2005 In Review: 6&5. Indices and Patents

In the 1990s, interbiznet was the only firm in the world tracking the detailed statistics of online job board proliferation, job posting volume, ATS company sales and so on. It was hard work and lacked the automation or elegance of the systems in place today. The market was at the mercy of one supplier of (usually optimistic) statistics. It's hard to put a coherent business plan together with only one source for your data. We've long since gone out of that business for loftier pursuits.

As we close 2005, there are many good tools for measuring the strength and performance of our market. The trail was blazed by Monster. The Monster Employment Index is widely cited as the primary measure of job demand. It has easily displaced the old school Conference Board Classified Advertising Index because the folks at the conference Board are so old school in their approach.

The reason that Monster is able to deliver this information stems from an old deal. In the late 1990s, Monster purchased FlipDog, a firm that acquired job listings by spidering websites, The Flipdog business model was always a bit sketchy. They got the data and delivered it to candidates. The development of a sales force or process always eluded the Provo Utah team. Monster management pursued the vision for years. For a long time, they used Flipdog as a competitive foil, robbing competitors of pricing flexibility by delivering free services. Monster would get them from the top and FlipDog would grab them by the heels.

We include the history as a reminder to the operations currently pursuing the FlipDog business model. The so called "vertical search" operations were neither news nor important in 2005 with one small exception. In price sensitive markets (and there are fewer and fewer of those these days in our industry) they provide a modest level of downward pressure. The unfortunate thing about their approach is that they are unable to deliver specific results for specific customers.

Back to the topic. Monster's success with the Employment Index has spawned a sea of imitators around the world. Regular readers of the bugler will recognize the niche, regional and global players who began shipping  their versions of the employment statistics.

For Monster, it's a buzz generator of extraordinary import. Google lists over 50,000 mentions of "Monster Employment Index".  The decision to put FlipDog technology to this use was a singularly smart move from a market leader.

Next in the queue, at number 5, is the H3 patent for email based referrals networks. On November 22, 2005, the US Patent Office awarded patent number 6,968,313, "Method and apparatus for facilitating and tracking personal referrals". Here's the language:

The present invention facilitates and tracks personal referrals made via electronic networks. In a preferred embodiment, using electronic mail delivered to a participant interface 110, a central controller 100 provides a Web page through which an individual may enter the electronic-mail addresses of those whom he or she wishes to refer. This spares the individual the inconvenience of generating his or her own electronic-mail referrals, and also enables the central controller to determine the format and tone of the referral. The address or contents of the Web page includes a unique identifier that is exclusively associated with that individual and a specific offer 120. In this way, the series of referrals may be tracked, duplicate referrals to the same electronic-mail address may be eliminated, offers may be withdrawn or modified, and referrals about an expired or withdrawn offer may be prevented.

We're neither patent attorneys nor particular fans of the patent system. Those irrelevancies aside, the H3 patent is a paying field shifter. Any web based email system for referrals will be touched by the patent. There's probably a small fortune to be made in patent enforcement.

This is the kind of industry gelling event that will put an end to the various islands of isolated automation that currently make up half of the market for internal recruiting systems. All of a sudden, H3 is a high-profile, high-value operation with interesting capitalization possibilities.

Ask yourself, "What are the issues for a fortune 50 company who has a home-brew recruiting system that infringes this patent?" The answer, in part will be to either a) hire a full time patent watching group or b) to acquire systems from vendors who are willing to guarantee freedom from infringement liability. It seems like the first ATS company (or other enterprise management system provider) would be able to wield a heavy competitive advantage by owning the operation that owns this advantage.

The H3 Patent will have an interesting and stabilizing effect on the way we all do business. Although many have tried to legitimze and standardize the industry, practical application of Recruiting and Human Capital issues have always remained niche-y. This is the first real sign from the outside world that things need to operate in an increasingly legitimate way.

Welcome to the future.

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

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