Starting out as work colleagues before becoming business rivals and now successful business partners, the startup journey for Xrecruiter founders Declan Kluver and Blake Thompson sums up the competitive nature of the recruitment sector.
But since kicking off in 2022 with a white-label solution for recruiters who want to start their own agency, the young entrepreneurs are doing the unthinkable – creating a collaborative network where recruiters can grow their businesses while engaging with their opposition.
“Recruitment is a very archaic industry where the recruitment agency down the road is seen as the enemy over the hill,” says Kluver, who along with Thompson won the Startup category of the 2023 Brisbane Young Entrepreneur of the Year Awards last Friday.
“You are not meant to talk to them or to other recruiters for fear of them stealing your candidates,” he says.
However, Xrecruiter is changing that dynamic with the Brisbane-based company developing a unique business model that has garnered the attention of Shark Tank ‘shark’ Andrew Banks, the founder of recruitment giant Morgan & Banks, while also securing former Oracle recruitment director Ben Blundell’s new business Candidate Path as a customer in the US.
Xrecruiter, which officially kicked off in July last year, is growing at rapid pace with 21 clients currently on its books – already putting it ahead of its previous forecast of 18 clients by the end of 2023.
“These are all brand new businesses, run by first-time business owners spanning Australia, Canada and the United States,” Kluver tells Business News Australia. “Our goal is to empower 100 recruiters to work for themselves by 2025.”
To get an understanding of how far Kluver and Thompson have come on their business journey in a little over a year, Kluver reveals there was a time when the two weren’t even talking to each other – largely due to the competitive nature of the recruitment industry.
“We used to hang out as teenagers and it was Blake who actually first got me into the industry,” Kluver says. “We both worked together for a small recruitment agency before we went out on our own.”
Thompson initially opened Vendito in 2017 and a year later Kluver established Blended Employment. The partners still operate these recruitment agencies individually today while growing the Xrecruiter business.
“After we went out on our own, we didn’t talk for two years,” Kluver says.
“That is until our businesses went to zero during COVID when we both lost tens of thousands of dollars in business pipeline. We got in touch and spent the next 18 months discussing various aspects of the industry.”
When a friend thought about starting his own recruitment agency at the end of 2021, Thompson let him use some of Vendito’s resources to get started.
“That’s when we started putting plans in place on how we could actually do this and help him,” Kluver says.
The Xrecruiter model is a unique offering in the recruitment industry by providing the framework and support needed by recruiters seeking to break out on their own. The business operates on a revenue-share model, with an initial upfront payment made to get started.
“That’s where the heavy lifting is,” Kluver says. “It’s where our accountant sets up the business for GST, tax and compliance purposes, and then we build the brand from scratch – the logo, the terms of business, the social media collateral, the website, and all internal HR documents.”
Kluver notes that the recruitment industry can be very lucrative for agencies that cater to niche markets.
“A lot of recruiters possess the skills to recruit for themselves but may lack the entrepreneurial spirit or confidence to take the leap and that’s where we help,” he says.
“Eighty per cent of recruitment agencies in Australia are one to three-person companies turning over under $2 million. When you become a specialist in your niche that’s when you get those kinds of returns.”
Xrecruiter’s revenue-sharing formula is structured on a sliding scale that decreases its take at higher volumes. It begins with a 75-25 split before ultimately falling as low as 85-15 at set targets.
“Xrecruiter partners keep a minimum of 75 per cent of their billings, while the industry standard is around 15 to 20 per cent,” Kluver says.
“When I started Blended, whether I made a placement or not I’d still had my fixed and variable costs each month.
“Xrecruiter essentially removes that barrier for recruiters. If they don’t make a placement, they have zero bills in their business.
“We give recruiters access to all the resources they need with the fee they pay meeting resource costs on our back end, which includes software, payroll, accounting, bookkeeping, and our mentoring and support.”
Xrecruiter currently supports a team of eight and set to rise to nine next month, which is up dramatically in the space of a few months following growth that has been solely achieved organically.
Texas-based Ben Blundell, who worked in recruitment for Amazon and Google as well as Oracle, tracked the partners down in Brisbane via LinkedIn to sign up his new recruitment business Candidate Path in the US.
“Ben told us there wasn’t anything else available in the US that did what we do,” Kluver says.
While most of its clients work from home, Xrecruiter has encouraged its Brisbane clients to work from the company’s Teneriffe office in inner Brisbane.
Competitors working side-by-side
“We have created an environment that is almost like a normal recruitment agency except all your colleagues are different business owners,” Kluver says.
“Creating these micro-relationships is so important, so when they go to a client they can say they are part of the Xrecruiter network.
“Interstate and international clients work from home, but here in Brisbane you get the benefit of working collaboratively in the same office.”
Growth has been aided by Kluver and Thompson running what they say is Australia’s fastest-growing recruitment podcast, Confessions of a Recruiter, which has attracted guest speaker Andrew Banks, the entrepreneur who in 1999 merged Morgan & Banks - the recruitment agency he founded with Geoff Morgan - with US-based TMP/Monster.com.
“We never thought we could get that calibre of guest on our podcast, which is pretty surreal,” Kluver says.
Xrecruiter also has established itself in the industry after becoming a tier-one preferred partner of the Recruitment, Consulting & Staffing Association, the peak body for the recruitment sector in Australia and New Zealand.
Asked if he is surprised by the success of the startup, Kluver pauses to reflect before saying: “Yes and no. We sat on the business for a couple of years and then we decided we had to do something with it. I thought the recruitment industry needed it but maybe I didn’t think it was going to be as popular as it has been.
“Letting people become a business owner whether it be a 25-year-old having a crack or a 45-year-old single mum with two kids who never thought she would be running her own company, working for herself, it’s those type of moments that are so satisfying for us.”
Kluver sees next year as a pivotal period for Xrecruiter.
“We haven’t done any direct selling yet, and Blake and I haven’t taken any wages from the business, but in the new year will we look to increase our sales team and become full time in the business.”
Beyond 2023, the company is also eyeing potential international growth after its early success in the US and Canada.
“There are huge markets in the UK and other countries that would benefit from the services of Xrecruiter,” Kluver says.
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