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It is better
to not be on
the web than
to be on and
not know why

John Sumser

is more
it seems.
John Gall


The Electronic Recruiting News is a Free Daily Newsletter For Recruiters, HR Managers, Advertising Agencies and Clasified Advertising Operations

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(July 20, 2000) The buzz about the industry is up to the point that even Webhire's stock is rising again. In a supreme show of financial muscle, Knight Ridder has moved to revitalize its massive investments in CareerPath by merging it with CareerBuilder and the RealCities employment properties.

We spent much of Monday and Tuesday of this week sorting out the implications of the deal with clients and members of our network. Early reactions ranged from terror and dread to loud guffaws. Seen in context, however, the move is a part of the predictable evolution of the online newspaper industry.

By all means, the newspapers are living, breathing contributing members of the ecology of Electronic Recruiting. It's been easy to forget this fact as the major property investments have floundered in indecision and committee-intensive decision making. With the single exception of BrassRing (and they retain deep integration problems), the newspapers have consistently failed to imagine useful marketplace solutions. Inferior performance lulled their smaller and more nimble competitors into an unjustified sense of well being. At the core of the slow market response is a deep political problem coupled with a strong lack of sales experience. The infusion of CareerBuilder's sales prowess should move the process forward by an order of magnitude.

We're reminded of an old cartoon in which an army of Lilliputians has built a small village on the chest of a sleeping giant. Because the Giant's metabolism is on a different cycle, the village has been built while he was immobile. The cartoon shows surprise and terror in the eyes of the village residents when the Giant snores a little more loudly.

The giant is an important reality of our marketplace. Much of the initial growth in Electronic Recruiting has come at the expense of growth in newspaper advertising. Imagine having to explain to your boss that you were only able to grow at 3% in the hottest employment market of all time. The only thing higher than the pressure in classified advertising offices is the level of Hamlet-like indecision.

While we applaud the Knight Ridder move as a confirmation of the fact that the problem can't be solved internally, we also recognize that it parallels the BrassRing decisions of last summer. Rather than a validation of marketplace consolidation, however, it's really a validation of the industry that grew up while the giant slumbered. The move ends the newspapers' commitment to a monolithic solution and frees other members of the CareerPath consortium to pursue competitive opportunities.

The direct beneficiaries of this move will be RecruitUSA, CareerCast, Pentawave,, Digital Discovery and the other small upstarts who have patiently built their businesses over the past five years. As the ramifications eke out over the coming months, we expect to see the investors in these concerns get increasingly more excited about the prospect of seeing a return. Rather than a market limiter, the announcement will fuel the next layers of growth across the industry.

- John Sumser © TwoColorHat. All Rights Reserved.

Valley Layoffs (from our vault)

(July 19, 2000) There's a silent story that appears to be going untold. You can see the symptoms and effects in a variety of places. But, the story is quietly being held back.

There are lots of layoffs in the once breathy "dot-com" industry. Acute readers will have noticed this as the subtext of our F***edCompany story from last month. We wonder if Silicon Valley isn't heading into one of its historical downturns.

It's important, we think, to understand the historical role the Valley plays in the national economy. We see it this way:

Silicon Valley is a large Training and Development laboratory for the rest of the economy. One of the greatest benefits of the Venture Capital structure that drives the Valley is that it creates lots of new talent for the rest of the country to absorb. In the Valley's periodic downturns, the talent the rest of the country needs is freed to relocate. So it will be with the veterans of the first wave of the Internet economy.

Layoffs in the Valley do not mean that the fuss about a talent shortage is offbase. If 20% of the IT/Web professionals in the SF Bay Area were laid off tomorrow morning and used to fill some of the massive IT openings in the economy, there would still be more than 1 million unfilled slots. It's best to understand that the labor shortage doesn't change business cycles. It may, in fact, amplify some of them. A labor shortage is more likely to produce higher attrition rates than slow them. So, company success and failure may well be on a tighter calendar than in earlier days.

Meanwhile, the tempers flare and dreams are lost. Anyone picking up players from this crop in the Valley will do well to be aware of the height and intensity of the aspirations involved in joining a dot com shop. These soon to be useful veterans are a bit shell shocked when you first meet them. The adjustment and retention processes will have to be fine tuned to keep them.

- John Sumser © TwoColorHat. All Rights Reserved.

The Underbelly of Attrition (from our vault)

(July 18, 2000) "People don't quit their jobs, they quit their friends." We heard this simple and powerful insight last week at the CTO conference. It crystallized our thinking. Retention is about the support and celebration of a social network. Attrition is rooted in bad communications or bad social fit.

If life were only so simple. The desire to have problems stated in ways that will respond to broad programs appears to be embedded in the minds and hearts of corporate America. The countervailing force appears to be the desire to have problems defined in ways that clearly blame management for being too unwilling to change.

