Jobstick Shifts Gears to Grow
After a few years of growing slowly but comfortably, Jobstick CEO Avi Marcus realized he needed to revamp his business model if he really wanted his company to surge ahead. It's now on the verge of hooking its first big client.
The Bethesda, Md.-based firm offers an online job matching service for lawyers. After confronting what Marcus calls his "chicken and egg problem" and reaching out to a new-found client base, Marcus believes it's finally on the path to success.
One of the challenges of starting a job-board service is that you need job applicants and employers to start posting. "When you've got a job board that's empty no one wants to use it," Marcus said. "If I'm an employer...and there are no candidates I'm not going to come back. If I'm a candidate and there are no jobs, what's the point?"
When Marcus was in law school, he noticed that the big law firms spent a lot of time on campus soliciting resumes from the top 10 to 20 percent of a class, "but that means in reality if you're not in that top echelon, you're not going to get anywhere," he said.
A law school's career center has limited resources, Marcus said, adding that unless a graduate is fortunate enough to have personal connections, he or she better be ready to enter a job-seeking world of mass mailings and cold calls. Marcus graduated from the University of Miami law school in 2005 with a 3.0 average, sent out 600 resumes and got three interviews.
He did land a job as a lawyer, but after a short time discovered that the profession just wasn't for him. He brainstormed for a while and came up with the idea of Jobstick because he strongly believed that there was a market for the service.
But if you build it, will they come?
Changing Model Leads to Business
After a fairly lackluster start, which Marcus partly attributes to minimal marketing, the company altered its business model. It now partners with law firms and law schools, who refer jobseekers who don't find a match on their Web sites to Jobstick's main job database. Jobseekers are only referred with their permission and may remain anonymous. These partnerships ensure Jobstick will have some applicants on its job board, and some larger revenue-driving deals, solving its "chicken and egg" problem.
Marcus acknowledged there are similar services to Jobstick, but said competitors cost $400 to $600 per job posting. On the high end are recruiters, who can charge as much as $30,000 to $50,000 as a percentage of salary when their jobseeker lands a job.
Jobstick's basic consumer model is for free job postings, resume viewings and matching. If a job applicant on Jobstick gets hired through the service, then basic fees start at $99 for the employer and $20 for the candidate, well below its competitors.
Jobstick has inked deals with a handful of law schools, including Notre Dame, Loyola and Temple University, who recommend Jobstick to students as a job search resource.
"As an owner of a business you've got to do whatever it takes to get business in the door," said Marcus, who grew up in Potomac, Md. "I've learned very quickly that you need to invest in those possible loss leaders so you can get business later on...I don't want to ruin a golden ticket for us."
He said it hasn't been easy to convince an industry that there might be a better, more efficient way of conducting the hiring process. "[We] come in offering this disruptive technology and we know it's going to take time for the industry to adapt," said Marcus. "Several firms that we talked to said it sounds great, but we're not ready."
Marcus has been working the conference circuit to drum up business -- a popular strategy among small firms that can afford it. His visits to the National Association of Law Recruitment Professionals in Toronto and another meeting in Las Vegas proved worth every penny, he said.
At one of the conferences, he met a recruiter from a large, global law firm who he said was wowed by the start-up's technology, created by Marcus's younger brother, Jonathan Marcus, a Massachusetts Institute of Technology graduate and now the chief technology officer of Jobstick. The recruiter told Marcus that the firm's human resources staff wastes 60 to 80 percent of its time weeding out resumes of unqualified candidates.
Jobstick's technology can help a large law firm quickly sort through a massive database of applicants on a very detailed level, including the locations and specialties of applicants.
Jobstick is now working with the global firm to determine if it will become a client. Marcus said Jobstick would work for about three months in a "pilot program" to see if the firm likes its technology. He hopes it will turn into a year-long agreement or a deal based on a per-resume basis. If it does, the five-person company would need to hire additional staff. "But if they don't like it, so be it," he said.
The company also is in talks with some Fortune 500 firms -- one company says it handles several hundred thousand resumes a year while the other does 9 million annually.
"We were comfortable plodding along doing the job board and we would be fine doing that, but when this new opportunity [to partner with law firms] came up it was too good to pass up -- not only for the company but to take a chance on a new venture when you've barely started the first one," said Marcus.
The company is looking to raise additional funds within the next six months or so, but Marcus said "we want to try and keep this as privately held as possible." He also hopes to use the company's technology to expand its services to other industries. "If we do that, we'll need to hire additional staff to implement this properly. We've had day-long strategy sessions where we're trying to figure out what are the next 18 steps so that nothing is a surprise."
He added that Jobstick is financially stable, which helps immensely in dealing with potential clients. "Once they realize that the need is there, they won't look at us as a small business."
Be Wary of Underpricing and Overpromising
Robert Baum, an entrepreneurship expert with the University of Maryland's Smith School of Business, said start-ups of all stripes need to make sure that they're not underpricing, overpromising and lacking resources just to seal a big contract. "Some of these contracts look big to small companies but they may look small to big companies," he said.
Baum said a startup should know its industry. "Is the industry fragmented with a bunch of small operators? Or are there a group of small newbies that are innovative and there are a bunch of huge firms that tend to buy them out, crush them or copy them?"
"If you're talking about being another car dealer, you probably don't have much to worry about if you sign a contract with a large auto manufacturer. Your competitors aren't trying to kill you because the market is so commoditized that new competitors don't look threatening to established dealerships," he said. "But on the other hand, if you're an IT provider that's got a little software routine, you may be pretty vulnerable if you strike a contract with a larger tech firm that may want to take over the small firm on not so favorable terms."
In Jobstick's case, he speculated that a law firm likely wouldn't be interested in copying software because it's not its main line of business.
"Working on a deal for free for a couple of months is a good idea if it's not going to kill you and you can survive," said Baum. "If you think it's going to lead to a contract that will be profitable and provide you with learning -- business is not just about profits week by week, it's about growing your business too."
He added that it's always important to consider resources, including how much you can afford to lose. "You can afford to do a bad contract if you're loaded with money, but the usual counseling for startups is to be really careful because you guys are fragile. It's much smarter to grow slowly and keep it close to the vest."
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