E5 - Pivots Happen
From a name change to another pivot, HourWork caught a wave that resulted in nearly 10,000 clients signing up. Additionally, more investments poured in, and our friend Rahkeem Morris shares his experience of being a black man raising funds for his startup. All these events led to the birth of HourWork, the company as we know it today, with a vision that's making them one of the hottest names in the industry. This finale, part of The Chad & Cheese Podcast's Voices series, may not be as thrilling as Breaking Bad or The Sopranos, but it's truly remarkable, even though I may be a bit biased. Until next time, I'm co-host Joel Cheesman, and this is more of our interview with Rahkeem Morris, the CEO and founder of HourWork.
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Intro: Voices. We hear them every day. Some voices, like mine, are smooth and comforting. While, on the other hand, the Chad and Cheese Podcast is like listening to a Nickelback album, you'd rather stab yourself in the ears with an ice pick. Anyway, you're now listening to Voices, a podcast series from Chad and Cheese that features the most important and influential voices within the recruitment industry. Try not to fuck it up, boys.
Joel: A name change, another pivot, and catching a wave that would lead to signing up nearly 10,000 clients. On top of that, more investment came in and our friend, Rahkeem Morris, discusses his experience about being a Black man raising money for his startup. It would all lead to our work being the company that it is today. It's not quite Breaking Bad or The Sopranos, but this finale, part of the Chad and Cheese podcast's Voices series, is quite remarkable, even if I may be a tad biased. Till next time, I'm co-host Joel Cheeseman, and this is more of our interview with Rahkeem Morris, CEO and founder at HourWork.
Joel: So you're talking about a pivot, which, when Chad and I talk about the numerous startups that we talk about all the time, pivots are a, they're just built in, right? It's just baked into what you do. You didn't start out as HourWork. You started out as Syrg. Talk about that name. You've talked about the pandemic pivot. What other pivots did you face in the early days of the company?
Rahkeem: Yeah, it's, yeah, this is going to be a trip down memory lane for me. It's been quite a bit. In terms of main major pivots, there's been one with the company. In terms of these smaller mini pivots, there's countless of them. The first thing that we were doing as a company is we were getting involved a lot with scheduling. We were backfilling shifts for people, and we thought that we needed to get, well, just very integrated into the scheduling system at these employers. And given the integration challenges that we were experiencing, we decided to build out a scheduling platform at that time. It was something that was too big for us. Time, like programming time is actually really, really difficult. And then getting it right is even more difficult, especially when you're dealing with employers who want to make sure that their operations are running as efficiently and smoothly as possible. It was something that wasn't going to benefit us long term. And so we dropped the scheduling component of that, and we kept this backfilling of the shift component, and that became Syrg.
Rahkeem: So before Syrg, actually, there was something that we had called Aday, A-D-A-Y. There happens to be, by the way, a woman's clothing company [laughter] in New York City that we occasionally got confused with.
Chad: It's where Joel gets his shorts, yes.
Rahkeem: Oh, I could tell. Shift to the camera that's on right now. [laughter] All right, that's our first product. Once we removed the scheduling component of this, that's when we changed our name to Syrg. We were only dealing with shifts that became open because, let's say, someone was sick or their car breaks down or something like that. That's when we made our first big pivot to just and then after shifts, that's when we not focus on Syrg, which was this individual shift product that we had, and then pivot to what we're doing today as a company as a result of the pandemic.
Chad: So a round of that, you talk about concepts, right? And then there's execution, because you can ideate all day. There are plenty of people that do it. Talk about the execution point to this pivot, because it's not as easy as it might sound. You can't just put it on the whiteboard and it happens. So talk about that, that actual transition pivot, who was involved. I would assume that there was a good amount of company interaction then also founder interaction.
Rahkeem: Yeah, 100%. For me, when I'm thinking about this business and just businesses in general, most startups at least, you know that there are going to be certain pieces to the puzzle of your grand vision that you will need to assemble at some point in time. So let's say, as an analogy, let's say you are building a car. You know that you need to have your axles, your drivetrain, your wheels, your doors. You know that you have a certain list of components that you'll need to build a car that functions and that's legal and that runs. Same thing with the business. You know eventually you'll need to have, let's say from an operational standpoint, like marketing, you need to have sales. But from a vision standpoint, which I have very clear in mind, there were certain components of the vision that needed to be true that we know that we need to build at some point in time. It's strictly a matter of sequencing that's the question at hand. And for us, around the time of the pandemic, we had proven at that point that former employees are willing to return back to their former employers for on-demand shifts.
