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It is better
to not be on
the web than
to be on and
not know why

John Sumser

is more
it seems.
John Gall


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Technology Haters Support Group Forming

(December 10, 1999) Somehow, marketing and technical excellence rarely coexist in the same body. In spite of its bad reputation, the Marketing mind (excluding those that run on pure fiction and treachery) is focused on the customer's perception of the universe. The technical mind, on the other hand, is centered on self-satisfaction.

Blending the two in a way that produces happy customers is the essence of any great technical company. Unfortunately, the gene-splicing required for success is a tricky and failure-prone operation. The teensy-weensy engineering problem tends to be the straw that breaks the customer's back. Often, damages from minor technical glitches are so out of proportion to their engineering cost that the good engineer just can't grasp them. These days, we're wondering if engineering management isn't a sport best reserved for masochists.

Across the industry, HR, HRIS and Recruiting managers are wrestling with a range of competing claims and services, trying to figure out how to solve their internal problems. Often framed as engineering questions, the real issue is handling an HR Budget that is exploding because of labor shortages. Decisions that used to resolve to a single supplier are now best executed by a team of specialized players. Unfortunately, they are all busy claiming broad marketing messages even though their technical excellence is quite focused on a small area. Currently, there is little in the way of "integration support" for a company that simply wants to solve its particular problems.

Here's an example of the kinds of quickie advice we're offering. The note responded to a reader with a short list of vendors who is trying to settle in on one.

First of all, it's not clear to us that a single vendor will satisfy your needs. The vendors are in a great deal of turmoil and quite busy figuring out who they are. That means that your ability to clearly articulate your priorities is paramount. In the earlier era, vendors were willing to promise to solve all of your problems, from screening and sorting to measurement for regulatory purposes. Because all of the players are brand new, even the ones with older name brands, they tend to optimize their efforts on a single issue.

Our take is that there are five or ten requirements that are all the top priority and no one vendor can satisfy them all simultaneously.

If you are forced to make the decision in the next 18 months, your best bet will be to establish a portfolio of suppliers and to try to nurse the group into compliance with your objectives. Obviously, this method requires a good deal more hands on supervision.

The labor shortage is underneath the problem. Frankly, good sorting and searching is not as necessary today as it was yesterday. Getting the candidates to apply is the largest single problem. That means that the trench level recruiters need a constant stream of new r "resumes" or "resume equivalents". None of the vendors on your list make that an easy proposition.

The best answer, in today's environment, is to pick the stable of providers who give you the best shot at changing horses in midstream. The thing you can count on is that next year's decision point will be somewhat clearer. That makes the process of administering the system very labor intensive in the short run. It's quite cost effective over a five year cycle.

At the bottom line, a comprehensive strategy that blends advertising, marketing, sourcing, technical training and a systems solution is the best way to approach the question. By merging all of the Recruiting budget issues into a seamless approach, you get a better view of bang for the buck. That said, any solution is going to be somewhat klugey in the short term (1 or 2 years). From a traditional HRIS perspective, it's hard to grasp that administrative systems and advertising have merged in a single, hard to name discipline.

The other approach, which makes xxx.com look like a real winner, is to scale back your expectations to the bare minimum. It may be that your stable of suppliers are each very task focused.

Whatever your decision, you have the good fortune of wrestling with a key decision at an inflection point. Well, maybe it's not such good fortune.

The old Chinese curse went: "May you live in times of great significance."

- John Sumser, © TwoColorHat. All Rights Reserved.

Next Phase....Orchestrated Lunacy
(from the Vault)

(December 09, 1999) The essential differences between a "visionary" and a "knucklehead" are timing and money. Only a lunatic believed that man would fly in 1650. At the same time, women were burned at the stake for asserting their rights to independence. The personal computer market was nearly impossible to believe in 1975 (and no one could have predicted the amazing fortunes involved at that time). In 1979, Bill Gates was a squirrely college dropout. "Those Magnificent Young Men In Their Flying Machines" were kooks and dreamers. Who could have predicted the emergence of a telephone (or Internet connection) in every classroom?

