Do Dice’s problems signal trouble in the job board industry?

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DHI GroupI used to work at Dice, as you may well know. I was employee #9, stepping into a company that had evolved from a BBS in California to a full-fledged niche job board in Des Moines. I managed the sales and marketing, and rode the wave as we went from $6M in ’97 to $70M in ’00. The company was acquired during this time by EarthWeb, one of the early tech IPOs, and this acquisition had a profound impact on the company. Dice went from being a stand-alone job board to a part of a larger company with many moving parts. However, it ultimately became the tail that wagged the dog, for EarthWeb was unable to generate significant revenues outside of Dice, and the New York-based company eventually went bankrupt (sadly, my Dice stock also became worthless). Dice was purchased by a group of investors, and eventually went public again. But some of the key players from EarthWeb remained, including Mike Durney, the current CEO.

So, enough of the history lesson. I just wanted to give you some background on my connection, and the origins of Dice. I’ve been out of the loop there since 2001, although I remain in touch with many employees – including Mike. But inside knowledge? Nope, I operate on the same data that you do.

Dice – or more properly, DHI Group – has just experienced an unpleasant 3rd quarter. Revenue is down 9% year over year for the quarter, and earnings per share down by $.02. Dice is more than just the tech board – it also comprises a number of other sites and services, which is why the organization switched to DHI Group. Dice the site continues to dominate the earnings picture, though – so when it’s down, the overall picture is usually not good.

In fact, the news is grim enough that Mike said “the Board indicated it would be appropriate for our company to engage in an investment bank to explore strategic alternatives to ensure the company’s ownership structure, optimize its shareholder value and the company’s growth agenda.” In other words, they’re for sale.

Now this news comes on the heels of Monster’s sale to Randstad, and TEGNA’s announcement that CareerBuilder was for sale. What the heck is going on? Is the entire job board industry in trouble? Well…it’s complicated. For my take on Monster, read this; for my take on CareerBuilder, read this. And as far as Dice goes, here are some observations:

  • DHI has some properties that are doing very poorly (Rigzone, down 55% and suffering from the worldwide crash in energy prices and employment), sort of poorly (eFinancialCareers, suffering due to its exposure to currency fluctuations), and just a little poorly (HealthECareers, down 3% on the basis of some contract issues). Dice itself is also suffering from a drop in recruitment package customers. Bam, bam, bam – these 4 properties definitely have a cumulative (negative) effect.
  • ClearanceJobs is doing pretty darn good: up 21% in a hot market sector. So that’s great – but 1 pro vs. 4 cons is not.
  • Dice’s retention rate is 70%. I would consider this the bottom of the acceptable range for a niche site. Mid-70s to mid-80s is more typical for niche leaders.
  • DHI is suffering from the same problem as the rest of us: attribution. If clients don’t attribute Dice’s results to a specific hire, well…they don’t renew. It’s been an issue since the first job board launched.
  • DHI has a new head of sales and CFO. That typically doesn’t happen if things are going swimmingly. The impact of these hires will probably be truly felt in Q2 ’17 and beyond.
  • OpenWeb (their people aggregation tool) is doing well – but adoption isn’t fast enough to offset problems elsewhere in DHI.
  • Dice is getting hit from multiple sides: StackOverflow continues to gain market share via their Q&A platform/job board; Indeed has moved into tech staffing with Indeed Prime; and hybrid models like Hired (recruiting agency/job board) and super-niche sites like Authentic Jobs are nibbling away relevant bits of Dice’s revenue stream. Being #1 in your niche means you always have a target on your back.
  • DHI is trying via their BrightMatter division to develop new products that are competitive in the evolving recruiting landscape – like getTalent (CRM) and Lengo (employer branding). The question is: is it too little, too late?
  • Finally, it’s always been a challenge for any organization like DHI to manage multiple products, market sectors, and sales teams effectively. How autonomously should each site/sector run? How much back-office integration should there be? How much cross-selling? I dealt with this in my previous life in publishing – and it ain’t easy. Think of a flotilla with each individual ship having different leaks and malfunctions at different times, while at the same time fighting off guerilla attacks from all sides. Not for the faint hearted.

So back to the original question: is the industry in trouble? I think it’s better to say that DHI’s troubles illustrate many of the challenges that are faced throughout the industry. If you’re a recruiting site focused on a particular sector, you rise and fall with that sector. If you don’t retain your customers, you suffer. If you can’t show your clients how your particular service is producing results for them – you’ve got problems. And if you fail to pay attention to changes in recruitment technology and trends, you may wake up looking at the market from the backside instead of the front. DHI is doing many things right. Their niche approach has succeeded in a world where many generalist sites have failed.

But they’re publicly held. And when fortunes dip, stockholders get nervous. Patience grows thin. And sometimes…companies get sold.

It will be fascinating to see what happens.

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This Post Has One Comment

  1. Chris Russell

    Good post Jeff. Once these boards get as big as Monster, CareerBuilder, Dice they only have one direction to go. Downward. Being public doesnt help either as the primary focus becomes shareholders, not clients. Dice has evolved somewhat over the years with tools like OpenWeb but from what I hear tech job postings are down overall on the other tech boards.

    A job board, like any other internet business, can stagnate if they don’t stay relevant. The big sites in our industry have reached their peak which means the smaller job sites now have an opening to grow, but only if they attack their weakened big brothers.

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