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2000 Part V

(December 22, 2000) In addition to our trends and predictions, there are a number of companies that you have to keep your eyes on. Virtually everyone agrees that the industry is in a formative stage and will be a cauldron of innovation over the next several years. The job board, a small improvement on newspaper classified advertising will begin to give way to other more focused and effective forms of recruiting. The Recruiting advantage will go to companies who are skilled at the identification of new tools and approaches. From our vantage point, some operations are more likely than others to develop the products and services that will define the future of the industry.

25 Companies To Watch In 2001

- John Sumser © TwoColorHat. All Rights Reserved.

2000 Part IV

(December 21, 2000) What's a year end review without a few predictions? We gathered a collection of soothsayers and mystics for a day long "What's Coming" conference in our multimedia greenhouse. With crystal balls polished and tea leaves prepared, we offer:

The Top 15 Things To Expect in 2001

Prices will rise to reflect the real costs of doing business. Recruiting budgets will swell. Labor shortages will escalate.
Continued rumors of an impending industry consolidation will dominate the conversations around water coolers and trade show floors. Meanwhile, the number of new companies in the business will continue to explode.
Several Applicant Tracking Companies will attempt to quietly leave their ill considered Electronic Recruiting Ventures behind.
Desperate for stock market traction, several staffing companies will enter the acquisition mode, hoping to pay 1998 prices for 2001 properties.
Two of the major Trade Shows will be cancelled for lack of vendor participation. A new, juried trade show will emerge to modest initial success.
Several new companies will make splashy market entrances as Online Recruitment Advertising Agencies.
Micro-project operations (like Info Rocket) will begin to be seen as solid "pay as you go" outsource solutions.
Several new models for candidate traffic development will emerge. Some will effectively target people who are not looking for work but want to have backup plans. Potential Employee Relationship Managers will emerge as a job category.
BrassRing will become the number one provider of Applicant Tracking Systems.
Hot Jobs will close the revenue gap between its operations and Monster's making a very tight race for number one in the industry.
The IPO market will stay cool all year creating a solid environment for creative acquisition and merger.
The economic downturn will not last long enough for people to notice that the unemployment rate is no longer driven by economic cycle.
Two or Three Fortune 50 Firms will appoint Chief Talent Officers or Talent Supply Managers at the "C" level.
There will be the beginnings of turmoil in the Administrative end of HR as successful Recruiters are promoted into leadership positions. The need to integrate HR based on the optimization of Human Capital investments should give companies like Icarian the solid market traction they've been seeking.
Alliance and partnership development will continue to accelerate as people discover that the value of this market is really 10% of Gross Domestic Product.

******************************************************************************************

THE 2001 ELECTRONIC RECRUITING INDEX

PREPUB SALES ENDS FRIDAY!
Order your copy today.

Table of Contents
Volume I
    1. Executive Summary
    2. Introduction
    3. The Premise: Human Capital Management Changes Everything
    4. The Human Capital Management Industry
    5. 21st Century Ad Agency
    6. Recruiter's Survey Results
    7. Valuation Models
    8. Employment Branding
    9. Forecasts and Predictions
  10. The Chief Talent Officer
  11. Stock Market Performance
  12. The Alliance Development Machine

Volume II
- 500 Pages of Detailed analysis of the top 225 vendors in the Human Capital Management Market.

Check out the Special Offers on 2001 and
the 2000 & 1999 ERI.

- Scheduled for release in January 2001. ******************************************************************************************

2000 Part III

(December 20, 2000) Every retrospective has a winner's list. 2000 was an extraordinary year in the evolution of our industry. The roadside is accumulating carcasses, of course. As we mentioned earlier, the blinding greed of dot com fever took its casualties. Old brands disappeared, new contenders replaced them. The industry looked like a hydra with 10 new heads emerging for every one that was cut off.

