We are pleased to welcome ITR to ReEcho. ITR brings a wealth of experience and influence in the technology talent market. I have come to realise that access to capital in the category that is ‘growth tech’ in Europe is not necessarily the biggest indicator of ‘winning’ - access and goodwill in the engineering talent market often is. A top software engineer can obtain a job / contract pretty much anywhere these days. What increasingly matters here therefore is trust and relationships. ITR, alongside our other recruiters on ReEcho, bring just that. I am excited about our continued partnership with ITR and building our technology out further to support our vision of delivering value to the world of hiring and recruitment.
In Oct 2020 I announced that we have been working on a 3 sided exchange to deliver more valuable hiring experiences for talent, recruiters and employers, and followed up with a post in Dec about our first official partners DigiSpace joining ReEcho. Since then, we have had Jefferson Wolfe join, as well as a number of independent individual recruiters who have joined ReEcho as independent business owners too. ITR is the latest in the chain of other great recruiting firms and recruiters to come. Thank you to all of you that have joined. I look forward to our continued work together.
Our vision has not changed. We look forward to welcoming all clients and talent onboard our app to improve the status quo of the hiring and recruitment market at large - we are simply prioritising relative to the resources we have today. As our 1st engineer Carl says - ‘tech is all about what by when. Almost anything is possible with the right people involved’.
Truth is, before announcing our official partners joining our platform, we already had quite the list of suppliers in the ‘growth tech’ category (with over £1.5 billion in transaction volume, 8000+ recruiter staff and over 2 million talent between them - which, on the talent front, is coincidentally about the number estimated to be employed by the growth tech category in Europe) - hence starting here in regards to product rollout. Of course not all this transaction volume is processed by ReEcho (yet!) - but this provided us with the scale and granular supply side insight needed to handle some of the most challenging hiring mandates in the market. It has also given us great focus as to how to ‘go to market’ with respect to our technology product launch.
When I showed my Dad the list, he could not quite believe the numbers - it went something like this - (on zoom screen share):
Me - here is our 2020 supplier list (the ‘legacy business’) that we are turning into official partners on the iOS app that Carl and team have built - you can see (excluding the larger listed players) just over around £350million in transaction volume to tap into as a first priority - they have already signed our docs. Also many of the top market makers in the firms on our list are currency setting up their own businesses which we are so excited to support...
Dad - which docs?!
Me - ones we drafted. You know my lawyer husband Pete that I married. Yeah, well, he drafted the docs and Tia and I get our recruiters’ directors to sign up!
Dad - No way. Where is Pete, why is he not on this call?!
More important than the docs and the numbers however, is the recruiters’ trust and commitment to collaborating. I am humbled by the goodwill amongst this category of the market to work with us and more importantly one another - more on this below!
I am also especially excited about the many family businesses the industry is composed of, and women setting up on their own (I learnt, I think in ‘Lean In’, that women outperform men in representative style negotiations - and this is what recruiting is all about - representing the interests of others!). Recruiting is also a business that lends itself to flexibility. One can essentially run one’s company from one’s phone! Not surprisingly, the many men we work with care about flexibility too. Often when I am on the phone to Greg (founder of ITR) and Richard (founder of Jefferson Wolfe) they are with their kids, managing complex transactions from their phones.
(I) Internal ‘Buy Side’ Recruiter - as a rule, largely works on fixed income (e.g. a monthly fee) rather than a commission based compensation structure. If providing this as a service, we often refer to the costs as Process Costs.
(II) External ‘Sell Side’ Recruiter - largely commission driven. Sums are usually entirely back-loaded with a form of ‘rebate’ to de risk further for the Buy Side - we call the costs involved Transaction Costs. These are pertinent in ‘mid-market’ recruitment (which we think of as involving salaries of less £100k, maybe £120k with recent technology scope creep). True top-of-market (i.e. Exec Search) world is slightly different as you often also see a fixed up front retainer fee as well. We often refer to the best Sell Side Recruiters as Market Makers due their ability to efficiently match supply with demand.
