Bullet Thesis: The $200bn blue collar staffing market ripe for AI disruption

Beyond LinkedIn: How AI Will Transform Blue-Collar Hiring

Hi, it’s Michael from firstminute capital. We are a $500m seed fund backed by 130 unicorn founders. In a previous life I was a foreign correspondent for the Financial Times for 10 years, and the founding editor of Sifted. Along with Lina and my other brilliant colleagues, I invest in European pre-seed and seed software companies like Vocca, Scalera, Granola and ai.work.

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I spoke to a seed-stage AI recruiting company the other month which had got to $750k in ARR in just two months. They had 60 customers, and some Tier 1 logos. I thought this was impressive. Then I started speaking to more founders in the space and realised it was not such an outlier. Another had got to $3m of ARR in nine months, and two more in the same ballpark.

This is following behind companies that have already scaled in AI recruiting at an extraordinary pace. Mercor, a US company founded in 2023, earlier this year raised $100M at a $2bn valuation with a $75m annual revenue run rate. That's $0 to $75m in just two years. The company was hitting month-over-month growth of 50% throughout 2024.

This is clearly a product category that businesses want. And you can see why, as the offering is compelling. First, AI recruiting tools can help source candidates at scale, doing targeted outreach and qualifying candidates. Second, they can automate resume screening and even conduct first round interviews thanks to the latest voice models. Third, they can help hiring managers scope out what they want from candidates and refine job specs. Some are even doing payroll on top.

The go-to-market is also great here. These startups can replace external recruitment agencies, which few people love, and today is a $620bn market, according to Staffing Industry Analysts (SIA). Then there is also an opportunity to replace internal recruiters as well, disrupting the whole function. This is already happening, with IBM this year laying off much of it’s HR department. As one of our portfolio Series B companies said to me recently: "I have four full time recruiters. I would love to reduce that down to 1 and some AI tools."

The Crowded Space Problem

The problem here, of course, is that this is an increasingly crowded space. Y Combinator's recent batches have featured several notable AI recruiting startups, each targeting different aspects of the hiring pipeline.

Contrario is the "first autonomous recruiting agency powered entirely by AI" with 2,500+ engineers using their platform. Founded by Stanford dropouts (ex-BCG, ex-NASA NLP), they focus on elite talent pools (Stanford, MIT, OpenAI alumni) and use voice agents to evaluate candidates' AI tool usage. Clado offers "AI people search" across 200 million+ profiles using natural language queries like "AI Engineers I can poach for my pharmaceutical startup interested in biology in Copenhagen," replacing traditional keyword filtering with agentic search. VoiceOS provides "voice AI interviews for enterprise," automatically scheduling phone interviews and analyzing sentiment, culture, and experience.

In Europe, there are emerging players like Jack & Jill AI, which I would encourage you to try if you have not - it’s amazing! Jack & Jill AI offers a conversational AI approach where "Jack" helps job seekers find roles through deep, personalised conversations that feel like career therapy, while "Jill" assists companies in finding candidates. The platform searches 10,000 new jobs every hour and uses AI to match candidates based on nuanced understanding rather than simple keyword matching, charging 10% of first-year salary with no upfront costs.

Outside of new startups, established companies are pivoting hard into the AI opportunity. Pre-AI era players like Eightfold AI (founded 2016), HireVue (founded 2004), and others are all racing into this space with varying degrees of AI integration and automation capabilities. These companies built their initial products before the current AI wave and are now retrofitting AI capabilities onto existing platforms.

At firstminute, we believe that winners will be those who find a compelling wedge—a specific approach that gives them an unfair advantage and allows them to build defensible moats over time. We're particularly interested in companies that focus on vertical niches where they can develop deep domain expertise and access to proprietary datasets that LinkedIn scraping alone can't provide.

The European market presents particularly compelling opportunities, with stronger data protection frameworks and regulatory requirements that favor more thoughtful, compliance-focused AI approaches.

The Blue Collar Goldmine: Why AI Recruiting's Biggest Opportunity Lies in Manual Labor

This is why we're especially excited about startups targeting blue collar and frontline staffing. It's not that nobody has thought of this approach. Vovana bills itself as the "only AI-native platform built specifically for industrial staffing." Led by CEO Charlie Maki, they call applicants immediately, conduct phone screens, and schedule interviews in under 15 minutes for warehouse and distribution roles. Others will likely try and serve this market.

Still, we at firstminute think this is compelling for a few reasons:

1. Scale of the opportunity

The numbers are big. Adecco, Randstad, and ManpowerGroup collectively generate over $65bn in annual revenue, with a significant portion coming from blue-collar placements. Adecco alone places 600,000 workers daily across warehouse, manufacturing, hospitality, and construction roles. The National Association of Manufacturers estimates the manufacturing industry will be short 2.1m employees by 2030. In Europe, four in five businesses are struggling to find workers with the right skill sets, with the EU losing 1m workers every year until 2050 due to demographic changes. Meanwhile, the green transition alone requires an estimated 400,000 more scientific and engineering professionals by 2030. Highly in-demand blue-collar jobs now command salaries of €45,000 to €75,000 annually, making this a premium market opportunity disguised as "manual labor."

