When there's environmental stress, human beings tend to blame it on each other. The industry (and most business niches, really) fell into a dramatic and nasty period in which survival was the name of the game. Business models were abandoned over night.

It was a line of demarcation. You were either in business before the implosion or you were in it afterwards. You were a veteran or not.

The Human Capital industry is very, very cyclical. Recessions have always been the bane of existence for staffing and other Recruiting oriented firms. When recession arrives, recruiters get laid off. The downturn in 2001 was severe, abrupt and unprecedented. The number of working recruiters shrank from about 300,000 to about 75,000 within six months.

No one was in the market for an improved workplace. Hanging on to the job you had was the issue. It was not an environment for innovation. In the interim, there was no venture capital, no excess in departmental budgets. There were no resources for new ideas. The same people who had been carried to the top by a rising tide were now building business one small deal at a time. It was Instant Karma. Overnight, innovators learned to be penny pinchers.

The period between the crash and 2005 was sparse. A few major things happened:

• Yahoo Hot Jobs shifted its emphasis from postings to targeted marketing to the huge Yahoo audience (years from now, this will be seen a s a pivotal inflection point) (2003)
• Monster shifted its revenue mix to emphasize database searching (2003)
• Video, ever so slowly, began to emerge (2004)
• Blogs turned up in their most nascent form (2002)
• Adicio slowly and patiently consolidated its position as the dominant newspaper service provider.
• Jobing.com began its southwestern niche acquisition strategy. (2004)
• The number of job boards continued to double on a three year cycle. Most estimates agree that 80,000 American job boards is a likely end state.
• Alternative, more proactive sourcing methods emerged (Shally).
• Recruitment Process outsourcing (in all of its various forms) emerged.
• Lean Staffing (the idea of methodically rooting waste from the recruitment system) took hold as an operating method (finally)

The economic recovery was often called "jobless". Though this wasn't exactly true, incremental gains in economic health seemed to pale in comparison with the roaring nineties. You could be excused for making the comparison between the 1920s and the great depression.

By early 2005, the recovery, fueled by low interest rates and housing price escalation, was showing unemployment rates that equaled the '90s. Several things happened in 2005 that signalled a change in fortunes for the industry:

• Jobster entered the arena with a huge ($50M) round of venture funding.
• Jobing.com purchased the naming rights for the former Glendale arena.
• Recruitment blogging took on a life of its own reaching a tipping point by year's end.

And so, the stage was set for today's hectic, innovation rich environment.

Tomorrow, The End of History

The series so far:

• What It Was Like
• What Happened I
• What Happened II
• What Happened III
• What Happened IV
• What Happened V

John Sumser © TwoColorHat. All Rights Reserved.
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