Just before their launch in January 2023, some of the co-founders of the Fuse Cooperative sat down for an interview with Brian McGuire of TalentBelt. 

BRIAN (TalentBelt):
‍Hello, everybody. Today, we're doing a special interview with a few of the founders from Fuse Cooperative, who are now launching a private beta. Congratulations to the team! I've been following your progress for a while, and I want to give our forum followers the scoop on your offering. First, I have a question for you, Edwin. What made you think of creating a cooperative in the staffing industry?

EDWIN (Fuse):
‍‍Well, Brian, as you know, there's a massive wave that's been happening in the staffing industry for quite some time now, and it's the adoption of the MSP/VMS model for contingent staffing, which has doubled in the last ten years! Today, over 80% of large organizations are either using an MSP or a VMS to manage all of their staffing vendors. And this is just bad news for smaller staffing firms and independent recruiters, especially. When clients adopt these kinds of programs, it squeezes the little guy through shrinking margins, supplier rationalization, and worst of all, vendor neutrality, which just limits your ability to connect with a hiring manager. I think today's market is rigged in favor of these large, national staffing firms that just have more resources at their disposal.

BRIAN:
‍‍I'm hearing some of the similar things in the market. I've certainly heard from smaller staffing firms that direct sourcing is shutting them out of programs.

EDWIN (Fuse):
‍‍Yeah, direct sourcing is making it even worse for smaller firms! It's currently the biggest trend in our industry and it's choking out suppliers as more and more of the placements are made via direct sourcing. And in those cases, you don't even get to see the req! The mass adoption of all these kinds of programs by enterprise clients has forced the smaller firms to retreat to the mid-market and smaller customers. These trends have made it harder and harder to grow a staffing business, and I actually believe that it's made the entire candidate experience worse as well. So, what do we have here? The entire staffing industry is becoming dominated by these large, powerful, national firms, and they're coming down into the mid-market to take that business as well. I think that smaller firms need a new growth strategy, and that's why we created the Fuse cooperative.

BRIAN:
‍‍I think I would agree with that. It's pretty clear that MSP/VMS is dominating right now and probably has been for some time. But how are you actually going to help the smaller players win? What's the problem that you're going to solve for?

RAY (Fuse):‍
‍I'll jump in here. Today's contingent staffing model makes it extremely hard to compete with the large staffing firms. They have all the resources to recruit for any type of role, and they can usually be faster to respond to new reqs. The problem isn't the dominant model of MSP/VMS and direct sourcing - that's just a fact. Clients see a lot of value in it and it's going to keep growing. The actual problem that we can solve is how to build our staffing businesses to better compete with the big firms.

BRIAN:
‍‍Okay, that makes sense. So, what's the key differentiator? Is it specialization?

RAY (Fuse):
‍‍Yeah, it's always good to specialize, but how do you do that when every firm has to have their own account managers, their own recruiters, their own tech stack and their own back office? And if you're an independent recruiter, somehow you're expected to have it all and do it all. It's really hard, it's really stressful and it doesn't allow us to focus and win based on what we do best. We're all competing to build the same - but maybe just a little bit better - staffing business. And if we continue down this path, we're going to keep losing to the bigger players.

BRIAN:
‍‍Okay. How do you actually plan to level the playing field?

CHRISTINE (Fuse):
‍‍Well, I think our only option is to unite and come together. What if we can actually cooperate instead of competing all the time? How much better could our industry be as a whole if the small and medium firms like mine at Virago had a level playing field where our success is based on how good we are and how good our candidates are, instead of just the size of our firm? Right now, it usually boils down to that, frankly. As a small firm we came to Fuse to help grow our business. But we realized pretty quickly this was an opportunity to make a big and lasting impact in our industry. If we can take all the best small medium firms and the independents out there, get them all together into one unified recruitment platform, that's a game changer for everyone.

BRIAN:
‍‍So, Christine, basically your plan to beat Goliath involves uniting all the Davids together under one flag, on one platform. Is that correct?

CHRISTINE (Fuse):‍
‍I guess it does! I mean, if we can keep what makes us special – it’s our agility, our focus, our expertise in a small firm - and we pair that with the kind of recruiting horsepower of the largest firms … that changes everything for us. And not only that, we won’t be stuck in any kind of archaic and rigid business model. Imagine if our recruiters are empowered to do what they do best, and they're supported by equally exceptional people who are taking care of everything else. That's disruptive.

