra: But you had to move to an online business at this point, right?

Hanmei Wu: Yes, we did. Actually, that was helpful for us in some ways because it was very exhausting to drive!

Sramana Mitra: You’re not a scalable business at all doing this manually. That’s just not a scalable situation.

Hanmei Wu: Not at all. Before the pandemic, a lot of families would request, “Hey, I want to meet you in person. I want in-person counseling.” We were getting counselors from all over the country. So we had to tell them, “We’re not in person, sorry.” A counselor being matched might live in Boston, while a student might be in the Bay Area.

But then with the pandemic, it normalized. It helped our business in some ways. No one could do in-person counseling at that time. So all those families turned to us, and we really focused on selling the best match for the child. So if your child was really interested in business or pre-med or undecided, or they need a certain personality of counselor, a certain experience of counselor, they would get it.

We were starting to actually recruit counselors pretty aggressively and just saying, “Hey, we can have a bunch of students. We’d love to match you. We’ll pay you this hourly amount.” We started building out this managed marketplace of counselors.

This segment is part 3 in the series : Building a Venture Scale Two-sided Marketplace for College Prep to $10M+ in Revenue: Empowerly CEO Hanmei Wu
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