A Contrary Point of View on The Vertical Search Market in Employment

Back in the days when I ran my own company I learned a hard lesson. We had some great new technology we had developed. I thought it was going to be really big. Then a bunch of people inside the organization started to give me contrary opinions. Being a concerned boss I listened to their points, which amounted to: its been done before and didn't work so it won’t work now.

I listened. I figured they were more experienced than me in this area, so I stopped focusing on the new technology. Eventually we stopped development all together and went another direction.

The problem was that the naysayers were wrong. The technology we developed eventually was developed by others and was a big hit in the market. The doomsayers made the common mistake of applying the filter of past technological failures to future technological opportunities. I have since learned that any argument about the impending doom of a technology based on the "it didn't work before" logic is faulty at its core and should not be listened to. If there is a real argument as to why something won’t work then it will be based on real data and analysis, which prejudice based on experience is not.

I bring this up because there is a lot of talk going around about the "vertical search engine" (I’ll call it VSE from here on) market place. While the vertical search phenomenon is hitting multiple markets (including ticket sales and general shopping), I have been most interested in the area of recruitment and recruitment advertising (specifically Simply Hired, Indeed and the recently acquired Workzoo).

A lot of people are scratching their heads and then predicting the doom of this particular industry. The arguments tend to fall into the following catagories:

1 - Its been done before and didn't work (Flipdog failed).

2 - There is no real business there.

3 - They are on shaky legal grounds.

4 - Once the job boards turn them off then they are dead.

All these arguments are inane, and none of them is well considered or based on fact. I agree that any new venture faces challenges, and that those challenges can eventually cause the failure of the enterprise. But it is not likely that this new "VSE" space is going to fail for any of these reasons.

Before we get into it, two pieces of information. First, I get paid by my employer to judge and manage the effectiveness of different methods of finding and connecting to talented people, including the use of job boards and like services. Second, I sit on the advisory board of Simply Hired, so I am a true believer in this market, its opportunities, and the benefit to companies like me. I thought it was best if you knew my context up front.

So, the arguments point by point (and my intent here is to offer a contrary point of view to the Chicken Little's, not to be exhaustive in my analysis):

1 - Its been done before and didn't work (Flip Dog failed).

First of all, Flipdog was bought at a premium by another company (Monster), so it is a bit of a stretch to call this a failure. But even more so, if the merits of this argument were persuasive on their face, then there would be no (as in none, zip, nada, zilch) technological advancement and you would be hunting coyotes for lunch. “Mmmmm, Zog no make fire first time, fire never going to be made.” Or electricity as a utility, or the car, or the United States or the PC, or the Internet. Each one of those things was tried in some other form, in some other place, and failed before somebody else made it succeed. In fact, there are few (if any) technological achievements of note that weren’t based on numerous failures prior to that point, by competent people trying to do exactly the same thing as the person who succeeds.

The fact is that there are many elements that can determine the success or failure of a product or service, and the old “its been done before” is never one of them. Market’s can change rapidly, people’s tastes can change. In short, economic theory is always more art than science.

Towards that end, the present crop of VSE’s have better technology than Flipdog (and therefore are getting closer to getting consistently superior results) and can distribute results through RSS (which FlipDog couldn’t, limiting its reach). So there are already some marked differences. But even without the technological advancement, there are clearly many other market factors which have changed in the last year. But to claim that an approach that didn’t work before can’t work now is to claim that the market is a static place when it clearly is not.

2 - There is no real business there.

Companies that compete heavily for talent want to do anything they can to connect to the best people. Everyone agrees with that. In addition, almost everyone agrees (except maybe the employees of TMP and Yahoo) that job boards are consistently over promising and under delivering, especially for mission-critical positions.

But regardless of the “money will move to places that get better ROI” argument, the overarching argument of “no real business” is faulty and ill considered. The real argument should be “There is no way to attract passive candidates to use these vertical tools.” Because if passive candidates use the tool, money will flow. Period. I won’t say how, since I want my ideas to benefit my employer first and Simply Hired second, but most people could tell you at least three things that they would be willing to spend money on if they had a source of clean information about passive candidates.

