IN THIS MONTH'S FEBRUARY ISSUE:
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STORY Techies.com Realigns Management,
Adds After filing on January 28 with the Securities and Exchange Commission for an initial public offering, management at Techies.com isn’t talking – but the document speaks volumes about the company’s future.Most notable is the shift of responsibilities among top managers, including a less prominent executive role for entrepreneur Doug Berg, who co-founded the company four years ago. In January, 33-year-old Mr. Berg, the company’s president since 1996, passed that title to CEO Dan Frawley, a former Gartner Group executive and Harvard University MBA who joined Techies in July 1998. Furthermore, in early February, the company announced the arrival of Larry Stranghoener, a 16-year veteran of Honeywell, who served most recently as chief financial officer of the $9 billion Fortune 1000 company.A second remarkable aspect of Techies.com’s management team is its high percentage of executives with work experience at publicly traded Gartner Group, a well-respected information technology consulting firm located in Stamford, CT. Nearly half – seven – out of Techies.com’s 16 senior managers, executive officers and directors have a past affiliation with Gartner. Add John Clements, who joined Techies.com in early February to spearhead the company’s launch in Europe this year, and the number rises to 8 out of 16 – a figure that must at the very least cause investors to take notice. Underwriters include Credit Suisse First Boston Corp., the offering leader; co-managers are Dain Rauscher Wessels and Thomas Weisel Partners, LLC.Plans for the $86 million in proceeds the company hopes to raise include expanding internationally and building the Techies.com name. Management also plans to broaden revenue streams from current job posting services to include training services and the sale of proprietary research and data. The filing comes when demand for technology professionals by employers is as strong as ever, and competition among job-boards for eyeballs is stiff. Consider that Earthweb, the publicly traded parent of veteran technology job-board Dice.com, just purchased Cambridge Information Network, an online community for corporate IT strategists, and also completed its acquisition of two online certification training providers. Both deals better position Dice.com to take on Techies.com. "We’ve been able to exploit synergies with Earthweb’s other sites," says Jeff Dickey-Chasins, vice president of Earthweb’s Career Solutions division. "Techies.com has its work cut out for it."Indeed, Techies.com is far from having a first-mover advantage, with Hotjobs.com, CareerBuilder and Headhunter.Net among others already public. Moreover, some observers call Techies’ offering ambitious: the company’s accumulated losses since inception are $26.5 million, dwarfing its $4.9 million in revenues. Of course competitors Hotjobs.com and CareerBuilder went public with losses ($5.4 million and $26.2 million respectively), but with stronger revenues. Hotjobs’ total revenues were $6.6 million at its August 1999 filing; CareerBuilder’s totaled $11.8 million at its filing last Spring.Yet Edina, MN-based Techies.com has come far, fast in recent years, led by Messrs. Frawley and Berg. Although he no longer has an executive position with the company, a spokesperson says Mr. Berg’s new title of Chief Techie is "still significant." As Mr. Berg told Online Recruiting Strategist in an interview last September, "If I attribute anything to my success, it is the ability to know what I don't know and not keep the jobs I don't need," he said. New Genre of Healthcare Focused SitesHint at E-recruiting’s Next Era Rhonda Creger is an avid Web recruiter: 20 of the 26 doctors she hired for Roanoke, VA-based Carilion Health System in the past year came from Internet sources. She’s tested numerous sites from generalist types like CareerPath.com and Headhunter.net to such highly specific ones as www.gaswork.com – "the largest anesthesia employment resource," according to its homepage. The result of her experience? "Generalist sites didn’t draw for us," she says. "We’ve got to advertise in places that are specific to physicians or healthcare or medicine."The benefits of niche sites over generalist ones is a popular theme these days, particularly with the offering of Techies.com, the first niche site to go public, pending. But within the niche sites that are now evolving for heathcare professionals lies a larger story. Behind the flurry of deals done, new ventures created, and website launches and revamps scheduled for the coming months is the foundation for the next era of e-recruitment business models. "This is the first wave of truly vertical sites," says Michael Lindsey, co-founder of MiracleWorkers.com, a start-up that launched February 22. "Right behind information technology professionals, healthcare workers are coming online. Hospitals have to buy supplies online, they’re moving billing online, buying