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My buddy just automated his way into a 15% margin bump for his recruiting firm and he’s still a slave to his calendar.

He replaced his admin with a candidate database and contract/invoice automations, but his revenue has barely moved since I’ve known him. When he told me "I'm in meetings all day, every client wants me in the room." I knew he had gotten stuck playing the efficiency game.

He spent the past year building the database instead of finding clients because he thinks he can optimize his way out of the pit, but instead he’s just built himself a comfier trap.

There are only 2 sides to a service business, and he is spending all his time on the wrong one.

Every service business on the planet runs the same engine. Doesn't matter if you're a recruiting firm, a plumber, a digital agency, or McKinsey. Under the hood, they are marketplaces:

Demand AKA getting clients and keeping them.

Supply AKA finding people to do the work.

David Maister wrote the book on this 33 years ago. In Managing the Professional Service Firm he laid out that professional firms compete in two markets, clients and talent.The client market is the binding constraint on scale, and the talent market is the constraint on speed of growth. Win enough of the right clients and you can always find the talent. But lose the demand game and no amount of recruiting saves you.

Most service operators spend all day on delivery, talent, and project management. Sitting in client meetings. Reviewing deliverables. They go home exhausted and tell themselves they had a productive day.

But work is not progress. They spent eight hours on the solved side of the equation.

Every other problem is downstream of demand, and that applies to a 1 (or 1000) person consulting org the same way it applies to the plumber down the street.

There aren’t enough plumbers, electricians, HVAC techs, or even painters to go around. They take years to train and have to apprentice directly under a licensed master in order to advance.

They’re also getting rolled up by PE at a lightning quick pace, and those rollup playbooks are demand side focused.

Apex Service Partners is a PE-backed rollup of HVAC, plumbing, and electrical shops across the Southeast. And when they published a case study on how they grew the business, demand was right in the open: "For a services business like Apex, the product is the staff, and since it's such an established and standardized industry, growth often comes from marketing over product innovation."

When the industry is standardized, growth comes from marketing. Not talent.

Apex didn't find a secret pool of plumbers nobody else knew about. They hired a head of growth, analyzed customer acquisition costs by channel and market, and used that data to decide where to expand next. Not "where can we find more plumbers"  but instead “where can we find more customers”.

By generating enough demand at high enough margins to pay more than the guy down the street, plumbers and other skilled talent came to them. Demand creates margin and margin solves supply.

A VP of Ops I know spent all of last year building scoping templates, staffing models, and contingent workforce plans. He got promoted for none of it.

His job is to “improve operational efficiency”, so he does his job and ignores the top line. He is spending all his time on the supply side where his talents are hamstrung, the trap is his job description. 

He can save money, but never more than they make.

The irony: he got promoted last year for a LinkedIn research tool he built in N8N that their sales team uses for lead gen. Pure demand side growth.

Maister was clear that until you reach significant scale (mid 8 figures or more in most cases) you are almost entirely constrained by your ability to find and retain quality clients. Talent (and now AI) is just more grease for the flywheel, but clients and contracts are what make it spin.

Delivery feels like real work. A client calls, you answer. A project ships, you get paid. There's a feedback loop and it feels like success.

Demand gen is much less rewarding or clear cut. You send cold emails into the void. You spend money on ads that might not convert for weeks. Or ever. It's ambiguous and uncomfortable, and there's no client thanking you at the end of the day.

So operators stick to their project tracker and their job descriptions because it feels like work they can understand. 

That’s how you get stuck with cost of living adjustments.

Even (especially) with AI which effectively uncaps the talent supply in markets that it is ready to compete in, most operators are building internal tools instead of marketing assistants.

Automating delivery is a surefire dopamine boost, but it’s trading growth for efficiency. My friend doesn't need to get his placements done any faster, he's already taken that to the edge.

He needs more contracts.

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