As humans, we fundamentally rely on trade in order to thrive. For centuries, our ancestors congregated in lively bazaars and large warehouses brimming with vendors to barter and exchange items in physical marketplaces. Those transactions are now happening more often in the silence of the internet, inside the numerous digital marketplaces that have popped up in the past decade.
With the success of companies like Amazon, Lyft, Seamless, etc. the digital marketplace model is quickly gaining popularity. After being applied to almost every industry, the model has finally emerged in the recruiting space as well. But matching individuals to a job, something closely tied to our sense of happiness and purpose, is no easy feat. Doubt persists on whether or not the model can work in such an intimate space. If the recruiting marketplace model succeeds, the results have potential to not only change the way that we hire, but to completely alter the way we view work.
The tipping point
Building a marketplace can be difficult. One obstacle comes right in the beginning with seeding the supply and demand. Companies will come if you have top candidates, but how do you attract talented candidates when you don’t have any companies to connect them with? In the beginning, spreading awareness through advertising, guerilla marketing, conferences, sales and referrals is essential. But for a marketplace to truly hit a tipping point where it goes from unstable to successful, a company must gain trust.
The problem is that the recruiting industry has an underlying distrust infused within it. Traditional recruiting is built on a compensation structure. Headhunters are paid per seat filled. As a result, candidates and companies feel a lurking suspicion about the motivation behind introductions and connections. It’s an uphill battle, but after a few good experiences, providing opportunity for reviews, word of mouth and luck, a marketplace hits a tipping point and becomes a viable model with the potential for exponential growth.
When a marketplace works, it works
When Airbnb launched in 2008, it slowly began to change the way we travel. Staying in an Airbnb is often much cheaper than booking through hotels and has made casual travel more accessible. In 2011, Ron Leibman, a NYTimes reporter, decided to test out the prices of Airbnb rentals in New York City and found that he “spent a total of $922 on [his] five-night Airbnb binge, $724 less than the $1,646 that comparable (or worse) hotels nearby would have cost, according to Expedia.”
Airbnb’s marketplace cut travel costs, leading to more flexible, whimsical and affordable travel. Fabrice Grinda, an entrepreneur who specializes in marketplaces having launched his own before investing in over 400 angel investments, one of them being Airbnb, says that when a marketplace works, it can venture into completely new territory. “By adding calendar management, reviews and upgrades, Airbnb removed a lot of friction and now Airbnb alone in that category is probably 20 million a year in sales. And so, the category that didn’t exist was created outright,” Grinda says.
“Before Airbnb existed, you actually had subletting on Craigslist, where you had to exchange keys, there was no calendar, it was just difficult, there was a lot of friction.”
Airbnb opened doors to the kind of jet-setting that’s given way to a distinction between the word “traveler” and “tourist”, or those looking for a more authentic trip vs. outsiders who see places through the lens of Top-10 must do lists. Airbnb’s marketplace is changing the way people travel and their mindset surrounding it. Not to mention, its contribution to the boost in city economies, the impact on the sharing economy and access to places that can’t afford construction of large hotels due to seasonal tourism and other factors.
There’s a parallel story in other industries. For example, companies like Etsy have contributed to the rise in the gig economy where people are finding non-traditional ways to make a living. According to Version One’s marketplace report, 35% of Etsy sellers started their business without much capital investment compared with 21% for small business owners in general. Many people are putting their passion first and working multiple side jobs to get an idea off the ground, pursue a career in acting, etc.
The transportation (think ridesharing apps like Lyft, Uber, Via, Gett, etc.) and food industry (ordering food or making a reservation has never been more streamlined thanks to Seamless, Grubhub, Open Table) have also been affected. And many services are erupting in marketplace form, changing the way B2B business is done. According to Grinda, “Marketplaces are dynamic, making interactions much more effective, especially B2B marketplaces. Before the model existed, transactions for B2B were happening in telephone, e-mail, spreadsheets, and well, with rolodexes. It was much less efficient.”
