Goodbye LinkedIn. A new era of hiring startups has arrived.

Quick note: We do lots of research for new ideas at Neighborhood Studios. In 2022 we began publicly sharing our research. We’ll pursue some of these ideas, but many we won’t. Either way we want more founders to build products to make our day-to-day lives better. If you are working on ideas around this problem, we’d love to chat — goodstuffnearby@neighborhoodstudios.com.

On a scale of 1–10, how much does this statement surprise you:

“A January 2022 Deloitte survey of 116 CEOs found that a shortage of qualified labor was the biggest external issue facing their companies.”

Not too surprising we would suppose — everyone knows that we are currently facing a generational labor shortage.

In addition to the current labor shortage, CEOs also frequently say that the quality of their labor is another critical factor to the success of their businesses.

With these two points in mind, there have been hundreds, and hundreds, and hundreds of startups that have raised significant VC funds to solve “hiring.”

The problem is clear, the need is obvious, the opportunity is massive.

In this article, we’re going to examine the history and landscape of hiring companies before deep diving into one area of our particular interest: skilled blue collar hiring.

Then, we’ll share what’s new and interesting in hiring and look into what might be next for hiring startups.

Buckle in as we take a look into the world of hiring and see what the future may bring.

Market definition

Broadly, we refer to “hiring” startups as companies that help candidates get hired. Sounds simple enough, but in reality, they actually come in a lot of shapes and sizes and have a ton of overlap.

Here’s a rough overview of the market layout:

• General jobs platforms (Indeed, ZipRecruiter, LinkedIn)
• Enterprise recruiting software
  - Point solution focused on sourcing (SeekOut, Visage, Uncommon Co.)
  - Broad solution with sourcing ability (Able, Talent Rover, HiringThing)
• Hiring companies that focus on a specific group
  - Developers (Turing, Revelo, TripleByte)
  - Nurses (Incredible Health, SnapNurse, Nomad Health)
  - Women (The Mom Project, Fairygodboss, Bus Stop Mamas)
  - Unskilled blue collar workers (Wonolo, Workstream, Fountain)
  - Skilled blue collar workers (Workrise, Nana Academy, BlueRecruit)
  - Others (e.g., diverse candidates, veterans, early career)
• Job-related education programs
  - Apprenticeship programs (Multiverse, Bitwise Industries, Praxis)
  - ISA schools (Lambda School — now BloomTech, Microverse)
• Professional / social networks (Chief, Bravado, Kindred)

Here are some adjacent spaces:

• Enterprise training programs (Guild Education, Flatiron School)
• Other enterprise HR software
  - Candidate communication software (AllyO, Mya Systems, Humanly.io)
  - Interview software (HireVue, Wepow, RIVS)
  - Human capital management (Workday, Rippling, Gusto)

Now, let’s take a look at the history of hiring and some of the startup trends.

History lesson

Phase 1 (pre-1994)
The Establishment

Prior to 1995, if you were a company looking to fill a role, you either used your personal networks, placed an ad in the newspaper, or you went to a staffing agency. If you went to a staffing agency, they would go out on your behalf and find a list of qualified people for you to interview.

Some of the big boy staffing agencies in this space were (and are today) Randstad, Robert Half, and Allegis. Even if you haven’t heard of these before, they are massive companies in their own right. They all were founded before 1960 and have revenues today of $10–30B — several are public too.

Phase 2 (1995–2006)
Internet 1.0

The invention and commercialization of the internet led to the next generation of places to find your next employee.

You could post your job on Craigslist, for instance, which was founded in 1995 and developed quite a substantial business in job postings to replace newspaper ads.

Other notable companies from the Internet 1.0 era included Monster and HotJobs, which served as the first incarnation of online job boards.

• Monster was founded in 1994 and became one of the first online job sites. The company had a tumultuous journey over its life: including going public near the end of 1996, several famous Superbowl ads (notably this), a failed and successful acquisition of its biggest competitor HotJobs.com, and a 90% drop in its market cap in the 2010s, before eventually getting acquired by leading staffing agency Randstad.
• HotJobs rose to prominence in the early 2000s, briefly becoming the most visited career site and posting revenue of $115M+ in 2001. They spurned Monster’s acquisition attempt in 2002 to accept a $436M buyout from Yahoo, before eventually getting acquired by and combining with Monster in 2010 for $225M.

