With so many people out of work, these should be heady times for job-search websites. So why are some of them struggling?
ItzBig, which pioneered a job-matching search engine, shut its doors at the end of last year after burning through $4 million from Rho Ventures and Sevin Rosen Funds.
Meanwhile, VisualCV.com, which raised $7.1 million from Heidrick & Struggles Ventures and Valhalla Partners to build a high-tech resume service, laid off 75% of its workforce in June, according to the TechCrunch Layoff Tracker.
Other job sites could also face a bumpy road ahead. While website traffic has surged as more people look for jobs, revenue has fallen as fewer companies place job ads. For example, Monster.com’s revenue is expected to fall from $1.35 billion in 2008 to $910 million this year.
Despite the woes of ItzBig, VisualCV and Monster.com, venture capitalists continue to invest in employment-related websites, albeit at a slower pace. They have invested a combined $50 million in 15 such startups this year (see table). That’s down from an average of about $130 million invested in 20 job-related startups in each of the past four years, according to Thomson Reuters (publisher of VCJ).
Sonja Hoel Perkins, a managing director at Menlo Ventures, is among those who are optimistic about the long-term prospects for job sites. “It will take a while to recover, but the market is so huge that you can get pulled along and still have a good business,” she says.
Based on where they’re putting their money these days, VCs believe the job sites best positioned for the long haul are those that are focused on producing the very best results—both for people looking for work and for companies looking to hire.
It will take a while to recover, but the market is so huge that you can get pulled along and still have a good business.”
Sonja Hoel Perkins
Saad Khan, a partner at CMEA Capital, says traditional job boards and employment sites are becoming obsolete in the face of social media.
“The whole concept of using a resume as way to represent myself to the world is dead,” Khan says. “There are so many better proxies for the resume, all stemming from the build-out of the social graph. The information and connections found on LinkedIn, Facebook and Twitter is far more relevant and up to date. The job market is fundamentally changing and job sites have to change with it.”
To tap into the social media trend, CMEA and ATA Ventures have invested $15.4 million over two rounds in Jobvite, which helps clients like Zappos and Tivo create job posts on social networks like Facebook, LinkedIn and Twitter.
“The reality is that the best job candidates are friends of existing employees,” says Khan. “The trick is figuring out how to harness the massive network of your employees.” For employees who opt-in, the Jobvite application can scan their social network and identify people who might be a good fit for a particular job. Employees can also send “jobvites” to relevant people in their network.
Khan says employers appreciate the Jobvite tool because it helps them identify quality candidates much more cost-effectively than if they used a professional recruiter. Even though fewer companies are hiring during the recession, Jobvite has tripled its client list this year, partly because of the cost savings it provides, Khan says.
Another startup leveraging technology to produce better results for job seekers is Simply Hired, which brags that it has built “the biggest, smartest job search engine on the Web.”
The company aggregates job listings from thousands of sources, including all the major job boards and vertical industry sites, as well as from major employers like Target and IBM. “There are 3 to 5 million job openings in the U.S. at any given time, and Simply Hired aggregates them all,” says Phil Sanderson, a managing director at IDG Ventures SF.
The whole concept of using a resume as way to represent myself to the world is dead. There are so many better proxies for the resume, all stemming from the build-out of the social graph.
IDG and Foundation Capital invested $4.6 million in Simply Hired in August, bringing the company’s total venture haul to $24.3 million.
As proof that the technology does what it says, Sanderson notes that the company’s revenue has grown 400% during the downturn. The job listing search engine works somewhat like Google—advertisers only pay if job seekers click on their ads.
“If the company can grow that much during one of the worst job markets in recent memory, imagine what they’ll do once the economy picks up,” Sanderson says.
While Simply Hired and Jobvite are using technology to produce better results, some startups have gone the opposite direction. For example, RiseSmart employs HR specialists in India who comb through job listings across the Web and return the ones that best match a job hunter’s criteria.
RiseSmart raised a $3 million series A round in July 2008 from Norwest Venture Partners. Norwest General Partner Venkat Mohan estimates that the so-called fill rate on most job boards is only 10 percent. The problem, he says, is that it’s difficult to come up with good matches for job seekers because every company labels its jobs differently.
This is a semantics problem that no amount of technology will ever solve, insists Mohan. And that’s where the Indian HR reps come in.
No job is secure any more, and 40 bucks a month, which is pretty much the cost of cable TV, is a small price to pay in this climate of uncertainty.”
Because it targets people looking for jobs that pay a minimum of $100,000 a year, RiseSmart believes its customers won’t balk at paying $40 a month for its service. “No job is secure any more, and 40 bucks a month, which is pretty much the cost of cable TV, is a small price to pay in this climate of uncertainty,” Mohan says.
The pressure is on for RiseSmart to take the business to the next level. It took the company twice as long and required twice as much money as anticipated to build its platform, but it’s now ready for primetime, says Mohan. The company is on the verge of closing a new venture round that will go toward rapidly growing its user base, he adds.
Like RiseSmart, Jobfox also offers a range of premium services to job hunters. For example, Jobfox offers an introduction service that goes above and beyond a simple job application. Company representatives will actually contact employers on behalf of job seekers and present them directly. Hoel Perkins says these consumer-focused services have enabled the company to grow “substantially” over the past year.
Jobfox now charges a subscription fee of $30 per month for personal intros. It is also offering a resume writing service to consumers.
The company, which was started by CareerBuilder founder Rob McGovern, has raised $40 million in venture funding since its launch in 2007, including $20 million in its third financing round led by Draper Fisher Jurvetson and including Menlo Ventures and New Enterprise Associates.
Do upstarts like Jobfox, Jobvite, RiseSmart and Simply Hired really have what it takes to challenge the established market leaders? In theory, the job hunting market is big enough for everyone. Estimates vary, but the total job search market—including online, offline, and executive search—is pegged at around $55 billion.
But before one of these startups can turn into a Monster.com killer, it must first make sure it survives the economic downturn.