Josh Hill - North Star Partners | Confessions of a Recruiter #111 - Confessions of a Recruiter

Episode Transcript
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Speaker 1 (00:00):
What were some conversations that you had at
the table where you're like,holy s**t, this is how it works.

Speaker 2 (00:04):
I was moving to Austin, which is the coming
quickly the global home of tech.
There were a bunch of themwould come in and say how do you
guys operate?
What makes you different?
What's the process?
Give us your secret sauce.
Hey guys, josh Hill here fromNorthstar Partners Just finished
up filming the podcast.
Had a great time talking aboutEBIT how to prepare a business
for sale.

Speaker 3 (00:21):
Congratulations on starting your own recruitment
agency.

Speaker 2 (00:23):
Thank you very much.
It's been a while coming.
How does it feel I should havedone it years ago.

Speaker 3 (00:31):
Welcome back to another episode of Confessions
of a Recruiter.
We're here joined by Josh Hillfrom Northstar Partners Group,
and that is a big reveal.
Mate.
It is Congratulations.
It's a pleasure to do it here.
Congratulations on startingyour own recruitment agency.
Thank you very much.

Speaker 2 (00:45):
It's been a while coming.
How does it feel?
It feels like I should havedone it years ago.

Speaker 3 (00:50):
Really Always right.

Speaker 2 (00:52):
It always is, it's an opportunity if you don't do it
early.
But it feels right, themarket's a good time.
Yeah it feels good.

Speaker 3 (01:05):
Well, that's made.
It's exciting times.
This is the start of a newjourney for you, but what I
think might be really good is togive the audience some context
who you are, what you're gettingup to.
We'll probably fill in a lot ofthe blanks moving forward with
a couple of your crazy storiesthat we're just talking about
offline, but just from a highlevel.
Let's kind of go through yourbackground.
So you've been in recruitmentwhat?
20 years?
God?
No, I'm not that old.

Speaker 2 (01:26):
Come on, jeez mate.
Come on, do I look like that?
Come on.
No, I've been in recruitment 13years this year 13 years, 20
years.

Speaker 3 (01:32):
We round up in recruitment.
It's close enough.

Speaker 2 (01:35):
It's like when you send a candidate CV They've got
20 years experience.

Speaker 3 (01:37):
You're a 600K biller.
We round up.

Speaker 2 (01:39):
When he was $10 I would be like hang on, no, 13
years across a couple of markets, the vast majority of that in
tech.
So I did a little bit of timeearly on in oil and gas.
Fascinating place to play,particularly in Perth where I
was at the time.
But my main market is executiveleadership and really bringing
technology leaders into the topjob CEO, coo type positions.
I think they're the leaders ofthe future.

Speaker 3 (02:01):
And you've got a good reputation.
A few recruiters have actuallytold us oh, this guy's going to
be a cracker to have on.
So we're excited, mate.
There's some big expectationsalready from the heads up from a
few people.
So you were in recruitment,then you founded your own
business.
For the last 13 years you'veessentially had side hustles.

(02:21):
You've been recruiting, you'vegone through a wild story at the
network technology businesswhere they kind of got acquired
and they didn't and we canobviously go into that a little
bit later and you sit on acouple of boards for recruitment
is it recruitment agencies andtech companies?
I do?
Yeah, that's really interesting.

(02:41):
And then, obviously, startingyour own recruitment business
for yourself.
What a journey, what a journey.
It sounds really good when yousay it.
Where should we start, mate?
Because, like what you justexplained to me 20 minutes ago
around specifically theacquisition of the network
technology.
Well, is that what it's calledthe network technology

(03:02):
recruitment?
The network for sure, yeah, thenetwork for sure.
Perfect.
That is a crazy story in itself.
It's great fun.
I also thought it was quiteinteresting that you have been
consulting with agencies on howto sell their recruitment
business, which is not somethingthat we've spoken about on the
podcast before, so I think maybelet's start there.
Does that sound pretty sensible, sounds good.
I'll give you the context ifyou like.

(03:23):
Yeah, definitely.

Speaker 2 (03:24):
I was.
I'd moved to Sydney in 2017with the company.
Before that, I'd been there fora number of years and kind of
watched it grow.
I was tapped on the shoulderone day.
I was actually going.
I was moving to America.
It was really good timing.
I was moving to Austin, whichis becoming quickly the global
home of tech, and I thought I'vebeen so good to the guys that I
was with at my former company,verse Group.
I don't really want to go anddo it somewhere else, and it was

(03:47):
just one of those opportunemoments sliding door moments in
recruitment.
I was preparing to go and packthe bags and take the wife to
Austin.
What were you going to do overthere?
Head up a recruitment business?
Yeah, so I was going over thereas a VP, which a great company
who've done amazing things, andit's really good to have that
global perspective too.
I still keep in touch with them.
They actually subsequentlyoffered me another job not too
long after and again, tough tosay no to, but that was COVID

(04:09):
times.
So at that point I kind of wentokay, well, what do I now that
I'm partially opening the eyesto something else?
It's been five years, let's seewhat happens.
One call.
I got a call from one of theguys over there and he said hey,
look, we're trying to dosomething really interesting.
We need someone to comealongside and work with our
director to help pump us up,make sure that we're on the

(04:30):
pathway for growth and we'regoing to sell.
And for me I thought, wow,that's something you don't get
the chance to do every day.
Sat down in the room, met theCEO and director, loved them
both immediately.
It was just, it was like we'dbeen friends for 20 years.
Right, very quickly thereafterjoining the business, I thought,
okay, we've got something coolhere.
This is really good.

(04:50):
I've done greenfield my entirelife, so I've never actually
walked into a business or had adesk that someone else has had.
And it was quite a weirdexperience, kind of picking over
what was there and figuring outhow to do it, but really
interesting.
So, yeah, we were kind of onthat journey then from how do we
take it, from the business thatit is today you know, five
employees, one office tosomething that's going to be

(05:11):
really interesting and excitingto grow.
And I came in and the companyhad already engaged EY and a
bunch of advisors and I reallyliked the clear plan and
direction, so being part of thatwas an easy discussion.
Some of my team from FirstGroup came and joined me at the
network, which helped as well,and it was like, okay, let's go
and make this thing happen.
So it took a few years andthere was a few bumps along the
way, as there always is the upsand downs but yeah, in 2022,

(05:35):
last few hours of the financialyear managed to get a deal done
and what an amazing experienceto be part of Nine months of
hard work from not just myselfbut all the operations team.
To be honest, we didn't do allthat much.
We came in and told people whatwe do and how we do it and
those kinds of things, but a lotof hard work in the back end.

Speaker 3 (05:52):
So, to be clear, this is the network, the network,
and so how are you involved inthat specifically?

Speaker 2 (05:58):
Yeah, as part of the leadership team it's about
particularly acquiringbusinesses, and there were a
bunch of them would come in andsay how do you guys operate?
What makes you different?
What's the process?
Yeah, Give us your secret sauce.
It's almost like a dog and ponyshow.
They bring you out to come andtalk about what you do, what
makes you different, how you dothings and, yeah, you spend
hours in a boardroom talkingabout what the future could look

(06:20):
like crystal ball type stuff sowe would do that pretty
regularly.
Come in and have a chat around.
You know, this is where we seethis market going.
This is what we think is goingto happen.
It was obviously post COVIDboom too.

Speaker 1 (06:29):
Who are you talking to?
Yeah, who are you speaking toEssential acquirers?
Okay, are they VCs?
Are they other?

Speaker 2 (06:34):
recruitment agencies.
There's all kinds of people inthat discussion, you know.
There was multinationalrecruitment businesses all the
way through to advisors of PEVCtype firms.
There was, yeah, a pretty widearray of different people wanted
to have a chat at some point.

Speaker 1 (06:48):
And who was the main person driving this?
The CEO?

Speaker 2 (06:52):
The CEO yeah, so this is his company.
He'd had it for 10 years plus.
He was in the background reallypulling the strings and driving
things to make it happen.
And, yeah, one of those thingswhere I think, when the timing's
right and the market conditionswere, it's definitely something
to have a conversation about.

Speaker 1 (07:06):
Yeah, it's the perfect timing, like I think, um
big boom big boom after COVID.
You know there was some otherfamous agencies that you know
were at the end of their ownhours or being purchased around
that time as well.

Speaker 2 (07:18):
Yeah, we always looked at them.
We were like, all right, whatare you getting, what's the
percentage?
And we try to find outmultipliers and the like and
there's some really big dealsgoing down at that point in time
.

Speaker 1 (07:29):
And what did you learn through that process?
Because I think a lot of people, whether you're an employee or
a director, some people havethese facades that that's like
the end game and you know somepeople get into business
thinking that does happen, butit actually a sale that's
beneficial to everyone, thathappens cleanly and carries on
is probably like a 1% chance ofhappening, and probably even
slimmer in recruitment agencies.
So like what did you learn?

