Crossborder E-RecruitingSolving a problem that's not yet existent
This is the story about my attempt to start an online job platform for cross-border recruiting. I spent a little more than one year on it, before finally putting it on hiatus.
Europe, 2012. Year two of the European debt crisis. Austerity measures to reduce government spending and deficits are taking their toll on the population of countries in Southern Europe. Economies stall, unemployment levels reach new highs. In Greece and Spain, youth unemployment rises above 50%. Media in those countries talks about a lost generation. Two thousand kilometers north-west / north-east, the situation is very different. German media increasingly reports about what is being portrayed as one of the biggest challenges Germany will be facing in the years to come – demographic change. Both, the Federal Ministry of Education and Research and the Federal Ministry of Economic Affairs and Energy start initiatives to encourage immigration.
Top politicians openly invite skilled workers from other countries to move to Germany. Publicly funded websites called “Make It In Germany” and “The Job Of My Life” go online, so called “Welcome Centers” are being established, the government launches a subsidy program worth 140 million Euros called Mobi-pro EU (Promotion of Vocational Mobility of Young People Interested in Vocational Training), the minimum annual income someone from outside the EU needs to earn in order to immigrate into Germany is lowered significantly. Politicians are acting upon the apparent threat to German economy.
Chapter #1: How It All Began
In late summer of 2012, I worked for a small media company in Munich (find out more about why I was there, soon). Back then, a colleague and I frequently pitched start-up company ideas to each other. One of his ideas was a job portal with specific focus on connecting skilled workers and academics from outside Germany with German SME companies. The idea made perfect sense. Neither of us had been able to ignore the large number of newspaper articles and TV shows that focused on a shortage of skilled employees. Apparently German companies were running short of good candidates to fill open positions.
So, just like many times before, my head ran crazy with ideas. For some reason my mind is wired that way: What would be technical features of the job portal, how would we be able to make money from the platform, how would we create value for our customers, what would we have to do in order to be attractive for applicants, where would we get money from to realize the idea, who could we talk to in order to find out if the concept made any sense at all, what would be the first thing to do, and so on. At one point I even scribbled down a bunch of growth opportunities once the initial business would be up and running. I left GoingPublic Media AG and joined Autodisplay Biotech GmbH, a biotechnology startup company, to finally start my career. That didn’t keep me from working on the job portal idea in my spare time, though. The idea was stuck in my head. It just seemed too attractive. After all, German media was still going on about how the country apparently needed shiploads of qualified immigrants in the near future. I knew however, I wouldn’t be able to pull it off all by myself. Plus, I needed someone with online expertise. I intensified discussions with a good friend of mine, Stefan Preusler. From day one, I knew he was a good fit for my undertaking. He had the skill set I was looking for (online marketing / SEO) and I had known him since high school. I was confident we would make a great team. Stefan, however, was still very reluctant in regard to jumping on board. He had to be convinced. After endless conversations about my plans and ideas, I was finally able to persuade him into joining the project. At the same time, my former colleague from Munich decided to focus on his career and not join the project team.
Project Crossborder Team
(Stefan Preusler / Martin Bellof)
Chapter #2: Product Concept Development
Now the real work began. I organized all ideas that I had once scribbled down on what was now a pile of paper. I conducted a thorough market analysis and found that, at that point in time, not one good job portal with a serious focus on cross border recruiting existed. Yes, there were international job platforms, but every one of them was lacking quality for both employers and candidates. Most importantly, not one of these portals was actually taking into account the specific challenges that arise when applying overseas / hiring from overseas.
Stefan and I dug deeper into the needs of the two groups who would one day use our multi-sided platform: employers and job seekers. We read an awful lot about the challenges employers were facing when trying to hire from outside Germany. In February 2013, the OECD published a “Review on the Management of Labour Migration in Germany”. One particular part of that study dealt with the obstacles employers were experiencing in regard to hiring from outside Germany. We talked to the authors. We had long conversations with industry associations. We talked with the Chamber of Industry and Commerce. On the other hand, we talked to Spanish academics who were desperately trying to find a job in Germany. This helped us gain a deep understanding of why it is so difficult for foreigners to find a job in Germany. We also got in touch with politicians at federal and EU level. Top-politicians like Martin Schulz (President of the European Parliament), Alexander Alvaro (Vice President of the European Parliament) and Philip Rösler (Federal Minister of Economics and Technology & Vice Chancellor of Germany) welcomed our initiative and offered support as did regional politicians. All this “research” finally resulted in the first product concept of what we decided to call Project Crossborder.
