BEST OF BOTH WORLDS

Sanjeev
cc: Kartavya / Atthi

cc: Nirmit

24-08-03

Best of Both Worlds?

To best of my knowledge, all jobboards (in India & abroad) offer to Corporates:

• Job Advt Posting
• Resume Database Searching
• Combination of two

PAID services (charged always)

Their services to Jobseekers are:

• Resume Posting → “Free” services (almost always)
• Job-Search

Occasionally, jobboard charges candidates for:

• Resume-Posting (Rs. 100/-)
• Resume-Blasting to 500/1000 recruiters (Rs. 500/1000)

Then there are jobboards (few) who allow Corporates FREE job-advt posting, some even allow FREE database searching. These are very small jobsites.

Some big jobboards also earn some revenue from advts but this revenue-model is under tremendous pressure – therefore shrinking. Big advertisers are cutting back on Ad-Budgets and demanding tangible results.

So, for almost all jobsites (here & abroad), the main revenue comes from:

CORPORATE SUBSCRIPTION SERVICES

(Job Advt Posting & Resume Search)

These services are offered in dozens of permutation/combination (silver-gold-diamond-platinum) to suit the budget/needs of a given Company. Idea is to differentiate from competitors – to offer to HR Managers/subscribers an “illusion” of “options”.

In a digital service (which is not a physical product) one can offer virtually thousands of combinations of features making each combination to appear UNIQUE.

And when “combinations” proliferate, the differences (between the combinations) become indistinguishable! There is no real worthwhile difference.

It is quite like offering 64 million “shades of colours”!

Most jobsites also have “offerings” such as add-ons:

• Banner Ads
• Personal Page/Pages
• Links to Corporate’s own website

And now, quite a few have started offering:

• Online Application-tracking / Resume Mgmt.
• Response Analysis for a given Advt.
• Historical statistics of all past Advts.
• Online emailing to candidates, etc. etc.

One day soon enough, you should prepare a “Comparative Tabulation of Services/Features offered by Major Jobsites.”

This should be fairly comprehensive and leave last column blank for RecrutGum.
This would help us frame FUNCTIONAL-SPECIFICATIONS for future services that RecrutGum should offer.

One important point to remember is that all major jobboards have ANNUAL SUBSCRIPTIONS payable upfront as a lump-sum.

Some do offer 6-monthly / quarterly as well (more expensive than annual).

Advantage of Annual Model

• Unlimited usage

Disadvantage

• Large upfront payment, even if you end up using very little during the course of the year.

It is like your Cable Operator charging you a flat monthly fee of Rs. 500, irrespective of what / how many channels you watch and for how long you watch.

Once you subscribe, you are “locked-in.”

Of course, those who watch TV for 4 hours/day benefit. But those who watch it for only ½ hour per day lose-out.

For Cable Operator, this is a good arrangement because, whether there are 100 subscribers watching at any point of time or there are 10,000, he has to keep pumping all channels thru the pipe, 24 hours too!

But when CAS (Conditional Access System) comes, clients will pay for only the channels which they choose to subscribe.

With CAS, it is very likely that the Cable Operators’ revenues may come down – and then there is a real danger that even the broadcasters’ (Star/Zee/Sony etc.) revenues may also come down.

That scenario could spell disaster for broadcasters & the Cable Operators – and that is why this enormous resistance to change.

They (the broadcasters & the Cable Operators) have an ESTABLISHED

• Business-Model
• Revenue-Model
• Subscriber-Base

And CAS is threatening to “de-establish” all these.

There would be a tremendous “CHURN” (shifting of subscriber-base) like being faced currently by BSNL/MTNL, whose fixed-line customers are leaving them by lakhs and signing up Bharti/Hutch/Escotel mobile services.

And then with the introduction of WLL, the mobile customers of Airtel/Hutch/Escotel would also eventually leave by thousands and signing-up TATA/RELIANCE WLL services!

There is a virtual CHAOS. There are altogether different “Rules” of the game! And the GOVT / TRAI / TDSAT are unable to enforce any particular rule for any given period of time, because ever-changing technological advances are making old rules obsolete.

Imagine if you can simply plug-in your mobile into the electric power socket in the wall of your flat and directly dial Australia – or ask your refrigerator to connect you to America!

No Govt. can stop/regulate the technical advances.

Our pay-per-use webservice will be quite similar to CAS.

It holds tremendous cost-saving potential to end-user Corporate subscribers

and

it holds tremendous “threat” to current “Middleman” (Monster/Naukri/JobsAhead etc.)

These jobsites have an already established existing Business-Model/Revenue-Model.

(See Middle-east graphics in Annexure.)

This is their TURF, their SPHERE, their TERRITORY.

And in this market they are way ahead of us. They are virtually un-challengeable.

There is no way we can take them on, on their territory, using their business-model/revenue-model (viz.: Lump-sum Annual Subscription). We have no resources to compete with them on their platform. We could be foolish even to try!

They have spent millions to acquire their leadership positions, and they will not give this up easily.

If we too get into “Annual Subscription Model,” Monster/Naukri can drop their prices and drive us out.

So, we must create a:

• New Market-Sphere
• New Territory
• New Turf

Where they cannot TOUCH us – where they cannot/will not migrate to threaten us.

This is our “Low Initial Activation Fee coupled with Pay-Per-Use” webservice model.

This is an altogether different MARKET / different TERRITORY.

To get into this territory & threaten us / compete with us, Naukri/Monster etc. would have to GIVE-UP / ABANDON / JETTISON their existing revenue-model/existing territory.

Instead of collecting Rs. 1 lakh/3 lakhs from each customer in advance, they would need to switch-over to charging Rs. 10/- per resume downloaded!

