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With the rights to What Color Is Your Parachute, online alliances with Junglee and it Kaplan subsidiary, the Post is maintaining the role of a traditional Newspaper while expanding its reach and delivery. Its an interesting approach that builds on the core competencies of the existing enterprise (and its massive Brand Recognition and capital resources).

Our attention was returned to this quiet giant by the recent acquisition of CEO Group, a canadian Job Fair delivery company.

The Post Strategy focuses on academic choices, career planning and face to face meetings, all of which provide an environment for building a lifetime branded relationship. We think the approach (we can only see the faint outlines) has the potential to be very smart.

Over the next five or so years, the depths of the labor shortage will become apparent. In a setting driven by a generation or two of labor scarcity, firms with a solid brand, developed early in the vocational cycle, are going to become the long term players. The Post is clearly pursuing that ideal

(Remember our forecast that a stock market contraction would be followed immediately by several months of decline in the unemployment rate? The bet is now officially on the table.)

IPO

Here's the problem. The offering glosses over the fact that, while most other job board services charge for their product (and have two revenue streams), Headhunter has banked its brand on the idea that free job postings can be profitable.

With 375K daily visitors and 375K daily ad impressions, the company loses $5 for every $1 it receives in revenue. In order to make a shift to profitability, the company will have to (although it doesn't say this in the S-1A) start charging for its previously free service.

And, that's the rub.

Our survey of 2620 Recruiters (soon to be published in the 1999 Electronic Recruiting Index) ranked Headhunter.net highly as a recognizable brand name. Customer satisfaction was another matter entirely. Companies with much smaller overall traffic are able to generate much higher levels of customer satisfaction because they derive revenue from their customers. They tend to be reasonably profitable and positioned for long term growth.

In order to become a viable player over the medium to long term, Headhunter.net will have to begin to be concerned about the success of its customers (job listers). It's hard to do when they are not a source of revenue and the company has been built on neglecting their needs.

It will be very interesting to watch the evolution of this play. We are reminded of the various attempts by Wired Magazine to go public. They never actually made it to the table because their core business model was not adequately developed.

A failure of Headhunter.net's IPO is not a broad indicator of the health of our industry. They offer an out of synch business approach in a sea of reasonably profitable competitors.

We are getting really excited about the 1999 Electronic Recruiting Index. Our survey of Recruiters has enabled us to derive customer satisfaction, market reach, service results and brand awareness measurements for nearly 50 of the most popular job boards. We've just completed the final judging for our annual Top 100. The strategy, market size and development components are in the can. We are on track to meeting the September 15 publication date. If you haven't had a chance, download our current print newsletter to find out more about the 1999 ERI and our concurrent industry outbriefing schedule.

Recruiting Online:
Fall 1998 Seminar Series