Chapter #3: Acquiring Partners
At all times, we wanted to create maximum value for both candidates and employers. This was going to help us stand out in the marketplace. However, this mindset also led to our concept becoming quite service-heavy. Stefan and I knew that there was no way in the world that we’d be able to realize everything by ourselves. We had neither the resources, nor the competencies to do so. Thus, we decided to get partners on board. For language learning, we were successful in acquiring the Goethe Institute. Goethe is not only one of the most experienced providers of German language courses. It also comes with an internationally renowned brand. The day we got the “go” from them was pretty fucking awesome. For the Relocation & Intensive Orientation module we partnered with the relocation experts, RSB Relocation and Sterling Relocation. Out of the relocation service providers we chose those two, because of their track record and the constructive talks we had on the topic. Finally, we also secured a collaboration with a local recruitment firm. Even though we had always imagined employers to use our platform to do the recruiting themselves, Stefan and I agreed that we should not limit ourselves in that regard. It had become clear that smaller companies tend to contract recruiters to find and select suitable candidates for them. So, it made perfect sense to have a partner in that field, too.
In mid-2013 everything was ready to go. We even had a marketing concept to attract job seekers in our back pocket. All we needed was a UX designer and a developer.
Chapter #4: Market Crosscheck
Before investing a significant amount of our own money however (it was impossible publicly fund our endeavor), we wanted to make sure that our concept resonated with the market. We believed to have a great package (an amazing concept, renowned partners to offer services for the whole value chain and support from KOL’s). The next logical step was to speak with potential clients. Stefan and I sent emails to the HR teams of DAX and MDAX companies. Feedback was poorer than we had actually hoped. Fifety-something requests resulted in only three replies. Why the hell did so few companies care? We fought the initial disillusionment with a thorough analysis of what had happened. Stefan and I then realized that our expectations for the emailing initiative had likely been unrealistic. Firstly, emails can easily be disregarded. So unless our email was read by someone who actually cared about cross border recruiting, we couldn’t really expect the reader to forward it to somebody who did. And secondly we were now certain that better known a company (or its brands), the easier it would be to attract good employees. This meant that we had likely approached the wrong companies. It’s not that we didn’t think our emailing initiative through. We had rather hoped that the recruiting problem was big enough for the big companies, too.
Anyway. We scheduled conference calls with the HR teams which were happy to talk to us and provided them with information packages. At the same time, we began to specifically target companies which we believed were most likely lacking a steady stream of good candidates. During the design phase of our concept, Stefan and I had done a lot of research on industries which were supposedly struggling due to a shortage of skilled employees. This came in real handy now. We also talked to what felt like everybody we knew, in order to get contacts in HR departments. I took a day to go to Technical University Darmstadt, because I had heard that the Executive Vice President Human Resources of a German chemical company with more than 50,000 employees was going to hold a guest lecture. By October 2014, we had spoken to a long list of companies. But so far we had not been able to acquire only one customer. The most prominent response was “The concept sounds great, but we are only now starting to look into cross border recruiting. We don’t actually plan to hire from outside Germany, yet. We’re rather trying to get a feel for the topic.” That was where the conversation usually ended.
Things seemed to turn around in fall of 2013. On a train from Brussels to Frankfurt, I started a conversation with the two people sitting next to me. It turned out one of them was the Chairman of the Central Works Council at Deutsche Bahn, Germany’s railway company with approximately 300,000 employees. Of course I asked, if I could present the Project Crossborder concept to him. For the rest of our trip, we discussed cross border recruiting. Just as he was about to get off the train, he kindly suggested to make a couple of phone calls for me. I gladly accepted. A few weeks later, the Chairman of the Central Works Council introduced me to the Head of Talent Acquisition via email. She in turn referred us to the one person responsible for cross border recruiting activities at Deutsche Bahn. Stefan and I knew this could be a major game changer. The equation was simple: Deutsche Bahn had been running advertising campaigns across Germany stating that the company intended to hire an average of five to seven thousand employees over the course of the next years (see video on the right). Plus, they obviously decided cross border recruiting was important enough to officially assign someone to the topic. So, if media was at all right about the shortage of good engineers and IT experts, Deutsche Bahn would definitely know about it. We thought we had the solution for their problem. We took a train to Stuttgart, we presented our concept, we discussed the topic for about an hour and half and then left empty-handed. We had just found out that all the time we were trying to solve a problem that was not yet existing.
