Venture Capital

Recruiters and job listing sites do not work

In fact if a job seeker were to place on roulette bet or buy one lottery ticket for every job they apply for on a job listing service, they would be more likely to win a living wage from gambling than job searches.

Finding a job is not easy and there are no shortcuts no matter what is said by the human resources industry, including Job finding services, independent recruiters, and in-company human resources (HR) staff.  Even with an unemployment rate of less than 5 percent there are 100 million skilled, experienced people who are looking for or have given up looking for work in the United States.

In fact, the conclusion of a year long New Tech Press investigation of the employment industry is it is doing a disservice to job seekers, employers and the investment community by making the claim that they can help people find work or employees. While some of these services can point to a few areas of success and some are better than others (our research shows Linkedin is the most reliable), none are particularly effective. In fact if a job seeker were to place on roulette bet or buy one lottery ticket for every job they apply for on a job listing service, they would be more likely to win a living wage from gambling than job searches.

There are bright spots for some job categories depending on the geographical location. In major tech hubs, there are plenty of jobs for engineers with short resumes. Elsewhere minimum wage employees with little training or experience can find work for more than minimum wage. For experienced, well-trained or just young people just out of college with anything other than a STEM degree there is virtually nothing available, even when suitable jobs exist.

“Wait,” we can here you ask, “Nothing available for potential employees even when jobs exist? How can that be?”

The biggest reason is data misuse by HR practitioners.

Employers and the employment industry rely on the Standard Occupation Codes (SOC) and North American Industry Classification System (NAICS) to form the foundation of job descriptions. In our interviews with HR professionals and system developers we discovered that when they are creating job descriptions they consistently overuse and misuse the coding system to pull in the most candidates, even those that are unqualified.

Second, the “artificial intelligence” built into the systems is not much more than a scan of those codes and word search functions, resulting in bad returns.

In making this discovery we input the following job functions into a dozen job-finding sites (e.g. and employment sites (e.g. Facebook)

  • Journalist
  • Editor
  • Marketing communications
  • Marketing manager
  • Audio design
  • Video editing
  • Program management

The results produced, at most, no more than two positions that were actually for those jobs and hundreds of positions that ranged from electronic system designs to sous chefs. The most egregious example is a standard search for audio designer jobs. This particular job is crucial in television, movie, and video game industries and is the key focus for the broadcast and electronic communications major at San Francisco State University. Using that job title in a search for jobs in a dozen job finding sites (e.g. resulted in more than 5,000 positions for electrical engineers and computer scientists and not a single job for an actual audio designer.

To see why we received these results we dug into to SOC and NAICS codes appended to the job offering and found dozens in codes that had absolutely nothing to with the listed jobs. The reason for these errors was simple: When a company is looking for employees they input the codes related specifically to their industry or discipline. When a tech company, like Google, is looking for an engineer to design an audio codec.  They append the NAICS 541400 code for specialized audio systems design to the posting. The systems and HR professionals do word searches for “audio” and “design” and make the posting. So an audio design engineer who produces sound, get thousands of job listings for semiconductor designers who have experience in audio codecs.

Neither the NAICS nor the SOC systems are adequate sources of data for effective job placement efforts, yet these codes are foundational to all job postings.

The next problem is human fallibility.

In spite of the flood of automated job sites and technology, all of which we have found to be horribly flawed, the HR industry is dependent on humans that are deluged by unqualified applicants fed to them by the flawed technology. Thos professionals are well versed in the legal requirements of their profession but lack basic tech understanding and and under use relevant technology.

We talked to 27 in-house and independent recruiters over the past year, some of them senior HR managers and vice presidents. None of them knew the capabilities of the search technology, much less the full capabilities of artificial intelligence. Many of them were flummoxed about the use of simple spread-sheet tools. As a result they do not use the basic automation tools available even for free and are generally overwhelmed by the amount of communication they have to handle daily from employers and potential employees. One manager for a major marketing automation system company did not use her own company’s technology for job openings. In another case, a recruiter for a social media company did not even have a profile on the company platform.

The combination of bad and misused data, and lack of basic tech understanding results in an ineffective mechanism for matching qualified people with jobs and, hence, the high number of qualified people leaving the job market altogether.

