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Market Spheres II

(August 11, 2000) We probably left at least some scratching their heads. Market spheres, indeed. Goofy sounding as it is, that's the way that we are trying to come to terms with the multidimensional complexity of a space through which at least 12% of the American Gross Domestic Product (AGDP) passes each year.

After all, how can you begin to describe a market that encompasses software systems, classified advertising, job boards, temp agencies, networks of relatives and friends, regional variations, extreme disparities in customer size and need, and, radically varying execution approaches?

Our smug friends in the Enterprise Systems arena discount the whole ball of wax as "that recruiting stuff". Customers, in need of "buns on seats", see non-differentiated offerings from a wide range of competitors who actually deliver very different things. The constant stream of visionaries who pass through our offices see the seeds of their self-proclaimed revolutions.

While we hate to go anthropological, it seems to us that the very definition of work and a workers relationship to a job varies by industry, education, employer and region. The simple dynamic of customer size (measured in the number of employees at a given location) creates a work environment that is a critical determining factor in potential employee success. In micro companies, employees are a part of the family. In macro companies, managers try to make the workplace "feel" like a family (sometimes). There is a world of difference.

Customer companies organize themselves into groups based on size, along a dimension that describes the depth of their planning and on their predisposition towards hiring based on skills or attitude.

  • Big, middle sized, small, micro and startup companies all make hiring decisions in different ways.
  • Some companies grow on an ad hoc basis while others devote a great deal of time to the resource planning and requirements definition that MBA-style management involves. The ad-hoc group is lost in a world of profiling while the MBA group gravitates towards it.
  • Highly technical companies focus on skills and certification while sales oriented companies tend to focus on attitude and fit.
Interestingly, these three customer dimensions are framed as extremes while real company behavior tends to be a blend. But, the extremes are useful for market segmentation exercises. They are also useful in the process of designing, calibrating and understanding a sales pitch. From the vendor's perspective, a value presentation will have more "traction" if it is aligned to the customer's perspective. From a customer perspective, knowing which type of company you are should make the process of weeding through thousands of competing propositions a bit easier.

- John Sumser © TwoColorHat. All Rights Reserved.

Market Spheres

(August 10, 2000) The map is not the territory. The map is not the territory. The map is not the territory. The map is not the territory. The map is not the territory.

Why are these six words worth repeating? As the Electronic Recruiting Marketplace unfolds and expands, the way that we look at it needs to change. Over and over again, we encounter bright eyed, bushy tailed visionary entrepreneurs who are certain that their simplistic picture of the market contains the penultimate answer. Typically, the root of their difficulties building revenues boils down to a flawed view of the dynamics that make our market what it is.

The phrase "the map is not the territory" means that the one assumption you can make is that your assumptions are wrong. Though there are time honored warnings about making assumptions (they make an Ass out of U and Me), it's hard to let the beliefs at the root of a business fall by the wayside to pragmatic experience.

Lots of analysts have tried to describe the Electronic Recruiting Market in simplistic terms. We're certainly guilty of trying to cram everything into a two dimensional picture that fits on a single sheet of paper. Categories of sales activity, near and dear to business plan developers, require slash and burn style assignment of this company to that revenue pile. If you read enough business plans (or subscribe to enough newsletters), you are certain to walk away with a decreasingly useful (but extremely simple to explain) map of our universe.

Take 10 analysts opinions, put them all together and divide by ten. The resulting answer will be simple enough to color with a crayon. It won't, however, be very useful for navigation purposes. It certainly won't be really useful for on-the-fly decision making. If you try to explain it to a customer, you'll lose a good deal of credibility because it won't match his/her experience.

Although it's difficult to explain, we imagine the market as a dynamic set of overlapping spheres of influence. Some observable customers, some observable budgets, some observable regional characteristics, some predictable growth cycles, some technology principles and so on. The integration of the pieces is what makes a sales team really kick into action. The unexpected behavior of customers and candidates is really the operating definition of the way our world works.

The central feature of any company's business prospects in this space (or any, for that matter) is the extent to which they segment off a knowable piece of the universe and map it for themselves. It's no accident that the most profitable (and most likely to survive) operations have cleanly identified the people who are not their customers and the problems that they don't solve. It's a cost effective world view that eliminates wasted time and divorces itself from "save-the-world" theories. Rather than forcing their businesses to absorb too many unknowns, they tightly constrain the world that they serve.

- John Sumser © TwoColorHat. All Rights Reserved.