Let's look a little closer.

Attrition is a big word that covers up the fact that it's painful when people quit. Retention is three syllables that mean "sometimes you can get them to stay longer". Marriage and divorce are more understandable terms....and closer to the reality.

From a manager or owner's perspective, an employment relationship is a series of investments. It goes beyond paychecks and covers learning curves, emotional involvement, facilities, the provision of work to do and the concern for keeping the work plate full. Taking on a new employment relationship is a high risk proposition that seems (to many managers) like the downside is not shared. Often, a manager (having once been an employee) is more able to see the employee's perspective than the reverse. We find that even the grumpiest managers have a wellspring of compassion (however badly expressed) for the circumstances of the employee. Generally, the manager is charged with seeing and managing company risk.

On the employee side of the equation, the issues are different. In search of challenge, security and a social network, workers often look for more than a company can provide. At best, with onsite pizza parlors, espresso stands and a Mercedes in every garage, the company is still fundamentally a profit producing machine. The best "corporate families" are teams that exist for a moment in time. Market factors, much more than individual managerial behavior, drive the company environment.

Given these two conflicting perspectives, it's a surprise that any work relationship lasts. As the labor surplus gets exaggerated over the next decade, we're going to see an astonishing array of bandaid approaches to the retention and attrition issues.

The vendor community will hype the things that can be sold (our espresso stand has an ROI of 40% when measured in human capital) while ignoring the rawer components of the question. Economic circumstances are evolving so that shorter term relationships are viable. Meanwhile the constraints under which managers operate are tightening. This is creating an environment in which bizarre, irresponsible behavior is sanctioned and celebrated.

We anticipate an increasingly polarized workplace. A 30% retention rate (normal in some corners) means that managers across the company are numb from the personal loss (and hardening their hearts). As workers experience an increasing depersonalization of their relationships with managers, a spiral will begin.

This is the fundamental dynamic of a free agent marketplace.

- John Sumser © TwoColorHat. All Rights Reserved.

The Big Mo (from our vault)

(July 17, 2000) It's always a deep privilege to get to witness the passion that fuels the inside of really entrepreneurial companies. People who pursue a dream each day have a special sort of charge about their private affairs. The distinctions between the work, the passion, the family and the product, rather than being balanced are tightly integrated into a seamless view of reality. The company is the product; the product is the family; the family is the work; and, the work is the passion.

While passion doesn't guarantee entrepreneurial success, it appears to be a prerequisite. But, as any sensible player will tell you, passion is, at its best, a way to console yourself about the shortfall in your paycheck. Real success involves seeing well beyond the confines of an idiosyncratic sense of the future and into the soul of the market.

It also requires a serious investment beyond a self-serving sales pitch.

Early start companies in our space had a nice and understandable challenge. In order to make the Electronic Recruiting marketplace emerge, they had to educate customers. In those days, candidates outnumbered advertisers by an order of magnitude. The job was easy...get a customer to use the system and results would take care of themselves. The real advantage the first movers held was the leverage implicit in the market.

With over 30,000 competing vendors of various sizes and offerings, the game is very different today.

Last month, we mentioned attending the first ever Chief Technical Officer Conference, hosted by in Austin. Leveraging their relationship with FastCompany, the team at managed to integrate a market need with their company's explosively growing business. The conference successfully placed in a thought leadership role in the industry.

The product line does not pretend to offer a full spectrum solution for CTOs. Rather, it solves one problem brilliantly. In order to successfully pull off the conference, had to invite a series of people who had larger, sometimes contradictory views of the way the world works. By combining these two issues into a single conference, the company managed to seriously amplify its market momentum.

In order for any company to make a permanent mark, it has to be a part of something larger. More than any competitor we know of, takes the challenge seriously. From deep community involvement (they have invested in saving a key Austin landmark...Willie Nelson's old Opera house) to important non-profit work, the company manifests a profound and reliable commitment to its local roots. On a larger scale, the CTO conference represented a profound move to give back to the larger market.

We are seriously impressed.

Investing in a network involves a kind of courageous risk taking approach that is not for the faint of heart. But then, the faint of heart rarely achieve real market momentum. When you invest in a network, the return on your investment can not be calculated in a straight line business fashion. The risk is that someone else will benefit from your investment. By delivering a relatively hype free CTO conference, the folks at demonstrated that they understand their broad responsibilities to the marketplace and are willing to take the risks involved in meeting them.

This is the way that real winners play the game. We were privileged to be a part of the process. The rest of the market should look closely.

- John Sumser © TwoColorHat. All Rights Reserved.

© 2013 interbiznet.
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Materials written
by John Sumser
© TwoColorHat.
All Rights Reserved.

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