As frustrating as this may be for employers and job-seekers, it must be even more frustrating for the investment community. More than $4 billion has been invested in HR tech startups in the past two years and there is no end in sight. Companies and seekers are paying subscriptions to these companies in the millions of dollars and yet with little positive results. When combining the current unemployment rate with the number of people who have left the job market, the effective unemployment rate in the US is 40 percent, with no relief in sight.

What can be done? Start with the data.

The SOC and NAICS codes were not intended to help people find jobs. They were designed to classify maintain records of employment for the purpose of population studies and taxation. Using them for job openings is a gross misuse of the data. The HR industry needs to employ experienced communicators and data scientists to develop and sort job opening data. The communicators can create accurate and realistic offerings and the data scientists, using sentiment analysis, can identify and process the recruits more effectively.

Secondly, marketing automation and proper SEO can attract, sort and communicate effectively with applicants making HR professionals more efficient and productive by eliminating frustration and wasted effort.

Finally, employers need to have an attitude adjustment regarding what they are looking for in potential employees. As the unemployment rate falls, it will be more difficult for overly selective companies to find productive employees. Instead of investing in tech based on bad data, invest in training of HR staff to do better work.

Mousetraps, alligators and EDA

I didn’t go to the 2011 Design Automation Conference in San Diego because this year I decided to stay home and see what I could pick up virtually from video, audio and news coverage day to day.  It was much more cost effective and focused, despite the usual bandwidth problems with the convention center. My apologies for mixing metaphors but this is how I wrap up the issues arising out of DAC. 

It is said that if you build a better mousetrap the world will beat a path to your door, but when your customers are up to their asses in alligators, vermin are not their critical problem. 

Gary Smith gave his usual glowing report of the future for the industry (he thinks it’s well on the way to being a $6.6 Billion industry by 2015, and once again he claims that this year Electronic system level design (ESL) is going to be really big this year (just like it has every year for the past decade, according to Gary.)  But this year he added a big caveat.

He said that the industry needs to provide tools to the design community that they need to do their jobs.

Um, isn’t that why companies in EDA are in business? Smith’s caveat has the implication that they aren’t.  I agree with him.  Apparently so do the VCs who are pointedly NOT investing in EDA or semiconductor companies because neither can turn profits.

The problem with EDA is a simple one: failure to communicate.  

The industry largely concentrates on making tools that only sort of solve the problems their customers have, which forces the customers to hire more manpower to make those tools actually help them do their jobs, or design and maintain their own tools (Smith has said before that the primary competition for EDA tools is actually the tools their customers are making.)  The tools the customers make actually resolve the specific issues, but it keeps them from concentrating on the job at hand, i.e, making new complex ICs.

So why aren’t the companies making the right tools?  Because they have no idea what the customer really wants.

Most EDA companies start out to solve one problem for one design inside one IC company; either be a design team that spins out of another company or design consultants that discover a nifty resolution to the specific problem.  In the old days (pre 1990) that was enough to get a buttload of money from a VC and launch a new company, but this is not the old days and those one-off solutions are not the money makers they used to be.  The EDA industry, however, is still acting like it is.

Infant industries are always engineering driven. When they reach adolescence they morph to sales-driven philosophy.  Mature industries are market driven. EDA is stuck, however, between infancy and adolescence and can’t seem to break out of it.  People like Smith and investors like Jim Hogan have been telling them what to do do break out of it for years, and they all nod their heads annually to the advice, and when DAC comes to a close they go back to the cubicles and start the process all over again.

The industry needs to mature and do it really fast or there is going to come a reckoning. It will be consumed by more savvy industries that are already making inroads, judging from what I could see, hear and read from the various media portals I was monitoring.  They need to learn how to really speak with, rather than at their customers and stop using the tired old sales tools (trade shows and press releases) that have passed for marketing efforts over the past 20 years. 

If the engineers running these companies can’t figure out what I’m talking about, they need to step aside and bring real marketers into management.  If they don’t, then the investors need to start making some changes in management themselves.


Taking a leap at another challenge: 12 Entrepreneurs

Now that things are calming down to a dull roar I should be able to get back to my series on location-based web apps next week.  But today I just wanted to give you aheads up on an overall new direction for me and what I write about.  

