“The truth is, the best people aren’t choosing to go work at most large enterprises anymore. Most of the most talented people in the world today are choosing to work in a different way.”
– Pat Petitti (HBS ’14), Catalant co-founder and co-CEO
Catalant, a Boston-based startup, is shaking up the consulting industry with its online platform that “enables the world’s best companies to work with top experts for on-demand needs.” This company’s name – Catalant – is a combination of “catalyst,” “brilliant,” and “talent,” representing its value proposition to customers.
Catalant is a two-sided market that connects experienced consultants – or “experts” – with companies tackling business problems. Through the Catalant platform, firms post projects that experts can bid on. During the bidding process, experts provide their qualifications and day rate. Based on a company’s needs and willingness to pay, it selects an expert to work on the project. There are currently over 30,000 experts and 650 firms on the platform.
Catalant creates value for both experts and firms. According to Glassdoor, the average salary for a post-MBA consultant at McKinsey is $136,284, equating to a day rate of $524 exclusive of benefits and $681 inclusive of benefits., Consulting firms bill clients for post-MBA consultants at a significantly higher rate, ranging between $3,200 and $4,800 per day. In contrast, Rob Snyder (HBS ’18), a consultant who uses Catalant, has charged clients $1,700 per day, a price higher than what he would earn at a consulting firm and lower than what a client would pay to engage McKinsey. Catalant takes 20% of revenues generated by the expert.
In addition to monetary value, Snyder explained that Catalant improved his quality of life. Compared to his time at a large consulting firm, Snyder had greater flexibility over the hours he worked and worked fewer hours overall. With clients paying over $3,000 per day for a consultant, partners wanted to ensure utilization was high, typically over 100%, so the client would feel like they were getting their money’s worth. This created a principal-agent problem that resulted in decreased quality of life.
Digital technology has created enormous opportunity for disruption in the consulting industry. Catalant has capitalized on digitization through a series of operational choices.
- Catalant is does not hire or train its own consultants. Instead, the company serves as an intermediary between experts looking for work and companies searching for talent.
- Catalant has a system that matches experts to projects. Catalant is able to search its database of 30,000+ experts to generate a list of experts who would be a good match for a project. Additionally, Catalant is able to match experts with each other and build robust consulting teams.
- Catalant has a rating system for experts following a project. Firms rate experts based on the quality of their work product; however, experts are not able to rate firms.
- Catalant facilitates a bidding process, which sets the price of a project. Companies want quality talent at a low price – but not too low as to drive away talent. Experts want to be compensated handsomely – but not too handsomely as to lose projects to other experts. Thus, firms and experts are incentivized to find some middle price that satisfies the needs of both parties.
Ultimately, these operational choices, coupled with large network effects, have enabled Catalant to deliver on its value proposition. According to a Fortune 100 Energy Company, “The ability to hand-pick our team with the exact experience we needed was a major reason we chose Catalant over a major consulting firm.” This firm was able to draw on Catalant’s broad network and simple platform to hire a well-rounded team to tackle their problem.
Although Catalant has been quite successful, the company should take additional measures to ensure they remain competitive in the talent sourcing space.
In particular, Catalant should provide professional development opportunities for its consultants. To maintain continue to compete on talent, Catalant should leverage its large base of consultants – who have myriad skills and experiences – to create robust development opportunities. Two challenges arise with this recommendation. First, consultants may not want to train other consultants, either because it decreases their own competitive edge or because their training materials may be proprietary. Second, regardless of who implements the training – consultants or Catalant staff – there are costs associated with such a program.
In addition, Catalant should invest more resources into vetting experts on its platform. Catalant’s website touts accessibility to “elite business experts” but does not conduct much screening themselves. Instead, Catalant relies on prior experience and a short interview as a proxy for caliber., To remain a leader in the space, Catalant should invest more resources upfront to evaluate an expert’s skills and ensure that consultants meet firms’ expectations. This will be increasingly time-intensive and costly as their networks grow, but is essential to maintaining their reputation.
Ultimately, Catalant is revolutionizing the talent management space by digitizing the role of a traditional consulting firm. Through their vast networks, they are able to connect experts with firms faster and more efficiently than ever before.
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 “HourlyNerd Becomes ‘Catalant’ as It Shifts Its Focus to Enterprise Clients,” BostInno, July 26, 2016, http://bostinno.streetwise.co/2016/07/26/hourlynerd-is-catalant-entreprise-freelance-consulting/, accessed November 2016.
 “A two-sided market is a market in which a firm sells two distinct products or services to two different groups of consumers (the two ‘sides’) and knows that selling more to one group affects the demand from the other group, and possibly vice versa…. A firm in a two-sided market is then said to act as a platform1 and to somehow connect distinct but interdependent customer groups (the so-called ‘sides’) in a way that generates value for at least one of the two customer groups.” Filistrucchi, L., Geradin, D. A. A. G., & van Damme, E. E. C. (2012). Identifying Two-Sided Markets. (TILEC Discussion Paper; Vol. 2012-008). Tilburg: TILEC, https://pure.uvt.nl/ws/files/1410181/2012-008.pdf, accessed November 2016.
 “McKinsey & Company,” Glassdoor, https://www.glassdoor.com/Salary/McKinsey-and-Company-Salaries-E2893.htm, accessed November 2016.
 Day rate is calculated based on the assumption that employees are compensated for five days per week 52 weeks per year. According to the Bureau of Labor Statistics, benefits in private industry account for 30.3 percent of total employee compensation. “Employer Costs for Employee Compensation news release text,” Bureau of Labor Statistics, September 8, 2016, http://www.bls.gov/news.release/ecec.nr0.htm, accessed November 2016.
 “How much do management consulting firms charge clients?,” Consulting Junkie, May 28, 2015, http://consultingjunkie.com/how-much-do-management-consulting-firms-charge-clients/, accessed November 2016. Blog post is consistent with personal industry experience and those of my peers.
 Interview with Rob Snyder, Expert on Catalant platform, November 17, 2017.
 Black, John, Nigar Hashimzade, and Gareth Myles, “principal–agent problem,” In A Dictionary of Economics (4 ed.), Oxford University Press, 2012.
 Interview with Rob Snyder, Expert on Catalant platform, November 17, 2017.
Cover Image: http://www.rlmconsulting.be/consulting/.