Startup CEO (Unwittingly) Explains Biggest Problem in America’s Unemployment Crisis

The somewhat peculiar results of the Challenger Labor Shortage Survey showed that 77% of the approximately 100 human resources executives polled said their companies were having difficulty filling open positions due to a shortage of available talent. And 45% said they were having a hard time filling tech jobs, which run the gamut from software engineers to medical technicians. About half of the companies offered some sort of incentive, from referral and sign-on bonuses to relocation assistance, to get people to jump ship.

Peculiar because there are still many millions of Americans who are unemployed. But the report was the opinion of only a tiny group of select HR executives. So not exactly a universal statement.

But today, I ran into something that put that report in a different light, via Rebekah Campbell’s article in the New York Times, which describes her experiences in trying to rope in potential investors for her company, Posse. It was a story of how time and money – two commodities a startup CEO is desperately short of – went down the drain during her pursuit of VC, angel, and corporate investors.

A successful pitch led to lunches, dinners, and drinks, and to meetings, and some took weeks to set up, and more meetings with different people, and everything was exciting, and big money was being dangled out in front of her eyes, and then there would have to be a meeting with the senior guy, who was on vacation. Due diligence had started, and she and her team got peppered with questions, spreadsheets had to be redone, projections were challenged, but there was still no term sheet that would nail down the deal. And after months of seeing money and time spiraling down the drain, she ended up without a deal.

The article is a must-read for all those thinking about outside funding for their startup. Campbell is an excellent writer, and she’s probably a great CEO of her company. She is a compelling voice from the trenches of the startup world.

So I checked out some of her other articles and came across a crystal-clear explanation of one of the most dreadful aspects of the American jobs crisis that still exists despite Challenger’s peculiar Labor Shortage Survey. She spelled out what motivates employers like her, and big companies too, to keep the unemployed from being even considered for a job.

It’s not like we’re going to run out of job seekers: the rate of the unemployed, plus those in involuntary part-time jobs, plus “marginally attached workers” is still 12.2%. Nearly 3.2 million people are currently considered “long-term” unemployed. They’ve been out of work for 27 weeks or longer. And millions of other long-term unemployed have fallen off the list for a variety of reasons. Many of them, after looking for a job for years and not making any headway, have given up and have stopped doing the things needed, such as responding to job ads, that would qualify them for the list of the unemployed. These folks can sing a song about how hard it is to find a job once you’re out of a job. And the longer you’re out of a job, the more impossible it gets.

And Rebekah Campbell, the clear voice from the startup trenches, told us why. She used to post job ads for developers on the “appropriate websites” and then “braced for the flood of applications.” She’d delete three-quarters of them and email the rest a list with questions they’d have to answer by a deadline – “to filter out at least another half who either didn’t reply in time, wrote dud answers or couldn’t spell and didn’t pay attention to details,” she explained. In the end, she’d set up some interviews, which often “would all be disappointing.”

Then she discovered that “the best candidates all had good positions and were not reading job advertisements.” Later she added the corollary: “I know the people who apply through online job ads are seldom the best candidates….”

So she decided to chase down people who already had jobs, and to heck with the unemployed and those actively seeking jobs. Her company is in Australia, but the principles are the same. She signed up with LinkedIn Recruiter and was off to the races:

Some companies, like Google, have a reputation for hiring the best developers. On LinkedIn I can run a search specifically for engineers who have worked or are currently working for Google in my area and have been in their positions for more than two years – so they might be looking for a new challenge.

Her search method seemed to be successful: “In one afternoon, I was able to set up meetings with three senior developers who work at a large competitor of ours.”

It’s not that she is using LinkedIn’s Recruiter per se, but that she’s using it specifically to exclude from consideration any candidates who are currently unemployed. She’s using it as a poaching device, and not as a tool to re-integrate a job seeker into the workforce:

As a small-business owner, I recognize that building the right team is crucial. We only have room for A-plus players, who will always be in good positions and may require quite a bit of convincing to leave. LinkedIn gives us access to the passive job hunter market that used to be available only through expensive recruiters, and it helps us seek out top quality candidates from within other companies.

