An example of a StartUp that failed with honour.

Retrieved from Snaptalent site 18 AUG 2009:

//Dear Investors, Users, and Snaptalent Fans,

From founding the company in 2007, we've had a crash course about the nuances of the online recruitment space. We'd like to announce that we've made a decision to move on from Snaptalent and return the majority of capital raised back to investors now than continue.

Its been a tough call, as we had enough capital in the bank to last for two years. The decision has primarily dictated by market conditions and opportunity cost which in aggregate would mean we probably wouldn't have been able to show the kind of results we wanted to make this a big company in this market. There are a number of reasons behind that decision and a number of lessons, which I intend to articulate here in this note.

We've been through a number of iterations since we launched. Initially we started as an ad network for recruitment advertising, which despite winning The Top 10 online recruitment products of 2008 (and earning critical acclaim in the industry) ended up being economically unviable as a business. Primarily because the number of candidate leads generated per impression wasn't able to satisfy employers to keep buying and therefore for publishers to keep getting paid.

In November 2008, we transitioned from this product to identify an opportunity to try and focus on how recruitment products could be adapted for the Facebook generation. We hoped that our experience of consumer products and frustrations of this generation would allow us to deliver an amazing product. With a few months of development and market research behind us in March 2009 launched a platform to enable college recruitment to happen more efficiently. Market timing couldn't have been worse. One, as overall recruiting dived, college recruitment became marginalized as a business (roughly 20% of college seniors had jobs on graduation, compared to 80% the year before, most calls to potential customers indicated that they wouldn't be willing to spend or focus on this area for at least another year). Secondly, the decision to focus on an audience (go niche) radically reduced our market size in a shrinking market. The outcome could have been different however. In November 2008 we had a number of decisions to make about our strategy. Instead of focusing on short term trends and going after the opportunity of owning how companies recruit on social networks we went for an audience focused approach with a longer term horizon. In hindsight this was a mistake. Going after short term trends would have given us the momentum we needed. For any startup, losing that trajectory is only recipe for loss of morale and momentum for the team. Three new product launches in 9 months didn't give us much to build on.

The online recruitment space has its own unique market dynamics that restrict innovation on the company side. From the outset, online recruitment spend is huge. Its a market with the right fundamentals from the outside looking in. Its a large market ($10B/year spend), with rich customers, and poor innovation. It sounds like an entrepreneur's dream. The truth is that there are barriers to adoption of newer technologies which come down to the position of HR in an organization. Since HR isn't directly revenue generative, HR decision makers aren't as empowered to drive change required by revenue generative functions like marketing or sales. This creates a unique enterprise sales environment where companies that innovate too radically are too early to market/phased out despite those innovations being commonplace in other enterprise markets. You can't change behavior too radically for HR, which as entrepreneurs super excited by changes in the consumer web we felt incredibly frustrated by. Recruitment spend is bloated, so as the cost of transmitting information to connect companies and candidates comes down, the trend is for companies to use free tools which help amplify that spread. The companies that will win in the recruitment space therefore are all working on solutions which take away from job advertising spending; search engine optimization, social networking, referral hiring, improving social media presence.

While this was never the result we were expecting, our entrepreneurial hunger remains strong. We've learned a lot in the last 2 years. There is no doubt we will be using these lessons to go after new opportunities very soon. Thanks everyone for your patronage and support.

The Snaptalent Team//

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