A promotional video from DB Careers
Chapter #5: Hiatus
It took us a couple of days to process what had happened in Stuttgart. Throughout the project, we had been trying to be as positive as possible. We had blocked out that there was not one public funding scheme willing to support our endeavor, that we had been cut off by stating that public funding is for technological innovations only. Those apparently generate jobs. Not even the government gave a fuck that our project was going to help solve one of the biggest problems Germany was apparently facing at the time. At least if you believed politicians and the media at the time. Even though the Federal Ministry of Labour and Social Affairs kept winging about the problem, not a single person from that ministry was willing to seriously talk to us about the topic. “F*cking bureaucrats”, we thought. For a long time, we had also blocked out that the HR workers we talked to genuinely liked our concept, but didn’t see the necessity to work with us. This doesn’t mean that we were acting blindly. Quite the opposite was the case. We were well aware of everything that was going on, but we never wanted to let negative incidents get to our heads and demotivate us. We strongly believed in our idea and our concept.
At no point did we want to make rash decisions based on emotions. We always tried to stick to our best judgement. About a week after Stuttgart, Stefan and I were intensively discussing whether it still made sense to keep going or if we should just pull the plug. We had numerous ideas of how to proceed. We discussed changing the business model, at least until we had a foot on the ground in the industry. We discussed creating a candidate database and selling that database to recruiters. We discussed sending letters to HR departments rather than emails. We discussed following the advice that an investor had given us: “Fake it ’til you make it”. After long discussions, we decided that for the time being there was no point of going forward. Neither of us had any recruiting experience, neither of us was genuinely devoted to cross border recruiting. We had always seen an opportunity, but it was never our passion, really. Don’t get this wrong. It’s not that we weren’t committed to building a business. That part we both loved. But the topic was just not encouraging enough for either of us to keep going after that many setbacks. It was time to let Project Crossborder go on hiatus.
Chapter #6: Conclusion
Stefan and I are and have always been self-conscious enough to realize that we probably didn’t do everything right. Maybe our concept was too big to take on from day one. Maybe we should’ve started by focusing on solving one particular but smaller problem. Maybe we didn’t communicate with potential customers in the best way possible. Maybe we were lacking sales skills. Maybe our focus on academics rather than “skilled workers” was part of the problem. We never wanted to be active in low-wages sectors. Then again, maybe the time just wasn’t right for Project Crossborder. Maybe we were too early. Maybe we were trying to solve a problem that did not exist. Stefan and I both learned an incredible lot during that one year. It was our very own real-life entrepreneurship course – nothing university ever could’ve provided us with, nothing we would have ever had the opportunity of doing at our day jobs. At least not at the same level and with the same effort. I genuinely enjoy looking back to that time. Project Crossborder was only the very first step of my journey as an entrepreneur. I feel much more prepared for other business opportunities now. And I know that the next good idea is only around the corner.
Recently, there have been numerous newspaper articles indicating that our theory about solving a non-existent problem was correct. A large number of unemployed Spanish academics have so far moved to Germany only to find out nobody wants to hire them. The opposite seems to be the case for low-pay sectors. Companies in such industries hire quite reasonable numbers of young people from other countries who then often undergo a round of formal training. So how come there is such a big difference? Let me hypothesize about the reasons:
Generations of Germans have learned that a university degree secures a well-paying job. By well-paying we’re talking being able to afford a wife, a couple of kids, a house and the Mercedes you’ve always wanted AND still being set for retirement. In other words, a university degree has been associated with social status and wealth. At the same time occupations such as painting, plumbing, waiting or hairdressing have lost their standing. Over the course of time, people who worked these jobs have fallen behind. Today, a forty hour work week is barely enough to support their families. This, however, has had a significant impact on the mindset of Germans. Almost every parent now wants their kids to go to university. They put their loved ones in schools which are not necessarily suitable for them. The problem with that sort of behavior is that the school system doesn’t act upon its correcting function anymore. Schools (and thus teachers) find themselves under pressure from politics to constantly generate more university students. The system has become incredibly “permeable”.
In 2013, for the twelfth(!) consecutive year, the number of German university grads hit yet another new all-time high. The number of young people leaving uni with a degree has more than doubled since 2000. Maybe we’ve just got too many University grads. Maybe skilled worker shortage, which obviously has to be a result of low wages in certain industries, is just one massive matching issue. So far, government subsidies have been one answer to the problem. About 1.3 million Germans work full-time, but require the social security system to top-up their income just to get by. Perhaps that’s just not sufficient anymore. Perhaps hiring people from foreign countries is going to help kick the can down the road for a bit. But for some reason, to me that just sounds an awful lot like exploitation.