Following a major restructuring of the online job site, CEO Jason Goldberg says his company is poised for success.
But six months into the restructuring, Goldberg says his company is poised for success. Jobster on Thursday plans to announce a new application, Employer Talent Networks. It will feature more than 350 employers who aim to develop two-way communication with Facebook users via the social-networking site's platform and Jobster's tool.
Goldberg, however, says it's more than the Employer Talent Networks application that will drive success for his 3-year-old company. Jobster is getting a financial lift from its controversial restructuring, which pared down expenses and shifted the company's model of direct sales and support to large corporations to one where services would be delivered online and by phone.
CNET News.com spoke with Goldberg earlier this week about Jobster and its prospects going forward.
Q: Tell me about the restructuring.
Goldberg: When we started the company in January 2004, we set out to first build social-networking tools to help employers build their own kind of private talent networks to find candidates. So, our first product offering was Jobster Employer Sourcing Tools, which we launched in March of 2005.
That product basically helped employers build private talent networks to reach out to the people that their employees knew, and invite them to develop relationships with the company...We signed up hundreds of customers to use these tools in 2005 and 2006. Then, in 2006, we started to see the market shifting a bit, where consumer public networks were driving a major part of the business. So we also started to invest in building public talent networks on Jobster.com and then other places where we could distribute our technology.
About mid-2006, we did a strategic assessment of the business. The analysis we did at that time, basically, saw that Jobster had three legs to the stool, in terms of a sales channel perspective. We had a very large field sales and service team that was selling to large enterprises in person and then servicing them in person. Then we also had a telephone sales and service team and, then, an online sales and service team.
The decision that we made starting in the middle of last year, which we enacted at the beginning of this year, was to restructure the in-person sales and service channel to the enterprise that was highly unprofitable. The rest of our business was trending in the right direction and was really moving us more towards the model we wanted to be in. We saw that we could accelerate the velocity and volume of our sales by selling more online and on the phone. So, what we did at the beginning of this year was completely eliminate our field sales and service, and all the supporting parts of the company.
The net result of that is Jobster, six months later, after a very public restructuring and pretty large cut of about 40 percent of the workforce, is doing very well. The business is very strong, and our core private-talent networks for employers are now profitable on a monthly basis.
If you were to take your revenue pie, how would you slice it?
Goldberg: Jobster's revenues today have about 80 percent coming from subscriptions to our recruiting tools. Another 20 percent comes from online advertising packages we've built to help employers advertise on Facebook, as well as on Jobster.com. Within that 80 percent for the recruiting tools, about half of the revenue is coming from large enterprises and half from companies under 1,000 employees.
You once said you expected to be profitable in 2007. Does that still stand?
Goldberg: I would say we could, but more likely it will be early 2008. It's just because we are very excited about the recent traction from our consumer investments, and we'll probably continue to make some additional investments in that area at the end of this year. Then we'll push toward overall company profitability early next year. It's not a question of if (we'll be profitable). It's more of a business decision.
What's been your retention rate among customers?
Goldberg: We've had very high retention rates. Our churn is relatively low. We sign up folks to term contracts, and we've been very successful at renewals. Large companies are consistently renewing with us. For example, we recently said Boeing renewed with Jobster for the third consecutive year, and Nike is in its third consecutive year. There's a number of examples like that.
What percentage of your customer base has renewed for three consecutive years?
Goldberg: Three consecutive years is hard, because, you know, we've only had the tool in the market since March 2005. Our renewal rate from year one to year two is very high. I would say that we have a loss rate of less than 20 percent for folks who don't renew from 2005 to 2006 contracts.
Why did you feel compelled to sign up with Facebook? Aren't you competing against yourself since you both rely on some form of social networking for your technologies?
Goldberg: The business problem that we're trying to solve is to help employers connect with valuable audiences of people, so they can hire them. Jobster is that linkage between the employer and those audiences.
The tools we give employers kind of goes from the employer-out direction. And one of the things that they've asked us to do, and the feedback we've gotten from them, is to bring them unique and valuable audiences. That's what spurred us to create a unique and increasingly valuable audience on Jobster.com and also inspired us to work with Facebook. On Facebook, you can tap into the 18- to 25-year-old demographic, and increasingly (the) 25- to 35-year-old demographic.
How do these different revenue models compare with each other? Which will give you the highest return rate?
Goldberg: Jobster, from a revenue perspective, without revealing the exact numbers, had revenue in the millions in 2005. We grew 400 percent in 2006, and we're on pace to grow by 60 percent over the last year in 2007. We're doing it at a 50 percent of the cost basis from last year, which is part of the business optimization resulting from our restructuring.
You faced some controversy in the way you handled the restructuring and layoff notices. How would describe that?
Goldberg: It's understandable that when you go through something like what we did there are a lot of people on the outside that don't necessarily understand it. They might see a different view of the company than what they thought, and there might even be a little bit of a reaction to it. Ultimately, over time, we think it's the facts that will speak the loudest as the business grows.