If they do this (switch-over), their 2004/2005 revenue could drop from Rs. 20 crores to Rs. 2 crores!!

That kind of an earthquake would destabilize them.

Their VCs/shareholders will not allow and their customers would get all confused!

On top of it, to bring-out a “pay-per-use” webservice would take them 6/12 months.

Whereas technology for webservice is quite within their enormous resources, the reasons they may not even contemplate such a drastic “make-over” are:

• Throwing out a well-established & proven “business/revenue-model” for a totally new/untried/uncertain/risky model.
• Playing a “follower” role instead of a “leader” role. (Of course, they can not only catch up, but even overtake us in a short time, even if they enter this market one year after we do).
• Create tremendous “confusion” amongst their shareholders/customers/employees.
• Problems associated with transition/repositioning.
• Huge (initial) dip in revenue.
• Not perceiving RecrutGum as a “competitor”/potential threat.
• Considering Pay-per-use webservice as a small/niche market, where it is not worth their while to worry about/be concerned about.
• Not knowing what other established players might do. (Suppose Naukri can read the …)

“writing-on-the-wall” and therefore feels inclined to change-over but, they have no clue as to what Monster/Naukri would do! It would be just too risky to vacate an existing market which existing competitors would simply “rush-in” to fill! That would be suicide!!

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WHY SUCH RIDICULOUSLY LOW PRICE?

I am thinking of:

• Rs. 5000/- for Activation (one-time/lump-sum)
• Rs. 5000/- for “Extraction-User” ( ,, ,, )
• Rs. 5000/- for “Other Service-User” ( ,, ,, )
• Rs. 50/- for Resume Search
• Rs. 10/- for Download per resume

etc. etc.

The idea is simple. Our pricing should be such that:

• It appears to competitors like a “PEANUT” sized market – not worth chasing. This would keep competitors away (Entry-barrier).
• It appears so risk-less to potential corporate subscribers that thousands should try a “small experiment” though – even if, for some reasons, some of them want to quit after 3/6 months, they must feel “nothing …”

“lost.”

• If a few large Corporates (Reliance/Birla/Bharat/RPG/L&T/Escorts/Wipro/Infosys etc.) have accumulated “lakhs” of live email resumes which they can convert into a structured database (Rs. 2 to 10 per resume) for, say, Rs. 10/20 or 50 lakhs, they might still get tempted to subscribe because they can SAVE this amount within the next 2/6 months by saving on cost of future job-adverts!

There are hardly any business investments where the “PAYBACK OPERATION” can be measured in “months”! Usually it is “years”.

Look at the “PRICE/DEMAND ELASTICITY CURVE” in annexure.

In first scenario – you sell 1000 items at Rs. 1/- each (i.e. a total revenue of Rs. 1,000/-).

In the last scenario – you sell 100 items at Rs. 100/- each also netting total revenue Rs. 10,000/-

Of course, on internet (or for that “virtual” world), no one KNOWS that dropping the price by a factor of 10 (from Rs. 10 to Rs. 1) would push demand TEN TIMES (from 100 to 1000)!

In physical world, this kind of experimentation is not even feasible because there is a definite manufacturing cost (raw material + labour + overheads) associated with manufacturing of each additional piece & selling (distribution cost).

But, on internet it is very different – especially if you are selling a “digital service,” such as:

• Music
• Software
• Resumes

Here the “marginal/additional” cost of manufacturing & selling is practically ZERO!

Your “Break-even Volume” is so low that every additional piece that you manage to sell is 100% profit!

So, it is obvious that we MUST play the VOLUME-game.

And that is only possible when you keep your prices VERY low.

Of course, as the Volume ramps up, once-in-a-while you will need to invest in extra “servers” – but that cost would be negligible as compared to revenues flowing in.

This is how Apple managed to sell 2 million pieces of music within 2 weeks from its website “iTUNES” @ 99 cents – a price at which a person could easily own an authentic/legal version, instead of “Pirated” version!

And, I am sure, for same SONGS, Apple can go on raising prices by 5/10 cents every year and no one will complain!

We may have (or will have) some initial “after-sales-service/handling/customer-support” with each new subscriber (and once each corporate is familiar with existing software), but once a customer “has the hang of it,” our website is really a SELF-SERVICE.

Again, if we manage to rope in a large no. of Corporate customers from across ALL industries (of the economy), then we effectively “immunize” ourselves against recessions! Because – experience tells us – at any point of time, some industries will be depressed and some other industries will be booming.

Having customers from all industries will cancel out this recessionary effect on our webservice. In fact, those depressed industries will provide the resumes (candidates) and the surging industries will provide the business (searching)!

So, what we need is to rapidly ramp-up our Subscriber-Base! The Number-game!

Of course, getting some big-daddies into our bandwagon will make your task of selling to others quite easy. This is to be done with help from Nirmit/Sri Ram/Rajiv. You should rope in some existing BIG corporates. They can fix-up your meeting and then you go to give them a live demo. At the least, you must convince them to signup for FREE TRIAL during the demo itself!

Simultaneously, under Nirmit’s guidance, you may consider an email campaign amongst 3000/5000 corporates. For doing this, you may consider using drafts of 90 email circulars enclosed.

These circulars may be sent-out at intervals of 15 days. Of course, everytime from the mailing-database, you must remove/delete the names of those corporates who have already signed-up on the site – and also avoid re-sending to them. If you don’t, they will get annoyed! And every time you must kindly remove duplicate names of those corporates who have signed-up – the site-master must maintain this updated database. After compiling this database – go ahead!

Remember, a SUPERB product is no good without a matching SUPERB marketing!