Rahkeem: What we haven't proven just yet is that former employees are willing to come back to their employers for full time and part-time jobs. When the pandemic happened, we weren't doing that one component of the larger vision that we know that we need to do. But there was another part, component of that larger vision that we saw an opportunity to launch a new product to the market that would accomplish the component of this longer-term vision, which was getting former employees to return back to their former employers.
Joel: You're talking about consumers driving the pivot or what you're doing going forward and I think that's a little surprising to people that are doing a lot of competitive analysis and what's the market opportunity. It sounds like that wasn't a big part of your decision to do or to change course with the company. Was it a part or does it even need to be a part? Is it consumer demand that should drive it?
Rahkeem: The broader market context was the only reason that we decided to pivot this company and then following that and wanting to catch the wave. We did two things around the time of the pandemic and that's just me, us, looking forward to the future thinking, well, half a million people are being laid off of work every single week. What's going to be the next phase of this? Well, the next phase is a massive rehiring effort of employers and we have documents here on the team that are labeled and titled in the beginning, call in something else.
Rahkeem: Catch the wave. Catch the wave. Do all businesses wanna catch the wave? All of the internal documents that we have? We created a program at the company that was focused exclusively on catching the wave of the massive rehiring effort of employers. And we built that product right before things got really serious in terms of the rehiring efforts. And we caught that wave all the way up into nearly 10,000 restaurants that we now have on our platform.
Chad: Which, predictable, right? That was predictable. You could see that this was going to happen. So yes, you weren't actually addressing something that was happening in the market. You were addressing something that you knew that was incredibly predictable that was gonna happen in the market.
Joel: Go where the puck is going.
Rahkeem: Yeah. Exactly.
Rahkeem: Yep. Go where the puck is going. Right around that time too. I wish I would've known that Tupperware stock would've gone through the roof. It went from $1.76 cents on March 27th, 2020 to $33 on December 31st. So that's another one I wish I would've caught the wave on.
Joel: Right next to the eggs.
Chad: Maybe next time. Maybe next time. So, in talking about the actual product, now, first and foremost, why did you feel like you needed a rebrand? Why didn't you just pivot under the same name?
Rahkeem: I really enjoy this question. I always wanted to have a name for the company that, and I was proud of our last name. I wanted to be proud of, and I wanted to represent exactly what our mission and vision were for the company. The company, it's called HourWork, and it is a play on words. Maybe a play on spelling is a better way to say that. The hour is spelled with H, I'm sure you get the connection. And this is really, this is this gets back to the reason why I founded the company which was to benefit people that worked these jobs. Especially recognizing and acknowledging the skills that they've learned from these employers and then using that knowledge to get additional income.
Chad: So, personalizing it, it's our work.
Rahkeem: Yes, exactly. Our work. Hourly workers. Hourly employers, our platform that is that's the reason why it's HourWork.
Joel: So you've raised a total of just over $16 million. What was the decision to go raise more money? Was it always something that was in your mind like, okay, we got a seed, now I gotta go get a series A. Are you looking to get more money? Also interested in raising money as a Black man and your take on the difficulty of that and challenges that maybe others don't have?
Chad: I think you're closer to 18 now, aren't you?
Rahkeem: Yep, $18.1 million. There's one fundraise. It's not recorded because it is a convertible debt note. [laughter] So you won't find that in the public documents. I suppose. And so why did we raise money and when we raised it. The first couple of rounds were, it was clear that we needed to raise money because I needed to hire a team, get engineers who are very expensive to work here at HourWork at the company. And so it was clear then and I've actually been pretty good with this which is to set out very, very explicit objectives that I wanted to accomplish with a certain set of funds. And then going out for each one of those raise with those objectives being first and foremost in my pitch. And so I was always raising based on some initiative that I wanted to achieve and accomplish here at the company. And each of my raises have, well just done exactly that. I'm actually, my forecasts for everything I've told investors so far has come true, including my top line revenue number, which I'm really proud and happy about.
Chad: What might that be?
Joel: Name names.
Rahkeem: It will be public knowledge now, and so we're right above $5 million, just a little bit over two years in the market which I'm also really, really, really proud of my team. And of course, me being involved in that getting us to that point.
Joel: Well, raising money as a Black man, your impression of that, more challenging, different than a White guy?
Chad: Much like the Harvard experience, I would assume.
Rahkeem: Definitely, yeah. It's exactly that. There's, it certainly is more difficult to raise money as a Black founder, and it's not because people are sitting, let's say in the decision making room thinking about, oh, this Black guy just pitched to me. Let's say no because he's Black. No one is having that conversation anywhere. What happens is that I'm sitting across a table from an investor who grew up in a suburb of some really big city that we all know of, and they went to a boarding school, they went to the same schools that I went to, Ivy League schools, and they've just had a very different type of life than I did. And we're sitting across the table and we don't have anything in common.
