The job market is f**ked [#75]

As founder of a recruiting studio, I speak to ~30 job seekers every week. 

I believe the job market is f**ked. 100s of people apply to every position. Most never hear back. Qualifications don’t matter; logos do. 

Here’s why I think that is (after speaking to >500 candidates). Let’s dive in. 🤿

We can break the f**kedness of the market down to 4 factors:

1. Ease of application
2. Heuristics 
3. Worse match quality 
4. Overall market dynamics

[1] Ease of application

If you treat applying to jobs as a numbers’ game, then it pays to apply to as many jobs as possible. This has become easier than ever. Back in the day, you used to have to print stuff and sent it via mail, which was expensive and effortful. Today, you can: 

• Use AI to generate a customized cover letter 
• Submit your documents online
• Tailor your CV to the position in a heartbeat 

LinkedIn EasyApply doesn’t make it better. The time to apply to a job went from 1h/application to 2-3min/application. 

More overall applications = more work for hiring managers. This is how it plays out: 

[2] Rougher Heuristics 

The more applications you receive, the rougher your heuristics that filter will need to be. 

• If you only receive 5 applications for a position, chances are high you’ll look at every single one. 
• At 50, you’ll still look at every CV, but probably screen out everything that doesn’t catch you immediately. (Hint: use pattern interrupts to catch attention). 
• At 500, you’re overwhelmed and resort to the roughest filters possible. 

This leads to a lot of false negatives.

(Personal experience: once applied to a job in international expansion last year; the exact thing I had done for the 3 years prior to that. Didn’t even get an interview because I don’t have a Master’s degree.) 

This is also why companies tend to prefer candidates that worked in “brand-name” companies (eg. strategy consulting firms, VC/PE/IB, scale-ups). These companies run a tight selection process, so if a candidate was good enough for them, s:he will probably be good enough for the company. 

Which means: 

• If you worked in consulting or a brand-name startup, great 
• If you didn’t, you’re s**t out of luck 

Obviously, it cannot be true that you're only a capable candidate if you've worked in one of these environments.

This wouldn’t happen if there were less applications to go around overall. And it leads to: 

[3] Worse Match Quality

A lot of outstanding candidates aren’t even seen in the process, and it becomes a “winner-takes-it-all” market. I've seen this at Generalyst: ~20% of candidates generate 80% of the offers.

This means: 

• the “best” candidates work at the best companies (good)
• the companies that aren’t perceived as “Tier 1” also make offers to the best candidates, but don’t get them; so now, they have to re-iterate on their process and go back to the drawing board (not great)
• candidates that would be a fantastic fit for a specific company aren’t even seen due to sheer volume (bad)

Hiring becomes an exercise in ranking candidates in one dimension (logos on a CV). While that seems to work just fine for companies, it’s an issue for the vast majority of candidates. 

Despite the fact that they might be a better fit. 

And of course, the market carries this: 

[4] Market Dynamics 

Right now, there’s simply more talent on the market than there are jobs (on the commercial side). This makes the situation difficult to begin with already. Throw in: 

• AI-generated applications that flood every hiring manager
• A further contraction in the market due to entry-level and specialist positions being replaced by AI Agents
• Less investor naiveté and an overall spicy geopolitical climate

… and you have the perfect storm. 

Hi, I’m Dominik, and I’m building a recruiting studio in this market. 

After reading all that, you’d think I’m insane for doing this.

In a contracting market? With AI Agents taking over everything? 100s of applicants applying to every company? 

Yeah. I might be insane. (That’s what sets good founders apart.) 

I still believe it’s a fantastic business. Hear me out: 

The Intermediary 

The value proposition of recruiting businesses used to be: 

You can’t find candidates. I find candidates for you, so you receive applications. 

In the current market, that’s a non-existing value proposition. Receiving qualified applications isn’t a problem for companies. Instead, I see five: 

1. Going through so many applications takes a lot of time. 
2. The cost of a false positive is insanely high. 
3. Most companies suck at selling the job. 
4. Lack of data leads to worse match quality.
5. Some companies don't want to publish anything.