pharmaceuticals online."A slew of venture capitalists, recruitment-company executives, and entrepreneurs are betting that healthcare professionals will handle their careers online, too. New businesses are cropping up nationwide. Start-up Jobscience.com got first-round financing from Kaplan Ventures. Boston-based TravCorp will soon spin off HospitalHub.com; CompHealth in Salt Lake City is launching a healthcare site with its own management team within the next two months. And Internet hotshot Healtheon/WebMD owns 30 percent of MedCareers.com, an employment website introduced on February 15 (see box).Keep ‘em coming, say employers. "In a perfect world, we’d post all our jobs online," says Dennis Hoban, a career specialist at Johns Hopkins Hospital in Baltimore, MD. At Bon Secours/St. Francis Health System in Greenville, NC, posting openings on the hospital website has yielded 45 online applications per week. "We were shocked" to get so many, says St. Francis’ David Townsend.Still, recruiters’ love for the medium is not unconditional. Like employers in most industries, healthcare search consultants appreciate simplicity. "We just cannot post all our openings," says Mr. Hoban at Johns Hopkins, "because posting and tracking the jobs takes so much time." Moreover, the peculiarities of employment in healthcare translate into special needs for employers and workers that must be addressed. Tight hospital budgets due to cutbacks in Medicare reimbursements, for example, make the Internet a more attractive tool. "I try to keep my recruiting costs down," says Ms. Creger of Carilion Health System in Virginia. Because of the Internet’s broad geographic reach, online enterprises can help hospitals lure to their area workers who trained in a far-off region. Throughout much of the country today, for instance, nurses are in short supply. Yet in her area, says Ms. Creger, "we’re oversaturated." Those two factors are major catalysts behind many medical staffing companies’ migration online. Staffing firms do best in markets of uneven supply and demand – a huge problem within the healthcare sector today. "Medical staffing had been the ugly sister of the staffing world," says analyst Jeff Silber at investment bank Gerard Klauer Mattison & Co. "That’s changed." CompHealth, a 20 year-old staffing company focused mostly on physicians, purchased two nursing staff outfits in 1999, and plans to buy more. CompHealth and competitor TravCorp, another long-established outfit, are both moving online using a clicks-and-mortar strategy. That is, they plan to develop new business online out of existing client relationships formed at their brick-and-mortar companies.Licensing, credentialing and continuing education are the final aspect of healthcare employment that translates nicely onto the Internet. Kaplan Ventures, a unit of testing company Kaplan Inc., invested in Jobscience.com as an entrče into heathcare recruiting business. "If you want to get a better job, increase your salary," says Robert Greenberg, president of Kaplan Ventures, "you’ve got to improve your skills." Begun by a father-and-son team of former recruiters, Jobscience.com aims to have "be a media business, a resource for workers with the most healthcare jobs on the Web," says president and CEO Ted Elliott.Credentialing, in which doctors are approved for coverage by certain insurers, is a crucial component of the hiring process. That’s why Healthcarematch.com’s parent, Caredata.com, acquired a physician credentialing firm in recent months. Says Charlie Holland, head of Caredata’s healthcare recruiting group, "The idea is to get new hires productive and at work as fast as possible."Agilent Lands Hiring Guru John Sullivan as Chief Talent Officer Few corporations nationwide are as hungry for top-tier technologists, engineers and scientists as those in Silicon Valley. There, established companies like Cisco Systems compete with fast-moving start-ups for the best and brightest employees. Agilent Technologies entered this fray upon completion of its spin off from Hewlett-Packard last November; one month later, the young company launched an impressive salvo indicating, in no uncertain terms, a definite commitment to finding and keeping talent. Agilent hired John Sullivan, head of the Human Resource Management Program at San Francisco State University, as chief talent officer. How? "They made me a dream offer," says Mr. Sullivan.Agilent’s winning proposal: the opportunity for Mr. Sullivan to work with his spouse. A human resources professional at Hewlett-Packard who recently moved to Agilent, Adeline Sullivan heads research and development for human resources. Both the Sullivans have virtual jobs in which they can work from home; while their functions are not similar, their professional interests and expertise overlap. Wendy Miller, Agilent’s U.S. Operations Manager and the person who hired Mr. Sullivan, explains her somewhat unorthodox offer. "I had to figure out what might make him leave academia, and certainly Addie was a factor." Of her