(07:51):
Or like what were someconversations that you had at
the table where you're like,holy shit, this is how it works
or Every day every day.

Speaker 2 (07:57):
We'd walk into that meeting and I'd walk out like
with a sore brain because theconversations were so much
higher than what we're used toright.
Recruitment's fantastic forrunning a business, and you guys
know this.
It gives you everything youfundamentally need to go and
start any business.
You're commercial, youunderstand how to generate
business.
There's BD, there's thebackgrounds and operations, but
what it doesn't teach you iswhat a deal looks like at that

(08:19):
level, and the conversationswere so long-winded.
We'd have people that wouldcome in and be really interested
for three months, six months ornine months and go in through
data rooms and all that kind ofstuff really heavy backend type
work and then we'd get to thekind of I guess, the part that
really matters where we'd comein and start selling the dream
and talking about the future andpeople would either go, yep,

(08:40):
we're absolutely loving this andit didn't work for us, which
happened on multiple occasionsor it just wasn't right.
You know, I think the biggestthing that I learned from that
is mutual due diligence.
The two parties are actuallythere to understand each other.
There's a bit of a drive fromowners to go okay, I really want
to sell, I want to sell, I wantto sell, I want to sell.
It doesn't really matter whatit's about and you know full

(09:01):
credit to the team at thenetwork.
Everyone was involved wasthinking about the best for all
parties.
It wasn't go and sell yourselfto some big no-name brand
business and be absorbed intosome massive company.
We didn't want that.
We were really proud of thebrand that we'd built and
achieved and wanted to figureout how we could also bring the
team on that journey.
So we'd been super transparent,without going into specifics of

(09:24):
companies and everything likethat.
But this is where we're at,this is what we're going to do,
this is what you're all going toget out of it, and everybody
had a piece of that outcome.

Speaker 3 (09:32):
So there'd be two really big parts to this that I
think would be awesome forpeople to understand, Because
for some people they understandbuying and selling businesses,
they don't know how, why or thepurpose.
And then the valuations on howthey're made up.
So one part of this questionwill be around valuations and

(09:52):
then I'll follow on to anotherquestion, which will be around
what the advantages of actuallybuying a business in the first
place.
So what are the metrics thatmatter for a business and how
you come to a valuation?

Speaker 2 (10:04):
Fundamentally, the only thing that really matters
is your contract deployment orany other things that are
recurring revenue.
So let's say you have long-termcontracts that are RPO paying
you recurring revenue.
That's really, that's it.
That's what EBIT's based on andthat's what they then basically
multiply it on.
So you can sit there anddifferent businesses will have
different goals and objectives.
So, for instance, somebusinesses might just want the
revenue.

(10:24):
They don't really care aboutthe brand or anything like that.
You know, you get absorbed intoa big business and one day
you're wearing one brand, thenext you're wearing the next.
But I think that the mostimportant thing is absolutely
recurring revenue.
That's the sole purpose, thesole value of your business.
Why?
Because it's the only thingthat you can guarantee.
Right?
Let's say that we all sell acompany today.
I go and look at it and go allright, guys, what's our perm

(10:47):
futures?
Look like it could be a billiondollars.
It doesn't matter, it's notreal, it hasn't been realized,
it doesn't exist.
You know, you could all walkout on me the next day after we
sell.
That's perfectly normal.
It happens, unfortunately inthese sort of situations.
As an acquirer, I might sitthere and go all right, we're
going to put you guys in somepretty strenuous contracts to
keep you there, but I can'tactually motivate you to do what

(11:07):
you did before we sold thebusiness.
It's very difficult.
So I think, yeah, if you're notactually able to say this
contract lasts this long withthis client at this rate, you
don't have a business.
In that sense, okay.

Speaker 3 (11:20):
Okay, cool.
So contracting is the primaryreason why people would buy a
recruitment business and so,putting aside, you've got one
contractor, a hundredcontractors.
What are the metrics thatthey're looking for, based on
those contractors?
That gives them a valuation.
So you said EBIT before.
For those who don't know whatEBIT is, can you explain it for

(11:41):
us?

Speaker 2 (11:41):
I love that you put me on the spot.
Earnings before interest,depreciation, taxation and I
hate this word, but amortizationI think it is is that one?
So it's essentially your endnumber that they can then
multiply and figure out whatyou're actually worth.
So it's a pretty key number andaccountants love talking about
it in recruitment.
We talk about GP, right.

(12:02):
That number is so, sodrastically different and it
washes out to be quite adifferent number when you
actually look at it and, whichis always interesting, when you
talk to recruiters and they sayI've earned it this, so the
company must be worth this.
So far wrong.

Speaker 1 (12:15):
Everything is so wrong.
Even like EBITDA to net profitcan also be different as well,
depending on, like, what financeyou have in the business and
stuff like that as well.

Speaker 3 (12:29):
So just to break this down so we've got revenue,
which is the total amount ofmoney flowing into the business.
We take out the cost of sales,which might be the contractor's
salaries, which gets us our GP,which most recruiters gross
profit Sorry, I shouldn't useslang when I'm trying to break
this down so gross profit, whichis what most recruiters get
paid on.
You might get 10%, 20% of yourgross profit.
Then you have your operatingexpenses power, lighting,

(12:49):
heating, office rent, et cetera.
Then you have your net profit,which is basically all the costs
to run the business, and thenyou've got your EBITDA or your
EBIT depends on whatever way youwant to look at it which is
also taking into considerationinterest, depreciation, et
cetera.
So you might have a milliondollars come in, cost you

(13:10):
$600,000 to service your grossprofit's 400 grand.
Your office rent for the yearwas 300 grand and you might have
$100,000 left over on a milliondollars.
Hang on, cool.
So hopefully that's given somecontext.
And so what they're looking forto value a business is your
EBIT number.
So how do those metrics work?

(13:32):
You mentioned before a multiple.
What does that mean?
And I obviously know what thismeans, but just to make sure
that everyone can follow alongnicely.
What do the multiples mean?
On what metrics?

Speaker 2 (13:44):
Yeah.
So generally, companies thatare valuing businesses for
acquisition or even just generalvaluations, will look at your
EBIT number and then they willfigure out a multiple based on
what it is then worth to buy.
So traditionally, recruitmenthas like three, four, five, six
times multipliers because youcan generate that amount over a
period of time.

(14:04):
It's essentially there tocompensate you for getting rid
of a business that's earningmoney.
So I'm going to give up my 12times or my six times, or my
three times, because I know thatthat's what it's worth over
that period of time.
In tech, in SaaS, we have 10,12 times multipliers.
That's totally normal.
So you know we've got a bit ofa bung deal in recruitment, but

(14:25):
still businesses will come inthen and go okay, well, we think
that you're worth.
Your future EBIT's going to looklike I don't know a million
dollars, right.
Based on all the informationyou've given us and based on
comps in the market and what wethink makes you kind of similar
to everyone else, this one saysthat you're worth four times
that multiplier.
So the price there $4 million,right.

(14:47):
And it's hard because theemotion of a recruitment owner
is oh, I think it's worth, andpie in the sky type number.
What is it actually worth?
This is the surefire way togive you an actual number.
This is what people will payyou.
This is what people will tellyou that it's worth and
realistically it's probably anachievable number.
The multiplier is all thatvaries and that's what different

(15:09):
people will come in and have alook at.
So someone might like somethingabout your business brand or
something like that, and theymight get you an extra
multiplier.
You might get four instead ofthree or something of that ilk,
but that's where negotiationscome in.

Speaker 3 (15:22):
Okay, so I'm going to tie this back to what it really
means for a consultant.
So let's say a consultant,they're building a desk from
scratch.
They spend three years buildingtheir contractor desk from zero
to a million dollars GP.
Take out their salaries, forexample, and let's say that, you
know, maybe the true cost ofthat person could be I'm just

(15:44):
going to make this up half ofthat.
And so what they're actuallydoing is they're creating a
million dollars GP, but theequity is essentially what we're
talking about here.
The equity that they've createdfor the business might be two,
three, four million dollars inequity.
And so I think what a lot ofrecruiters perhaps overlook
around just thinking aboutincome, is the equity that they

(16:06):
can build in a contractor book,similar to a house, where you
sit on your house, you do a bitof a reno, you jazz it up a
little bit.
It's worth 10% more in a year'stime.
Same type of outcome for acontractor book, whereas, yeah,
you're getting cash, you'remaking a bit of profit, but
you're actually building moreequity than you're making in
commissions that you're earning.
So it's a super powerful way tobuild your future income and

(16:32):
your future net worth if you'rebuilding your own contractor
book, so really interesting.
Okay, so we understand what themultipliers are.
If you're making a milliondollars in your business, you
could sell it for a 4x multiple.
No-transcript yeah, yeah, yeah,but hypothetically I mean, if
you find someone call us.

