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    It is better
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    John Sumser

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    Tiny Tidbits
    (September 03, 1999)
    • The Wired Article "Silicon Valley's One Sure Thing" is a fluff piece for the Temp firms in the valley...useful to give to potential investors.
    • Ooops...we must have missed Hall Kinion's IPO. The net-centric staffing firm has been dutifully added to our list of companies we track.
    • Icarian locked down $18M in VC financing in its rush to an IPO. The "people supply chain management" company joins the ranks of the 60 or so firms that target the hiring process. The list of investors is impressive.
    • The folks at Claria demonstrate one extraordinary way to execute an online Recruiting operation. Take a look and notice the twin emphases on candidate value and relevant news. We like the entire approach.
    • Add MyConduit.com to the list of emerging talent auctions. On that front, Monster.com is claiming 65,000 registrations and 20,000 live auctions. So far, all of the competitors are claiming to be "the world's largest Web-based contract services marketplace".
    • The Department of Labor has released a new study on the future of work. Read a short synopsis from the Post. Be sure to review the executive summary.
    • "The nation does a better job of placing cornflakes on grocery shelves across the country than of making sure each classroom has a qualified instructor", says a recent article on regional teacher shortages. Look for a major web intervention in this area that combines job board technology with regional relocation pitches.
    • Referral programs that grant stock options are being touted as a replacement for Recruiters. The broad availability of meaningful stock options is making it hard for big companies to lure talent from small tech firms.
    • Check out the transcript of a recent interview with Rob McGovern (CEO of CareerBuilder). Best quote? "Employers should advertise where they find the best ratio of job seekers to job listings." Repeat it like a mantra. Bravo!
    • How did we miss this? Texas Instruments (one of our perennial faves) features a "Career Mapper" in their Recruitment suite. The key to its success?
      TI's Engineer Your Career program is a way for you to begin the process of planning the ideal career -- whether you choose to work for TI or for another company.
      It's the single best example of the right mindset we've encountered in corporate Recruiting!!!
    • Bookmark the Contract Employee's Handbook. It includes The Contract Worker's Bill of Rights and some amazingly funny perspectives on the relationship between contract workers and their agencies.
    - John Sumser, © TwoColorHat. All Rights Reserved.

    (September 02, 1999) Yesterday was a watershed day in the Electronic Recruiting Industry. Money poured into the entire group of Job Board stocks. By market close, HotJobs (HOTJ) had settled in at $29 per share (up 17% and 350% of its opening price in early August). CareerBuilder (CBDR) closed at $9 1/2, up 22% on the day. Headhunter.net (HHNT) hit $14 1/2, a 26% increase. TopJobs moved to $7 7/16, 46% over its opening.

    HotJobs saw a huge number of shares change hands, the prices are as supported as the stock market ever gets.

    Meanwhile, Webhire (HIRE) remained stable at $10 on the news that it has finished porting its core recruiting product to the web. The price represents a doubling in under 60 days. Although TMP held relatively even, the stock appears to be finding a stable level in the mid 50s.

    All told, these few stocks are now each in a position to dramatically alter the recruiting landscape through a series of marketing and acquisition moves. From nowhere, they have come to represent more than 15% of the capitalization in the industry. And, the capitalization is relatively liquid (particularly when compared to the highly leveraged companies in traditional staffing).

    As the financial reports emerge from the newspapers, it's very clear that the Job Boards (publicly held and private) are having a profound effect on advertising revenues. Rather than the historical 7% to 12% growth in ad income, the papers are seeing 2% increases in the best economic environment in decades. Rather than growing actual sales, most of this increase (as it is in the staffing industry) is due to rate increases. Their growth problems will result in increasing focus on our industry.

    While it's obvious that you can't foretell the industry story from a day on the market, what was interesting about the various moves in pricing (and the financial reports that will ultimately drive prices) is that the shift is becoming visible to institutional investors. Electronic Recruiting is beginning to really change Recruiting Cycle Times, third party business volume and newspaper classified advertising volume. In total, yesterday appeared to be the first time that the market behaved as if this were the truth. Pricing in the Electronic Recruiting sector moved visibly to a new level.

    - John Sumser, © TwoColorHat. All Rights Reserved.

    Talent Auction Overview

    (September 01, 1999) Talent Auctions are the rage. We got a whiff of the current Economist article and started digging. "There's a bull market for talent, and we're all in it." So goes the line in Fast Company's recent piece. USNews is reporting on 'contingent workers'. Free Agent Nation (learn everything you need to know to make it as a free agent) documents the skillset. (Sign up for the FreeAgent email newsletter.) Temp 24-7 tells the grumpy inside story. Freelance New York gives the local angle. Fortune weighs in with Auctioning Humans. NetSlaves chronicles the horror stories.

    It's still very early and hard to tell the auction houses from the outsourcers and the outsourcers from the Application Service Providers. Nonetheless, the market is growing fast.

    Examples of Talent Auctions

    Take a look at the list of online auctions at Yahoo. Although Idealab has yet to deliver an offering, a look at their portfolio of companies would suggest that they are heading in this direction. Michael Ovitz isn't far behind. Excite Classifieds (with its mammoth distribution network and auction sophistication) is sure to become an active player.