The drum beat at the trade shows was "End to End Solutions". Everybody had one. Nobody believes in them anymore. We learned that every corporate setting is an individual problem and that "one size fits all solutions" look like baggy clothes on small operations and constraining devices on the large. Nonetheless, we expect to see more ends meeting ends since that's the most profitable internet industry so far.

If we're on target, next year's buzzword will be Human Capital (but more about that tomorrow).

This was the year that Recruiting began to assume the leadership role in HR. Once the bastion of administrivia, the HR function is slowly becoming a supply oriented shop. Minds are changing. Our hope is that they change fast enough to adjust to the permanence of the labor shortage.

Here are the things we think are the most significant milestones from the past year.

Top 15 Achievements In Electronic Recruiting 2000

Recognizing that dominance doesn't mean market ownership, Monster and its parent, TMP, continued their aggressive market moves and defined the industry. From consumer education to brand differentiation, the company consistently made winning choices and, as we've noticed, made everyone's life a little easier.
Brass Ring Systems emerged as the fastest growth player in Applicant Tracking. From nowhere three years ago, the operation has become the number two or three player in the niche.
RecruitUSA built a singularly impressive distribution business with approximately 300 job posting deals in the cue, laying the groundwork for the rollout of the first real eRecruitment Advertising agency.
DDI released Source2Hire , a remarkable specialized tool that blends assessment and applicant tracking for volume hiring projects. This marked the first visible recognition of the fact that specialized solutions have specialized markets and requirements.
Net Temps quietly rolled out its talent center. In the midst of all of the brouhaha regarding Free Agent Marketplaces and Exchanges, the company clearly defined buyer and seller relationships in an existing context. Good move.
Hire.com offered the first ever conference for Chief Talent Officers. Seizing the thought leadership role in the vendor community, the company shed real light on the rapid evolution within HR.
SelectMinds opened the doors of the Alumni Program business. We think of it as the reinvention of recycling.
Vault.com exploded several myths about the utility of "the real skinny" as a Recruiting tool, and in doing so moved well into the top 10 most trafficked job boards.
CareerCast moved into the newspaper market and walked away with the service end of the business by providing diligent customer service and an outstanding product.
The Name Change vendors made buckets of money in the staffing industry.
Heidrick and Struggles made one right move after another, making their stock the clear winner of the year.
The Referral business opened its doors with a dozen entrants including Angami, Refer.com and Referrals.com setting the pace.
Community Recruiting, as pioneered by the infamous "Craig's List" moved into the forefront, reestablishing networking as the key to recruiting effectiveness.
Cross posting and new distribution techniques drove job advertisement volume to well over 100,000,000 observable posts and raising several obvious questions.
The Talent markets, led by Guru, and eLance established themselves as survivors after their first full year of business.

- John Sumser © TwoColorHat. All Rights Reserved.

2000 Part II

(December 19, 2000) When the dust settle, there will be a number of winners for a number of reasons. The marketplace was frenzied with new entrants and new offerings. Tomorrow, we'll run down the big moments that we think defined the industry this year. Today, we'll focus on the Top 15 events that you might not have noticed.

When Career Mosaic, Monster and the Online Career Center opened their doors for operation, no one noticed. These operations, which would change the face of Recruiting, caused barely a ripple in the surface of things when they opened their doors for business. The important moments often go unnoticed til years later.

We think that some or all of the following events and businesses have the potential to reshape the industry as time goes on.