Speaker 2 (16:53):
A few people would like to hear that.

Speaker 3 (16:54):
Yeah, if you're making one mil net profit or
EBIT and you get a 4X multiplier, happy day someone to give you
$4 million.
There's obviously some nuancesto that, but that's just a
general kind of ballpark.
So why would someone pay $4million, $3 million, whatever
the multiplier is for someone'scontracted book?
What is the strategic advantage?

Speaker 2 (17:16):
Particularly it depends on the company, right.
So I think the acquirer is amassive part of that and if
you're a large recruitmentcompany buying another one,
you'll sit there and go well,I've got that contractor book
let's say they're solidcontractors in government You're
probably going to get 12 monthsplus your chance of re putting
that contractor back in for anextension pretty high.

(17:36):
So you can, over the course of,let's say, the next two to three
years, with relative certaintysay that you're going to keep X
percent of that.
But then the additional part ofthat is you've actually got a
whole team now who've been on atrack to continue to grow that.
So that's your upside andthat's why people are coming in
and buying these businesses andthat's why, also, no one pays
you a lump sum to go awaybecause they want to keep you
around for that period of time.

(17:57):
Make sure that, a, you'rehitting the minimums and also, b
, that you're able to thencontinue to grow and, given
stretch targets, to be able tokind of make more for that
business and it sounds likeeverything was built from the
beginning and the correctfoundations to prepare for sale.

Speaker 1 (18:11):
But the opportunity cost of trying to find a buyer
can be massive and quitedraining on many, many business
owners and also the team,because if you don't communicate
it correctly, if you don't havethem Like, it can be a
rollercoaster.
Recruitment's already arollercoaster just with your own
clients.
So let alone all right, guys,we've got another meeting taking
place, let's go through this.
Oh, we're going to get them.
Yeah, they're really keen andthen they're not.

(18:32):
So, like how you know, you wantto also keep it like a short
period to let that happenBecause, like I could imagine
dealing with that, it's almostlike you're trying to maintain
Did the CEO just deal witheverything himself?
Did he have separation and getan advisor in between so he
could focus on the team andgrowth and executing.

Speaker 2 (18:57):
I think you have to have an advisor right, Because
so much of the sheer volume ofcorrespondence between
interested parties in itselfwould be crazy.
We saw maybe 20% of it and itwas probably a part-time job for
about nine months Exactly.
Yeah, To get a real deal donewith interested parties, mutual
interests, that was actuallyquite difficult.
Imagine if you're out therewith, say, four or five
different parties or asking thesame questions and it is just a
constant communication stream.

(19:18):
People come back and say, hey,can we have a report around this
?
Can we interview that person?
Can we do this, Can we do that?
And it becomes, as I say, apretty intensive process.

Speaker 3 (19:33):
I was about to say to Declan's point around
distractions in the business andkeeping the team engaged and
excited through the process.
How do you do that?
Because I went through aworkshop maybe a couple of years
ago and we were thinking bigpicture and we were like, oh,
let's get this business to salein five years time.
What an amazing journey thatwould be.
And one third of the team ofthat business turned around and

(19:55):
said what you want to sell, am Igoing to lose my job?
Why would I want to contributeto losing my job?
And all of a sudden it actuallywent backwards.
So we're in the opposite way.
So you've got to be reallycareful on how you position that
to your staff.
To go, hey, we're going toprepare for an exit, and then
they can either go what anamazing journey, let's be a part
of it or they could gobackwards.
So did that ever happen?

(20:15):
What was the sentiment in theteam?

Speaker 2 (20:16):
A lot of that really started before I was there, so
it was kind of a lot of the andit was.
It was like five year plus.
I think.
If you're going to sit thereand try to make a specific time
period, you actually setyourself up for failure.
Let's say, I want to do it bythe end of this year.
I'm going to take whateverdeals on the table then, because
my position is weakened,whereas I think if you and yeah,

(20:38):
we had COVID in the middle,which probably definitely made
it a little bit more funky butyou've got to be transparent to
a point.
But you've got to betransparent to a point, but
you've also got to be reallyprofessional, and I think we did
that really well.
Full credit to everyone at thenetwork.
We were brutally honest aboutwhat we were doing, without
being highly specific.
It was obviouslyconfidentiality and things we
could talk about, things wecouldn't talk about, and maybe

(21:00):
occasionally we were too.
Oh, we think it's close.
But everyone we would say, hey,look, we're going to tell you
as much as we can and this iswhere it's going, this is how
it's looking, don't hold us toit.
But everyone was part of thatjourney from really early on.
So everyone that was there from, say, 2019 onwards, had a stake
of some part in that business,which really helped people kind

(21:22):
of visualize and plan andeverything that went with it.
I think some of the negativeconsequences of that is that if
it takes longer, you do start tolose people.
But that's where that justclear communication, that
discussion with the team, thatlook, this is why we're doing
this type discussion and we'dhave those every week.
Obviously, you know it would beso tied into what we were going
to do In the background.

(21:42):
We might be having that chatevery day Like what are we doing
?
How are we going about this?
What's it looking like?
These people are interested.
I don't know if we're going tobe interested in that.
What do we distill to the teamand what do we not?
And there's probably a wholebunch of stuff that even I
wasn't privy to, but thatconversation was really
paramount to keep people on thejourney, because otherwise,

(22:04):
you're right, it's actionable,they can see it and I think
there's a trust that comes withunderstanding that you're going
to act in their best interests,which I think was a really
pivotal part of that as well.

Speaker 1 (22:15):
And it was interesting to find out who
actually bought the network.
So can you explain what the andthen maybe make more sense once
we know, like the industriesyou dealt with, what industries
did the network specialize in?

Speaker 2 (22:26):
Yes, there's a big government component to what we
did at the time.
That kind of grew over the timethat we were there.
It's great margin, it'slong-term contracts, it's about
as good as it can get for anacquisition, and we were bought
ultimately by a defensecontractor, which was why?
Well, the biggest problem indefense still is they're 10,000
people short of what they needfor everything that we do, right

(22:48):
, and that number is probablyonly growing.
The reason that is is becauseyou can't bring people from
different countries in.
You know, you can't even bringpeople from, say, new Zealand.
That's changing a little bit.
We're talking about Five Eyes,security, clearance and those
kinds of things.
You need to have Australiansand you're working in places
that are already talent short.
For instance, like SouthAustralia is massive, canberra

(23:12):
is always a fun place.
Perth has got a pretty smallkind of skill set, so they would
sit there and go.
We need a company that can helpus take this message to market,
that can really get peopleinterested, engaged in what is
fast becoming one of the biggestindustries in Australia, and
that's not going anywhere, right.

Speaker 1 (23:24):
And defence contractors is very broad.
You could be making bullets.
Weapon systems yeah.
What does Instatec do?

Speaker 2 (23:31):
Instatec was a defence contractor, specifically
around telco and sometechnology pieces that were
adjacent to it.
There's a whole bunch of stuffthat I wouldn't even know.
They were highly securitycleared in what they were doing.

Speaker 3 (23:43):
Telco communications.

Speaker 2 (23:44):
Yeah, telco communications building
applications in that space, Lotsof defense work.

Speaker 1 (23:48):
Because I've heard, like Matt Cossons if you've
heard of him, he's obviously areally good tech recruiter.
He talks about some of the techroles that he's recruited for
government and defense andthey're like we'll let you know
how it goes.
And he's like we'll let youknow if they get the job and
that's all the feedback.
The client will tell them.
And he's like and causeeverything's so top secret, they
can only discuss with acandidate.

Speaker 2 (24:09):
Yeah, it wasn't really my cup of tea, to be
completely honest.
Personally, I like to be ableto sit there and influence
things.
I don't know, maybe it's thecontrol.

Speaker 1 (24:15):
You think about that.
Imagine the struggle that theywould go through as a company to
try and bring that message tomarket.

Speaker 2 (24:20):
if they private sector, you lose, and this was a
discussion that we had multipletimes over that journey.
It was like, look, banking iskicking your ass because
everyone wants to go and workthere and there's not a negative
association.
Sexy industry.

Speaker 1 (24:36):
Yeah.

Speaker 2 (24:37):
It's boring as batshit, let's be honest, but
it's doing stuff that is payingwell and will move quickly.
So how does the defenceindustry not just in our space
at the time, but how does thatindustry holistically, actually
change its approach to go tomarket?
And I think that's a bigchallenge for them.
I've been away from that spacefor a little while because,
again, I like that kind of fast,reactive nature of things and
being able to influencedecisions.

