James Masini, 25 year-old founder and managing director of Hippo Jobs, an online recruitment company for Gen Y, shares the first 12 months of building a business.
“We’re only 12 months old but sometimes I feel I have been eating, sleeping and breathing nothing but Hippo for a decade,” says Masini. As Hippo celebrates its first anniversary as a fully-fledged business, he has felt the added pressure of changing the perception that he was just another lazy Gen-Y oaf looking for the easy road to success and fortune.
While Hippo confronted some major challenges and setbacks in its first year, if it came down to it, Masini would do it all over again, “in a heartbeat”.
“Nothing worthwhile is easily overcome. Hippo has achieved amazing things in 12 months but really, we’re only just getting started.”
In the beginning: A great idea
Masini started working on the Hippo concept while studying business management and entrepreneurship at RMIT University. “The idea for Hippo came about from being at the pub with friends who couldn’t really afford to buy the next round of drinks because they weren’t working and basically were always broke. Not that they didn’t want to work, but rather it was difficult for people of my age to find an employer who would work with their timetable and be willing to give someone young and inexperienced a go,” he says.
Further research by James confirmed that he and his friends were not the only ones having problems finding work and that of the 2.8 million Australians aged between 15 and 24, about a million were unemployed or actively seeking employment. Masini immediately sensed an opportunity.
Phase 1: Raising capital
Looking to break down the barriers confronting the Gen Y workforce as well as combat general negative perceptions of the group’s supposedly suspect work ethic, Masini prepared a detailed business plan that went on to form the basis of an information memorandum, a document crucial to raising capital.
In June 2006, he took the Hippo show on the road; his goal was to present to potential investors with a view to raising about $3.2 million.
“My hopes were big at that stage. Within a couple of months I had presented my business concept to some 20 venture capitalists; I wore out plenty of shoe leather walking up and down Collins Street but unfortunately I didn’t get anywhere,” he says.
“I kept hearing the same things over and over: the market is too large, there are too many competitors, you are trying to raise too much money, you’re not raising enough money. But the one factor that stuck out most was my age and lack of experience.” (James was only 23 at the time).
Rather than deterring James, such comments only made him more determined to show that youthful energy, drive and determination could make the concept work.
By October, 2006, Masini had presented to almost 50 potential investors. Things were starting to gel and he had received offers from three potential investors. The three parties each offered different levels of finance in exchange for a percentage share of the business; interestingly, they each brought differing partnership ideas and styles to the table. Rather than shooting for the highest amount of cash on offer, Masini decided to go with the investors who proffered the least amount of cash, a group led by Jeff and Janine Allis, the founders of Boost Juice.
Masini says he believed this group truly understood his business idea and brand concept and, importantly, could provide the mentoring style of support he needed, especially being so young in Hippo’s initial stages.
Launch time: Hippo is born
With money in the bank and energy to burn, Hippo was away! On April 18, 2007, the Hippo jobs website officially launched with a national radio campaign, outdoor advertising plus a solid online marketing push. According to Masini, it was important to “get the brand out there” and let word-of-mouth take effect.
“It was an amazing time and so rewarding to watch the number of user registrations increasing on the site, literally on a day-by-day basis,” says James.
The launch sparked a period of amazing growth for Hippo. The company hired new staff and found larger office space to house the developing business. However, the possibility that the business might not pan out continued to play on Masini’s mind. He decided to play it safe, hiring temporary staff and securing office space with a flexible, short lease arrangement.
Midway: Hiring a new CEO
With the business quickly expanding, the Hippo board decided an experienced chief executive officer should be hired to help run the day-to-day operations as well as put systems and processes in place that would take Hippo to the next level.
James concedes that with a CEO on board, he took his finger off the pulse. “It was during September – six months we’d been in business – and I was looking at the accounts one day when I remember being shocked at how low on cash we were,” he says. “I left the office and called an emergency board meeting to discuss the matter; we needed to decide a course of action, and quickly. The board decided to raise additional funds through convertible notes issued pro-rata to existing shareholders. I learnt two things at this time: one, to keep a detailed and constant watch on the financials of the business, regardless of what you have in place; and two, as an entrepreneur I don’t like convertible notes!”
Shock of a lifetime
November came and with it another board meeting. “During this meeting I was told straight out I was costing the business too much money and that maybe my salary should be cut. In other words, I was being asked to take a massive financial hit for the sake of the business. I was shocked,” says Masini. “This method came from the highly paid CEO as a way of reducing the business’ cash burn, knowing as the young entrepreneur I would stick around anyway. I felt they wanted my ideas, they wanted my opinions and they wanted my knowledge of the market, but because of the financial situation, they did not want me paid for the work I was doing.
“I was distraught, physically and emotionally exhausted. To sit and think of the amount of time and energy I had put into this business, yet here I was as good as out on my ear.”
After some soul searching and advice from mentors, close friends and family, Masini started to push back and subsequently pressured the CEO and board about fixing the situation; a situation that was not going to just be fixed by reducing his wages. Following a series of frank discussions, it was agreed all parties would set aside their differences and work together to make the business work.
As Christmas neared, Hippo ended its office lease and moved into the Boost Juice head office in Glen Iris. “This was probably the best decision we made because not only did it save us some money but it put me in close proximity with the amazing people at Boost; as a young entrepreneur, such support has been invaluable,” says Masini.
But while he had a new lease on life, Hippo’s growth was still a concern. November’s revenue dropped, so did December’s. “The equation just didn’t add up,” says Masini. “We had got off to such a fantastic start and were growing exponentially month on month, only to hit a wall six months later.”
Analysing the business carefully, Masini says it became apparent growth had come solely from a focus on closing off on deals with existing clients, but there had been no strong enough pipeline of new client leads to maintain this growth. “Having identified the problem, we started back in January with renewed vigour and pretty soon we saw a fantastic increase in sales.”
A new beginning: signing the DMG deal
On February 5, 2008, just 10 months after launch, DMG Radio Australia, owners of Nova and Vega radio stations and backed by a publicly-listed entity in the UK, purchased a 20 percent stake in Hippo. This was a significant step . The link with DMG was the first deal of its kind in Australia and it now allows Hippo to deliver a consistent brand message nationally, while building brand awareness across all states. It also helped Hippo to deliver peace of mind for its staff and clients; this was one start-up that was here to stay!
Fast forward to today
Today, Hippo has more than 75,000 fully registered and profiled candidates nationally, of whom 80 percent are under 25. More than 7,000 employers have advertised more than 13,500 jobs since launch and the site itself attracts 100,000 visitors each month, a number that continues to grow.
Masini says: “The learning curve has made the journey so rewarding, plus I get to help young Australians find a job, giving them an opportunity to get money to do the things they want to do: enjoy a drink with friends, buy their first car, save to go overseas, move out of home or even just be independent enough to pay for their own mobile phone bill. It’s a start, and that’s what Hippo is about.”
Advice for start-ups
Masini says the key to Hippo’s growth and success in its first year is a clear vision, clear differentiation and clear passion from all involved. His advice for start-ups is to continually ask for feedback and learn quickly from mistakes.
“No matter what happens, no matter how hard it gets, just keep working forward,” he says.