new chief talent officer, Ms. Miller says, "I thought John had a unique combination of depth and breadth. He also has his own style, which really challenges the status quo. That’s what I needed for this new company." Mr. Sullivan is well-known among human resources professionals. In addition to teaching at San Francisco State, he is a frequent speaker at staffing conventions worldwide, and writes for numerous publications. "John has some great ideas," says Ronan McCann, internet recruiting manager at Intel Corp. "Its an opportunity for him to implement those ideas and see how effective they can be." The concept of hiring two people, including spouses, at once as a package deal, is one that Mr. Sullivan suggested in a column published in November 1999 by Electronic Recruiting Daily. "Firms can gain a tremendous competitive advantage by breaking old rules and acting differently from the average firm," he says; that is the spirit he will instill at Agilent. The chief talent officer, for instance, is not the only new hire with a dream job. "We give employees opportunities to do things that other employers wouldn’t," says Mr. Sullivan. "Not because they couldn’t legally, but because they aren’t bold."Of course, in addition to recruiting, Mr. Sullivan also has specific projects to oversee and complete during this two-year stint on leave from SFSU. These include developing a new employment website; creating and implementing an employee referral program; and formulating best practices for hiring. All are demanding tasks, but doing them at Agilent poses some unique challenges. Though only a few months old, Agilent has a large existing staff of over 40,000 employees, as well as an existing infrastructure that is a holdover from Hewlett-Packard. Having them presents unique opportunities and problems. "We’ve got to figure out what we do well, and what we don’t," says Mr. Sullivan. To help make this assessment, Mr. Sullivan has hired fellow SFSU colleague and entrepreneur Kevin Wheeler, CEO of consulting firm Global Learning Resources as a consultant. Starting in late January, Mr. Wheeler is "doing the plumbing," he says, figuring out the various hiring systems and processes that are in place, and assessing which ones work and which ones don’t. One large component of the project, for example, is to gather data and determine metrics on hiring, then analyze how recruiters can be more effective in using their time. "If they have one third of their recruiters focus on administrative hires, but they aren’t hiring enough key engineers, that’s a problem," explains Mr. Wheeler. "The ultimate paradox here is that we have to blow up the processes, but do it without hurting anyone."At the same time Mr. Sullivan and his team are conducting internal investigations, they are also looking outside the company to gather all-important information on their competitors’ hiring practices. "It isn’t good enough to be current with what they’re doing," says Ms. Miller. "We’ve got to second-guess and outperform. I need to make sure we have endless pools of extremely talented professionals in areas where the technology is literally being developed today. "Agilent now uses a hodgepodge of software programs, some customized and developed internally, to help manage resumes and applicants." Ms. Miller won’t discuss how that might change in the near future. Savvy competitors who are familiar with Mr. Sullivan’s work are likely keeping a close eye on Agilient these days as well as on their own workers. "If you worry about the other person you’ll never get ahead," says Randall Birkwood, staffing director at Cisco Systems. "What you worry about is your own people. As long as we keep our people happy we will do well." Omnicom Buys Stake in Recruitsoft Bernard Hodes Group, the recruitment ad agency owned by ad behemoth Omnicom Group, and start-up Recruitsoft plan to jointly develop and market a Web-based recruiting software package as well as related services to employers. The new product will integrate Recruitsoft’s technology with two recruitment software programs developed at Bernard Hodes Group in recent years, says Barry Siegel, president of Recruitment Enhancement Services, a division of BHG. "This will help companies with an end-to-end recruiting process. Many of these products already exist, but aren’t easy to implement," he says. Customers can contract with BHG for applicant screening, resume mining, and appointment scheduling – some of which will be done via technology and some through old-fashioned human contact. The deal "pretty much ensures our future," says Recruitsoft president Karen MacPherson, referring to Omnicom’s purchase of a stake in her company. Details on the deal’s financial aspects were not released. Executives at both companies said that CareerMosaic, the job-board owned by BHG, was not involved in any aspect of the agreement. Central Newspapers Sells Westech Group Central Newspapers, whose flagship properties include The Arizona Republic and the Indianapolis Star, in early February