Liquid HR: Notchup.com: hockey stick or hokey shtick?

Notchup.com is a new website with a cool idea. Recruiters pay members to interview them for jobs. It targets more senior professionals and sleeper candidates who already have a job, not the desperate jobhunters who are giving their CV away. This will mean that recruiters do more groundwork and prequalification before calling upon the candidate for the interview. It will therefore also mean that a higher percentage of these "calls" will translate into job offers.

Given the business model and the target audience, discretion is pretty important. So there are some less-than-airtight features designed to protect you from over exposure: you can be invisible to recruiters who use certain domains (e.g., mycurrentcompany.com) - a way to keep your current company from seeing you. Also, you can preclude recruiters from seeing you altogether -- and be visible only to hiring companies. Furthermore, you can indicate that you are "Happy, but will listen at the right price" to a pitch - a statement that's a little less offensive should your current company's HR rep find your profile on notchup.

Well, I gather notchup.com has just begun to experience exponential growth in first time users. According to an insightful business week article, they went from 200 users to 70,000 users in a few days, who then invited 900,000 more. Having read a little bit about it in techcrunch.com, I received an invitation soon after from an old B-school classmate who works at Bain consulting. This would indicate a pretty high profile average user. Of course, when I found out that I get 10% of the interview cash generated from colleagues that I sign up, I shamelessly invited my entire linkedin.com contact portfolio. (Hopefully, my contacts that are senior have developed quick and painless methods of filtering out invitations in which they have no interest.)

My Analysis:

Hmmm. At first glance, I really like this idea. Companies pay recruiters for their services already, so simply redirecting a bit of that cash to the candidates shouldn't be too hard. Professionals who ordinarily wouldn't interview are tempted to do so - tempted by money. But I think the market is a bit smaller than one might think when you look at it. Various things chip away at the business model:

1: The cash-up-front problem. Companies generally hire recruiters on a contingency basis, which means recruiters will have to pony up the cash in order to talk with a candidate. Recruiters will do more groundwork and prequalification before calling upon the candidate for the interview - which means a higher placement rate and less candidate time wasted. But it will also shrink the candidate pool and the number of transactions.

2: The dearth of pay-me purists. People that are working but open to hearing about new jobs may not want to put up a money-barrier for potential recruiters. Really, we have to ask the fundamental question: who is the buyer and who is the seller? Who has the power -- the candidate or the hiring firm? It depends on the job market - but note, we're heading for international recession right now. Candidates who have the power are generally pretty senior, and there's a headhunting market already in place for them which offers more discretion than a Web 2.0 site like notchup.com. And a little bit of cash aint much to the most senior people - certainly not worth risking their reputation.

3: The classic network leakage problem. If I see someone on notchup.com, can't I just contact her via linkedin.com, and avoid being asked to pay her cash? It depends on how tough that professional is -- how much he or she adheres to using the notchup.com website. Interestingly, notchup.com allows you to import your profile and contacts from linkedin.com. This implies that users on notchup can often be found on linkedin - leading to network leakage.

And there's no way for notchup to really respond to this. If notchup were to launch social networking features, it would dilute the website's singular purpose and eat away at the privacy and discretion of its (already-employed) members, not to mention put notchup in the hyper-competitive social networking market. Furthermore, what's to stop Linkedin.com from adding a "pay me to interview me" feature?

Well, notchup is something of a fit for the Web 2.0 Liquid HR economy -- it is helping to standardize HR information by utilizing Linkedin profiles. But this just in: apparently there may be legal constraints put on the model as well -- apparently, linkedin is angry that their user information has been mined by notchup in violation of terms and conditions. Notchup is not providing new information to the mix -- it's just another place with regular member profiles (often imported from linkedin). Therefore, it's not an Information Provider. Nor is it a Conduit for information (linkedin is the conduit in this story). As a Matchmaker, it is providing some service by adding new incentives to bring people together, so I guess that's the notchup play. I think this company will make it, but won't have stellar growth: its market is too vulnerable.

Comments

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I agree with you on this Mark. In my opinion this model has too many pitfalls and might work only in economies wherein population index is in negative ;)
For eg, Nordic countries.

Posted by: Vaibhav | February 06, 2008 at 08:25 AM