She isn’t the only one. That’s how it is done nearly everywhere, from small companies to large corporations. Convenient and relatively low-cost online tools allow companies to routinely court people who are already employed and are not looking for a job. In the past, only key positions were filled that way, usually via expensive recruiters or networking. Now any position can be filled that way. It’s less risky for employers: the record of what the employee is currently accomplishing for the competitor speaks louder than a resume.

With her credentials as startup CEO, Campbell delineated the prevailing attitude in today’s business world, and simultaneously one of the most harrowing problems for the millions of unemployed job seekers. It’s one of the reasons why the unemployment crisis in America is dragging on: if you don’t already have a job, forget it.

Acquisition and layoff queen HP, after 11 straight quarters of declining sales, reported that they ticked up a smidgen but for the wrong reason, while net profit plunged nearly 30%. But no problem. “I’m very pleased with the progress we’ve made,” bragged CEO Meg Whitman. Read… Hewlett-Packard Reports a Miracle.

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  42 comments for “Startup CEO (Unwittingly) Explains Biggest Problem in America’s Unemployment Crisis

  1. jan frank says:

    I don’t know about the US, but in the UK ordinary people have learned to solve the problem. Yes! They go free lance. After banging their heads against the wall for a year or two looking for a job, they set up for themselves. This solves two problems. One is that they get some income, although perhaps not as much as they had been earning – still, something is better than nothing and it keeps them off the street. The other problem they solve is that the UK Government can proudly proclaim that the number of jobless has gone down.

  2. Michael Gorback says:

    Typical shortsighted strategy by employers.

    It’s nice if you find an applicant that’s perfectly suited for the job, but I have never hesitated to hire someone without the requisite experience if I thought they had sufficient background and intelligence to learn the job skills. Most of my employees end up with far more skills than they originally brought with them.

    In order to poach an employee who’s not looking for work you have to provide an incentive. You also have an employee with an inflated sense of their own worth. You will be paying the poaching premium for a long time, provided the employee doesn’t decide to see if she can get even more somewhere else. Don’t blame them – you were the one who gave them ideas.

    OTOH, if you hire someone inexperienced with raw talent for lower compensation and then train them, you now have a talented and skilled employee going forward that will cost you less. They are also inclined to be grateful for the opportunity.

    There’s also the opportunity cost of having a vacant slot producing nothing while you search for the perfect candidate. You could spend the time training up an inexperienced person.

    Sadly, employers have forgotten the concept of investing in people.

    • dc.sunsets says:

      I can’t comment on employers like Ms. Campbell, but from my experience at a Dow 30 company, your final sentence encapsulates corporate America completely.

      Individuality is meaningless. If you are a grunt (e.g., a field sales person) you will never be more than a employee ID number. If you break into management, because you might later be in a position to help another manager who lost his/her job both heaven and Earth will be moved to favor you.

      The modern employment arena is thus entirely dehumanizing. No wonder Americans consume the lion’s share of anti-depressants and pain killers. Our society is too sick to adequately describe.

    • Louis says:

      Poaching as a strategy is almost always unsustainable because there will never be enough workers ready to go without training. There will always be a “talent shortage” as long as everyone is essentially competing for the same finite number of people who don’t require training. Business are either going to have to learn do get by with inadequate staffing levels or learn to start training people again.

      • gman says:

        “Poaching as a strategy is almost always unsustainable”

        it is entirely sustainable for the company that succeeds in poaching, for the time period for which anyone – employer and employee – has any interest.

      • Blinknone says:

        Or import foreign workers, which is what they have been doing (and want to ramp up on steroids).

    • gman says:

      “Most of my employees end up with far more skills than they originally brought with them …”

      … and then they get poached. the employee and the poaching employer get free training and move ahead, and you get the bill and have to start over.

      “employers have forgotten the concept of investing in people.”

      “investing in people” is a cost. successful capitalistic corporations minimize costs.

      • B00mer says:

        Maybe we have a defective definition of “successful.”

      • Michael Gorback says:

        So your model is to pay a premium to lure away employees who you know can be lured away? And then you expect them to do what?

        So you go right ahead and hire people who jump to the highest bidder. You’ll pay a premium, then they’ll get a better offer and leave, and you’ll pay another premium. High-priced employees are a cost too. Great business model.

        Go ahead and treat your employees like a commodity, because it worked so well for Henry Ford.

