It’s sometimes called “the ecosystem for indies;” was built to help creative freelancers book and track projects, send invoices and get paid on a single platform; has $250 Million in fresh investor capital; and is sitting at the crossroads at a seminal time for so-called gig economy workers.
“It” is HoneyBook, a self-styled “client experience and financial management platform” that aims to empower over 10 million independent business owners to “be successful doing what they love.” Co-founder and CEO Oz Alon tells PYMNTS right now there’s more than enough work to be done and plenty of room for HoneyBook to grow beyond its current $2.4 billion valuation as it caters to the fast-growing microbusiness freelancer niche.
“These are service-based businesses. They’re selling themselves. It’s very personal,” Alon said in a recent chat with Karen Webster. “On both sides of this kind of commerce, the clients and the business truly care who they do business with. It’s not transactional. They want to know if they jibe [and] if they have exact chemistry.”
That also creates a high-wire act: sustaining client relationships on the front end while ensuring business functions are being well-managed on the backend, a task at which Alon thinks HoneyBook can excel.
“How do businesses balance … wanting to be very personal and automating responses? Because if they don’t respond quickly, they lose a deal. This challenge is what we wanted to solve,” he said.
How It Works
It’s not as if HoneyBook is alone in operating a freelance job site — it must compete with entrenched rivals such as Fiverr, TopTal, Upwork, and more. But as Alon describes it, HoneyBooks’ differentiator is its role as coach and business incubator.
“What we do for these businesses [is] manage their client flow, and how they respond to clients. We don’t stop at money in the bank,” he said, noting that they also advise microbusinesses about managing cash flow, all at a time of growing demand and supply for this type of work.
In fact, since COVID’s onset, PYMNTS’ data show a surge in SMB use of freelancers in the 2021 Main Street Business Survivor Study, which showed online sales have become integral to many surviving Main Street businesses, whether they are made on SMBs’ own websites or via third-party digital platforms, with nearly 60% of all Main Street SMBs generating more sales on their websites and via platforms in 2021.
Get the report: 2021’s Main Street Business Survivor Study
Capitalizing On Remote Trends
Given the lumpy income that microbusinesses and SMBs often experience, a single platform to manage tasks from lead generation to pitching to cash flow has lots of potential to help raise the level of sophistication and professionalism within the creative universe it serves.
“These businesses many times have these big lumps of funds, and then suddenly a desert, a couple of months without an income,” he said, noting that their expenses often follow a similarly lumpy pattern too, which can cause huge problems for tiny individual companies. “Sometimes the expense comes before the income. We believe we can impact all these things. Our members trust us with their clients and with their money,” he said.
And because the pandemic has fueled an unprecedented increase in remote-everything, the timing and opportunity for “indie-minded” entrepreneurs has never been better.
“What’s cool about it is that now their market…just [got] much bigger. If before your market was your town, now it’s the entire country,” he said.
See also: Freelance FinTech Chases The Sweet Spot Between Consumer And Business Banking
Data, Trust and Collaboration
Like so many digital businesses and platforms today, data is at the heart of HoneyBook’s business, to help streamline each part of the process — including payments, which is arguably one of the most important. Even in instances where clients pay by cash or check, which he says happens less than 20% of the time, HoneyBook users still track the funds and use the platform as their system of record.
“When it comes to data, you always want to make sure you maintain the trust of your members, and you want to make sure that as you share information, they don’t feel you’re taking information from them as well,” he said, noting the importance of privacy. “Clients are the most important thing,” he said, “and if you trust us with your clients, you give us quite a bit of trust, and then [also to trust us] with your money.”
This partnering and shared-prosperity mindset is also directly linked to HoneyBook’s own success: it only grows if its freelancers grow since it makes money from transaction fees and subscriptions.
Future Plans, Magic Software
With $250 million fresh investment dollars to draw from, Alon told Webster he plans to invest a lot in the product to help bring together the currently fragmented “indie” market.
“We’re finding…that as we launch new products…our members really want to consume them from us. If we can replace the bank for them, they would want to do it with us [because] they trust us,” he said.
Not that HoneyBook intends to take on banks, but Alon did say that the platform will underwrite agreements to help members with cash flow.
“We’re the only ones who know about this agreement, so if someone can underwrite that agreement, it’s only us. We have a responsibility to do so. It’s immoral for us not to do it,” Alon said, noting that a similar opportunity exists on helping small entrepreneurs manage their taxes too.
“If we can do these [things], if all of that happens automatically, you can imagine that it’s very beneficial for these businesses,” he said. “Software can do magic, and everything I just described are things that we’re thinking about.”
Read also: B2B FinTech Funding Creates Another Unicorn
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