October 2011 – DAN REICH

The Future of Hiring New Employees

Image representing LinkedIn as depicted in Cru... — Image via CrunchBase

This post originally appeared on Forbes.com.

Technology and data are changing the ways companies do business but perhaps more interestingly is the way they are influencing how companies are hiring, and could be hiring, new employees. In many organizations the human resource department is considered the most important part of the organization. And rightfully so. A company is nothing more than the people within it so it should be no surprise when you hear about how rigorous some hiring processes are. For example, its been said that Google has had candidates come in to interview “as many as 16 times before ultimately releasing them back to the wild.”

So let’s take a look at three new and innovate concepts that may help drive the future of how companies are staffed.

The Social Graph. It’s not what you know but who you know. We’ve all heard this phrase before but we finally have social graphs that are accessible through technology. These are social graphs and social connections that will at some point be used to help us as individuals in our careers. So imagine how powerful it would be if companies could leverage one’s social network to get personal references at scale. A company called Jibe is doing this and their employers have said that Jibe candidates are 4x more likely to be hired than those from traditional job boards. And it makes complete sense. Personal references are invaluable and its why 92% of hiring managers in 2010 used social networks as a recruiting tool, according to CareerEnlightenment.com.

Statistical Data Models. If data exhaust was actually smoke we would all be suffocating by now. The abundance of raw data is staggering and making sense of it all can be a daunting task. It is the reason new cloud computing based companies are starting to emerge. But capturing and understanding data is very different than taking actionable steps from the findings. There is a new school of thought among firms that look to statistical models as the basis by which candidates are hired. For example, every company has an associated cost with hiring and training a new employee. The cost of hiring this new employee is recouped if that person stays for a certain period of time. If however that candidate leaves before that time, the firm realizes a loss in opportunity costs. So what if you could predict with a high level of probability that a candidate will stay beyond a certain period of time? What if you could essentially predict which candidates are retention risks? Well this is what one, stealth-mode Chicago firm is working on and their results could end up saving firms millions of dollars annually in their hiring process.

Niche Data Sets. Hiring a math teacher is very different than hiring a quantum mechanics physicist. As the world continues to slice itself up into niche verticals, it will also be important to have niche data sets especially for the purpose of hiring highly specialized candidates for very specific roles. This is probably the reason why LinkedIn (NASDAQ: $LNKD) has seen its biggest growth in revenue come from its hiring solutions line of business. This is also probably part of the reason why LinkedIn has subtly added new fields like “skills” into profile pages. These fields make it easier for recruiters and hiring managers to look for people with very specific skill sets. And just as the ladders.com tailored to folks looking to make over $100k, I believe there is also an opportunity to specialize on other niche verticals like B2B sales, pharmaceuticals, nuclear engineering, and many, many more.

New solutions will continue to emerge but I think we are beginning to see the future of how new firms will hire employees.

Connect with Dan Reich on Twitter – @danreich.

9 Reasons You Should Blog

This post originally appeared on Forbes.com.

I think everyone should blog, especially entrepreneurs, so here are my top 9 reasons why you should be blogging if you aren’t already.

1. It’s your new resume. I had a recruiter call me once out of the blue. She said, “Hi Dan, this is Emily from a recruiting firm. I just finished reading your blog and I don’t really have any questions for you. I just wanted to let you know that you are perfect for a job I’m trying to fill and I wanted to see if you would be interested.” Wait, what? I was stunned. I had never met this woman before in my life and she already knew that I was a great fit for the job she was trying to fill. It was actually a very good position at a great firm. Make your resume dynamic. We are no longer in the world of 1 page resumes.

2. It’s your new hiring tool. As an entrepreneur or hiring manager, think about #1 in reverse. If you are trying to hire for certain positions, people will want to know who you are and what you are about. Show people why they should be a part of your endeavor. Why they should be on your team. Blogging is a great way to do this.

3. Network with new people. I tried making music once with some fancy DJ software. I didn’t know what I was doing so I googled, “how to make house music” (that story for later). I was curious. I stumbled upon a few blogs, left a few comments and questions and before I knew it I had a new friend. This was a person I had never met before but it was a person that took special interest in my questions and helped me understand what I was trying to learn. After some back and forth, I was able to create some solid tracks. Now I listen to his tracks whenever they are released. New friend in the music world.

4. Turn messy ideas into neat ones. Ideas are a dime a dozen. They exist as some lofty, grandiose thing that lives in your head and your head alone. When you talk about those ideas they begin to make more sense. When you write about those ideas they make even more sense. This is often the reason why people write business plans. Having a blog is a great outlet to force your brain into a laser-focused state of mind. Sure, you could do this in some private notebook but what fun would that be? Furthermore, it might help you with point #1 or #2. It might even help you find business partners.

5. Reflect on your past to improve your future. When you blog, your thoughts and ideas are documented over time. Sometimes you may take certain stances on topics that may prove to be right or wrong later. By documenting your ideas in sequence, you can look back and reflect on how your ideas and opinions evolve over time. Looking at the past is critically important in understanding how to improve the future. This is why students at Harvard Business School review hundreds of business case studies. Learn from the past.

6. Get some peace of mind. As I write this post I have 15 different tabs open in my web browser, all of which require a different mindset (e.g. music vs. email, Facebook vs. Google docs spreadsheet). However, as I write this post I’m able to momentarily focus my mind on one stream of conscious thought. Doing this can be particularly hard in today’s world considering how many distractions there are. Just like the blinking Gmail tab telling me to check the 9 new emails I have waiting in my inbox. But for now I’ll ignore those and continue on with the post.