I'm working on several fronts with people that want to change the world.  I wish I could say that  that some of those people are in the semiconductor and EDA worlds but that is just wishful thinking.  I recently helped launch a new organization that is aiming at being a movement to change how start ups are launched and nurtured called the 12 Entreprenuers (here's the NTP report).  These are people from a handful of countries in Europe as well as US businessment, government representatives, angel investors and people who are thinking about things in new ways.  Here's a couple of snapshots.

The first signers...60453_469515034433_670559433_6558892_4646652_s


Me as the MC at the kickoff meeting...60916_469518369433_670559433_6558939_901389_s

These vibrant people are working in online video content, medical applications, gaming, mobile apps, location-based technology, green tech, publishing... everything but electronics.  They are brilliant, innovative and driven.  It feels good to be around them and is giving me hope for the future.  You'll be hearing a lot more about it, but I write this today to say, if you really want to do something about unemployment, the economy, and the general state of the world, I'm all ears.  There is a movement afoot and everyone is welcome to join.  But we're not going to try to revive a dead horse.

Just saying...

The 12 Entrepreneurs. What have I gotten myself into now?

50184_143431825677984_5976_n  So I just got back from a 2 hour meeting with a handful of on-fire entrepreneurs from Europe who want to shake up the establishment and start building relationships, companies and jobs on both sides of the Atlantic.  "The 12 Entrepreneurs," as the group calls themselves (12 stars in the EU logo... get it?), come from all over Europe (Austria, France, Spain, Germany, United Kingdom, Romania, Poland, Portugal, Norway, Italy, Czech Republic, Netherlands and Centrope Region (encompassing Austria, Slovakia, Czech Republic and Hungary) and have launched multiple successful companies, but they have grown frustrated with Euro-reticence and Silicon Valley no-it-all-sim (yes I spelled it that way on purpose). They want to get our respective economic engines humming again.

I like these guys so I have volunteered my time to get it started.

The kickoff event will be a small gathering of no more than 50 invitees at the Plug-and-Play Center in Sunnyvale on September 22 starting at 4 p.m.  If working with European companies and investors is interesting to you.  Let me know and I will see about getting you an invitation.  For more info you can find them on Facebook.

What the "new" EE Times means to venture capitalists

I concluded a great week with a sit-down with Paul Miller, CEO of EE Times Group for United Business Media, regarding what the new format and philosophy for the venerable publication will mean for entrepreneurialism and investment in the electronics world. To me, everything looks to be moving up and to the right.  This interview was sponsored by Magma Design and Vpype.

Watch video live on Vpype Live Broadcaster

Investors and Entrepreneurs video series begins

Today I started a new series of interviews on my Vpype channel, Investors and Entrepreneurs, where we will be exploring, anecdotally, where venture investment is going as we come out of our recession.  We started with Piers Cooper, a partner at Point Bonita Partners, and a founder of a new type of venture capital organization called Nano Holdings.  We talked about where venture capital and innovation has been in the past couple of years (Piers called it "nuclear winter" ) and where it is going in the next couple of years (he says going up and steady).  Piers has been involved in early stage startup investment for some time and has made a good living at it, so he has something to say.  The first video is the interview, that got cut off before we could wrap up, the second video is my wrap up of what we missed.

Watch video live on Vpype Live Broadcaster

Watch video live on Vpype Live Broadcaster

Hey, Semi World! Wake up!

For my first post of the new year I'm looking at reports from journalists (remember them?) and analysts predicting nothing short of chaos for the semi world this coming year.
On the one hand, everyone is in agreement that the industry will be in growth mode, but on the other, they are also saying the industry is not prepared to grow. No one has a plan for an economic turnaround and in spite of every indicator to the contrary, their collective heads are firmly jammed... in the sand.
Fabs like TSMC, UMC, Global Foundries and the rest are at capacity, China fabs are starting to tank and companies with fabs are shutting down operation, right at a time when additional capacity is required. No one is buying capital equipment and equipment manufacturers are looking to consolidate, making technology advancements for the next level rare.
And the venture capital world, which is supposed to be the spark plug for innovation, is still pouring money into gaming, cloud computing and alternative energy, all of which need a healthy, growing semi industry to succeed.
And all the while, companies will continue to decrease investment in trying to find out what is really going on in the world. In case you were wondering, that's called marketing.
But there are some bright spots starting this year. Look for investment leadership and entrepreneurialism out of new places, like the California Central Valley and Midwestern states. Look for new technology developments out of Eastern Europe. That's what I'm seeing. Time to wake up and smell the coffee, folks.