Rahkeem: And so now there's no small talk, there's just very, very strictly business is what we're talking about. And very small differences and micro behaviors that culturally come up, those are not relatable. And so for that reason, it is there's just less favorable outcomes for a Black man in this league. There's unconscious biases certainly of investors. And there is also, I think we also think that we're in complete control of our mind. 99% of the day we're doing things on autopilot, and if you're not intentional about the evaluation process for the founders that come into your room, you're going to have unpredictable results.
Rahkeem: One of the things that we do here at this company is that when people are interviewing for a role here on the team, we make sure that we're asking that person, each person that comes in for that one role, the same questions, and we wanna make sure that we can compare apples to apples. That does not exist in the VC world. No one's asking you the same questions. No one's caring about creating a fair and equal process. And I say that because it's not an intentional process of making sure that they're picking the winners. It's all based on gut feelings about the pattern recognition that they have. And I'm saying all that to say that it hasn't fazed me in a bit. I go into a room, I go into a pitch expecting to win, expecting getting that investment and walking away with a yes from the investors that I meet every single time.
Chad: I have to say, intentional isn't a word that just automatically points to you, for goodness sakes. You've been intentional through the whole walk, it sounds like, of this journey. When it comes down to the actual platform itself, everybody, and Joel and I talk about this all the time, talks about, they talk about how they slap DEI on their platform and they put their thumbs up or AI on their platform, and they put their thumbs up. You guys haven't done that. You've kind of stayed away from that. Why is that? When that is the popular thing to do and also moving toward with that wave, what do you think, how do you think your platform can just help find people who are qualified?
Rahkeem: Yeah. Yeah. I really appreciate this question, especially thinking about the types of people that work these jobs, these wage earning jobs. So you're thinking about, when we're thinking about jobs that pay less than 30, $40,000 a year, those jobs are going to be worked predominantly by Blacks and Latinos in the United States. The majority of people that work these jobs are gonna be US minorities, again, Black and Latinos primarily. And, well, these employers, at least at this level don't struggle with DEI in the same way that let's say, a desk job would.
Joel: I want to a little shoutout to you, your team is very diverse. And Chad mentions the companies with DEI on their pitches and their websites, and then you look at their leadership team and it's not so diverse. So you guys walk the walk, which I think is, which is commendable. And was that on purpose? Is that based on your interviewing process, which you just said is everyone gets the same question and also one of your corporate mantras is be like the Army. Explain that.
Rahkeem: Yeah. Two things here. We have on our job postings that we focus on DEI at the company, and it is a program that we have here internally. I will also say that we always hire the best person for the job. When you have an interview process in which you're comparing apples to apples, what happens is that you get a more diverse group. So no one gets a job because they're a woman and because they're Black, because you're, whatever it is, no one gets a job for that reason. We're able to get a diverse team at this company because we run our interviews well, and that's the reason why we have a diverse team here at this company. That's one.
Rahkeem: And in terms of the Army, I think you may be referring to sometimes how I pitch what we want to do longer term with this company, which is that we want, let's say a McDonald's manager to think about their workforce very much like the Army does. They have your active duty people and you have your reserves. And we want a place like McDonald's to think about their headcount as every single person that they have ever trained.
Rahkeem: It's also the case that 1-8 people have worked at McDonald's. And so you can imagine now that you have your active duty staff working at McDonald's, a shift becomes open or someone quits their job. You're able to go into your previously trained people just like the Army does with the reserves. Get that person in here in short order, and make sure that you're meeting every single operational metric goal initiative that you have at your restaurant. And it's something that, would employers embrace it, they will have a operational revolution that they've never experienced.
Chad: It's pretty amazing though, too, as you talk about that when we were at war in Iraq and Afghanistan, there were many times when we had more infantry units that were National Guard and Reserve on the ground overseas than we did active duty. So being able to actually structure a workforce like this gives you more assets and more availability to actually get the job done, especially when we have issues with jobs just going totally unfilled, positions going unfilled and companies that are missing top line revenue because of those unfilled positions.
Rahkeem: Exactly. Yeah. There are more than enough people in the United States for every single hour of every single job. The reason that we don't do it today is a collaboration failure among employers that they don't recognize these skills as universal skills to be shared among employers so that people can work at multiple employers. If that were something to be true with wage earning jobs, and then people were actually able to get legally, which is a whole other thing. Then every single job and every single hour would be filled. Over time, all the stuff, all the things that owner, operators, operators, managers, franchisees worry about, this would all be solved for the platform as I'm describing it.
