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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


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The Market
(December 05, 2002) -
We worry when the TMPW stock price decays. When the market leader is under pressure, the industry as a whole is at risk. The capital investment required to grow our various businesses is rightly sitting on the sidelines trying to figure out the vibrations. While we understand the importance of using the firm as a competitive benchmark, strategies that promote TMP's failure are misguided and short term. 

It would be easier to be a loser. Success has unique penalties that are simply not understood by failures, wannabes or strugglers. Once you've achieved "King of the Hill" status, staying on the offense and staying ahead requires a bigger burst of energy than you'd ever expect. Imagine the plight facing Monster's executive team.

By pioneering the job board space, they have created an entity that eats itself. The company profitably succeeded in gently easing the 40% of the executive search firms that failed in the past 2 years out of existence. They did it by making those companies profitable. By dramatically reducing the costs of sourcing, Monster single-handedly caused them to behave profitably at the edge of the precipice.

Not surprisingly, revenues from the staffing industry are down. While the core, mid market job board business remains robust, Monster has raised expectations in both the staffing and enterprise segments. In neither case is the core job board business a meaningful long term play. In both cases customer expectations exceed the company's ability to deliver.

The problem is that the market was changed by Monster's activity. The staffing firms want a continuation of the excess profitability and the value is changing downward rapidly. Think of junkies hooked on cheap drugs who are finally being asked to pay full price. The problem won't be solved with  new interfaces and gimmicks. The spin off of the search business won't solve the real inherent conflict...Monster is a 'do it yourself' alternative to traditional staffing company services.

The enterprise customers want, well, enterprise level services. The arrogance that fueled the company's rapid rise to prominence is turning out to be its Achille's heel. Enterprise customers engage in a collaborative creative process that involves listening more than anything else. The service, provided well by TMP's growing Adcom business, involves giving customers access to the very technology and marketing prowess that drives Monster's mid market success.

TMP is changing its name to Monster. As a part of the maneuver to spin out the money losing executive search and sourcing business, the company will formally trade under the Monster name. An increasingly new set of characters are assuming the mantle of leadership as the ship changes its course.

As the competitors struggle to balance out the number two and three slots (and as the niche boards imagine their evolving business models), it's important to remember that what the competitive marketplace sees is Monster's back end. At the top of the heap, the game is all about reinventing the game while defending against deep-pocket market share onslaughts.

Yesterday, the company presented a comprehensive view of itself at an onsite "Analyst's Day". The newly minted executive team is focused on the same mumbo-jumbo as you'd expect from a rigorous introduction of external operators. The problem is that market dominance involves continued innovation far more than proceduralization and cost-discipline (though all are certainly required). The result of the meeting was a fairly dramatic sell off of the stock. Why? Gloomy forecasts and management focused on incremental growth.

As we said in the opening, we're concerned when the TMP price decays. The industry needs the company. But, the company needs to show real leadership in the industry. There are plenty of costs to be cut internally but, real market leadership, aside from clever branding, involves developing a partnership culture that is committed to moving everyone into the future.

We still see them as the market nexus. The next quarter or so will be really telling. Without a clear demonstration of leadership, the price will fall to the point that the company becomes attractive to a newspaper buyer. Then we'll all have to start over.

- John Sumser

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