sold its Westech Group of Companies to BrassRing, a company formed last September that offers career fairs, testing and training services and recruitment software to employers. Westech Group, founded by a group of magazine publishers in 1983, includes Westech Career Expo, a producer of bricks-and-mortar career fairs; incpad.com, a job-board; and the magazine High Technology Careers. The company reported 1999 revenues of $29 million. Though BrassRing’s other assets include career fair producers and a nascent job-board, the Westech assets offer an immediate entrée into IT hiring. "The opportunity to join forces with BrassRing, we believe, will provide employers with more options to meet strong demand for top information technology professionals," says Louis Weil III, president and CEO of Central Newspapers, who is joining BrassRing’s board of directors. On deal’s closing, the combined Brass Ring and Westech entity will be owned by Kaplan Inc. (41.6 %), the Tribune (27.5 %), Central Newspapers (23.2 %), and Accel Partners (7.7 %). CareerEngine CEO Tom Ferrara Revs Up CareerEngine With Partnerships Tom Ferrara doesn’t like to work in large companies. He’s a build-it-from-scratch guy who loves to get his hands dirty. As a boy, he sold turtles to his neighbors; over summer during college, he ran a landscaping business with his brother and an auto detailing service on his own. His first customer owned a Porsche. Not wanting to lose a sale, he took the keys and learned how to use a manual transmission as he drove the car home. "He’s always wanted to be his own boss," says his father, Nick Ferrara. "He couldn’t wait to be in business." An avid bent for entrepreneurialism, plus a vast amount of physical energy, have energized 29-year-old Mr. Ferrara throughout his most ambitious undertaking yet: creating CareerEngine.com, an employment website launched in June, 1998. Owned and funded by Helmstar, Inc., a publicly traded real estate developer, CareerEngine is comprised of over 25 industry specific sites that draw traffic through a broad network of partnerships. The online employment company has a multitude of deals with recruitment advertising agencies, other job sites and makers of recruitment technology. "Tom comes from sales," says Sam Daniel, a CareerEngine senior vice president and the first person Mr. Ferrara hired. "He loves to make those deals. He loves making them happen."From Mr. Ferrara and Mr. Daniel nearly two years ago, CareerEngine is now a 64-employee outfit, based out of its parent company’s Manhattan offices. Mr. Ferrara developed the business plan and started the company at the invitation of Helmstar Group chairman, George Benoit. The two men met when Mr. Ferrara was executive vice president at Remote Lojix, a technology consulting firm. "Tom is a very charismatic and also a can-do guy," says Mr. Benoit. Helmstar wanted to get into a technology business, and asked Mr. Ferrara to come onboard. After getting started throughout most of 1998, CareerEngine began recording revenues in 1999. Sales for the nine months ended September 30, 1999, were nearly $400,000, up from nil for the nine months ended September 30, 1998, according to Helmstar’s most recent quarterly report. Helmstar, which reported a net loss of $1.5 million for the same nine-month period, has poured several million dollars into the dot-com enterprise. Creating CareerEngine within an existing company was in some ways easier and faster than it would have been on his own, says Mr. Ferrara: "I had the luxury of a year and a half without thinking about money. I could take advantage of what they have to offer." The downside of the arrangement of course, is living with the parent. Certainly the Helmstar Group has a colorful history. Public since 1986, the company buys, operates and sells businesses in a range of areas, from bond underwriting, insurance and real estate development. One of the company’s directors is a self-employed real estate investor who filed for personal bankruptcy in 1997; another was a general partner of a limited partnership that filed for bankruptcy in December 1994. Helmstar’s stock currently trades around $3.125 per share, with a 52-week low of $1.25 per share and a high of $9.50 per share. Mr. Benoit, the chairman, is optimistic about CareerEngine’s future. He is in the process of raising money to continue its growth, either by securing venture capital, taking out a loan or issuing warrants. He anticipates breaking even sometime in 2001. "We figure that growth for 2001 will be about three times revenues of 2000, and will grow faster than that in 2002," says Mr. Benoit. Mr. Ferrara is focused on constructing the partnership network that he believes will put the CareerEngine name in front of recruitment advertising decision makers. Though risky, the start-up life he’s chosen has some long-term rewards. He pulls out a dog-eared business card from a prior job, flips it over, and reads his handwriting on the back: "I refuse to live my life in such a way where one day I’ll look back