(24:58):
And yeah, you can't, andrightfully so, right.
I think that it's importantfrom a national security
perspective and everything likethat, that it is the way that it
is.

Speaker 3 (25:06):
So how do we solve this?
Like if it's 10,000 short oftalent.
It seems like it could actuallybe a goldmine if someone puts
their thinking cap on and solvesthis problem.
Is that what you're planning todo?

Speaker 2 (25:18):
No, no, I'm trying to stay away from running away
from it.

Speaker 3 (25:23):
That's someone else's problem.

Speaker 2 (25:25):
I think it's so interesting.
There's so much stuff, and Iinvested a couple of companies
in that space because I thinkthat it's just, unfortunately,
where the world is heading.
If you look at it and speakingto some of these guys, the
stories they would tell me aboutthings they knew which it was
horrifying.
Right, you're not seeing ade-escalation of this market.
How do they solve it?
I think one.
You need to look at fastackinggrads.

(25:46):
Well, yeah, that, butabsolutely clearances for people
from other locations.
So New Zealand, I mean, maybethat's not the best, but Canada,
anyone really, in five hours,we should be looking at seeing
how we can bring those people onthat journey, because so much
of that intelligence is sharedeverywhere.
And also, I think you have toget into high schools a lot
quicker, and this was one of thethings I said.
I was like, look, we need to goto places like Mudgie or Port

(26:13):
Macquarie or Bendigo, theseplaces that are packed full of
people with Australian passportsand we can really offer
something that other peoplecan't, because the work's
fascinating.
Right, there's a lot ofrobotics, there's a lot of, you
know, top secret cryptography,the cyber component of things
alone.
You probably won't work inbetter environments.
But it's also really hard toget people to want to work yeah,
and want to work in some ofthese locations.
If I'm trying to get someonefrom Garden Island probably one
of the best locations you can beat to go and work in, I don't

(26:36):
know rural Townsville, I mean,what's your preference, right?
So that's the hard part andthere's not much they can do to
fix that.

Speaker 3 (26:51):
It's just by the nature of what they do for
business.
So what are you consulting andadvising these businesses on for
sale?
So are these small agencies,medium, large?
Give us some context on thechallenges they've got, the size
they are and kind of how you'reguiding them through that
process.

Speaker 2 (27:00):
Yeah, generally it's been referrals from people that
I've known and people that weboth all know, who've said look,
you've been through this, doyou mind having a chat to these
guys?
And kind of you know, talking abit about what you did?
And generally the struggles aremuch the same when do I start?
What do I do?
What's a good outcome?
Look like I've got this idea ofwhat I want to do, but how's it

(27:20):
actually going to yield results?
And the first thing I often sayis look, you're in it for the
long haul.
You're not going to go fromagency of two years to suddenly
selling for X times milliondollars in a very short period.
It's going to take time.
I often say to people thefoundation is the most important
thing.
You need to have the back endin order.
That's by far the mostimportant piece.

(27:42):
Why?
Because it makes it a loteasier to go through the process
, data rooms and everything thatgoes into selling a business.
If your shit's all over theshop, they're going to look at
it and go.

Speaker 1 (27:52):
I'll just go down the road to someone who knows what
they're doing and define whatshit's all over the shop Like to
me that's like a lifestylebusiness.

Speaker 2 (27:56):
You're just Totally yeah, and I think lifestyle
businesses aren't ones to sevenyears to sell it.
You have everything locked downin the back end.
You have ordered reports as youmeant to every time.
You have top end CFO involvedin the discussion.
You have commercial managementinvolved in the discussion.

(28:16):
You have your HR and operationson point.
We had all of that Some of thebest people I've ever worked
with and their job was to makesure that us recruiters who like
to go and do deals andeverything like that were kind
of kept in check.
We can't do it at this margin.
We won't do deals that looklike that because it looks bad
when companies look at it on aspreadsheet they're figuring out
oh well, if your total marginis this, why do you have this

(28:37):
one down here at 10%?
Let's say so.
It's actually about keeping thestandards really high and about
kind of building a company withan ethos of excellence or as
close to excellence as you canfind, because companies come in
and they want to do dealsquickly and they want to do
deals that make sense for themand if you're haphazard and you
don't have a CRM and there'snothing really that they can

(28:59):
take and look at and action andvalue, you don't actually have a
value, and that's the hard partfor a lot of people.
They have to start investing inthe back office early.

Speaker 3 (29:09):
What do you see in these recruitment agencies
lacking?
Is there a pattern where you go?
Ah, this is the 101 mistakes ofa recruitment agency.
When thinking about selling.

Speaker 2 (29:18):
I think there's different ones for different
people, right, like one is thereason that they want to sell.
You know some you'll sit thereand go, okay.
Well, I think I can make Xamount of money.
Where have you pulled thatnumber from?
What does that look like?
Oh, you know, I've seen recruitbuyers, companies for that.
It's surely it's what it'sworth.
Yeah, but we're talking aboutcompanies like Bluefin that are

(29:38):
massive, you know, multi-statebusinesses with X number of
contractors.
You're this.
So if we want to get you tothere, this is the work that's
required to get you there, andthat's not to say that you won't
be acquired, but yourexpectations need to change on
what that looks like.
I also think that the marketneeds to be for it right, and
interest rates were verydifferent to what they were then
.
Pe and VC firms were goingabsolutely crazy at the time.

(30:00):
Everyone was buying things.
It was like the last plane outtype thing at that period of
time.
Get things done, get the dealsin and kind of cement them.

Speaker 3 (30:13):
I think if you're looking at it now, you're
planning for a three to fiveyear window or longer.
Why, why why that?

Speaker 2 (30:15):
timeframe.
Well, I think, first off, youneed to have a demonstrable
period of time of consistency.
So people want to see, rememberthat there's no emotion
attached to this purchase, right?
So companies come in here andthey'll look at spreadsheets and
, yeah, they'll haveconversations with staff and
people like that but they wantto know what the value of that
business is.
Empirically, I don't care aboutyour work from home policy.

(30:37):
I mean, yeah, cool, it's goodto know, but it's irrelevant to
us.
What are you worth on paper andwhat can we take from that
business and generate morerevenue for ours after we
acquire it?
So I think, if you're going tohave that period of time, it
takes that long to get the backend together and get your
processes right and to be ableto actually go into discussions
on a strong footing.
So if we were to come togetherand someone said, hey, look,

(31:00):
I'll offer you two and a halfmillion dollars for a business
today, yeah, most peoplewouldn't be able to turn that
around and some people wouldjust go yeah, sure, no worries.
And terms and conditions arevery important Understanding
what's good for both parties,due diligence mutually, and it
needs to be right.
There's a lot of companies outthere that'll just give you a
bunch of cash, acquire yourbusiness, bring it into theirs

(31:20):
and there's nothing wrong withthat If that's the goal and
everyone's on board, happy days.
But I think a lot of companieshave a cake and eat it too.
Mentalities I want to sell forX and I want to be around for a
year and I want all my money andthen I just want nothing to do
with it and got to work on mygolf swing.

Speaker 3 (31:38):
Great.
So what's realistic then?
If that's not realistic, whatis realistic for someone to sell
their business?

Speaker 2 (31:44):
Like two to three year earnouts standard.

Speaker 3 (31:46):
So an earnout is.

Speaker 2 (31:51):
A period of time between the start of the
transaction and the completionof the transaction.
So the business takes you overon day one.
365 days later, the first yeartimes that by another two or
three.
In the end you'll sit there andgo, okay, well, we've actually
met all the goals that weachieved or that we agreed on
day one, and that might be EBITgrowth, contractor growth, that
might be whatever it wants to beright.
There's no real hard and fastrule.

(32:17):
Each company will have theirown goals that will tie back to
their goals that they're talkingto their board about.
You're going to have to hitthose to then get every cent
that you were promised on dayone.

Speaker 3 (32:24):
Yeah, so it's not like your business is worth a
million dollars.
You get a million dollars andwalk away.
What would typically happen inthese scenarios?
They'll go your business isworth a million dollars.
I'll give you 60% of it now.
I'll give you 20% of it after ayear to make sure that the ship
doesn't sink, and then I'llgive you another 20% of it the
year after, just to you know thesteady growth, to avoid someone

(32:48):
coming in, getting their moneyrunning away and then the
business is worth.
Nothing is essentially whatyou're saying Bang on.

Speaker 2 (32:53):
Awesome, which is what anyone that's done this
before will do.
They'll sit there and go, okay.
Well, how do we actually makesure that I'm incentivizing you
guys, who are an integral partof the business, to continue to
be that integral part of thebusiness?