(III) Growth tech - tech assets, often backed by Venture Capital, targeting large scale returns. We are seeing other types of funds enter the space of growth tech and also speciality finance providers. Overall Europe represents about 13% of global total Venture Capital allocation in comparison to the US which represents 54% of the market.
Why should External ‘Sell Side’ Recruiters collaborate?
Bottom line is that great recruiters (Internal and External, regardless of identity, background etc.) understand that the goal is to fundamentally help people find work and for employers to build great teams - all the numbers are a derivative from here. The best recruiters focus on trust, value and interest alignment with their talent, clients and constituents above all else - and if that means collaborating with other recruiters through ReEcho, they are more than willing to do so.
Interestingly, Internal and External Recruiters working together for employers has been done for many years in the large cap corporate and banking world, through what is referred to as Recruitment Process Outsourcing and/or Managed Services - i.e. where fixed cost Process providers allow for other External ‘Sell Side’ Recruiters to plug in and help serve their goal of hiring top talent - especially in the hyper competitive areas of hiring that the Process model is having to accommodate. ReEcho is simply bringing this type of arrangement online and to the world of growth tech.
More broadly though, the recruiting industry still feels quite outdated in that it rewards those that service low scale at high costs. I see an alternative solution, analogous to a stock exchange if you like - in finance (albeit first facilitated first by the May Day regulation changes of 1975) the advancement of technology helped open the doors for those serving high scale at high quality but, importantly, at lower cost. Recruitment has yet to see such disruption.
There is plenty of work and fee volume to go around as well. Even without an efficient exchange, the recruitment services market generates c. $500bn transaction volume combined, with 50 million placements from just over 2 million recruiters - and this is only really counting the professional External Recruiters in just 5 countries. The majority of this transaction volume moves through non-purpose built tech, offline and, yes you guessed it - with the traditional banks playing a major role in supporting the cash flows!
Over the years, I couldn't quite get my head around why founders go from the gruelling process of raising capital only to embark on what is sometimes an even more daunting process - recruiting software engineers. One would think that a business with a great product, cool tech stack and capital behind it would not struggle to recruit full time committed engineering talent, but this is often not the case. In an efficient labour market (where talent with the matching skills meet the number of jobs available) one would not struggle. However, in structurally challenged areas - i.e. tech, but also design, data and growth in the category that is growth tech in Europe - much of the employer market struggles, especially when optimising not only for great tech talent but other criteria such as ‘previous startup experience’ (and especially when the talent are focussing more and more on purpose, team and culture more than, say, funding amount or EMI - we actually think there’s now some notable ‘EMI-fatigue’ in the market which could make for a separate article!).
At the same time, the UK is one of the most advanced and fragmented markets as regards External recruitment, and labour laws are also more weighted as regards protecting income stability and rights for employees (in each case compared to, say, the US). So when companies here try to scale they are faced with different dynamics. And of course, we have also had two major macro events, Brexit and COVID, the full effects of which we are yet to see (although I think that they will likely exacerbate the labour challenges even more).
And then there are some more subtle factors at play as well. E.g. Europe has great academic technical talent but this tends to be a pool for hedge funds and insurance companies that have programs to employ those that have completed their PhD. I believe growth tech could seize under-tapped opportunities in this regard. It requires good management experience which I believe we are cultivating - some things just take time to burgeon.
I think two things are for sure - 1. network, relationships and trust matter more than ever, and this is why we are officially partnering with the best recruiters in class; and 2. for us to grow the growth tech talent set from 2 million to 3 million, as is forecasted will need to happen within the next couple of years, we will need to look beyond those that are currently already employed by the growth tech community...
I look forward to joining forces with recruiters, talent and employers that share our values and who fundamentally see that we are all here to help people find great work and employers to build their businesses. Tech, but more importantly trust and commitment to improving the status quo by all sides of the hiring equation, will be key. We all need to work together - by competing and collaborating - to make it happen.
If you are interested in being part of ReEcho please do not hesitate to contact me - firstname.lastname@example.org. I do my very best to respond to everyone that reaches out. If you feel I have missed you please persist and let me know. We are currently focused on growth tech but have had enquiries in other sectors and are always open to speaking to Market Maker recruiters that bring other specialisms to the table.