Top 15 Things You Might Have Missed

The Acquisition of PDI's Assessment Division by ePredix placing ePredix at the leading edge in the reinvention of assessment.
The full force entry of Kennedy Publications into the Electronic Recruiting Market. Five years into the process, the old industry stalwart made a fantastic splash this year with conferences and publications. It's the final validation of the emergence of a new industry. Nice momentum.
Hire.com's expansion into traffic development marks the company's full turn into becoming an advertising agency.
Intralect's name change to PureCarbon. The merry band of Cisco refugees has the "interface thing" down cold.
NorthernLight's release of RecruitingShark, a service targeted directly at online resume research.
Bridgepath's release of their Recruiting Exchange.
All of the companies that prospered in 2000 did so by keeping their CEO.
Goodshark launched its business with the first really valuable seminar series in the industry.
CareerEngine pioneered variable pricing in its advertising purchases and left its REIT operations in the dust.
CareerCast opened the business in a box concept with Pre-IPO Jobs
HotJobs moved onto the JobFair turf with WorkWorld including a marvelous utilization of the San Jose Tech Museum.
The FlipDog Game (searching all jobs online) expanded to include Wanted Technologies and GrassIsGreener
VerticalNet quietly established the best network of industry specific Recruiting Sites.
Advantage Hiring introduced Industrial Strength Online Interviewing as a filtering mechanism.
CareerPath and CareerMosaic disappeared.

- John Sumser © TwoColorHat. All Rights Reserved.

2000 Part I

(December 18, 2000) Looking back, the first thing you notice about the past year is the Spring NASDAQ Train Wreck. Our portfolio is still screaming "ouch". We don't imagine we're alone. Some of our favorite billionaires had their net worth pared by hundreds of millions of dollars. Funding for fringe ideas went away and never came back.

That said, there was never a better time to be building an Electronic Recruiting business.

Although we occasionally still encounter a team who are pursuing the IPO lottery, expectations have normalized. The adrenaline testosterone cocktail of the fast buck dreamers appears to have had a mild infusion of B vitamins and settled down a bit. The decks are cleared and the time to build the next generation is upon us. Increasingly, the business models we hear about have that down to earth quality of selling something to customers while trying not to spend all of the money they give.

That's how you build a business.

The freedom that comes with lots of Venture Capital money is a very mixed blessing. While the organic growth that can be achieved with "bootstrapping" has a slower acceleration than what's possible with a large bank account, a pure connection with customers has amazing consequences. Many of the really large market mistakes we've witnessed were driven by the notion that building a business didn't involve customers. Rather, pleasing the investors became the name of the game. That's problematic when you understand that the very investment mechanism used, pre NASDAQ crash, assumed that the investors were unable to predict winners.

Large scale hedge investing, where ten bets are placed on the assumption that one will pay, was the standard method employed by VCs during 1999 and early 2000. By definition, acquisition of that kind of money means that your investors think you only have a 1 in 10 chance of making it. It's hardly an endorsement. Better off were the few enterprises who were given the demand that they produce real revenue results.

There are a number of large projects that can not be taken on purely based on a sales driven machine. The development of real, sophisticated targeting, advertising delivery systems; At the same time, there are a few investments that might make real sense for the VCs in todays market.

There are any number of properties on the market that have way too much money invested in them. Designed by a genius who was buffered from market realities by too much money, they are really specialized tools. To the extent that they duplicate readily available functionality, they are worthless. The value in these tools is the places where they are different from the run of the mill stuff. A clear understanding of the market and a tightly focused sales program can turn some of these dogs into modestly successful products. They aren't the world beaters that their founders claim. But they are precision tools that can be used in very specifically defined circumstances. In this group are a number of lexicon driven profiling systems that, when used by focused and highly trained researchers, can dramatically improve the quality of the overall hiring process.

Unfortunately, the broad markets never wanted these sorts of tools. Their inventors focused on technology, which is what VCs wanted at the time. Marketing, the critical link between customer and product, took a back seat. Generally, successful businesses in our industry are spending 35% to 50% of their budgets on marketing. Rather than believing that an excellent product is enough, they met customers, listened and sold.

In Wayne's World, the mantra was "if you build it, they will come". Here's to hoping that 2000 brought a solid end to large scale investments in these sorts of projects.

******************************************************************************************

THE 2001 ELECTRONIC RECRUITING INDEX

PREPUB SALES ENDS FRIDAY!
Order your copy today.

Volume II
- 500 Pages of Detailed analysis of the top 225 vendors in the Human Capital Management Market.

Check out the Special Offers on 2001 and
the 2000 & 1999 ERI.

- Scheduled for release in January 2001. ******************************************************************************************

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