and say what if." Adecco S.A. and CDI Corp: One month into the new millennium, Adecco S.A. and CDI Corp., two of the world’s largest staffing companies, announced separate deals that illustrate the staffing industry’s continued determination to move their businesses online.In its first major push online in North America, Adecco S.A., the biggest staffing company in the world, announced on January 27 its purchase of a five percent equity stake in Dallas, TX-based start up Jobs.com. As part of the deal, Adecco chief executive John Bowmer takes a seat on jobs.com’s board – a group that includes numerous high-profile investors including Christopher Bancroft, a member of the family that owns Dow Jones Co.; CBS; and Idealab!, the start-up incubator.The first phase is simple. Adecco will post job openings on jobs.com’s site and the two companies will set up reciprocal links between their respective sites. The second phase will include a roll-out of jobs.com’s Resumail software in thousands of Adecco offices throughout North America and eventually, in Europe. The software "is a good solution to a common problem of being overwhelmed with resumes," says Barry Asin, vice president, strategy and marketing for Adecco. For jobs.com, working with Adecco overseas enables the startup to make major strides in distributing its software in Europe, which is a largely untapped market. Several days after the Adecco deal, CDI Corp., owner of Today's Staffing, Technical Staffing and Management Recruiters International disclosed a five-year, multimillion dollar agreement with Personic, a maker of e-recruiting software. CDI is boosting the number of licenses in use at its companies from 1500 now to 10,000 worldwide. "Speed in matching candidates to jobs and having a rich database are crucial in our industry," says Ray Barratt, chief information officer at CDI. "We wanted all offices to have a similar tool in use long-term," adds Mr. Barratt. The Personic software will also be an integral part of CDI’s Internet program, which is currently in development.For Personic, the agreement provides a valuable opportunity to roll out new Web-based products and services on a broad scale. CDI has used Personic’s client-server application E-Z Access for several years, and will now shift over to a web-based version of E-Z Access and also test such new extensions as Candidate Bench, which allows staffing consultants and employers to communicate with candidates electronically. "Our goal going forward is to seamlessly connect all separate parties in the recruitment process," says Mike Silvester, Personic’s senior vice president of worldwide sales. Techies.com's Domino Effect Talk about a fascinating phenomenon. Techies.com’s business model, which has evolved from being a regionally focused employment site selling employers super fancy jobpostings into an online community for technologists and a supplier of data for prospective employers, is revolutionizing an industry – healthcare.How is it happening? There’s ample opportunity. As the Internet and technology have strengthened in the past several years, more businesses are using the Web as their communications channel. That transformation is happening quickly in healthcare, which comprises roughly 15 percent of the U.S. economy. One of the clearest examples of the Internet revolution is Heatheon/WebMD Corp. Management at the Internet-based entity, it seems, is attempting to create a portal through which doctors and patients can communicate with each other, or with pharmacies, or with laboratories. Its uniting entities that were once disparate and drawing in doctors and patients. The result is a community – similar to techies.com’s community. Add employment to the mix, as happened on February 15 with the launch of MedCareers.com, which is 30 percent owned by Healtheon/WebMD, and the model broadens."We’re still in the infancy stage of medical staffing online," says Jeff Silber, senior vice president of investment bank Gerard Klauer Mattison & Co. In addition to Healtheon/WebM.D., other companies are gearing up for a big splash. " "We think that will grow to 30 percent in the next three years." CompHealth’s new entity, a healthcare e-recruiting site with career management content, online continuing medical education and credentialing, offers services similar to those provided by techies.com to its technologist users. Indeed, most of the new ventures now being developed in healthcare have a similar menu. "We think that techies.com has a great model," says Ted Elliott, CEO of startup jobscience.com. "We’ve spent a lot of time studying what they did."Seeing these changes happen in only a few short years forces one to wonder about the next frontier in e-recruitment. Is it telecommunications-related? Neal Fondren, a new media executive at E. W. Scripps Co., predicts that employment ads will be distributed through palm pilots, cell phones and pagers. "The ability to customize information and send it only to you is going to be available soon," he says. Think about it. |