Speaker 3 (33:05):
What happens if they say it's worth a million dollars
?
I'll give you 60% now, as longas the profit at the end of the
day doesn't drop below theoriginal deal metrics.
So as long as you don't go froma million dollars profit down
to $200,000 profit, I'll keepgiving you that agreed amount.
What if it does drop?

Speaker 2 (33:26):
Well, that's where the lawyers come in, the
advisors and everything that youdo at the first day one.
That's the really importantpart of that discussion how do
we actually mitigate the worstcase scenario?
It's like going into a newbusiness and setting up a
shareholder agreement.
You hope you never have to useit, but you want to make sure
it's really well done, Becauseif it goes the way that it says
there, then you want to makesure that you're actually able

(33:47):
to say, well, look, I'm stillentitled to this and it happens
right.
You know, I think a lot ofbusinesses that were purchased
during that period of time wereon massive COVID highs and
everyone thought that the gravytrain was going to continue.
And I mean, we've probably hadthe worst year we've had in tech
recruitment in yeah, possiblyever.

Speaker 3 (34:07):
Really, though, or is it just perspective, because it
was so good beforehand?

Speaker 2 (34:11):
yeah, there's definitely that right and
there's definitely that I thinkI I fluctuate between thinking
that I'm old and jaded and thatthis is the way it was
beforehand and this is normal,and, uh, the world's gonna end.
Why are we in tech?
You know, maybe we should dosomething else.
But that's probably from my, mypast scars being an oil and gas
winner at all.
When dead, the whole world juststopped one day, well, over a

(34:32):
period of a couple of months.
So I don't think it's been thatbad.
There's still been deals beingdone.
There's companies.
You know you're not seeingcompanies go into administration
ad nauseum, right, it's not thecase.
There's been a couple,absolutely.

Speaker 1 (34:42):
But there's been 22,000 small businesses going to
voluntary administration orliquidation in two years.

Speaker 3 (34:48):
Really.

Speaker 1 (34:48):
Yeah, in the last two years Terrible, isn't it?
23, 24.
Terrible the biggest downfallof businesses ever.

Speaker 3 (34:53):
All right, why?
This is pure speculation here,but why do we think that is yeah
?

Speaker 2 (35:00):
I've got my ideas.
I think there's a combinationof political reasons, I think
it's interest rates, I thinkit's the good times that have
come through and people notknowing how to run a business
and not knowing where warningsigns are and being able to
adjust.
I also think that personalconsumer spending and everything
like that means that theexpectation of what you can earn

(35:22):
needs to be up here now when,in reality, when you start a
business.
I think when I started my firstbusiness, I pulled maybe like
eight grand out of it in myfirst year and that was all that
really we could do.
It's not meant to be easy,right?
It's not meant to be as hard asit has been the last couple of
years, but the role of a smallbusiness owner, which is
something like 80% of the market, that's pivotal, and I think a

(35:45):
lot of places have actuallyturned their back on small
business A lot of politicians, alot of governments over the
last couple of years.
Why do you think?

Speaker 1 (35:51):
I think people just got used to the good times,
didn't account for the bad times.
So then they overspend, like alot of midsize, any agency that
got over like six to eight staff.
They started hiring marketingpeople, they started hiring
extra admin.
They got really heavy in theirOPEX on non-billing roles and it
was a bit of a flex.
It was a bit of you know, firsttime immaturity where you think

(36:12):
you're killing it becauseyou've got a certain headcount
and then the yeah, the tide ranout, so to speak, and then you
saw who was actually playingball.

Speaker 2 (36:28):
So many companies were like that, weren't they?
And not that went intoadministration or anything like
that, but you would see themmassively scale up and you'd go,
wow, that's really interesting.
This company went from 15 to 45.
And I was always really mindfulto not do that.
A wanted to hire 18 players allthe time, so there's not that
many of them.
You can't go hiring 15 in sixmonths.
But B, it's going to end atsome point and I was kind of the
I don't know, maybe thepessimist walking around while
everyone was seeing sunshine andlollipops.
I said, listen, this is notnormal.

(36:50):
We need to prepare for when itgoes the other way and we need
to implement AI.
We need to talk about how we'regoing to be in front of our
clients more.
What are we going to do whenthe inevitably you know bad
times do happen?

Speaker 1 (37:01):
And a lot of unskilled staff, like.
So you know, like what Carolinasaid on the other podcast, she
was a four year.
She's four years in recruitmentnow, but she started in 2021.
So she's like I walked in, Ithought being a recruiter meant
you're a rockstar and you getgiven all your jobs and this is
easy as and then, like, no oneactually warned her to the
degree in which she has to winbusiness now and she said it was

(37:22):
such a shock and that justhappened at scale and you saw,
you know, agencies look likethey're doing really, really bad
and recruiters now, like it'sstill affecting.
I speak to recruiters all thetime and it's the reason why
they're leaving as well, becausethey're like the goalpost has
changed.
The boss is so highly strung.
My comm check's changed this,that and the other.
So Some checks change this,that and the other, so it's
still like there's recoil fromBig time.

Speaker 3 (37:44):
Yeah.

Speaker 1 (37:44):
And it takes for ages , like if you have to go get a
loan out to cover your businesswithhold, like you know,
potentially paying your taxes ontime to pay wages, like that's
a really fast wheel that youcan't get out of very quickly.
Yeah, and people think like, oh, it's only a BAS payment, it's
just three months.
But it's only a BAS payment,it's just three months, but that
could take two years, threeyears to pay off.
And then like what does thataffect you else in the future?

Speaker 2 (38:07):
Yeah, Spirals pretty quickly.

Speaker 3 (38:16):
Yeah, faster than you think.
I think people get used to andrealign their expectations to
what the new standard is reallyquickly, definitely, especially
when you start in 2021 or 2022as a new business owner and
you're making truckloads of cashLike you sneeze and all of a
sudden you've got a deal.
I was saying to a lot of myconsultants who started around
that time they would just send abulk email.
They'd get seven jobs on that,half of them would be exclusive

(38:40):
and they'd fill them all.
And it wasn't until I auditedwhat they were doing that they
had clients coming back to themasking them questions around
terms and their mindset was oh,this guy's too much, he's too
hard.
I'm like he's asking you whatthe replacement guarantee is,
like yeah, no, he's too hard Ifhe's not just coming back saying

(39:02):
I'm ready to go, I'm not goingto bother, it's a buying signal
and I sat there and I was like,are you serious?
You're putting this guy in thetoo hard basket because he's
asking three questions about theterms and all of a sudden it
got.
Everyone got really comfortableand then, as soon as that
comfortability kind of ran out,not many people were able to
adjust too quickly, especiallyliving standards as well, I

(39:24):
think everyone.
When they start earning 100,200, 300 grand, it's really easy
to be like this is the newstandard.
I'm way, I'm so much betterthan I was six months ago and
then over over leveragethemselves and I've seen so many
people do it and it takes a lotof humility and humbleness to
just kind of rip straight backand go okay, let's, let's get

(39:45):
back to basics and let's keepcracking on, because you know,
before COVID you'd be doing BDfor four days straight, you'd
get two speckies in one job andyou'd be like, oh, hopefully I
can convert these.
This is the good times.

Speaker 2 (39:59):
I think I, you know, I started my career during the
oil and gas and mining boom inPerth and there were guys doing
300 grand a month at that periodof time, Absolutely killing it.
150, 200 chefs out, that kindof stuff AMGs, Rolexes.
Yeah, you'd look at it and goI'm doing terribly, because I'm
doing 50 grand a month Now like,yeah, brilliant, it was really

(40:21):
good by those standards and Ithink it's a positive thing
because it makes youaspirational.
If you see other people can doit, it's actually feasible.
But it's also just.
It had no longevity and I thinkyou know the pros and cons of
the industry during the mostrecent period of time is that if
you didn't focus onfundamentals, all you had was a
telemarketer, really, andsomeone who was just trying to

(40:42):
go and speak to people whodidn't want to be spoken to,
largely about jobs they didn'tcare for and have any interest
in.
I think the most important thingfor the last few years and
where I started focusing myattention was relationships,
personal relationships, so thatwhen the bad times are there,
you can pick up the phone and go, hey, how are you going?
Hey, look, I don't have much on, but I might have something
coming up that could be worth alook at.

(41:03):
Okay, hey, look, I don't havemuch on, but I might have
something coming up that couldbe worth a look at.
Okay, cool, You're going to getthat work when there's not much
else out there.
Also, I think you know that themarket is changing and the
expectations from clients andcandidates is evolving.
I think a lot of companiesaren't matching that as well,
how?

Speaker 3 (41:15):
so?
How are they evolving Like?