Chad: So requirements, go down real quick. When you're hiring from a requirement standpoint, one of the big issues that I see with companies today, the requirement is a need, right? We need you to have this skill, this skill, this skill. A want is, I would like you, it would be nice if, you had these. We're clumping them all together these days in the same group. And when people are applying, you're getting a variety of mishmash of people who meet the wants and or needs in vary, in a variety of ways.
Rahkeem: There's a case that, well, actually every single employer outside of QSRs, fast food places, they don't know which positions their employees are trained on. They just don't know. And I know it because we've sat down with managers at places and gone through the entire roster on a table with all of the positions on the Y-axis and the people on X-axis, and then fill out every single one of the boxes. Can this person be a sweeper here? Can this person be an expediter here? And have done that exercise dozens and dozens of times. And so what happens when you have a short-term staffing need? You don't, you literally don't know who to call because you haven't recorded these positions or skills either at that employer or you're recognizing some external skills that you need at that job. And so there is, that not knowing what someone can do that is in there, that prevents us from having an efficient labor market, both local to just that one employer, that one location and just the broader labor market. We just don't know what people can do.
Joel: You mentioned McDonald's and at risk of getting even hungrier than I already am with all these fast food names being dropped. A popular story that we read a few years ago was a McDonald's franchisee paying $50 for people just to come in and interview. I assume that's the kind of problem that you're looking to solve at HourWork. And what sort of your... What would you do with that franchisee and what is just your overall opinion and perspective on the state of hourly work in America?
Rahkeem: Two big questions. The first one is what would I do to let's say advice or some suggestion that I would make to that owner who is paying people $50 for their interviews. Is that right?
Joel: Yes. And they weren't even coming in for $50.
Rahkeem: Yeah. I think a better way, a long term, that's a very short-term solution to a problem that they have. I'd say that they, well, what I would suggest to them is that they take the 50 bucks or the amount of money they're paying to people. 50 bucks times, let's say, 10% success rate and they need to fill 50 roles. Now they have 500 interviews and they're paying, I don't know, $25,000, $2500 for this. Maybe that math is right. [chuckle] But they're paying a lot of money for people to take interviews, people that are not guaranteed to eventually work at that employer. A longer term sustainable solution would be to take that amount of money they're paying for interviews and pay that to their existing staff for doing a good job at that employer to engage in some profit sharing with their hourly workers and their frontline workers.
Rahkeem: In the same way that desk workers, I look forward to my bonus at the end of the year and how that incentivizes people to stay longer at that employer to cash out on their bonus by the end of the year. That same thing could do wonders for employers, especially, employers that have hourly workers. Having that bonus structure of profit sharing could incentivize people to stay longer at that employer and take more pride in their work. One thing I'm confident about is that there is for many people a stigma for working in these types of jobs. And it's a stigma for many different reasons. One of the main reasons is that, it's a job that is very much plug and play for certain people. You're not walking into a McDonald's with a certificate or a license to say, "I'm a proficient."
Rahkeem: It's not a professionalized job just yet. But when you do things like profit sharing, you get people on the frontline thinking about how they can improve the profit margins of their employers because you're doing profit sharing, the more profits that the store has, the more that you get your take home pay as an hourly worker that is engaging in a profit sharing program. And so I would take the money that they would spend on interviews and really create a robust benefit package that would include profit sharing at that employer. And that will do so much, [chuckle] again, for their operations. And absenteeism, people showing up on time. It would do a lot.
Joel: Absolutely. Rahkeem Morris, everybody. Thanks for giving us so much of your time. For those listeners out there that want to know more about you or HourWork, where would you send them?
Rahkeem: Yeah. You can go to rahkeem.com. It's my Twitter, follow me. And then you can also go to hourwork.com. Make sure you spell Hour with the h to get to the right place. And you'll find out more about me, the company, what we're working toward, and more about our vision and where we see the market going for HourWork.
Joel: Awesome. Such a pleasure, man. We appreciate the time. Chad, I'm gonna go eat some Taco Bell, man. I don't know about you.
Chad: Maybe you should.
Joel: We out.
Chad: We out.
Rahkeem: Yes. Grilled cheese. Do it. [chuckle] See ya.
Outro: You can find more episodes of Voices, the Chad and Cheese Podcast series devoted to stories and opinions of industry leaders by subscribing wherever you listen to podcasts or just visit chadcheese.com.