Phase 3 (2007–2014)
The Horizontal network

The invention of the horizontal job board for the masses began in 2002 with the creation of LinkedIn but began to really take hold when LinkedIn began to rapidly scale in 2007. LinkedIn pioneered the idea of combining social media with an online network to find success.

After a series of execution mistakes by Monster, Indeed (founded in 2004) and ZipRecruiter (founded in 2010) began to take over as the pure-play dominant horizontal job boards. They took over the market for job boards by offering a stronger tech native platform and some early AI-capabilities.

Phase 4 (2015-present)
Modern Jobs platforms

There are three key trends we are seeing in the modern era of job platforms.

• Job platforms are becoming unbundled and verticalized: LinkedIn works great for the average white collar worker, but not for the rest of the population. What if you are hiring for lower-skilled retail or hospitality jobs that de-emphasize the need for a resume? What if you are a great software developer but don’t have the greatest college on your resume? The newest era of job platforms are becoming more verticalized, with point solutions in retail / hospitality (Wonolo, Workstream, Fountain), healthcare (Incredible Health, SnapNurse, Nomad Health), blue collar (Workrise, Nana Academy, BlueRecruit), and for specific groups of people (Chief, Untapped, The Military Veteran).
• Job platforms are doing more of the work previously done by companies or candidates: The days of simply facilitating connections are over. Job platforms are taking on more of the work previously done both by candidates (building a profile, upskilling, job discovery) and by companies (vetting candidates, tracking candidates in workflow).
• Job platforms are moving from true marketplaces to managed marketplaces: This is happening across all types of marketplaces, not just job marketplaces. Companies are becoming more and more involved in the transaction to guarantee a better experience for consumers. Examples include StockX helping to verify / inspect shoes, Amazon helping with seller consignment / logistics, or Uber subsidizing drivers with guaranteed earnings.

Skilled labor hiring

Now that we have some of the broader historical context, we wanted to dig into one area we are particularly interested in: skilled blue collar hiring.

Before we dive in, let’s get our definitions straight.

Broadly, there are white collar jobs (office jobs) and then blue collar jobs, which can come as either skilled or unskilled. When we say skilled blue collar jobs, we’re referring to ones that require training before going in (e.g. electricians, plumbers, HVAC), as opposed to unskilled blue collar jobs where the workers learn the task and get the necessary tools when they arrive at the job. Examples of this are gig jobs and restaurant jobs.

Within skilled labor hiring, there are several different angles companies are taking:

• Traditional skilled labor marketplaces: Some companies (BlueRecruit, PowerUs, Ladder, and Kollabo) are trying a traditional marketplace approach to connect skilled laborers with work opportunities. PowerUs has gained the most funding — they’re a European YC company that recently raised $10M from investors including General Catalyst in this space.
• Sub-vertical specific marketplaces: Some companies (Workrise, Greenwork, FactoryFix, Faber Connect, and SteadyInstall) have focused on only serving the hiring needs of a specific sub-vertical, such as energy or manufacturing. Workrise (previously named RigUp) has gained the most traction in this space with $750M in funding from top VCs such as Founders Fund and a16z. Their secret sauce appears to be figuring out how to fix liability insurance for hired workers in this space.
• Social media + job marketplace: Some companies (Hardworkers, BoomNation) are integrating social media on top of a job board to create the LinkedIn or Instagram for skilled laborers. Trade Hounds was trying this approach before pivoting to a new social media model without a job board on top.
• Education + job marketplace: Some companies (SkillPointe, Nana Academy, ForgeNow, hireblue) are hanging their hat on the idea that the biggest problem with creating a skilled labor job marketplace is the lack of available skilled laborers. They’ve created training offerings to solve this problem, with Nana Academy seeming like it’s gotten the most traction.
• Other plays: There are several other interesting models that companies are trying, such as focusing on gig-ifying commercial drivers (Haul, DriverReach), offering simulators for training (SkillCat, Field Sim), home evaluations for REITs (Wreno), scheduling / dispatch software (Rivet Work, Buildforce), and AI-first platforms (blueLINC, U2LYZE).