Speaker 2 (41:17):
what are you seeing?
I think that the community playis the biggest play going right
, like people will sit there andit doesn't take much.
A quick LinkedIn search willshow that people don't like a
lot of recruiters.
I don't know why.
Right, we're great, people getto know us, but in reality, some
of that's probably quite fair.
There's been a lot of behaviorsthat have been rewarded by the
good times that are not what wewould want to show as

(41:39):
representation of our industry.
So I think that what that hasled to is A you get recruiters
earning silly money who don'tactually have to do anything and
are being rewarded forbehaviors that we would look at
and go.
Well, that's not conducive tothe overall benefit of our
industry.
What that now needs to change ispeople are going okay, but I
now need to know who you are andwhat you're about.

(41:59):
I want authenticity.
I want to see content from theperson.
Um, you know, content has beena massive part of what I've been
doing for a number of years andpodcasting and the like.
I find that what it means isthat people know you or think
they know you a lot more.
I'm sure you guys probably seethat in your travels too, and
the the by-product of that whenyou're going into business is
people go.
Oh yeah, nice to hear from you,like you've been meaning to

(42:22):
call them for six months.

Speaker 1 (42:23):
Yeah, it's weird.
Sometimes you get quoted onstuff you said two years ago,
completely.

Speaker 2 (42:26):
Yeah, I was listening to something you said the other
day.
I was like shit.
I don't remember what I saidthe other day, it was like it
was months ago.
But what that means is that thepeople that resonate with you
and want to do business with you, they're authentic in their on
in recruitment and try to nailit down.
Even if it was shit work oreven if it was stuff that you

(42:48):
would look at now and go God,don't waste your time on that.
They don't know what they'redoing.
You just get so much less ofthat.
We don't get paid for all thework we do, so we need to stop
doing that kind of work is mypersonal belief.
I think the community playhelping people with training,
development, you know, freecontent on job searches, helping
clients with salary datawithout even having roles Like

(43:09):
these are little little things,but being able to help someone
on their journey, as well astheir company on their journey,
I think that's non-negotiable inthis day and age.

Speaker 1 (43:16):
Well, it's very like the tech industry is known for.
Like what are they called?
Like beers and ops.
There's beer ops.

Speaker 2 (43:23):
What's beer ops Like a community group, massive group
, uh, in every state wherethey'll go and like book out.
I think they had it at a marvelstadium this year down in
melbourne.
It's in every state.
It's literally a bunch ofengineers and a bunch of vendors
and the like that get together.
It's a weird old industrybecause there is that kind of
reclusive, almost nerdy elementto it.
But you know, us recruitersaren't necessarily that way in
Climb.

(43:43):
But then you've got thesalespeople in that space as
well who will make you a killing.
I love it, but it's a strangeold place.

Speaker 1 (43:49):
Tech do it really well though with community.
Like there's not that manyother industries Like
construction to a bit, but likeI'm talking about recruiters
that are involved in community,like tech women in digital,
these types of forums.
Tech exec that's a big one.
Is that a big one and who isthat?

Speaker 3 (44:08):
Bullock, bullock, steve Bullock, just a little
plug there.

Speaker 1 (44:12):
Yeah, nice, that's Australia's fastest growing one,
and so these types ofcommunities add a lot of value.
But how would you go about it?
If you're a recruiter andyou're like, hey, I want to have
a profile like Josh, I want tohave presence in the industry,
like Steve, how do you actuallystart a?

Speaker 2 (44:30):
community.
Well, you've just nailed it.
You have to start it right, andI think the market is really
interesting in our space becausethey react well to the fact
that we're not technical.
We're not engineers I'm moretechnical than the average and I
know nothing, but that'snothing more and I would go,

(44:53):
yeah, it looks great.
I go, no, it's a piece of shit.
What are you talking about?
So, getting in front of thosepeople and having a conversation
with them and just being real,just being real, just being
authentic, being like, listen, Idon't know anything about this.
What would you look at or howwould you go about this?
And also, I think, just actingwith integrity and authenticity.
I know that seems really,really basic, but do what you

(45:14):
say.
Add value to the people thatyou're going to have a
conversation with, and none ofthat old school kind of cloak
and dagger bullshit that we sayall right, yeah, there's a place
for it in some agencies whenyou're competing with multiple
places.
Totally get that, but peopleresonate with people like them
and everyone is sick and tiredof getting 100 calls about the
same role.
So just be honest and go hey,look, have you had the
conversation already?

(45:34):
Yes, I'm aware of it.
Okay, cool, no worries, look ifI say anything else, but I
think you'd be good for it.
Little things like that.
It helps build capital and ithelps show people that you're
genuine.
I think also just caring aboutthe people you work with.
I'm so lucky the people I speakto every day.
They're really interesting.

(45:54):
I walk away from conversationsand just go, wow, I'm often the
dumbest person in the room and Ilove it.
That's what it's all about roomand I love it.

Speaker 3 (46:03):
That's what it's all about.
I think community is going tobe the biggest differentiator
for a lot of businesses in thefuture, when we think about the
world it already is.

Speaker 1 (46:09):
It is yeah yeah, Jim Shark beat Nike.

Speaker 3 (46:12):
Yeah, yeah, like we see all these.
We still see all thesebusinesses with these like
online digital strategies and ina world where everyone's so
connected, it's almost likecommunity physical getting
together type of communitieswill actually drive better
outcomes than just spraying, andhopefully someone will engage

(46:34):
with you on a really surfacelevel.
So I think in the future, anybusinesses that align themselves
with either building acommunity or really community
focused will be able to leverageand build so much more trust
than others that just try andskirt around it or do it as a
marketing facade.
Yeah, because it is a bigthrowaway line for a lot of
people.
It's like, oh yeah, you knowwe're out there with the

(46:55):
community and it's like whatactually is that?
And it might just be someonetaking photos of themselves in
front of a building.

Speaker 2 (47:01):
Always going to a meetup and saying, yeah, there's
no shade on people that do that.
It's better than the peoplethat sit behind a desk all day.
Our job is people-based right,and when we were, two years ago,
starting to plan out Northstar,we started to figure out the
most important thing is thisspace.
We were doing it organicallythat's kind of how we'd always
been, my business partner and Iso when we started looking at it

(47:22):
, it was like, okay, how are weactually going to make this
beneficial for all parties?
A, it can't be us.
We can't be that, that middlepiece in the wheel.
We just need to be anotherspoke on it and we need to help
promote people that are going toadd value to others in the
community.
Um, I think it's really easy.
As you say, it's a throwawayline and the world is so
connected in this day and ageeveryone thinks that an online

(47:42):
community is a community.
It's not the reality of whatpeople are looking for now is
actual connection and communityand connection can be the same
thing, but often it's.
I've got a group of 400 peopleand I send some stuff in a chat
group.
That's not community, you sure.
No comment, but being able toactually say, hey, I know that

(48:08):
person, you know, I know whatmakes that person different, and
I think you as a recruiterinstantly get credibility from
both sides of that equation.
Like you know, you're in thecommunity over here and I know
this person from another one.
I know that person.
I don't just know this, even Iknow that person.
You should have a conversationwith them.
Oh okay, why?
Might be just a mentorshipthing, but eventually there
might be something there andyou'd hope, naturally, that they

(48:28):
come back to you and say, hey,thanks for that introduction,
here's a recruitment fee, right?
Also, I think the work that youget out of those kinds of
communities is so much betterbecause people look to you for
trust and they will sit thereand say, hey, I've got this
problem and it might becompletely unrelated.
I've got this HR issue whathave other people done?
And the ability to actuallyhelp people at that kind of
level.
It's so linked to the abilityto then help a business better.

Speaker 1 (48:56):
Yeah, you need to get to that trusted advisor status
as fast as possible, but you canonly get there just by doing
the work, doing the work, it'sundefeated, unfortunately.

Speaker 2 (49:03):
Right, the phone is your best friend.
Pick it up, have thatconversation, get out and meet
as many people that make sense.
It's hard to differentiatebetween those that are worthy of
worthy is being a terrible wordbut the ones that are going to
actually appreciate thatinvestment in you and the ones
that are never going to call youagain or never want to hear
from you again, from you again,and that's okay.

(49:25):
Some will, some won't.

Speaker 3 (49:25):
So what?
You can't make everyone be theway you want them to be, so are
you building a?

Speaker 2 (49:27):
community yourself.
Yeah, we've been like that fora couple of years, right.
So kind of intrinsically it'sbeen a really part of how I've
operated.
Is there a name?
What's the community name?
The community is just part ofour North Star group, so it's
part of what we're trying tobuild in the back end.
There's some technology thatworks.
It's not a chat group.
There's some technology in thebackground to make sure that
we're actually bringing peopletogether on that platform, but

(49:49):
also in person.

