Pontificia Universidad Católica de Chile
This case starts in March 2008, when Andrés González, the entrepreneurial mastermind behind Empleados Ya (Employees Now, EY) was worried about his startup’s financial health. González and Salvador Sáez, both professors at one of Santiago de Chile’s top-tier business schools, had created EY with only US$ 10,000 to address the employment needs of the population’s poorest segments and the companies requiring their services. In a country where unemployment ran historically high, the two founding partners were determined to accomplish a two-fold goal: earning profits (creating economic value) and contributing to alleviate a major social problem (creating social value). Chile featured a well-developed headhunting industry for highly qualified professionals, but the low-qualification job market was largely managed by the State with municipal offices (Labor Intermediation Municipal Offices, OMIL). These agencies had an inefficient labor intermediation performance, and companies did not rely on them to handle their job openings. González realized that one of the underlying causes for unemployment in lowly qualified segments revolved around limited labor market information –people looking for a job did not know where to turn to, and large companies did not rely on OMILs to find good workers. As a result, a market niche remained untapped, with a business opportunity awaiting anyone willing to become a reliable liaison between potential employers and LIS workers.
This case describes the challenges faced by EY to stay in business. Nearly three years into the project, EY’s leader has forged an alliance with an international labor intermediation organization that has failed to reap the expected fruits. Sáez was ready to cut his losses and close down the startup, but González refused to admit defeat. However, confronted with the harsh reality of EY’s financial results, González has to make some key decisions if he is to make his business profitable enough to survive.
This case may prove useful for courses on entrepreneurship and startups’ early development, as it illustrates how to build a sound, sustainable business. It may also be used in courses dealing with base-of-the-pyramid business ventures, cross-sector collaborations, and economic and social value creation in businesses involving low-income sectors.