        • Jerry Bear says:

          Henry Ford had pretty strong socialistic leanings and believed very strongly in taking care of his workers and benefiting society. He insisted on paying even his beginning workers at least $5.00 a day because he understood that making automobiles cheaply would be meaningless if the working class still couldnt afford them. He knew he was about to unleash a vast technological change on American society and create a host of related industries by making it possible for the first time for the common working man to afford an automibile of his own. He was a visionary who could foresee the enormous impact his decisions would have on the American economy and American society. He understood as clearly as Karl Marx would have that none of this could ever happen unless the working class were paid enough for their labor to purchase the products of their labor. And so it happened. America was never the same again after the Model T came out. Despite his ugly antiSemitism (which was more motivated by his hatred of big bankers and Wall Street than racism), he was a hero of free enterprise and one of the great benefactors of the American people. His spirit is now utterly dead among moderm Capitalists and they are rushing to detroy the economy, American socoiety and the environment in the name of short term profits for ultra wealthy and utterly heartless, unpatriotic, and downright evil billionaire investors. I never used to be sympathetic to Marxism or the movement of the Left but I am beginning to change my mind. The dire scenario that Karl Marx predicted a century and a half ago as the end stage of Capitalism (in Das Kapital) is now happening, right down to fine details, all over the world. I read and I tremble!.. I do not want in my lifetime to see complete economic, political and social collapse; I do not want to see the end of our current civilization and the beginning of a new Age of Darkness. But I fear it may happen if we dont start changing now.
          Are we, the human race REALLY that pathetic? To destroy ourselves and all we have accomplished over thousands of years of civilizatiom only to feed the insatiable pathological greed for wealth and power of a tiny handful of our leaders at the top? Does the 1% of the 1% have to be human cancer cells that grow and spread relentlessly heedless of the devastation they cause? Do we as a race deserve to survive or would it be better if we destroy ourselves before we become a menace to the rest of the galaxy? Maybe I am just being paranoid and overdramatic but do any of the rest of you fear for the future of both our nation and the Civilized world?
          Hauntingly Yours,
          Jerry Bear

    • Greg says:

      Corporate managers are just responding to the incentives of the system. And the system rewards short term. “Investing in people” would look like a rise in costs on the income statement. Your margin goes down, your stock suffers, along comes a PE firm, buys you out with cheap debt, kicks you out and them cuts all those costs to the bone anyway. So why do it? Better leverage even more with cheap debt and stock buybacks. It is just rational on the part of the managers.

    • DGC says:

      Err, 1. she spends money like water both recruiting investors and employees. and 2. she didn’t get the funding. Anyone see a connection here? Sounds more like she’s trying to appear employed by starting a company and writing articles, so that someone will recruit her!

  3. Hypnocracy says:

    That’s because most of our economic activity is related to pure consumption, nothing productive which can then be used as a base for further growth. Major corps get cheap loans from the fed or banks and then bid up their own stock.

    They want people who are already brain dead drones/zombies or who’s conscience has been seared to the point they will not balk at lying for company sales or quality.

  4. lawisevil says:

    Most employers use those modern tools to exclude everyone without the keywords they think are important.

    We are always doing start ups and need great people and find that if we give people who have the basic talents or abilities a chance they will greatly exceed expectations.

    We took one guy who had just a high school education but was very good on computers and had a nice personality and trained him for 3 months in house and then put him on the street doing customer support at customers sites. He was very friendly and everyone including customers just liked to have him around. Not only does he make customers happy, he books a lot of business.

    What is great is we made an investment and we now have golden handcuffs on a guy who will return 100x our investment every year. He is earning 5x more money than he has ever earned.

    The golden handcuffs are from the idiots who run those companies who have no idea on how to conduct business. They would never hire a high school graduate nor even think of giving him a chance, nor would they hire him away from us because he just doesn’t look good on paper.

    As we always say, give us $50 million and we will easily put Google or any of the other idiots out of business in less than a year. They are afraid to talk to people.

    • Petunia says:

      You obviously know what you are doing. When you invest in people they feel invested in your company.

    • gman says:

      “nor would they hire him away from us because he just doesn’t look good on paper.”

      now that is an interesting approach. speak gently to your valuable-but-pet employee but never speak well of him. “you’re not responsible for our profit, you’re just a cog in our machine, but we like you so we’ll keep you and pay you a little above your value. you’ll never do better anywhere else ….”