Speaker 3 (49:50):
So what type of people are you bringing together
?
Is it people that you're?

Speaker 2 (49:54):
Well, our three specialisations are pretty
intrinsically linked.
So one is data and AI.
I've been consulting in dataand AI for a number of years.
I still know nothing about it,but but it's really interesting
and it's part of what people aretalking about Cybersecurity,
which is a big part of whatwe've been doing for the last
few years, and we actually builta community in that space prior
to leaving the last company andexecutive leadership those

(50:14):
three you got a nice littletriangle.
You put that to anybody at aboard at the moment.
Those are the three thingsthey're worrying about how
are're going to get the bestexecutive, are they on the hook
for a cyber incident and whatthe bloody hell is AI?
So if we're able to help peoplein all those communities I find
that they're very much linkedyou need to have the best
security people possible.

(50:34):
If you're going to go crazy onAI because it opens you up to
some concern, you need to havegood executives who are going to
help you plot that course andtake that roadmap on how you're
going to take your businessthere.
And I mean, everyone needs goodcyber people.

Speaker 3 (50:46):
That place is not going anywhere.
So the last couple of monthsyou've been building your agency
, the North Star.

Speaker 2 (50:53):
I've got that right now North Star.

Speaker 3 (50:54):
Partners yeah, North Star Partners.
Talk to us about some of thechallenges that you've had in
starting an agency, becausethere's a lot of recruiters out
there.
We think that 2025 is going tobe the year of the new agency
startup.
We're seeing a lot ofrecruiters kind of get the
ambition and kind of the wonderto go what if I did this for

(51:16):
myself?
Some are at the early stages,some are at the later stages.
You're at that perfect stage ofI'm going live right now, but
what was the kind of what didyou have to put in place over
the last number of months if itwas that to really get to where
you are today, to launch?

Speaker 2 (51:33):
Yeah, I think you've got to start with vision, right.
You want to know why.
What's your why?
And if my why is I just want towork for myself and work flexi
awesome, cool.
I don't think that was ever theambition for us.
It was like okay, we want tocome in and really be at the tip
of the spear in our space.
We want people to look at us astrusted advisors.
We want them to sit there andsay, hey, that's the kind of

(51:53):
business that we should bespeaking to about our work.
And cyber's got a lot of reallygood agencies and exec has a
fairly strong reputation in thatspace as well.
So a fairly strong reputationin that space as well.
So, looking at how we can kindof bring that all together, it
was kind of a vision of mine fora number of years and talking

(52:14):
to my business partner about it,it was like all right, look, we
need to figure out why and whatand what's actually going to be
different.
And for us, I think we're aheadof that curve when it comes to
things like community.
We have put a lot of time andeffort into building
relationships over the lastnumber of years.
We've got, you know, we've onlyjust started and we're
launching officially in February, but the plan for us was always
to do this and it was justabout what that needed to look
like, and I think if, if eitherof us weren't fully committed,

(52:36):
we just we'd keep going anddoing other things.
You can earn great money forother people and add value.
At the top end, I think whatI've learned is it's always
harder than you think it's goingto be Always harder.

Speaker 1 (52:48):
It always costs more.
It always costs more and takeslonger.

Speaker 2 (52:50):
Particularly if you screw it up early, right, or you
make mistakes and everythinglike that.
And I was lucky, having done alot of that myself over the
years and having so long to planit.
I wanted to take six months offafter finishing my last role.
That was always purposeful.
Figure out what I wanted to dosix months off after finishing
my last role.
That was always purposeful.
Figure out what I wanted to do.
Spend a bit of time in startupland, do a bit of consulting,
which has actually been reallyuseful, because we in

(53:12):
recruitment are very blinkered.
We know how to run arecruitment business or run a
desk or plan your day around BDcalls, et cetera, but the real
world quote unquote is notactually like that.
So, going and speaking tofounders about issues that we
would look at and go, you'rehaving issues with contracts and
IP clauses why?
Oh well, you know, I justtrusted them.
Oh guys, come on, you know it'sa rookie mistake.

(53:36):
So I think when I, when I,founded the business, or when we
decided to found the business,we wanted to know that it wasn't
just going to be noise, weweren't just going to be another
company that everyone had kindof known of but no one had
really kind of bought into.
So planning was paramount and Ithink that's really been the
differentiation getting feedbackfrom people hey, what would you

(53:57):
want to see in a business?
Speaking to people that havebeen in our network and mentors
and that kind of thing, andactually getting validated
learnings about what's wrongwith our industry and trying to
put plans in place to fix that.

Speaker 1 (54:08):
What did they come back with?
What's wrong?

Speaker 2 (54:10):
A lot of people don't like us.
I'm not going to lie to you.
There was a lot of things right, like even down to the way that
we do business and the way thatwe're incentivized, and there
was some stuff I'd walk out ofmeetings and I'd, but it's
really interesting to know theyfeel that way.
How can we help address thatfor the betterment of the

(54:32):
industry holistically, but alsowhen we're going to go to market
.
What does that look like?
So one guy tech CEO.
He said look, what I reallydon't like is I actually feel
like you guys aren't around longenough.
I'd never heard anyone say thatLike people generally want you
in and then they want you gonebecause there's a presumption
that maybe we're going to comeand try to steal people and that
kind of thing.

(54:52):
He said I would pay you more ifyou were part of the journey
for 12 months and made thatperson I hired better.
And I remember walking out ofthat going yeah, there's
something in that and bringingthat into our community play and
figuring out how, when peoplejoin our community, they're at X
and how we can then get them upand make them more hireable or

(55:13):
more desirable within the marketby linking them with RTOs or
people that are already in thatspace.
It's really not that difficult,but for us that was really kind
of it was inspirational,because we just assume people
know what we do and how we do itand actually taking the time to
ask what feels like a stupidquestion absolutely, you know,
impacted the way we decided togo about business.

(55:36):
What was like the hardestchallenge you had.
Look, I think the hardestchallenge is twofold.
One, you know, not having thebrand and not really being able
to do too much until you knowthis year how did you go about
getting the brand together Likemarketing agency?

Speaker 3 (55:51):
I knew what of, knew what I wanted to do, right.

Speaker 2 (55:52):
And when I remember vividly when we actually figured
out we were going to name itNorth Star Partners, we were sat
having dumplings one day and Iwas babbling on, as I like to do
, about True North and how it'simportant and people and that's
a really important thing in allbusinesses and this part I was
like there's something in that.
I'm on ASIC having a look.

(56:13):
No, can't find anything to dowith True North.
Okay, well, maybe there'ssomething else there.
And the iteration ended upcoming out and it just it was
right.
You know that moment where yougo, I get it.
And we started like testing itwith people going, hey, would
that make sense?
And they went.
I can totally see why you guyswould use that name.
It reflects who you are, itreflects what you're trying to
do.
It makes perfect sense to us.
So I think when you actuallyhave that law start and you know

(56:33):
what you're trying to do, it'sa lot easier.
But yeah, we went out, we spoketo a bunch of people.
We, you know, used all ournetworks that we could and said,
all right, how can we do thisas cheap as possible?
And we were really lucky.
We found a fantastic designerwho just hit it out of the park
and I remember opening it goingoh that is good, awesome, this
is going to be good.

Speaker 1 (56:52):
What made you want to do it as cheap as possible?

Speaker 2 (56:54):
I think it was early doors right, like just purely on
the design side.

Speaker 3 (56:57):
Yeah, A Is that where most of the money gets invested
up front.

Speaker 2 (57:01):
No, most of it, I think, is well.
I think your actual cost ofsetting up no-transcript, the
barrier to entry in our space,is horrendously low.

Speaker 1 (57:21):
I think that's what it's good and bad, definitely.
Like you look at.
You know you've got to belicensed.
Now, say real estate, you'vegot to be licensed.
You've got to be licensed.
Now, say real estate, you'vegot to be licensed, you've got
to have trust accounting, that'sgot to be audited.
Like it's not that easy just togo and set up a real estate firm
and then to run, like, say, aproperty management business,
like it can be a shit show ifyou don't have your ducks in

(57:42):
order as a as a agency owner.
But in everyone thinks like,and rightly or wrongly, you can
start a recruitment agency for Idon't know, you could almost
start for $0.
Yeah, essentially, you registera company as a sole trader and
you can start at 500 bucks.
Like the success and theabundance and freedom you're
probably not going to get fromit.
You'll probably just get astressful, low paying job.

(58:03):
But the reality is, I don'tknow.
I think that adds, it doesn'tmake, it creates an opportunity
for you to be, to be great.
You only have to be good.
But then it's also frustrating.
Every man and his dog can justdo it.

Speaker 2 (58:17):
I'm fully on board with licensing.