Reminder on courage

A few months ago I did a post on having courage in down economies.  Today, an essay popped up in CNN on the same subject.  It was a good reminder.

Anyone who starts a business in this time is a hero.  

Anyone who funds one of these businesses is a hero.  

It doesn't even matter if the idea for the business is a brilliant one or a mediocre one.  What matters is that someone is making an effort to overcome fear.

There were too many companies that should never have been funded in the 1990s.  That's a given.  There are too few companies being funded and founded now.  And it's all based on fear.  

We really need a few heros right now.

Looking for leaders

Everyone likes to say they're leaders.  In fact, in the past week alone, more than 21,000 companies around the world have called themselves "a leader" in something according to Google.  But if we have so many leaders, why aren't we going anywhere?

Footwasher Media and New Tech Press have decided to do something to find at least one real leader in the technology world.  If you think you are a leader ... or you know a company of investor you think is a leader, let us know and the best candidate will be given an unsponsored video interview on New Tech Press.  Here are the guidelines:

1. Anyone can recommend any company, including their own

2. The nominated company must have a product or technology that is truly game changing.  The technology can't be an incremental improvement over an existing technology but a complete restructuring of the way things are done.  For example, when ARM and Rambus first came onto the scene, not a lot of people really got the idea of companies that sold ONLY intellectual property for semiconductor design.  But almost two decades later, they are the leaders in the Semiconductor IP space, having created the space itself.

3.  The investor nominee (angel or VC)must have taken a lead position in an A round in the past two years and not in a Web 2.0 or green tech company.  Remember that we are looking for leaders.  Everyone is jumping on Web 2.0 and green tech because that's where all the hype is.  An investor who takes a lead in one of those areas is just following the crowd.  We want an investor that is looking to really change the world.  A contrarian you might say.  We're looking for someone or some organization that sees a problem that needs fixing because there is big money to be made, jobs to be offered, and lives to be changed for the better.

So, let's hear from you leaders out there.  You know who you are.  Let's make some noise.

Broken media equals funding doldrums

About three years ago I attended a financial conference where a big VC stated, categorically, that the reason they were not investing in semiconductor or EDA startups was because there was a lack of informational coverage to validate research.  In other words, because media coverage of the industries had significantly degraded, they couldn't afford to pull the trigger on investment.

This same VC firm has invested heavily in Web 2.0 and green technology over the past three years and you can see why.  There is lots of coverage on those areas.  There is pretty much nothing but coverage on those areas.  The only coverage on semi and EDA is negative.

You might say that that is the media's fault because, after all, the semiconductor coverage is all about the economics of the industry, not the technology so it's naturally going to be bad.  But I would like to point out that the the green Web 2.0 industries has yet to turn a profit, yet the media continues to go bonkers over the technology.  What's the big difference?  Which industries invest more in getting their story out?

I know, I'm a broken record.  But this time I have a case study.

I've been working with a start-up in the semi arena for a few months now helping them craft their message and get a communications program going for them as soon as they get funding.  I've also been introducing them to VCs to get that funding.  We had a lead investor all ready to go.  They got great feedback from current customers.  Dataquest and IC Insights show real growth potential for this particular technology over the next 18 months and beyond  ... but the rest of the players in the market haven't put out anything innovative in five years and they look like they are cutting back even further.  There is no media outreach in the sector so, as a result, the only buzz is negative.  Even with all the numbers lining up for success, negative buzz made the VCs back off.  They still want to invest, but they don't want to take the lead.

There are many similar stories out there.  Investors are lined up and ready to invest in technology outside of Web 2.0 and green, but not as a lead investors.  All because of a a lack of media.

What about all the bloggers covering the semi sector?  Well, here's the thing: the VCs haven't yet come over to the blogosphere, even when they invest in it.  That's going to take some education still.  And education requires some investment in media.  Funny how that works, isn't it?