In general, there is a sound reason for treating visions with lithium. The status quo provides a safety zone and decision making continuity. "If it ain't broke, don't fix it", goes the song of the effective maintainer of the way things are. Like a bull in china shop, the visionary tends to say "If it ain't broke, break it." When the security and stability of an entire workforce are at risk, the wise thing to do is keep the visionaries at bay. While it may put you out of business tomorrow, it keeps things stable today.

That said, money completely changes things.

Over the next year, some really different things will emerge in our industry. The war chests, brimming from public offerings, productivity improvements and strategic investments are about to produce a level of experimentation in tactics like we've never seen.

We're beginning to believe that HR Departments are starting to see some interesting budget surpluses in their advertising kitties. If the most expensive online advertising campaign (through a job board) runs $50K and you sign up for 10 of them each year, you've spent a months worth of the old newspaper advertising budget! That leaves an interesting pile available for experiments. It makes the possibility of direct, one to one, relationships with key elements of the potential candidate pool a credible option for large players. While we think that current pricing levels are designed to put Job Boards out of business, they are the current price.

If you look around the Recruiting value chain, the opportunities for expansion are skimpy. Applicant Tracking, as a market, is a mere $250M per year with at least 80 players vying for a piece of the pie. Background checking, screening and other administrative services are similarly tiny.

So, what do job boards on an acquisition streak, HR departments in need of better results do with their growing surpluses?

Lots of players are looking at lots of rollup companies. We won't be surprised by much of anything. The industry, after many formative years, is about to begin real experimentation.

- John Sumser, © TwoColorHat. All Rights Reserved.


(December 08, 1999) Over the last quarter, Webhire has announced a broad range of partnerships and tools that move it beyond the nearly disastrous integration of Junglee's spidering product. The past year has been a tough transition for Webhire. Morphing a company with a mediocre reputation (at best) in applicant tracking into a formidable web competitor is no small thing. Along the way, Webhire has begun letting go of its core approach to database searching while broadening its platform for the management of web recruiting. It has closed in on a positioning that makes it an interesting complement to the big job boards.

Among the public announcements, Webhire has built strong alliances with CareerCentral (a perennial favorite), Guru.com and Yahoo. In addition, the company has added a Resume spidering tool, web enabled versions of its core products and entered the Canadian market. As proprietors of a somewhat smaller company, we're in awe of the execution.

They are moving forward on a variety of parallel fronts simultaneously. While that is typically a risky strategy, we believe that the company compared its bank balance to the calendar and did the only possible thing...the impossible.

While the jury will be out for a while on matters of success, we're ready to give credit when due. Webhire is making the right moves at the right speed. It looks like they are really becoming a full Internet player.

We've been tough enough on Webhire (nee Restrac) that they stopped advertising with us. It's a normal part of the publishing business. Integrity has a price and we're ready to pay it. We think that it differentiates us from the rest of the pack in the e-trade press.

They're hardly the first and unlikely to be the last. Though it's a pain in the wallet, an advertising contract canceled for editorial reasons validates our mission...to define excellence in the industry. You simply can't buy our opinion.

That said, when it's smart, we stand ready to applaud. From here it looks like Webhire has achieved the critical mass they need to continue to move forward.

- John Sumser, © TwoColorHat. All Rights Reserved.


(December 07, 1999) No, that's not the sound of someone clearing their throat. It might as well be. It's the sound of the reemergence of a campaign to create
"standardized, human-resources-related XML vocabularies for enabling e-commerce and the automation of inter-company exchanges of human resources data"


It turns out that a "non-profit" organization called Oasis (the Organization for the Advancement of Structured Information Standards) has been building a consortium of mostly small Erecruiting players who hope to "transform the data standards" in Staffing and Recruiting. With it's directorship emerging from the ranks of current employees at Sun (2), IBM (1) and Xerox (1), Oasis appears to be a standard issue "standards committee" from the pre-Internet era.