Speaker 1 (58:18):
Yeah, I think it needs to happen because, like
you look at how pivotal and howmuch a good recruiter can
transform a company, that samebad recruiter can fuck up a
business really fast.
So there's got to be like ahappy media, I know, like the
RCSA has its place and they're,you know they do things to a
certain extent, but there's gotto be like a rubber stamp, like
the labour hire authority.
That yeah.

Speaker 2 (58:39):
I mean, I hate the fact that in certain states you
need a labour hire licence, butalso it makes sense.
I feel like it's a bit of acash grab.
There's so many other areas ofgovernment that rule over that,
like IR and workplace laws andeverything that go with it, but
I think that the RCSA is greatfor advocacy, and particularly
when it comes to things like theIR laws changing same job, same

(59:01):
pay, right to disconnect, whichis a nightmare for people that
live on phones, as I'm sure allof us do.

Speaker 1 (59:05):
How do you understand those tricky things in layman's
terms?

Speaker 2 (59:09):
Totally.
But also, what are we doing tobring the quality of our
industry up?
And time and time again,unfortunately, we see examples
of where that hasn't been thecase and the people that get
impacted are people that arecontracting to these businesses
or consultants and what have you.
And that's where we have to sitthere and say, all right, well,
we actually need to contributeto making it better, to

(59:30):
uplifting the reputation,because, yeah, it's a tougher
gig for everyone else wheneveryone has a bit of negativity
towards us.

Speaker 3 (59:37):
Yeah, it's funny.
Like over the last two yearsI've realized and I've always
known this to be the case thatrecruiters have a bad name
because there's a lot of cowboysout there and you find that the
cowboys aren't actually therecruiters at agencies.
The cowboys are the recruiterswho started their own agency

(59:57):
with an Excel spreadsheet andhave a $10 website up that calls
themselves a recruitment agencyowner.
They're actually the cowboysthat aren't adding the value
that might make a placement.
The person doesn't last andbecause really it doesn't really
matter or impact them much,they won't give them a
replacement, they won't care,they'll just move on, find
another client.
And they're kind of, they'rebringing the majority down and

(01:00:21):
I'm using general terms here.
You know this isn't the casefor everybody, but I'm starting
to find there's actually moreagency owners, one-man bands,
that are sticky, taping someideas together and presenting
themselves as a recruitmentagency.
They're the ones that areprobably impacting us the most.
So it's really strange.
To Declan's point, it's kind oflike I've always said it's our

(01:00:45):
blessing and curse becausethere's a really low bar in
recruitment, which is badbecause we all get tarnished for
the same brush, but it's goodbecause you don't have to be
outstanding.
To be a really good recruiter,you just have to do what you say
you got to do and you're likeyou're a God.
And so, for the people thattake it seriously, they make

(01:01:05):
lots of money, they'rewell-respected, they have a good
quality of life and then thepeople that are kind of, you
know, in this scarcity mindsetof like I'll just do this myself
and I'll just figure out thisand you know, yeah, whatever
I'll just you know, I'll get abit of cash here, get a bit of
cash there, and it's like supershort term, transactional and
not sustainable.
They're the ones that arehurting us the most.

(01:01:26):
But yeah, it's a weird industryand I'm still working out the
best way to try and evolve thatfrom being this kind of Yahoo
kind of cowboy to like theseprofessionals that actually care
for what they do.
Because, like in the US, haveyou dealt with US recruiters?
Much, very different they arejust they're like lawyers.

(01:01:46):
Yeah, they take it superseriously.

Speaker 2 (01:01:49):
And the way they do business is completely different
.
When I was moving over there,the rate's like 30%, 35%, almost
everything is retained as itsuper seriously, and the way
they do business is completelydifferent.
You know, when I was movingover there, the rate's like 30%,
35%, almost everything isretained as it should be and the
discussion that you have.
It's a long discovery process.
You get to know the people.
It's how it should be.
Yeah, I tried to emulate thathere, and some clients, they're
just preconditioned to the raceto the bottom.
Yeah, so it's not always on therecruiter, right?
Sometimes the one-man band willgo hey, I'd love to work with

(01:02:12):
you.
Oh, this is how we work.
Oh shit, okay, I need the deal,All right.
Yeah, cool, I'll do it.
It's hard to point blame all inone direction.

Speaker 3 (01:02:21):
It is 100%.
But yeah, you're right, in theUS they kind of hold a very high
standard for themselves and thework that they do and it forces
the companies to go okay, theseguys are taking it really
seriously.
I've got to take this reallyseriously too, whereas sometimes
recruiters they don't take ittoo seriously.
You know, a recruiter will takea job brief, like I hear from
companies all the time.
A recruiter takes a job briefand disappears.

(01:02:41):
Yeah, never get a candidate.
Can you imagine that?

Speaker 1 (01:02:45):
Yeah, that probably explains why the average billing
per head is like 5x in the UScompared to here.

Speaker 3 (01:02:51):
Yeah, so I was looking at recently like
productivity per recruiter andin Australia it's like $175,000
on average of revenue perrecruiter.
In the US it's $680,000 perrecruiter.
So not only is that 10x theamount of recruiters, they
generate four times the amountof revenue and it's just a whole

(01:03:11):
different, weird landscape.

Speaker 2 (01:03:13):
Very culturally different too.
So you know, the company I wasjoining had a big office in New
York and was based in Texas andalso had an office in LA, but
they were all just all over theshop doing whatever you know.
They'd go and haveconversations with someone in
Miami and ultimately they werehyper-specialized.
So the result for the clientwas I actually know my shit from
top to bottom Like there wasguys who were working on just
this one technology workday.

(01:03:34):
They were making $3, $4 milliona year just doing that all over
the country, but hyper-focused.
So I think here we have thatkind of laid-back mentality and
we also maybe don't celebratethat kind of hunger and drive to
do the $3, $4, $5 million thatsome of these types do.
Maybe that's a cultural thingas well.

Speaker 3 (01:03:52):
Yeah.
So lastly, mate, tell us aboutNorth Star Group.
What is the North Star?
What are your plans for thefuture?
Give us a bit of an idea onthat.

Speaker 2 (01:04:03):
Yeah, I think yeah, depending on when this is
actually released.
We're having our end launchparty, you know the official
coming out type thing whichfeels like so overdue late
February, and then from therethe plan is really this will
align pretty well.
Yeah, I think so.
Yeah, and I think I'll probablybe in everyone's LinkedIn feed.
There's podcasts that we'redropping around that time.
There's a few announcementsthat we want to be doing around
that same period.

(01:04:23):
If I was to look back on it andsay six months and what would
constitute success?
I would say a really solidgroup of billing clients and it
doesn't have to be a huge number, to be honest, I'd rather it
isn't but ones that you knowthat every time there's
something there, you're able toreally generate a result for
them.
I would say the end goal longerterm, which I hate putting down
this is going to come back tobite me, but realistically, we

(01:04:45):
want to be in every major city.
We've already got set up in theUS as well.
We've already got set up in theUS as well.
We've got one person over therewho's doing a bit of work for
us.
It's a natural segue betweenboth locations.
I want really people to saythose guys are right at the tip
of the spear when it comes tothe best in their sectors,
whatever sector that may be, beit cyber, be it data and AI.
If we decide to then expandthat into legal or insurance,

(01:05:09):
what have you?
We're doing it to be at thattip of the spear?
The way that looks is reallysimple Doing good work with good
people and not being the oneschasing the ambulance which is
so easy to say right now.
So we'll see what happens in sixto 12 months.

Speaker 3 (01:05:23):
No, I love that.
So how does someone get incontact with you?

Speaker 2 (01:05:25):
LinkedIn's the best way I've like most.
Spent far too much time onthere and otherwise all the
other paraphernalia andeverything that goes with it
will be announced in due course,really soon.

Speaker 3 (01:05:36):
Love it Awesome mate.
Well, thanks for joining us.

Speaker 2 (01:05:38):
Thank you, it's been a good chat.
Really enjoyed it boys.

Speaker 3 (01:05:40):
And, yeah, it'll be coming out probably in three or
four weeks, so it'd be awesometo watch this back and celebrate
the launch of your business.
I'm excited.
Thank you, awesome Thanks, mate.
Thanks for tuning in to anotherConfessions of a Recruiter
podcast with Blake and Declan.
We hope you enjoyed and got alot of value and insights out of
this episode.
If you do have any questions oryou would like to recommend

(01:06:02):
someone to come on theConfessions podcast, we would
love any introductions andremember the rule of the podcast
like share, share and recommendit to a friend Till next time.

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Josh Hill - North Star Partners | Confessions of a Recruiter #111

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Josh Hill - North Star Partners | Confessions of a Recruiter #111