BRIAN:
‍‍That's also a novel idea … cooperation in the staffing industry. So technically, you're building a co-op. What exactly does this mean? Maybe back to you, Edwin?

EDWIN (Fuse):
‍‍Technically, Fuse is a limited cooperative association or LCA. But we're not just a co-op, we're a platform co-op. So, it's a cooperatively owned, democratically governed business that operates a tech platform for the benefit of its members. And this tech platform, it's a recruitment marketplace similar to others in our space, like BountyJobs, Scout, or Crowdstaffing. But there's a huge difference here. Those platforms are owned and managed by their private owners. While Fuse we’re owned and managed by the staffing firms and the recruiters that actually use the system. So it’s as if Uber was owned and managed by the drivers. And I think this addresses a major problem that these other marketplaces have really suffered from, and that's maintaining a high level of quality jobs and quality candidates in the platform.

BRIAN:
‍‍Yeah, but how are the members going to trust each other within the platform or the co-op?

EDWIN (Fuse):
‍‍Well, the co-op structure has been around for 150 years, and it has proven to effectively scale and unite people through the bonds of membership. And to be a member of Fuse, you have to agree to live up to our three cooperative commitments, which include adding to our collective purpose, maintaining the accountability loop when you're working on jobs, and most importantly, abiding by something we call the “Trust Code”, which says that any disrespectful, dishonest or damaging behavior will not be tolerated within the co-op. Now, this question that you're asking, this question of trust, it came up in every single discussion that we had in the forming of Fuse. So it's clearly our number one priority to build a co-operative that is worthy of everyone's trust. And I think that's how we're going to create a game changing platform for our industry.

BRIAN:
‍‍Okay, well, that may be the most ambitious undertaking in staffing today, but statistically, most startups fail. What makes you guys confident that you can pull this off?

EMILY (Fuse):
‍‍I'll take this one. I'm confident because I think we have all three things we need to make it a complete success. We have the money, the technology, and the team. On the money side, we have a mission-aligned investor that's going to give us runway for years. Technology wise, we acquired an existing recruiter marketplace that's been around for five years, has over 1000 users, and has all the functionality we need to run the platform. On the team side, we have a dozen industry veterans, and as a self-managed co-operative, anyone can make proposals and how they want to help Fuse, so we're constantly adding new contributors.

BRIAN:
‍‍Well, thanks, Emily. One more question for you. I'm curious, how is working in a self-managed co-op different from working in another typical company?

EMILY (Fuse):
‍‍Very different. And it's perfect for this! Trust and collaboration are really the keys for our success. Organizing as a co-operative, it’s the right structure to help people trust one another and win together. We also happen to have deep experience in running a self-managed organization. The staffing company that I come from has been self-managed for years. We have probably 500 employees and no managers. Fuse is going to use this operating system of practices to make sure the co-op is managed collectively and effectively. So once you're a member, you'll be able to see anything and do anything to make the change you want to see within Fuse.

BRIAN:
‍‍Okay, so do you already have members? Let me kick that over to you, Khadesha. We haven't heard from you yet today.

KHADESHA (Fuse):
‍‍You know, our staffing firm Virago is one of our founding members, so we're also helping the co-op to launch and grow. This is a really exciting part of Fuse right now. We wanted access to extra recruiting horsepower for the job orders that we can get, but didn't really have the in-house recruiters to work on. Then we spent some more time with the Fuse team and learned about the vision and how anyone can help. We realized this was a rare opportunity for us to make an impact. This is our chance to be the change we want to see in the staffing industry.

BRIAN:
‍‍Nice Gandhi reference Khadesha. Where are you at now with the co-op and how can people who are interested find you and join?

KHADESHA (Fuse):
‍‍We're now taking on more founding members and over the next few months we're doing a private beta with real jobs and candidates, while we also test and transition the technology that we acquired. What's really cool about being a Fuse member is that there's no hierarchy here, so anyone can make suggestions, anyone can make improvements as long as you follow the self-management practices that Emily talked about earlier. We're looking to add more US-based independent recruiters, and any firm who has quality job orders. So if you want to join and you want to apply, just visit us at fuse.coop, we'll then schedule an information session and onboard you.

BRIAN:
‍‍I just want to say many thanks to the Fuse team for spending some time with us today. I appreciate the information. I wish you guys great success with your new endeavor.