The Internet has spurred many new, employment related businesses to flourish in the past twenty years, some with great financial success Small start-up HR and recruitment/placement technology firms are receiving two to three times (or more) their revenues in new investment from private sources. Many ask, “What gives? Placement numbers have barely budged in relative terms, and the job seeking public has become disenchanted and frustrated by this new digitized process that has created a huge ‘black hole’ from their perspective.”
Three trends are the main drivers of these valuations. First, employment is one of the few sectors of the economy that is showing long-term, positive growth potential. Literally, it will never be “saturated.”
Second, there is an enormous overhand of capital sloshing around the United States. It’s not just the trillions of dollars printed by the Federal Reserve in its quantitative easing of a few years ago. You must also add in the trillions of dollars that have been pumped into our economy through deficit spending at the federal and state levels.
Then, add the $1.5 to $2 trillion of cash and marketable securities held by American corporations (for which they can presently find no use), and it is just one huge pile of money-money looking for a return. There are few easy answers, and few obvious places to put it-0.5% money markets anyone?
And that leads to the third issue, which is the lucrative world of recruitment and placement. Wall Street and Silicon Valley have been assaulting this “industry” since the inception of The Internet… They cannot figure out why an industry that is so fragmented, so inefficient and dysfunctional (from their point of view), can’t be conquered.
Wall Street still doesn’t know what to do with all of the data that they glean from these sites and quite a few investors feel that someone will come up with an idea on how to monetize all of that data and, voila… The next Microsoft/Google/Apple ! Much is prophesized by the many investors who represent huge sources of capital, and the conversation inevitably leads to “Why can’t real technology do to EMPLOYMENT what it has done to so many other businesses?”
Why can’t the capital and the smarts of Wall Street and Silicon Valley figure out how to disrupt traditional approaches to sourcing, recruitment, and the on-boarding of new employees and drive huge valuations for their efforts? After all, it has worked almost everywhere else.
The answer is the unique, and multi-faceted nature of professionals and how they attempt to manage their careers—and their relationship with “the sea of unwashed professionals” ready to assist in the process.
Corporate recruitment and hiring is a transaction that is infrequent, complex, and fraught with downside when things go wrong—driving consumers to use someone who knows how to reduce their fears, doubts, and threats and help them get a result they want: the smoothest employment transaction possible. And, in great part, the “industry” does deliver that.
However, the process, itself is flawed and dysfunctional.
That’s it: a great $multi-billion business, an oversupply of money, and investors who want to disrupt an industry and hopefully make a fortune doing it. Who knows, these smart investors may be right, and one of them will find the key to take the middleman out of this business and make a fortune.
Or, they may be one of many who have come before and not quite found a way to do so. Just don’t get hung up on the efficiencies promised in today’s market… they too will pass.
Over thirty years of experience as a Career Services Consultant. Projects have included: classic, corporate-sponsored outplacement activities, including career transition centers; internal career development centers; talent management services; and strategic recruitment programs. He also offers direct pay services to professional individuals, including: assessment and branding development (resumes, LinkedIn profiles, etc), job search skill training and job search coaching.
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