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Does the ZipRecruiter IPO even matter?

The big news in our industry is the impending ZipRecruiter IPO (set for the day after the Doctor’s birthday – no coincidence, I am sure!). When a job board IPO shows up in the tech press, the financial press, and even the national press, you gotta figure it’s a big deal, right? Well, maybe.

The Doctor has worked for several public companies, and worked through the IPO of another. If you’ve had the opportunity to live through the buildup of going public, you know it’s a bit of a pain. Sure, there’s always the chance that you’ll make some spending money – but it’s the stock market, so no promises. There are rules and rules and rules, and a quiet period, and carefully calibrated public statements with many words but little information.

So why would a company like Zip decide to IPO? Glass Door famously flirted with the notion for years before being acquired by Recruit. Dice went public, bankrupt, private, and public again – kind of like a lingering disease. In the Doctor’s (very jaded) opinion, Zip wants to IPO for two big reasons:

  1. So their investors can get a payout.
  2. So they can grow their company more aggressively than they have thus far.

The first reason is pretty obvious, and usually drives most of the IPOs I’ve seen. The investors want to get paid – and the IPO is how it’s going to happen. Sometimes there is a different path, via a purchase (witness Stepstone’s recent purchase of Mya) – but if you have a company that either is or appears to be doing well, an IPO is the way to go. Investors can be patient and wait years for a payout, or they can suddenly freak out and want a payout NOW. Veteran entrepreneurs learn to choose their investors wisely – if at all. There’s a lot to be said for bootstrapping.

The second reason is more typically trotted out in the IPO documentation – ‘expand to new markets’, ‘penetrate more deeply into customer supply chains’, etc. It makes sense – if you have a company that is doing really well but you feel – for whatever reason – that it could be growing much faster with additional capital, then an IPO could be the answer. Interestingly enough, in Zip’s case, they haven’t been growing that dramatically in recent years, and they seem to have been losing money. Hmmm.

There is another reason for wanting to grow quickly – and this one is very specific to the job board industry. Zip is what I call a generalist job board (actually, they are a job board + aggregator + programmatic network, but let’s just leave it at generalist). They take any and all jobs, for any and all industries and professions. Generalist job boards are competing against: other generalist job boards (like Indeed), aggregators (like Talent.com), programmatic ad networks (like PandoLogic), and social/professional networks (like Facebook and LinkedIn). Lots of competitors!! That’s ok, competition is fun – but competing with these particular broad market companies is expensive. Grow or die is the best way to describe Zip’s path – or really any generalist site. Those that do – like Indeed – only begin to stumble when they stop growing. Those that don’t – like Monster – just fade away. (An observation: one very smart thing that Zip did – that Indeed didn’t – is to establish a consumer brand early. This may be one of the most helpful things they’ve done to contribute to a successful IPO.)

(NOTE: Niche job boards – the types the Doctor works with most frequently – don’t necessarily have the same imperative to grow at any cost. If they effectively service their niche – and grow with it – they can do just fine. But that’s also why you don’t see many niche job boards conducting IPOs. They just don’t need to.)

So you have to ask yourself – does the Zip IPO really matter to the rest of us? Well, yes and no:

  • Yes, as it serves to validate the job board industry to the outside world. A big splashy IPO will quiet a lot of ‘job boards are dead’ rumors.
  • No, since most of us don’t compete directly with the generalist sites.
  • Yes, because many job boards are already in a relationship with Zip, and may find that relationship change after the IPO.

As a side observation, isn’t it interesting that two of the largest job board companies in the world – Recruit and Stepstone – are very out of step with the quarter-to-quarter mindset of most publicly held US companies? One of the many things that doomed Monster was an excessive focus on the next financial quarter, instead of the next 2 years. Both Recruit and Stepstone are in it for the long haul – acting strategically via both expansions and acquisitions. (To a lesser degree, Seek also falls into this category). Certainly the short-term mentality was a contributing factor to Dice’s bankruptcy. I wonder what kind of public company Zip will become – a slave to quarterly reports? Or a long-term player?

I guess we’ll find out!

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