So, can the VSE’s attract high-end passive talent to their site? Good question. I think the answer is yes, and since this (in my opinion) is the crux issue of the whole thing I think they will succeed and that therefore there is a very viable, very powerful business there.

3 – The VSEs are on shaky legal grounds.

I don’t get this one at all. First of all, if they are on shaky ground for scraping content from other sites then every search engine in the world is on shaky ground. These companies are a portal to other destinations. In order to be effective as that portal they have to spider and scrape information. Welcome to Yahoo in 1996.

As a little test I went to Google and typed in “Microsoft jobs Redmond wa” and got a set of results. I then typed in the same query to Simply Hired (leaving out the word “jobs” as redundant). And two things were immediately evident:

A – Simply Hired only “aggregates” about 40 more words of information than Google. But Google caches the entire page in its database. So you don’t even have to leave Google to see the entire content. But you do have to leave Simply Hired to see the content.

B – Google returned Indeed as a result. So if Indeed is in trouble, Google must be going through fits as it contemplates the quick sand of it business plan. Google aggregates the aggregators. Time to sell them short for sure.

I am sure that job boards could determine that they are on shaky market grounds and decide to head off the competition at the pass and shut down their ability to spider (see next point) their postings. But frankly, that has nothing to do with legality. That just has to do with business strategy.

4 - Once the job boards turn them off then they are dead.

Again, a silly argument that isn’t even addressing the real issue. Since all job board ads come from “customers,” and since most job board customers now have their own hosted job sites, and since ever more of those job sites are powered by distribution technologies that take reqs and distribute them to various job sites, the real question is “will employers post directly to the vertical search engines if the boards turn them off?” And then answer is clearly “yes.” So there will be a source for the VSEs even if the job boards turn them off. (Actually if my assumption about the vertical search company’s ability to attract and hold passive talent is true, then this argument is all just semantics. Of course companies are going to post to where they will get the best return. And if they don’t, then God bless ‘em, because my ads will have to compete a lot less!)

But the most important point here is that most companies want their ads to be seen by as many candidates as possible. That is why they distribute them to different sites, both free and paid. So why would a job board want to limit the effectiveness of their business model by preventing the customer’s content from being found? I would think that such a move by job boards would be market limiting after a short period of time.

Again, I know this isn’t the best researched or argued point of view. But the stuff that is passing for discourse these days about this market is so poor that I thought it important to bring up a contrary point of view.

Comments

[Heather]

Really well done, JJ. Couldn't have said it better myself (no seriously!). I think many of the naysayers aren't considering things like "who is the customers" or rather "who are the customers?", unsubstantiated market needs (because sometimes your customers aren't going to innovate for you), innovation within anexisting category, monetezation models. I think they just don't dig enough to understand the value. Anyway, good job on explaining this!

[arthur]

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[arthur]

nice. check 925m.com maybe another place to post this excellent story and build your buzz. thx agn. -art

[Joel Cheesman]

Well done. Also keep in mind that Yahoo! aggregating jobs from other sites aside from HotJobs represents a trend of the big search engines getting in the vertical search game.

With pay-per-click advertising revenue, the major engines have figured out how to make money via quality, free content.

That said, they'll make a pretty penny offering vertical job search.

[Canadian Headhunter]

So you think they can make money but you won't say how. Glad the issue is resolved.

[Jeff Hunter]

Too bad I can't break my confidentiality agreements and spill the beans. Of course I am pretty sure that you could figure out most of them in a couple of minutes. Or just wait six months to get the answer from the companies directly.

[Vidal]

Hi, I've just finished my new vertical job search engine JobGeni http://www.jobgeni.com that runs on Google AJAX Feed API. It's pulls the data from several major jobsites like indeed, simplyhired, yahoo hotjobs, monster and jobster.