      • Petunia says:

        He will look very good on paper after listing all the training he received and adding in the practical experience.

      • lawisevil says:

        You don’t get what is happening. His resume would never contain those keywords that get an interview. He has no college education and did not go to all the rights schools… his resume would never be picked up by the google crowd.

        Those who perpetually have trouble finding the right employees literally just threw out hundreds of resumes because they don’t met their “criteria.” Fundamentally they have no clue what they are doing.

        • Trish says:

          I have suspected for some time that our economic problems have more to do with the very poor training of managers and lack of adaptability to new circumstance (which we are in currently). As a group they all went to the same schools and had the same education so are very predictable. No real creativity or diversity as most of them are practicing the same kinds of business as their competitors.

          Funny how the management entitlement mentality is going into start-ups. Entrepreneurship is a lot harder, a lot more fail as they don’t have large expansive budgets to cover up mistakes.

  5. Petunia says:

    I would never work for Ms. Campbell because she obviously doesn’t know what she is doing. She needs Google’s or Facebook’s stamp of approval to hire because she does not know how to evaluate a candidate from a resume or interview. I am not surprised she didn’t get any VC money. Those people really know their stuff.

    • Wolf Richter says:

      True. But…. VCs themselves are doing it (not hiring the unemployed). Perhaps more so than any other industry.

      • Petunia says:

        For the VC it makes sense to hire only currently employed people because they are buying contacts and insider information when they hire. They are in the money business using innovation as a strategy.

        • sirik says:

          Maybe this story is a good example for a starting business. Older, matured or bigger companies might need other kind of employees and hence an other approch ?

      • the blame/e says:

        It use to be that “you would have a job until somebody didn’t like you and then you would not.” Nothing has changed in that regard for probably the last 100-years. The only thing left was to get rid of the rather overt rawness underscoring the unpleasant fact that sometimes in the real world large (and now in high tech) companies, life can be cruel. But now all these companies can feel better about themselves. Being made unemployed and being unemployed is a moral statement bearing moral consequences, where you will be guilty forever. Some socially undesirable “good” person, who is also unemployed, will say: “Nobody is going to stand for this.” But they will. They will run out of money and that will be that. But for people like Rebekah Campbell all this has been priced in. Now that’s cold.

  6. RDE says:

    The basic rule in success: It’s not what you know, but who you blow. Can’t say that my sample is exhaustive, but it does span the range from the #2 officer at Berkshire Hathaway to the individual in charge of sales to Saudi Arabia for Boeing.

    If your potential immediate supervisor has the final say in hiring, the one sure way to be axed from consideration is for him/her to fear that you might be more competent than them, and thus threaten their position. What they require is a sheeple who can be loaded up with work and thus free the supervisor for longer golf dates.

    And by the way, Ms. Campbell is totally clueless when it comes to hiring quality personnel.

  7. Alex says:

    I find Ms. Campbell amusing. What is she, 19 or something (she has her picture on Twitter)? And a band manager to boot. Heh!

    But obviously, she’s not clueless. She’s following the well-worn path of getting rich off other people’s money through angels and will likely cash in a year or two down the road, probably off to start a new venture of photos in the cloud or something akin to it. More social media fluff that doesn’t really do anything.

    What does she know about boot strapping? Hard to tell.

    Loading up debt. She’s an expert.

    Yes, the world really needs more “tech entrepreneurs” like her.

  8. Dude says:

    Pardon my cynicism,
    did you see what Posse is?

    I wouldn’t even reply to her if I were unemployed.
    She didn’t get any money not because she can’t talk to people, but because who want to invest in in another one-day angrybirds wanna be?
    Seriously, invest in android app?! Now?!

  9. Dude says:


    About that CEO talked about in that last paragraph.

    I don’t know if I would really want to work for a startup like hers.

    This Rebekah Campbell started a Yelp clone in Syndey and then promptly outsourced every Australian not in management.

    The current Posse team…

    and the process she used to create it…

    According to the NYTimes she also moved part of the company to NY?

    • Vespa P200E says:

      Too funny… Went to Linkedin and did some searching.

      Not even ONE of Renekah’s Posse worked for know tech company! I mean no GOOG, AAPL, MSFT, YHOO, Fakebook, etc. Not ONE employee ever lived or worked in Sillycon valley! Most of the non-outsourced Filipino workers live in Australia with very thin resume to boot.

