This post is brought to you in part by this week’s Startup Edition question: How do you get a job in startups?
I am Not a Recruiter
I was playing ping pong with a friend recently when he tried to distract himself from the beating he was receiving…
Friend: I need to hire 15 people this quarter. Do you want to help?
Me: Of course not…dick. I’m a dev, not a recruiter.* Don’t be rude just because you’re losing. 17 serving 3.
* Engineers hate recruiters. Happy to provide details, just ask in the comments.
But he got me thinking – companies are so hard up for senior dev talent, they’re paying recruiters an extra 20% – 25% of a new employee’s 1st year’s salary (e.g. for a $100k/year hire, they’re shelling out an extra $20k to $25k to the recruiter who found her).
Curiosity piqued, I wondered…what would it take to solve this problem? And how would I test it?
Except when I’m Testing
Recruiting is a classic 2-sided market. You’ve got candidates and employers – neither of which will talk to you if you don’t have buy-in from the other (e.g. Craigslist is useless w/o buyers and sellers, Groupon is useless w/o companies and consumers, etc.)
When I mentor startups in 2-sided markets, the question is always, “Which side do I test first?” To which I answer, “The harder one.”
In this case, finding great developers is harder than finding people who want to hire them, so…
Of course, that begs the question, “How do you test one side of the market, without the other on board?” In other words, how can I get great candidates (e.g. amazing devs who currently have jobs) to talk with me, if I’m not working with great companies they want to work for? The answer…
To crack the chicken & egg problem of 2-sided markets, we’re going to “forecast” to one side of the market that the other side is on board. Let me be clear, I make a big distinction between Forecasting, Predicting and outright Lying:
Forecasting = Statements made with > 90% certainty
Predicting = Statements made with < 90% certainty
Lying = Statements made with < 50% certainty
You can see what I mean with a screenshot from my MVP:
Predicting would have been including logos of friends’ companies on this page, without talking to them first. It’s likely they would have been on board, but since I wasn’t > 90% sure, I didn’t include them.
Lying would have been including logos of companies I had no relationships with.
The flier above is an example of forecasting. I haven’t nailed down everything 100%, but if the candidates come, I’m > 90% sure I can deliver what’s written.
Next I spent 3 weeks researching and interviewing each of the candidates to confirm these folks were high quality. Sounds tedious but I had a couple tricks up my sleeve:
- I used to be a hiring manager for a large software company – that made screening faster.
- It’s actually fun. Nothing better than 1-on-1 conversations with smart people who I can help take the next step on their path. It’s proving to be a privilege.
Within a month, I had validated problem market fit for the “hard” side of my 2-sided market.
Validating the “Less Hard” Side
Once I knew I had solid candidates, it was time to validate I had opportunities to place them in. Of course I had friends who were hiring, but I wanted to see if there was a more scalable way to make connections:
Since my customers are my friends, Facebook did the trick and got me 4 intros to recruiters – 3 of which wanted to collaborate (i.e. I would source candidates, they would source open positions, and we’d share referral fees).
As a meta-cruiter(?) I now have access to a couple dozen open positions.
Problem Market Fit isn’t Product Market Fit
At this point, I’ve validated Problem Market Fit for both sides of the market, but it remains to be seen whether or not I’ll successfully place folks. If I can do that with consistency, we’ll know we’ll have achieved Product Market Fit as well.
Want to know how this story ends? So do I. I’ll share the results as soon as they’re in. Subscribe via Email or RSS to get them, plus I’m really excited about our next post – Hacking the Google News API & Mechanical Turk to get press!
3 Steps to Testing a 2-sided market:
- Define the “hard” side (e.g. candidates) and the “less hard” side (e.g. employers)
- Validate buy-in from the “hard” side by forecasting buy-in from the “less hard” side
- Use validation from the “hard side” to validate the “less hard” side
Step 4. Profit.
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