Inspired Entrepreneurship at Zinch.com
As an entrepreneur you always hope that your venture is touching the lives of others in a positive way. But when Mick Hagen started Zinch.com with a vision to give high-school kids a chance to be “more than a test score in their college applications” he never dreamed of helping so many. Aided by a serial-entrepreneur and current CEO of Zinch.com, Anne Dwane (HBS ’98), they aim to become the first professional portal for all students’ needs.
Arriving in the new Zinch office in San Francisco definitely had a feel of a growing young start-up: there was a big lofty kind of office space in SoMa, with the skyline of San Francisco in the background; three tables were occupied, but there was plenty of space for another 10 people there; they had just installed their Ikea furniture, and although they currently did not need all this space, they were expecting growth soon.
Zinch is a multi-purpose online platform for (high-school) students applying to colleges or looking for scholarships. It allows students to showcase their talents beyond their test scores, and build their first “professional” profiles. “If you don’t do well on standardized tests, before Zinch it was very hard for a student to get on the radar of some of the top schools like Harvard and Princeton. There are a lot of people out there who have unique talents and abilities but did not do well on their test scores. Zinch is here to show that people are so much more than a test score,” Mick comments.
At the same time, Zinch is an online platform for colleges looking to communicate with and find students, in a way that no other average test score would allow them to. “When we started building Zinch I remember a chat with the dean of admissions at Princeton. One day the orchestra director came into her room and said that they needed to recruit brass players, because all the current brass players were graduating. If they didn’t, they could not continue with the orchestra. She answered that the admissions office will have to wait and see if those kids apply because they had no active way to recruit those kids; but that they will keep it in mind. We realized then that colleges everywhere in America had various specific needs in admissions every year, but had a hard time recruiting those students. We set out to build a website that could facilitate the connection between students and colleges. Students could finally be seen for who they really are, and colleges could target them for more than their test score.”
Opportunity & success
Yearly, colleges in the US spend $7 billion on student marketing outreach, of which 40% is spent on direct mail. While direct mail might not be completely obsolete, it is hard to focus your mail when all you have is a test score. Zinch uses a social media approach to allow students to create their first professional profiles and expose their unique skills. This way colleges can search much more targeted and find the students they want to reach out to for their specific skills. So far, Zinch has relationships with more than 750 universities in the U.S., 25 employees, offices in two countries, and 2 million U.S. students in their member database (from 9th grade onwards). They have more than 14% of high-school seniors.
“Our model is successful because on one hand students want to connect digitally; it is the digital generation. Increasingly parents want to connect digitally.
On the other hand, with 408 points of data we can be much more predictive for colleges. It is not ‘what is your zip code and what was your test score’ anymore. They can actually find the students that they want to connect to.”
How to approach growth?
Zinch just opened its first international office in China. There were two clear market demands for this: there was high willingness to pay for U.S. education in China, and the colleges here had a hard time assessing the quality of Chinese candidates based on test scores only.
China is the second largest supplier of foreigner students to the U.S., right after India. The ability to pay for American education in China is quite large. In addition, “it is predicted that in 10 years there will be more Chinese families who can afford a U.S. education than there will be U.S. families. Of course, the size of the country plays a role here,” Anne adds.
“China is our first non-English market. We are approaching it with a template-ed approach, which we could use on other countries afterwards. We have a local team that localizes the matching engine and the website; at the same time, we are iterating the template that we can import into other markets.”
When to expand internationally?
“We’re three years old, and we were cash-flow positive before our current venture financing came. Although it is risky and expanding internationally adds a lot of complexity to the business, we think this is such a good idea that we want to expand before someone else does.
The scarcest asset is our relationships with institutions. They are very skeptical, but right now we have more than 800 clients, of which some are the most selective in the world,” Anne adds. This, together with simplifying its technology, gives Zinch the edge to expand internationally and manage its complexity.
In October 2008 Anne went out to VCs to see about funding. As the market was down, Zinch was forced to look carefully at its business and sharpen its business model even further. “Sometimes when VCs don’t like your idea it can be good thing – it could actually mean that you are ahead of the curve. Most VCs at that time said that the timing wasn’t good.
The education sector in the VC world is very unpopular; there is a lot of government involvement K-12, so they tend to stay out of it. VC tends to run in certain things like gaming, social media and green.
The biggest critique that we got was that they did not believe that we would grow by saving our customers money. We go to universities and say give us 10% of your direct mail budget and we will help you achieve 3x the result. Surprisingly, some schools are so resistant to change that they take 8 months to decide even though we are traceable and measurable.
So in the summer of 2009 we got a preemptive offer. It is always good to fundraise when you are not looking to fundraise. It was a serious decision because the company was doing well and could have done well without the VC funds. However, the idea was so good that we wanted to inject some serious capital and make it big.”
How did you as an HBS grad get into start-ups?
Mike Levinthal, at that time general partner of the Mayfield Fund, funded Anne’s first business (Military.com), which she sold to Monster. Afterwards Anne stayed with Monster for four years, but Mike kept asking her to check out other start-ups. When he suggested Zinch, she was very intrigued and happy to be able to join the team.
In the summer of 2008, a year and a half after Zinch was founded, Anne came on board as the CEO. When asked about the transition and whether it was difficult to accept someone new to run your business, Mick answered: “We knew that we needed somebody that had been there, done that, and that could help us reach Zinch’s full potential. We knew that we did not want this to be a mom-and-pop thing anymore. We also knew that this would require some sacrifices, making it more people, and more complex, and we would not call all the shots. We knew that we also would need to give up control and equity, but we wanted to see that this thing would succeed.”
Anne adds: “It’s a credit to founders to think big and do what needs to be done to make a venture go big.”
Building the team
As business school students always wonder how to find techies to join your start-ups, Zinch gives three different pieces of advice: Dice.com, craigslist, but especially a lot of networking. “The single most important thing about the Bay Area is networking. People often ask me why Cambridge or Washington might not be as suitable. It is the critical mass of talent at the Bay Area. So many people move around, support each other and spread the word. It’s not the money – it is the talent.”
Assessing if someone is qualified when you have not previously worked with them, is another story. Zinch had a creative way to recruit its CTO in China. “There are two things they never teach you at HBS: sales and hiring. One of the best things to assess hires is to give people a project. It is not about the work output, but it is to see how they work, how they respond, whether they ask clarifying questions, whether they take ownership, etc. Our guy in China interviewed 30 people for a lead developer there. He said ‘Here is a piece of software, an off-the-shelf software that was new to everyone, and if you are interested learn it and write a program that does this.’ He estimated that it would take 10 hours. The guy who got the job spent all night and sent it in, and it was beautiful and he hired him.”
Follow your passion
Many students want to get into entrepreneurships but don’t know exactly how. They are looking for that one breakthrough idea or that one path that will lead you to victory. But looking at successful entrepreneurs there is always one theme that sticks out – they followed that passion. Just as in the example above of Anne and Mick, you can take many paths in entrepreneurship, but following your passion will keep the little shots shooting.
If you are interested in Zinch, they are looking to hire product managers at the moment, full-time or summer interns. If you are interested, email me and I will put you in touch.
Tamara Obradov is an entrepreneur at heart who is involved in the HBS entrepreneurial community. In order to shine a light on the many ventures of HBS grads and the support of the HBS community towards entrepreneurs, she will bring you stories from HBS start-ups in a bi-weekly column. Should you have any ideas or suggestions on HBS entrepreneurs that we can learn from, do not hesitate to contact her at email@example.com.