      Renekah – you sure are narcissistic posser!

  10. Pashley1411 says:

    That recruiting strategy is quite identifiable; its what the NY Yankees do; pay top dollar, and more than top dollar, for established talent. And, if you have really deep pockets, or in this start-ups case, dirt cheap money, by all means, spend on.

    And just like for the Yankees, some years it works, and then again, in some years you have simply hired a team of aging, ego-driven white elephants.

  11. Kevin Smith says:

    I am a physician and my experience has been like that of lawisevil [above].
    My best people do not look good on paper, but were bright, friendly and trainable.
    They do good work for a reasonable price, are reliable, nice to work with, and have been with me for years. Patients love them, and specifically request them. The flow of wine, chocolates, etc from happy patients attests to their value.

    • Wolf Richter says:

      Music to my ears!

    • Stephen Caird says:

      Speaking from the perspective of a veteran software engineer, I can attest to the fact that current HR “wisdom” favors those who are presently employed and have the correct academic and corporate logos on their CVs. And yes, that same “wisdom” is deliberately blind to those who have mere potential.

      On those occasions when I’m brought into the screening or hiring process, I do my best to influence things in favor of young, hungry, motivated people who might bring more to the position than just fungible code chops and some connections to Ivy League schools and the Silicon Money Pit.

      There’s a saying among the grownups in my racket: “I’d rather train a journalist to write software than train a CIS graduate to communicate.” In my experience, it’s dead true. Some of the best folks I’ve worked with — or for — have lateraled into the software bidness from other disciplines, and have brought new and interesting perspectives with them. I mean, it’s all just symbol manipulation when you get down to fundamentals. Did you take Spanish in high school? Hah. I bet you can learn Lisp.

      Another, less charitable saying in my line of work is “An MBA program is one of the few known rubrics that can accurately measure — and reward — gullibility.” Make of that what you will. I can say that the management layers in large companies I’ve worked for, and the “executives” in startups, seem to be remarkably willing to believe in complete rubbish — discredited nonsense peddled by generations of management consultants, pop psychologists, and model-infatuated economists.

      The prevailing “wisdom” in the bleak, drafty halls of startup “executive” thought is that you “have to hit the ground running,” with personnel who “can hit the ground running.” In other words, buy talent that’s already baked into the proper (uncontroversial) shape and consistency, and stamped with all the right logos. A great recipe for repeating everyone else’s failures, if you ask me.

      It is endlessly amusing to me that most startup “executives” these days are subject to the same sort of filtering: must be MBA from approved school, have the right connections, but must also be easily manipulated, willing to dance in the most degrading fashion for VCs and investors, and be too stupid to rise above the cultural constraints and actually accomplish something new and profitable.


  12. Eric says:

    Don’t forget managers are under the same pressure. If a hire does not perform and they hired them from google no one will criticize the person who hired them. If a hire comes off the street and there are issues the manager will get the heat. It is a protective impulse. That is why when top management in a big corporation has to make a decision they bring in consultants and attorneys… give them cover…….making one wonder why we pay management so much.

  13. John says:

    Many professionals’ work in IT was offshored, some returned as while the low cost appeal in “free markets” ( lower cost labor elsewhere to trash domestic market in the emergence of robotic or software human replacements became the market ) is a symptom of a defective Fed: print more money, dillute its purchasing power to effectively tax the people with a paracite – no value added government wealth transfer of real assets.
    The larger picture: why offer up to a labor market system with limited future? This is a call to think and act outside the box. Half of the collected tax goes to private banking, the other half to push multinational corporate agenda driven war, or war for theft of a for profit resource. Solving problems is not part of this agenda; propaganda and manipulation for profit drive this clueless, trash the world, fill oceans with garbage program and create dependencies of people through fear, intimidation and tv stupid.
    Thankfully, people are not simply accepting this agenda after its failure becomes clear, painful, in a debt driven black hole.

  14. Stud Duck says:

    I ran across many people like this lady over a 32 year period as an insurance adjuster. I experienced a few mergers/buyouts by major players, (Safeco/American States comes to mind) and the incompetence/egos of management was appalling. One example was a manager hired away from another company. His ego and 50’s style management (management by intimidation) left the best preforming unit nationwide in ruins. I, unlike most of the other adjusters, would not be intimidated, finally got home office management attention to the grafting/kickback methods that this manager was involved in, and he was finally fired, but not after the damage to the unit was done. Hiring from outside, without considering within, has damaging effects on the people that have preformed well over a long period.
    Regional management replaced with a man I discovered, pushed them to hire for the field position, he is now in command of this unit and the unit is now back to high performance.