7. Create your own PR machine. If I was working on my own project or business my blog would be the first place I’d talk about it. It’s your own Public Relations soapbox. It also helps surface your views on a specific topic or industry. Views that might help you win new business. In the past, we needed radio and TV to get our messages across. Not today.

8. Juice up your writing skills. I suck at writing. I’ve maybe taken 3 writing classes throughout my life. But just like anything else, practice makes perfect and the more I write on my blog the more I find my skills improving slowly but surely. And when you consider that most work and sales today is done over email, you quickly realize that it’s much more critical to have good writing skills than ever before.

9. Produce more, consume less. It’s very easy to get caught up with media consumption. There are many days where I feel as if I’ve achieved nothing because I spent my entire day consuming other people’s content. This is a very dangerous road. I believe that by asserting yourself as a contributor instead of a consumer, you will realize huge payoffs down the road. Be a builder. Be a producer.

So if you are feeling a little motivated to start you’re own blog, I would suggest taking a look at wordpress.com and tumblr. You could be up and running in no time.

And if you already have a blog, I’d love to read it. We can connect on another micro-blogging service like twitter – @danreich.

How To Start A Company

This post originally appeared on Forbes.com.

Starting a company is a daunting task and taking the first step sometimes seems impossible. I’ve encountered a number of people with the dilemma of “I know what I want to do but I don’t know how to start.” And rightfully so. Taking an abstract idea from thought to fruition is one of the hardest things to do. It’s why the failure rate of new business endeavors is so high. It’s also why most investors value people and execution of ideas above anything else. Ideas are a dime a dozen, but being able to execute on a vision is an entirely different story.

So how does someone actually start a business? The great thing about starting a business is that it requires creativity. Sure, you need to be creative in formulating the idea, but I think what goes overlooked often is the fact that you need to be even more creative with specifics around how you start the business. It doesn’t really matter what industry you are in. If you can be creative at both developing the idea and launching the business, I think you’ll have greater chances of success.

Here are a 7 examples of how you might consider starting a business.

1. Build a specific solution, for a specific problem, for a specific client. Most doctor’s offices confuse me. Not only do they confuse me, they drive me crazy. When I walk into a doctor’s office today I look over the counter and see endless shelves of manila envelopes. There must be thousands of sloppy, handwritten notes just sitting there unprotected in those color coated manila envelops. Every time I walk in I have the urge to walk up to the doctor and say, “give me $100,000. I’ll build you a digital solution for this mess and you will get lifetime rights to the technology. I’ll get to sell this to other doctors but you will get to use this technology forever.” If you see a specific problem that you think you can address, you might be able to find one client who will fund development. You will give them lifetime rights to the technology and in return, they will pay you and let you resell the solution to others.

2. Sell now, build later. Sometimes the best way to go about starting something is to first understand whether or not it makes sense to start. The best way to do this is to sell or pitch an idea to perspective clients before you even have a working or tangible product. When I was in college, I told the owner of a bar that I wanted to host an event on behalf of my marketing firm. I told him I was going to donate money to the charity I’ve worked with in the past. I told him I was going to bring in my entertainment. I told him I was going to create a marketing campaign. These were all lies. I didn’t have any of these things. I didn’t have a “marketing firm.” Well, he agreed to the event and I built up all the necessary pieces after it was sold through.

3. Go back to school. Do you know how much intellectual capital exists in academic universities? That’s why they are called academic institutions. They are pillars of knowledge and these pillars often facilitate cutting edge research. But sometimes these new technologies are never designed with the goal of commercialization in mind. When I was in school, I had a professor working on technology that could literally change the world. He had no interest in bringing this technology to market. He only cared about being published in some research paper. When I asked if I could take the technology to market, he was ecstatic. I expect there are others out there that have great innovations but have no interest in building a business with them. But maybe you do. Physically going back to school to explore these opportunities could potentially lead to the start of a new endeavor. It could be a school visit. It could be a school enrollment.

4. Combine and conquer. Sometimes two heads are simply better than one. It’s tough work staying motivated or even getting motivated in the first place to create a business. When you team up with someone and bring on a partner, you might find that a little bit of motivation and encouragement are enough to move the needle in terms of execution. Having a partner might also free up some burdens so you can focus on more pressing issues. And just having concerted dialog with someone else, who has the same directional goals, could also be that missing factor needed to start a new business.

5. Take money, make money. There are certain companies and industries that require a large capital investment to get started. For example, it would be nearly impossible to build an alternative energy company without some form of initial capital investment. These funds would most likely go towards research and development or manufacturing. In some cases, you may need to just go out and ask people for money in order to fund the development of the first iteration of your product or technology. But maybe you aren’t building an energy company and maybe a quick infusion of $5,000 to $10,000 from friends and family might be enough to kick start your company.

6. Leverage a distressed asset. People make great livings flipping houses (or used to anyway). They buy cheap and sell high. Many times people will buy cheap, fix up the house and bit, and than sell high. This is no different with businesses. There are plenty of distressed assets and companies out there that would love to be acquired for peanuts even though there is still huge potential and room for growth.

7. Don’t be glamorous. I heard a story once of a guy who sold hot dogs for a living. He made about $800k a year selling hot dogs and did so by setting up two hot dog stands at the entrances and exits of Home Depot stores. Not exactly an exciting job but it definitely pays the bills. There are probably a dozen other ways you can turn a low level job into a meaningful, high income producing business.

I’m sure this list can go on for quite a while, but what methods of launching a business have you seen?