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(September 20, 2005) 
As you read this, we're in LA at the DEMOfall conference. We'd never heard of it until recently. Demo is a prestigious and grueling conference in which the best of the latest new businesses are given six minutes each to pitch to an audience of funders, analysts and journalists. It's like watching a Gladiator day in Rome.

We're going at the invitation of Hans Gieskes, CEO of H3.com. Those with long memories will recall that Hans ran Monster.com with Jeff Taylor in a kind of Bill Gates / Steve Balmer partnership at the peak of the dot com bubble. Hans is a gracious and compelling executive who tells his company story with a combination of modesty and passion. A Dutch immigrant to the United States, Hans embodies the self-reliant, entrepreneurial spirit of our best. Besides being a player in our industry, he has broad exposure in publishing and the consequences of the internet. We had a delicious dinner at our place on a recent Sunday night. Hans was coming through town to talk to the industry about his new enterprise.

H3.com is an online contingency referral system. By combining the best of contingency recruiting and referral systems, H3 is reinventing and disintermediating the industry in true internet fashion. The combination of a contingency payment model, referral beyond the internal employee network and performance tracking separates H3  from what is a growing pack. It's a new model built from small pieces of the existing process.

The business is best explained by comparing it to Jobster. We think the comparison is useful, in part, because we've never seen a functional description of Jobster.





"help an employer hire great people"

"help a friend find a better job"

Business model

- No hire no charge
- Customer decides on $ reward,
- H3.com adds 10% 
- 90 day full refund warranty
- Fixed upfront charge of $395 per job
- Discount on volume commitment


Network Motivation
(75% of all referral hires come through "acquaintances")

Cash rewards to be shared equally by path that leads to hire. (Depends on a more predictable motivator than loyalty)

Feel good / feel cool for helping your employer. (Depends on employee loyalty)

Network Privacy

- All email campaigns launched from people's own email
-Only people who want to actively refer will register at H3.com and enter only their name + email + zip code
- Avoids majority of spam filters 

- All email campaigns launched from Jobster mail server
- Everybody's email address has to be entered on that server

- Spam filters are de facto problem

Candidate privacy

People can only express interest for themselves and their identity will be verified.

Anybody can enter names & contact details of possible candidates they know;

People can also enter personal opinions about candidates on same Jobster server 

Go-to-Market strategy

Small & Medium sized companies

Fortune 500 Fortune 1,000

Hans spoke eloquently about his desire to be hands-on in a cutting edge startup. H3 is a lean mean fighting machine, trying to build a culture of high productivity without reliance on the "supersizing" to which  many VC backed startups fall prey. In addition, Hans has put a fair amount of his own money into the business, so he manages for return.

The name is designed to be short and memorable, meaning was an afterthought. The team has been batting around the idea of "Hidden Head Hunters" as a tagline. That gets at the fact that H3 will motivate an interesting range of performers.

Using the service is easy. Unlike most of the players in this growing space, H3 offers a clear picture of "How It Works" on their website.  H3.com handles all of the logistics of disbursing the reward money. H3.com will disburse the Referral Reward 90 days after the candidate begins their new job. In addition, H3.com will handle all necessary tax processing (e.g. 1099 Forms) associated with the disbursement of the reward money.

Their privacy policy is explicit and simple. (Interestingly, the Jobster privacy policy contains a lengthy section distancing Jobster from Third Party advertisers. We wonder when ads will start showing up on Jobster.)

We're going to see a great deal of competition in the Automated Referrals market. H3 will come out at the head of the pack because the team is very clear about what they are and what they aren't. The are not interested in the Enterprise market, preferring to target markets where innovation and competitive advantage are matters of survival. They are not a new kind of Recruitment Advertising Agency. They are simply a contingency referral business and really good at it.

Here are some other players in this emerging space:

The VirtualHandshake Vendor Wiki has a great list of some of the players in business social networking. Some form of referral recruiting will emerge in most of them.

Don't forget to check out the blogs on bert.

- John Sumser

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