My partner, B and I have been reading up a bit more on the headhunting/recruiting industry to get a better sense of our competition. In our analysis of the financial statements of the leading headhunting firms, we came to some interesting conclusions.
Companies get charged very high fees (24% and up) so that the headhunting firms can advertise widely to build their databases. For every dollar in fees that the headhunters receive, 50%-60% goes towards advertising costs. Imagine that ! In essence, companies are paying headhunting firms for the privilege to advertise for them and build the headhunter databases so that the headhunters can then fill more positions with the firms. It is truly a database game for these firms. An additional 30% the goes towards the salaries of the headhunters and their nice offices. Operating margins are between 10-20%.
Now imagine that if the referral network does work, how much of that cost savings can be passed on to the employers (as what we are trying to do now). However, our employers do not see it that way yet.
It has been an interesting couple of weeks as K and I work full-time on Vawch. As you can understand, trying to build a marketplace for high value jobs and referrers / candidates is certainly no easy feat.
We speak to companies and they generally think its a great idea but only a select progressive few are willing to take the ‘risk’ to try something new and what we consider innovative. It has been been quite puzzling for me since there really isn’t any risk cause it doesn’t cost them anything to try. I do wish they would just give us a try and see if indeed we come up with different results. If we don’t… no harm done, just continue the way you recruit for talent without us. Do you know anyone who is looking for talent right now and might be willing to give us a try? Please e-mail me at admin (at) vawch (dot) com. I am grateful.
On the other side of the marketplace are referrers. When I decided to start this venture, just about everyone of my friends were supportive of the idea. Oddly, most of them don’t realize that we need their support to get Vawch up and running (it counts guys!). The more referrers we have the more powerful a proposition we have to the employers. It seems many are taking a back seat and waiting for us to find them relevant jobs before they sign up (or even worse … they tell me they haven’t got the time!).
Friends and readers of this blog please consider signing up with Vawch. Each sign-up matters, in fact please do also invite your friends to join vawch either by using our invite friends function or by just telling your friends about us. Just small efforts on everyone’s part certainly counts and again … what is the cost to signing up / inviting your friends? Hardly anything … and if this all works, we would have created an exciting jobs market place for everyone to find jobs as well as to ’tap’ the value of their networks.
Looking forward to finding a more pro-active group of Vawchers 
We have just completed week 3 of our prelaunch. Time seems to move really slow now … we measure our successes and failures each day: Did we get new referrals? Did an employer show interest? Are we reaching our referrer targets? etc. We have had about ~90 referrals so far sent out through our system by 25+ referrers. The resume submissions have been generally of good quality but we hope more people will participate and also invite their friends to join.
Today, we spoke to a young founder of another local Web business who has managed to bring his startup to cashflow positive in 1.5 years and generating good revenues. Boy did we feel old when we talked to him! We were able to glean a fair bit from his experience since he has always been involved in internet businesses while my partner and I come from the brick-and-mortar variety and we worked as consultants (yes what they say about consultants is generally true, it is quite different in the real world….). We will try to put some of these new learnings into practice in the next few weeks.
Do contact us if you have any thoughts or ideas. We would love to hear from you.
As we try to create a marketplace for talent in the good ole red dot, it struck us how we couldn’t have picked a worse time to launch our service given the impending economic bust (yah.. okay maybe it is not that dire). We are still struggling to get traction with more recruiters; companies loathe to try anything new even if its success-based and cheaper than their traditional methods. However, we still hold out hope for the few renegade HR folks out there who may see value in what we are doing.
When the marketplace works, it still surprises how networks can find people. Recently, I invited a friend in Thailand to join who then invited another friend in Thailand to join who then referred a friend in NYC to a job, and he applied!
We would love to have more referrers sign up their friends and refer friends to jobs. Ultimately, the marketplace will survive only with your help and participation.
If you have leads on employers who may be willing to try us, do drop us a note as well. Any feedback that you may have on how we can improve our site or just random musings - feel free to add comments on our blog. You can also reach us at admin@vawch.com or use the Contact us page.
We stumbled onto the website of one of the major headhunting firms in Singapore and happen to notice a banner ad that touts their generous referral program. This one firm offers a free Ipod Nano for your referrals. A far cry we think from what we at Vawch offer our group of professionals…. I think the message speaks for itself.
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