I was going to become a headhunter or a body shop precisely because I believed that I was significantly better than the market at picking good but cheap people. But then I realised that the headhunter/recruiter job was more about selling (selling your services to the company, that is.) than it was about getting good people. Once they have the contract with the company, any warm body, it seems, will do. Large companies are heavily invested into this 'water loom' model.

The problem with the 'end run' of just starting your own company is that you then end up with embedded systems engineers doing things like web applications, because it's easy to do the web application as an independent, while it's harder to properly utilize that Engineer's talent without a large corporate team.