Texture of the problem

There are several key reasons preventing a billion dollar marketplace for skilled blue collar workers.

• Labor shortage: This market faces a huge lack of qualified labor, especially in blue collar industries. According to the U.S. Chamber of Commerce, “if every unemployed person in the country found a job, we would still have 5 million open jobs.” And this problem isn’t fleeting — the lack of blue collar labor has been a trend 10+ years in the making.
• Lack of access to education: Despite high-paying salaries in these fields, these skills are not readily taught. Schools like trade schools or community colleges that offer the necessary certifications are big commitments, somewhat expensive, and not super well known. On-the-job apprenticeship is common but time-consuming.
• Status of these jobs: People look down on skilled trades. As a society, we have glorified the idea of going to college and working at Starbucks making $30K over going to trade school and making $90K in a trade.
• Untailored solutions: A lot of existing solutions are insufficiently tailored for blue collar workers. Why build an app for your marketplace if blue collar workers respond to texts way more frequently? Why send Zoom links for interviews when lots of blue collar workers don’t have Zoom?

Novelty

At Neighborhood Studios, we celebrate novel ideas to tackle these problems in all their forms.

The 2010s saw a bunch of interesting and novel approaches to hiring, such as companies trying to develop a talent search engine (TalentBin), build the personality data genome (Traitify), find positions for people with certain skill deficits (Viridis Learning), or create a “Tinder for Hiring” (Switch, Jobr).

Here are the current attempts that we find particularly novel.

• SkillCat and Field Sim: These companies are building simulators to help remotely train skilled laborers. The secret sauce on these could be to help trainees visualize their jobs in advance and improve retention.
• Talentdrop: A YC company with an interesting “bounty system” that rewards people for referring others to roles
• Multiverse: A UK-based company that has raised $400M for white collar apprenticeships for students that don’t go to college.
• Scoutible: A little less new, but Scoutible uses gaming to vet candidates for jobs.
• Textio: There’s been cool things happening with AI in hiring, and Textio is a good example. They’re building AI to detect bias in written job descriptions.
• Counter: Founded in 2022, Counter is a pretty interesting concept that mechanizes offer shopping to guarantee 5 offers in 5 days after submitting an offer letter to the platform.
• Fixer: Founded by one of the Grubhub founders, Fixer is a home repair marketplace that may be a trade school in disguise.

So what’s next in skilled labor hiring?

As a startup studio, we are always looking for what’s next in various hyperlocal spaces. We aren’t actively working on a startup in this area, but we think these parts of the problem are promising to explore:

• Training / apprenticeship: The key problem in this space is on the supply side. Could there be a novel product focused on training kids out of high school that could increase the available supply of trade workers? Maybe a disguised trade school like Fixer?
• Gig-models: We’ve talked a lot about gig approaches to skilled labor. Could the next-gen skilled labor model have the same intrigue and flexibility as driving for Uber?
• Ultra-verticalized plays: Some successful approaches (Workrise) have focused on a seemingly tiny segment of the market to really solve their key frictions. Could this model be done in other sub-verticals?
• Underserved communities: Another approach to solving this problem that could have promise is to focus on underserved communities. Could there be a novel product that vastly reduces barriers for women or people of color already working in the trades?

If you are a founder currently working in any of these areas or if any of this really grabs you, we’d love to talk with you at Neighborhood Studios — goodstuffnearby@neighborhoodstudios.com.

About Neighborhood Studios

Neighborhood Studios is a venture studio that partners with tenacious founders to build hyperlocal startups from the ground up.

If you are building a business in any hyperlocal space or if any of this really grabs you, we want to hear from you. Drop us a note at goodstuffnearby@neighborhoodstudios.com.

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