The Definition

(August 09,2000)Today, a small quote. We think it encapsulates everything that concerns the use of the Net in Recruiting.

"Recruiting is the sales and marketing component of a company's relationship with its employees and potential employees."

Dark Horses

(August 08, 2000) While the CareerPath/CareerBuilder merger grabbed everyone's attention, there was a lot of movement around the newspaper industry. The combination did a solid job of trying to move CareerPath into a place where profit was possible. Focused on the big issues (as huge entities must), little things (like CareerPath account attrition and the end of monolithic control of the newspaper industry's franchise) have gone somewhat unmanaged.

We are very sure that under Rob McGovern's able hands (he's the CEO of the combined mega-play), CarrerPathBuilder is going to be a very profitable and lasting network of job distribution and resume collection operations. Rather than focusing on industry dominance and the protection of regional territories, McGovern should be able to breathe positive cashflow and sales capacity into his newly minted array of regional newspapers and dot-com publications. With over 350 outlets, there is no question that CareerPathBuilder is the second largest provider of targeted advertising delivery in the business (after RecruitUSA).

We're tempted to see all of this as stage setting for the next round of industry growth. We recently received a series of notices from CareerCast's Rick Miller identifying a dozen new sites added to the network of ventures that are powered by CareerCast:

  1. The New York Times selects CareerCast to aggregate jobs from employer websites.
  2. Orange County Register and selects CareerCast to Power Job & Resume Databases and aggregate jobs from employer websites.
  3. selects CareerCast to Power Job & Resume Databases and aggregate jobs from employer websites. ITWorld sites include:
  4. selects CareerCast to Power Job Database and aggregate jobs from employer websites.
Over the long haul (and in spite of the intense attention paid to Media Metrix rankings), the Internet Job Board Market is going to resemble a complex, 30,000 headed hydra. Big, high profile plays like the merger will always create opportunities for nimble Dark Horses to grab 5% of their market share in a week. The market is huge, the customers demand choice and there is room for a large number of profitable players.

We're looking forward to the next waves of evolution.

- John Sumser © TwoColorHat. All Rights Reserved.

Talent Labs II

(August 07, 2000) Last week, we wrote a little bit about the Fast Company job fair alternative, Talent Labs. In a our sustained labor shortage, the essence of the Job Fair needs an overhaul. The more we consider the prospect of Talent Labs, the more excited we get about the prospects for change. The simple fact that someone is willing to invest capital, reputation and energy into a reinvention experiment is cause for applause.

At its root, the traditional job fair creates an "us and them" marketplace with little visible room for the middle ground. On the whole, the assumption underlying traditional job fairs is that the carney mentality ("marks" strolling by booths) works for all participants. Although sophisticated job fair producers will assure you that the real business of a job fair is competitive intelligence (and therefore a third category of player), it's a well kept secret. Most carnival goers are oblivious to the deeper possibilities on the midway.

For the most part, job fairs sell hope to candidates and recruiters. Recruiters pay with money and candidates pay with time. Everyone invests hope. In that way, job fairs are very similar to most job boards and free agent markets.

To counter this underlying dynamic, Talent Labs is selling skills, interactions and possibilities to candidates and recruiters. Like many experiments, the underlying thesis is intuitive. Like many event development prospects, the process will be evolutionary. In its first iteration this fall, the event will be a pragmatic attempt to find out what works and what doesn't.

You've got to envy Fast Company's position. Rather than having to push towards an IPO under the stringent scrutiny of investors, the operation is harvesting an audience they've built for adjacent reasons. That gives them an extraordinary edge in the process.

Although we can rant for hours with cynicism about the Fast Company audience, the truth is that they all identify themselves as free agents or change agents. One of the magazine's constant themes is the development of "Me, Inc.". Focused on proactive and hard charging professionals and managers, the magazine provides hope and encouragement as a component of an annual subscription. This leaves them positioned to cover other things in the Talent Labs. It creates an environment for Silicon Valley Recruiters that is significantly higher quality than Craigslist (or its Boston equivalent). They appear to be able to execute the experiment profitably while learning how to improve the process over time.

It's interesting, we think, to have a non-participant in our industry point out the fact that the local Recruiting market can be very nicely segmented along quality lines. From the way that most analysts cover the space, you'd have to think that one job board would dominate a region or industry segment. Really, we think that profitable candidate pools can be built in numbers that look more like 10,000. Talent Labs is trying to show that it can be done in lots of 2,000.

- John Sumser

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