We've seen a couple of these thingies come and go. Who is interested in the standards? Small vendors with large ambitions hope to "leverage" the emerging standard in their favor. In other words, if we'll all just do it their way, life will be easier and simpler for everyone involved. The medium term object of the game is to "level the playing field".

Unfortunately, most HR transactions happen in companies with fewer than 100 employees (a group explicitly left out of the target market). We'd describe the organization as an explicit assault on the markets that are currently "owned" by Monster, Webhire (nee Restrac) and Resumix. The benefits accrue explicitly to large organizations at the expense of the smaller majority. The development of new standards is a non-subtle way of forcing the incumbents to eat development dollars while opening the proposal process. The motives are transparently framed as "making a better world for all of us". We must have missed the philanthropists on the list.

Ultimately, standards are emerging through the hard, focused work of companies like RecruitUSA, CareerCast, Webhire, IT-TA, Resumix, IIRC, RSLLC and others. Their emerging skills at transferring data between vendors and sources facilitates the emergence of real world standards honed in the fires of routine commerce, not built by a committee. In our opinion, these middlemen have the right financial incentives to keep their data transfer processes up to date and market friendly. By letting the industry develop its own solutions as the market requires them, they move the financing from a centralized committee structure to an ad hoc industry oriented approach. In the current scheme, customers pay as required rather than when required by the standards organization.

The good news, for anyone who gets the fact that standardization reduces market entry time for big players, is that no paying customers from HR seem to have been interested enough to join the party. Any long term standardization play will require a consortium of customers, not vendors. When vendors dictate the standards, it's called arrogance.

- John Sumser, © TwoColorHat. All Rights Reserved.

The Stock Market

(December 06, 1999) Make a commitment of $100 Million, get a market cap of $1 Billion. That appears to be the result of the recently announced deal between Monster's Parent and AOL. Within two days of the announcement, TMP,s Stock price seems to be settling in at around $120. That's an astonishing 100% increase in under a month. We're jealous.

The deal involves broad development of Career capacity across AOL's properties. A number of co-branded websites will emerge nearly immediately.

Meanwhile, in a fit of absolute brilliance, Futurestep has inked an exclusive alliance with The Standard. In case you don't know, The Standard is to today's Internet market what Wired was to the early days: It's the website of record for the broad Internet industry. Though we're sure that the market will be less kind to Korn-Ferry's move (they're the parent of Futurestep), we think that both alliances represent the best in web partnering.

It's always seemed to us that Monster is positioned to harvest the very low end of the industry in a powerful way. Volume (in Resumes and Postings) is central to the Monster world view. A deal with AOL is a critical component of their apparent intention. Pulling the revenue from small "mom and pop" businesses depends on big branding and high numbers of transactions.

In the very same way, Futurestep has bedded down with the most logical partner for its niche. Any savvy Internet executive has a subscription (in paper) to the Industry Standard and occasionally reads the website.

The two companies are making moves that help consolidate the traditional staffing and newspaper industries. That's where we think the initial impact of the Erecruiting Industry is going to be felt most intensely. The announcements position both operations as the employment section of major publishing activities.

Our traditional staffing companies index is holding still at around 600. It began its life in July '99 at 650. The downside is driven, in large part, by major decliners led by CDI. Meanwhile, the web savvy index, which began life at 1500, has moved to 2411.

Smart traditional staffing companies are becoming employment advertising sections. Smart newspapers are moving to become web based employment advertising sections for other web ventures. There are few examples of either.

Over the next six months, the competition will center on alliance development. We hope that more of the deals will have the substance of these two intoxicating arrangements.

- John Sumser, © TwoColorHat. All Rights Reserved.

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