  15. Duke says:

    I’d hate to admit it but Rebekah’s story reflects the reality…

    I was unemployed and underemployed for 2 years (2009 – 2011) after stint at a biotech start-up which was not acquired or even decent partnership offer from large pharma companies (countless DD) due to the dubious drug in joke clinical trials. We even pulled out of IPO 2 days before trading date in 2007 due to lack of interest.

    I barely got by as consultant and small company client who paid late. I must have applied 200+ jobs as my goal 1st year out of work was how many jobs I applied on-line. Had interviews but also found out that I was over-qualified and frankly maybe perceived as threat to hiring managers. I see this at work now as other hiring managers pass over qualified and competent candidates over “fear”. Only the competent and “secure” managers seem not to mind hiring the A-class talents.

    I work for very large biotech company and also worked for large medical device and “once largest” software company. I’m getting a lot of unsolicited inquiries thru Linkedin from recruiter poachers. It seems like they are the arms-length independent contractors hired by the HRs. Companies are targeting those who are employed. We also give names of people we like at 1st tier suppliers to recruiters to poach.

    It seems to me that only dummies apply on-line now days and see why hearing about Rebekah’s experience with mirror my experience – too many non-qualified unemployed and often unqualified for the job spammers applying with a click. I remember how it used to be – scour newspaper ads or talk to recruiters and send resume by fax or PO # AKA blind ads.

    This is indeed bad news for those older and qualified candidates who have been out of work for some time. I was there once and really saddens me as those 2 years were the darkest moments of my life and it affected my family greatly with my kids seeing their once proud dad shrivel and even wife beginning to question my ability and resort to part time work (she always stayed home ) to get by.

  16. Duke says:

    So checked out what Rebekah the hiring gurus was able to muster:

    It is me or is she only hiring Asians (Chinese and lot of Filipinos) worker bees? I mean 12 out of 20 employees are Filipinos no doubt mostly domiciled in Manila are AKA outsourced, 3 Chinese, 4 young attractive white women and 1 Hispanic male?

    So let me get this – she resorted to outsourcing which she did not disclose or mention on her NYT piece. I bet that none of her staff worked for the tech giants Google, Apple, Fakebook, Microsoft, etc. No I take it back – I hear my ex-employer Microsoft has been hiring B/C talents and couple of Chinese engineers are probably ex-Microsoftees.

    Been to Manila once in 2008 for outsourcing prospect and stayed at call-center neighborhood and saw stream of young Filipinos heading home around 8 AM – end of their shift toiling for multinationals. Outsourcing the short-term profit making route is literally killing the goose that lays the golden egg by decimating older tech workforce (especially hardware) and young kids can’t get into tech unless they join the worthless non-productive social mania bubble which is soon to pop. That’s why I’m telling my kids to get into medical service field…

  17. Employed in SillyValley says:

    This is very true.

    I am employed in Silicon Valley and I get contacted by recruiters through LinkedIn all the time.

    Sometimes the are pitching positions that are outrageously below my pay grade or skill level, but they don’t care.

    If you are unemployed, I suggest you keep your LinkedIn profile up to date and claim that you are still employed!

  18. Somewhat Conservative says:

    Henry Ford created the notion of a permanent “job” or a box in an org chart. Prior to that, when you needed a crew to build a barn, you hired them and upon completion, they moved on…

    If you’re hung up on the notion of a “job”, the world may be moving to the past…?

  19. Joe says:

    I published an IT technical book, writing my second one. Got a PhD, published software outside work. I have worked in R&D dept. in mega IT corporation named with few alphabets. Since then I have been working for my entrepreneur boss for more than 10 years.

    For the last 5 years, I tried to look for another job on and off and eventually I gave up. The no. of skills required for the job is like filling the whole IT encyclopaedia. I had few technical interviews and I immediately knew I was no match to the kind of the candidate they dream for. At the end, I gave up and stay put in my current position and it pays more than the market offer, why bother.

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