Going through so many applications takes a lot of time. 

Say, you receive 150 applications, and spend 3 minutes screening each of them. Then, you pick 10 and invite them to a 15min screening interview. At this point, you’ve already spent ~10 hours to go through the entire screening process. Time, that a founder could use to make their beer taste better.

(I’m consciously stopping the count here, as you’d likely have to do the subsequent parts of the interviewing process anyway even when working with a recruiter.) 

The cost of a false positive is insanely high. 

When you’re drowning in applications, false negatives (= screening out a candidate that would be a great fit) aren’t the problem.

It’s the false positives (= hiring a bad candidate) that truly screw you over. Let’s run the math:  

• Candidate starts. You (the founder) take out 1 week to fully onboard him; the rest of the team takes another week for the onboarding. 
• It takes 3 months to realize he’s not good, and you fire him. 
• Now, you’re back to the drawing board, and begin your recruiting process again (that takes ~1 week out of your time), as all candidates previously in your pipeline now have a job. Posting, screening, interviewing takes 1 month. 
• Your new candidate accepts the offer and starts 1 month later. 

And all the sudden, you’ve lost 5 months trying to fill a position that’s key to the business (on top of wasting 2+ weeks of valuable founder time). 

Any reduction in the probability of a false positive happening is a huge gain. By working with an intermediary (like Generalyst), you reduce the likelihood of this happening: 

1. You reduce organizational and internal biases by working with someone outside of your company. 
2. You get a nuanced opinion from someone that has done thousands of interviews. 
3. You receive more data points about a candidate from additional screening. 

This won’t guarantee preventing a false positive, but reduces the likelihood of this happening. (Plus, if it goes wrong, you always have someone to blame.) 

Most companies suck at selling the job. 

The best candidates aren’t actively applying. They let opportunities come to them. 

And even if those candidates saw your job description, it'd not nearly have the degree of nuance necessary to properly sell it. You can’t possibly transmit all this information about the founders, the company, the trajectory, in 3000 characters of text.

(With very few exceptions. Here's one.)

While a recruiter will never be able to sell the job better than you, they can give you the opportunity to get in front of the right talent – that otherwise might never get to see the posting in the first place. 

More available data → increased match quality. 

A recruiting studio like Generalyst sees a lot of candidates, and can better assess than a hiring manager purely based off a CV which candidates fits and which one doesn’t. So it has: 

1. More comparative data, as it screens candidates for positions all the time
2. Can invest more resources into the screening process (eg. by running additional assessments), as candidates technically don’t just apply to one company, but to many

The aforementioned rough heuristics, that make hiring so problematic, aren’t necessary here. A more refined process should lead to better outcomes. 

Find candidates even when you don’t want to publish a job.

There are a variety of reasons to not want to publish a job: a company might be in stealth mode, just lost a key manager that they don’t want to publicize yet, or are raising a round and want to begin hiring without sending signals. 

Normally, the solution here is to work your own network. Which works sometimes. But when it doesn’t (or you don’t have a network in the first place), a recruiting studio might be the solution. 

In an ideal world, every candidate would apply to exactly one job, and every job would only receive one perfect application.

(Which is beautiful in theory, but doesn’t work in practice, as neither candidates nor companies know what “perfect” looks like without having benchmarks.) 

Right now, the job market is the polar opposite of that. 

I wanna change this.

Making the right hire and finding the right job for you are trajectory-changing events – both in the positive and the negative. Even if I just improve this marginally, there’s a lot to gain. 

That gets me fired up every single morning. 

If you'd like to join me in solving this problem, drop me a note. The company is too early to hire someone full-time, but maybe we can find a way to work together.

Hope you’re fired up too for this week. 

Let’s have a day. 

LFG. 🔥

Dominik

Question for you: 

What’s your take here? Am I insane for building a recruiting business?

Would genuinely love to hear your counterpoints or reflections. There’s a decent chance I’m completely off base here. 

Shoot me a message with your comments as a reply to this email or at newsletter@dominiknitsch.com.

Big thanks to Patrick de Castro Neuhaus for reading drafts of this and providing feedback.

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