They don't know what they don't know...

A big problem the VC community has right now is that they don't know what they don't know.  The VComm Venture Faire was developed, using a large dose of social media, to give them a little bit more information they didn't have.  Like what?

Conventional wisdom:  With the media dying, the best way for them to find potential companies is to go to the venture meat-market events with dozens of companies presenting information that the VCs know is useless and presented poorly.  Why do they believe that?  Because everyone believes that.  It's not the greatest process, but it's the only one we got.  Right?

What they don't know:  There is always another way to get the job done.  Someone just has to do it.  Doing the job like everyone else doesn't make it any better.  Going another way may not make it better, but there's a chance it might.

VComm didn't bring a ton of companies in front of the VCs.  The presenters were given strict guideline regarding what to say.  Time was given for quality discussion between VCs and companies.  It wasn't a free-for-all.  It was a lucid discussion.  Life in the Internet age is like putting your mouth on a fire hose of information, someone has to create a faucet.  That's what we did.

Conventional wisdom: You can't invest in European companies because they won't relocate or set up an office in the US.

What they don't know: You can ask.  We considered 30 companies to invite to VComm looking for 10,  We found 9 that fit our guidelines, one being a willingness to set up a US corporation.  It's not in most peoples' agenda to ask about something they just "know" won't happen.  You have to think outside the box.  Sometimes it helps to have someone thinking outside the box for you, rather than agreeing with your position.  That's what an independent consultant is supposed to do.

Conventional wisdom:  There's not very much innovation to fund.

What they don't know: There is plenty of innovation.  There's just not much innovation on display at investment meat markets. 

VComm went first to the VCs for a year and a half and asked, "What are you looking for?"  Most investment events are designed to get revenue from the companies and the VCs are what they pay for.  In VComms case, the companies were the product for the VCs and all we asked of them was their time.  Sometimes you have to reverse the equation to get the answer.

What we learned in the VComm experience is that there is something to be hopeful for.  We learned that social media is an incredible too for dissemination of information.  We learned that conventional wisdom is for the herd.  It's better to be the predator.

BTW, VComm is now on iTunes.

Tell them what they want to hear and they will listen to what you have to say

The cornerstone of the VComm program was the understanding
that most companies looking for VC financing really have no idea what a VC
wants to hear.  Two years ago I sat
with a group of investors at a major conference and listened to them complain
about the quality of the material and, in the end, how useless it was.

Understand this: 
There are, at any given time according to Dow Jones, 5000 tech startups
in the US alone that are seeking funding. 
But less than half of those companies have any credible research into
their technology market.  The press
covering those markets has shrunk almost to the point of non-existence.  The VC's are flying blind nowadays,
which explains why so many are having poor returns.  What they need is real information about market potential.

But most companies pitching VC's spend 90 percent of their
time in front of them explaining how great their technology is.  Get a clue!  They know you are doing something interesting or you
wouldn't be doing it.  What they
want to know is, if they invest in you, how are they going to make a return on
their investment.  Drew Lanza at
Morgenthaler puts it specifically: "How am I gonna make a bunch of money
for retired school teachers?" 
(Think about it.  Most large
investment firms are responsible for investing the retirement funds for common
people.  They have an enormous

So the purpose of VComm, at the core, is to prepare
companies to present the information that the VCs NEED to hear.  Once you have told them that, then they
will be willing to listen about your technology.  Based on the comments we got back from the investors at
VComm, that's exactly what we accomplished.  Lanza even said the presenters were ready to make an initial
presentation before the assembled partners of Morgenthaler.  That doesn’t mean they are going to get
that chance, but how they get to that point is the subject of another post.

What I want to leave you with is another point that I have
been hammering for a decade is: KNOW YOUR AUDIENCE.  If you really have that knowledge you will make progress in
your communications, if you don't you are dead in the water.

And now for something completely different

I got a little flack for the past month about all the bad news coming through this blog about media and the tech industry.  But here's some good news.  A major player in real estate development has thrown financial support to a small investment event called VComm Venture Faire for the simple reason that promoting the investment in technology is just good for everyone.  The interview can be seen at New Tech Press.

So there you go.  Happy new year.