2. Better product for blue-collar workers

AI is uniquely suited to blue-collar recruiting in ways that don't apply to white-collar hiring. The process is phone-first—blue-collar workers all have phones and expect immediate responses when job hunting, but many don’t respond as well to complex online applications. This plays directly into AI voice agents' strengths. Unlike executive roles requiring nuanced evaluation, blue-collar positions have standardized requirements (certifications, experience levels, physical capabilities) that AI can efficiently assess through conversational interfaces. The volume and urgency dynamics create an environment where speed of placement becomes the primary competitive advantage—exactly where AI excels over human recruiters. Workers often take the first acceptable offer, making instant response crucial. AI systems can engage through SMS/WhatsApp with no apps or logins required, handle high-volume processing essential for industries with high turnover, and communicate in multiple languages—addressing cultural nuances consistently across markets in ways traditional staffing agencies simply cannot match.

3. More defensible data sources

Blue-collar staffing generates access to proprietary candidate data that creates real competitive moats. Many warehouse workers, delivery drivers, and hospitality staff operate outside the digital realm and aren't on LinkedIn or traditional job boards. They find jobs through Facebook groups, community bulletin boards, union job boards and specialist job sites. A startup that taps into these alternative channels—partnering with trade unions, regional job centers, industry-specific training programs—can build proprietary candidate databases that LinkedIn scraping alone can't replicate.

4. The European green transition multiplier

The European context makes this opportunity even larger. The green transition is creating massive demand for skilled workers in renewable energy, sustainable construction, and environmentally friendly manufacturing. Blue-collar workers are on the front lines of installing solar panels, upgrading energy-efficient systems, and operating infrastructure for Europe's carbon-neutral future. As McKinsey notes, we're facing a workforce transformation akin to the shift from agricultural work to manufacturing in the early 20th century, but happening much faster. As many as 375m workers globally may need to switch occupational categories by 2030. The retraining and reskilling market alone represents a massive opportunity for AI platforms that can match workers to new roles and facilitate rapid skill development.

5. Opportunity to own the supply side

There is also an opportunity in blue collar recruiting to not just access existing talent pools, but actively create new supply through training and development programs. Our portfolio company Montamo is one taking this approach — not simply scraping LinkedIn for skilled tradespeople but actually training immigrants and career changers to become certified skilled workers, creating a proprietary pipeline of candidates they can then place with employers. This vertical integration gives them an unfair advantage: they control both the training curriculum and the placement process, ensuring perfect matching while building genuine barriers to entry that competitors can't easily replicate.

Similar models are emerging across the space. PowerUS (backed by General Catalyst) combines training programs with job placement, getting closer to the source by partnering with apprenticeship programs and community colleges. Multiverse takes this even further, creating apprenticeship programs directly with employers while building their own talent pipeline. The key insight is that skilled blue-collar workers don't just appear—they're developed through specific training pathways, certifications, and hands-on experience. Companies that position themselves at the beginning of this journey, rather than just at the end during job placement, can lock in supply before competitors even know these workers exist.

Other Vertical Opportunities Worth Watching in Recruitment AI

Beyond blue collar, several other verticals are perhaps compelling opportunities for AI-native recruiting approaches.

1. Healthcare staffing represents an enormous market with critical shortages of nurses, technicians, and caregivers. The volume is high, the credentialing requirements are specific and verifiable, and the cost of unfilled positions is massive for hospitals dealing with closed beds and overworked staff.

2. Early-career and graduate hiring offers another interesting angle, as companies like Huzzle are demonstrating. Corporate campus recruiting involves standardized processes and high volumes, making it conducive to algorithmic matching. Gen Z candidates are comfortable with AI interactions, and the criteria for entry-level roles are often more standardized than senior positions.

3. Logistics and warehousing extend beyond just warehouse floor workers to include delivery drivers, truckers, and dispatchers who often need specific certifications that AI can verify instantly against databases. The growth of e-commerce has created surging demand in this sector, and many of these workers are already comfortable with app-based work through the gig economy.

The key insight across all these verticals is that AI recruiting works best in high-volume, repeatable hiring scenarios where there's lots of data to learn from and tolerance for new approaches. The defensibility comes from developing deep domain expertise, accessing proprietary candidate pools, and building feedback loops that improve matching accuracy over time.

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If you are building in AI recruitment, we’d love to hear from you. Do reach out at michael@firstminute.capital or lina@firstminute.capital.