    Auctions are coming, make no mistake about it. They are a much more efficient way to deal with the transaction between employers and contractors. As of yet, there is no significant momentum, but it's just a question of time. To learn about the more mainstream product auction sites, try

    In particular, imagine a meta-auction site for employment based on a skills profile. The Internet Auction List Referral Tool is a great model.

    For employment auctions to really make sense, the auction companies are going to have to adopt many of the practices of the Great Temp companies. Key to success will be solid background and reference screening. Guaranteeing that the work will get done is an additional critical question. So far, most of the endeavors are simple technology plays. That puts the Checking and Screening companies (like Avert) in extremely interesting positions if they can solve the liability problem. As usual, market adoption will be a function of lawyers, insurance and marketing, not the technology.

    If you're scoffing, remember MBA Free Agents, the first web based service in this arena. The firm is consistently breaking new ground in the definition of what work can be accomplished on an interim basis. Clamping an auction on their backend would be a simple chore because they have worked the rest of the details out. The staffing firms we follow lost an additional 3% in Tuesday's market. Integrating auctions with their core expertise may be the only solution for their valuation dilemma.

    - John Sumser, © TwoColorHat. All Rights Reserved.

    Keep The Brand In Front Of The Customer

    (August 31, 1999) All the time. Make them think you are everywhere. Do whatever it takes to keep your web address in front of the customer. All of the time. Be everywhere. Be everywhere.

    Why do you suppose that the major web players are pushing the "instant messaging" issue so hard? It's not because they have a soft, mushy feeling that standards improve the value of your life. It's certainly not because they want to find something else to give away. We have a hard time believing that our family relationships are at the root of the issue. If they can't build easy to use software, why would they care about instant communications?

    It's a branding play, period, end of question. The object of the web game has become brand awareness, for the time being. With large portal strategies at the end of their useful life, the majors have moved on to bigger, better and more expensive tactics. Just this morning, Sun announced a plan to give away office software over the web? Why? To boost sales of their servers by keeping the brand name in front of users on a moment to moment basis.

    In case you missed it in the last paragraph, we'll say it again:

    The large portal strategy is at the end of its useful life.
    Predictably, the idea that the web consists of increasingly attractive places to go (the portal strategy) has fairly severe limits. Although web users like having resources in one place, there are limits to a strategy based on attraction (the build it and they will come idea from 'Wayne's World'). As a result, there is a huge shift in the way that strategists are thinking about web audience development.

    In our business, there is a decided uptick in the volume of press releases flying around. Taken from a distance, it looks like typical 'mine is bigger than yours' macho posturing. Tiny bits of news are shredded and spun to make a particular service seem bigger, better, more widely recognized.

    Some of the players in our industry are responding in interesting ways:

    • By being the first of the talent auction companies (there are now at least a dozen including a rumored entry from The Learning Company), Monster extended its branding influence well beyond the media saturation bombing campaign of the first half of the year.
    • Net Temps has established an interesting partnership with the GoNetwork that places a search engine on your desktop.
    • CareerBuilder's MegaSearch Technology (which simultaneously searches a variety of job sites) is driving the company's traffic to significant highs. Coupled with network traffic, CareerBuilder may well be the second most visited careersite.
    • HotJobs, Jobs.com, CareerPath, InfoWorks (the Works), CareerSite, CareerCast, WebHire and Resumix have all embarked on next generation advertising campaigns (many coupled with road show visits to major analysts including IBN)
    The fall is going to be rich and interesting. We expect to see rollouts from more auction companies, a couple of major competitive entrants from unexpected sources and lots and lots of experiments in brand awareness.

    - John Sumser, © TwoColorHat. All Rights Reserved.

    Short Takes

    (August 30, 1999) Have you taken a look at the Net-Temps site recently? It's quite possible that the company has managed to deliver the most comprehensive set of features and services available to an online job hunter. Net Temps, as you may remember, was our site of the year in 1997-1998. They earned the award for consistently delivering the kinds of cutting edge services that define the standard feature set in our business.

    Here are some of the aspects we really like:

    • The Jobseeker's area is divided into channels that include a weekly newsletter, job agents, chat areas, discussion forums and regionalized searches
    • The Recruiter's areas include a range of tools designed to make a job posting successful.

    We can't put our fingers on it. Maybe it's the irreverence. Maybe it's the feeling of authenticity. Whatever, take a look at CoActive for an IT Recruiting pitch that appears to work very well. It's the "feel", not the graphics or the technology.

    CasinoCareers claims over 4,000 Resumes in its Gaming Industry Database. A clear example of the power and potency of niche Recruiting.

    The folks at CareerMosaic are quietly building a network that rivals CareerBuilder's. We stumbled on this site for European CPAs. Same interface, great focus.

    Schwab is going to deploy handheld trading devices. Can a Palm Pilot based recruiting tool be far behind?

    Headhunter.net, fresh from their recent IPO, is cobranding a site with Warner Brothers. They are moving into the space currently occupied by Hire.com

    As of Noon (PST), the staffing companies we cover were down by about 5% for the day. Although the market has not been kind to the old school industry, value erosion has been typically limited to about 0.10% per day. Is this the precipitous drop?

    With over 600 Newsgroups directly involved in job posting and distribution (a 300% increase), we're beginning to wonder where the ceiling is.

    - John Sumser, © TwoColorHat. All Rights Reserved.

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