And finally, relationships. Dating marketplaces that match humans to other humans - OkCupid, Bumble, Tinder, Grinder, etc. - have completely affected the way this generation meets one another. People aren’t limited to their network of friends and family, nor to their location. They can be as specific in their search as they want. According to a graph in a Time article, as of 2010 over 20% of people met their spouses online compared to under 5% twenty years before. Online dating comes with setbacks but there’s no arguing that the effect it’s had on the dating world is significant.
Although a strange and difficult comparison, the fact that dating marketplaces have completely changed the way people find partners bodes well for the recruiting marketplaces who also aim at fostering better relationships between humans and the jobs they hold. “If you go to a dating agency, the reality is they only know so many people and will be limited in who they can match you to. But if you go to a Match.com or a Tinder or a Bumble, you’re going to have the entire universe and you’ll actually be able to find a person that will fit you much better than the placement agency can do it. So that analogy applies here, it makes way more sense in the job category,” Grinda says. Unlike other marketplaces where the supply and demand is usually product oriented, both dating and recruiting are much more intimate spaces that have a profound and sometimes long-term effect on a person’s well-being and happiness.
In all of these examples, it’s not just the process that changes, but people’s entire mindset. When a marketplace works, the effects don’t just improve that industry but also have a profound effect on human behavior. If the recruiting marketplace model succeeds, there will be an avalanche of change.
Changing the way we hire
The recruiting industry is already experiencing the first signs of change as the talent marketplace is becoming a part of internal recruiters’ methods for finding top candidates. Because a marketplace collects all of the information about candidates and stores it in one place (resume, skills, website, linkedin, etc.), hiring is more transparent and efficient than ever before. Hiring managers, founder, and internal recruiters can filter for candidates by experience, skills, education and more in a matter of seconds. They have autonomy to find their own interviewees within a short period of time instead of sorting through thousands of ill-qualified resumes or outsourcing the project to an agency. Companies with open roles can reach out directly to those who look like a good fit, speeding up the process. Hiring with a marketplace is not limited by human connections and agendas, but rather relies on data and innovative technology.
“The marketplace, by putting all of the inventory of jobs and all of the inventory of employees that are available in one place, provides more liquidity so people will actually find jobs a lot faster. It costs a lot less money and it’s is more efficient overall. It makes way, way, way more sense.”
With efficiency and transparency also comes accuracy. Recruiters inside a marketplace can see the job-seeker’s goals and learn a little bit about where they see themselves in their next role. As a result, conversations begin quicker and on a more level field. With an efficient, more accurate system, companies save money for trying to recruit and train the most talented individuals. “If your a software engineer and you’re looking for a job, a marketplace can help you see what’s right for you - what’s the stage of the company in, what’s the right comp for that level, etc. so you don’t have to go figure it out on your own by reaching out to company after company,” Grinda says.
Recruiting marketplaces also tracks trends in data and can see the entire recruiting process from start to finish (interview to close), opening up the door for more technological advances, especially with artificial intelligence and machine learning that thrives on data to operate sufficiently. As this new model for recruiting takes over, the overall hiring process is transitioning into a much faster, more accurate, more cost-effective and overall happier hiring process.
Changing the way we view work
As recruiting marketplaces gains traction, the process will continue to change, with the potential to affect the entire mindset our generation has surrounding work.
Similar to the way that Airbnb, TaskRabbit, Seamless, OkCupid and the many others mentioned above affected their industries, a recruiting marketplace will not only affect the process of hiring, but has the potential to influence the world’s mindset.
It starts with an abundance of reachable opportunity. Companies and job-seekers will be presented with more choice surrounding their job, office, company culture, etc. than ever before and standards will skyrocket. Younger generations already expect more from their jobs than just a salary. People have started to pursue positions where they can grow, learn, and feel connected in ways that weren’t possible before. With a more efficient, more accurate system of recruiting, this phenomena will only increase.
Furthermore, the efficiency of the marketplace recruiting world will enable people to find jobs quicker leading to faster growth for businesses, sparking innovation. As the productivity level of companies increases, we’ll see more companies, more products and more change in every industry.
Imagine the possibilities of a world where the word work isn’t synonymous with dread, but rather excitement. Where your job isn’t about a salary but about personal growth, education, the ability to build something you’re passionate about with people you care about. Our world is moving in that direction, and the marketplace might be the tipping point.