Thursday, November 12, 2009

Mandatory Ingredients For A Recruiting Startup

This post is for all the entrepreneurs out there that have (or want to) talk to me about a recruiting startup idea they've got. Most people think that the biggest problem recruiters have is sourcing candidates. Nope. A shortage of time is a recruiter's number one pain in the proverbial butt, from having too many candidates to posting jobs one at time.
    So, here's my list of mandatory ingredients for any recruiting startup...

  • Cash. You need lots of it, because I guarantee you that you won't have the winning formula on the first try. Because the recruiting space is so crowded, unless you have significant traction, no one will invest significant cash into your company. That means you'll be spending a lot of your own time (and therefore a lot of your own money, unless you live on air and love) figuring things out before you see any success.

  • Recruiting expertise. You need to understand recruiting inside and out. Not just how recruiters find candidates, but how they find work, spend money, think, etc. You don't really understand recruiting unless you've worked with other recruiters, have been a hiring manager, worked at a staffing agency, and have worked in house as well. Good luck getting a recruiter to try your product, let alone stick with it or pay money for it.

  • Technical expertise. Larry Ellison of Oracle mentioned that it's easier to write a check than software (he buys existing software businesses). Writing software is hard. If you aren't a programmer, building your startup will be automatically 10 times harder. If you think writing software is hard, try getting someone to do it for equity and no cash. Ha!

  • A loose screw. If you try and get into the recruiting space, you'd better be frikkin' nuts. It's hyper competitive, everyone copies everyone else, and there's no honor among thieves, er, recruiters. Only someone a little off their rocker can endure the pain of a recruiting startup.

  • Significant revenue from customer #1. It will take you so much time to get recruiters to try things, you'd better be able to make revenue from them early on. Seriously. You could spend months trying to get a few dozen users, so you might as well milk them for all they're worth! If your business model makes $50/user/year, you need to add a couple of zeroes to the revenue each user generates.

  • Knowledge that recruiters are jaded. Pretend every recruiter thinks this...

    "I don't care that your crappy little recruiting app washes my car and does my laundry. That's what the last guy said. I checked out your site. Why don't you have more than 5 jobs posted? It's because it doesn't work. You know how I know? I tried it and it didn't generate any results for me, and it's your fault that I didn't read the instructions. Your site sucked away two hours of my life and I want them back."

  • You're nothing until you have traction. Everyone will ask you how you are different than, why a recruiting agency wants to raise money, or how come you haven't self funded it. All the questions you'll hear are the people's way of telling you they don't understand, and so you have to show them why your site is different.

  • Lastly, at the risk of sounding vain, you should talk to me. I love talking to entrepreneurs, and I hope I've scared a few of them away from starting a recruiting startup. Recruiting is like a career in show business... most of your friends will think you're crazy to try it, they'll tell you to get a real job, and then their jaws will drop in amazement (and jealousy) when you hit the big time and join the Pinnacle Society.

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