Go public or go home: the job boards that have gone public and why

In this episode of JobBoardGeek, we decide to talk to each other about publicly-held job boards! What a concept! Jeff Dickey-Chasins of JobBoardDoctor and Steven Rothberg of College Recruiter dig into the list of publicly-held job boards reviewed on Jeff's recent blog post, and are amazed at how many there are. The move to public happened in two phases, Jeff points out, and Steven talks about why a company might want to - or not want to - go public. Many anecdotes are related!

Transcript

Jeff Dickey-Chasins  0:00  

Hello, everyone and welcome to Job Board Geek, the podcast about the business of connecting candidates and employers. I'm Jeff Dickey-Chasins. The JobBoardDoctor, I'm your host, and I'm here with the extremely optimistic Steven Rothberg of College Recruiter. He's the co-host. Hey, Steven, how you done?

Steven Rothberg  0:18  

I'm good. I haven't heard it. Facebook has been acquired or put out of business today, yet. So there's still hope for the rest of the day.

Jeff Dickey-Chasins  0:26  

Yeah, well, you never know what's going to happen with Facebook or actually, these days, I tend to wonder what's going to be happening with ZipRecruiter. And you know, some of these other players that have grown very quickly, talent dot coms another example, they were suddenly acquired by XYZ or they were suddenly shut down because of a scandal or, you know, I don't know what it would be. Anyway, I'm blabbing on. Today, we have a little bit of a special episode, we're going to be talking about publicly traded job boards. It's interesting because as a job board consultant and analyst I get called quite a bit by people, both in the press and in investment houses, venture capitalists, that sort of stuff, asking me to give them evaluations of the market. And they typically when they say that what they're really talking about is the visible market, which is the market that the few companies out there that cover this, like the aim group and staffing industry analysts are the publicly held companies. So when you hear someone talking about the size of the job market, they're thinking about how much money the dice make, how much money does zip recruiter make, how much money did indeed make, because these are the companies that people can see. And they don't see the 85% of the industry that's privately held. But recently, I wrote a blog post because I was just kind of curious, I'd never seen anyone else write an article about this about all the publicly held job boards that I could find. And I literally spent the better part of a week trying to track all these ones down. And I did come up with some job boards that I had never heard of, or I had no idea that were publicly held. And in one case, I listed one read that had been publicly held, but went private, I was told by someone that work there, I found it an interesting exercise. And one of the things that I found interesting about it, Steven is that most of the companies that I were looking at went public in one of two areas. So you know, I used to work for dice, we went public when we were acquired by Earth web, which was one of the first tech companies in the original tech boom of the late 90s, to list themselves on the New York Stock Exchange, and then dice went private, and then it went public again. So that's kind of typical. So there were quite a few job boards that went public in that sort of late 90s, early 2000s period. And then the second round have been over the last decade where a lot of job boards that maybe had been around for a while went public, either through acquisition or because they wanted to, or they were new new companies like a fiver, for example, or a combination of two older companies like an upward so I thought that was kind of interesting, because for a long time, the only companies that anyone could point to that were publicly held would be monster, CareerBuilder and Dice. And that was that was the job board industry. So I think that's interesting. I'm not sure I have any great insight into any of this except that the there's a huge variation. And I'll bring this up. And then I'm curious to get your thoughts on it. There's a huge variation in size. So on one end, you've got professional diversity networks, they listed on NASDAQ in 2013. They have 38 employees, and they're publicly held. And then on the other hand, you've got a company like indeed, which is part of an even larger company called recruit holdings that also holds Glassdoor they were listed. Our recruit was listed back in 2014, holds dozens of job boards, dozens of staffing firms, huge company, 1000s and 1000s of employees, and then everything in between, I don't know what do you think about this whole business of looking at the industry, primarily at the publicly held job boards versus trying to get a gauge of the rest of the industry?

Steven Rothberg  4:15  

Well, I apologize in advance for insulting you, but I see it the same way as you do. And so if I see something wrong with you, that's a compliment to me and an insult to you. So I beg for your forgiveness. You know, in years ago, you in undergrad I was a finance major. We were taught a thing or two about the stock market and why companies go public, what are the pros and cons of that. So first of all, for the for the listeners who might not know the difference, and there might be some out there, publicly traded company basically just means that anybody can become an owner. You can go to your local stockbroker or online company and buy a fraction of a share or 100 shares or 1000 1000 shares or whatever it might be, the biggest pro, in my mind of becoming a publicly traded company is that you're able to raise capital much more easily. If you want to go out and raise $10 million, or $100 million, or whatever, you can just issue new shares, and you sell them to the public. That's called an initial and initial public offering an IPO and you put all that money in your bank account, and you go and you spend it as quickly as you can.

Jeff Dickey-Chasins  5:28  

Well, you also have the opportunity as someone in management or, you know, at the high level, that you now have an exit path, that's relatively straightforward compared to being at a private company,

Steven Rothberg  5:39  

yeah, you have an exit path, you're those executives and other people that are high up in the company, it's much easier to reward them very handsomely to give them stock options, which gives them a right to buy those shares at a certain price in the future. And if your stock price is going up, that's a very easy way of putting a lot of money into the pockets of usually a fairly small number of people. If you are privately held, and you own, you know, a million shares, and they're valued at a penny each, and then later on, you go public, and that share is now worth $2 each, then you've just made a ton of money. So the money part of it is is a real, real attractive piece. The downside of it in this company that you're talking with about with a few dozen employees, I just shake my head, there are massive reporting issues and accounting issues. I mean, if you've got your own sole proprietorship, I mean, it shouldn't do it. But you could literally run it out of your own personal checking account, your company is kind of you and you pay taxes, personally, at least in the US. And it's much less formal, you don't have other shareholders. But when your public massive disclosing disclosures, your legal fees are enormous, your accounting fees are enormous. And then every single one of those shareholders you owe a duty of good faith to you cannot sell assets of the company are putting money into your pocket to to their detriment, it has to be you have to run the business in the best interest of your shareholders, which is often very different than running it in the best interests of management. Another piece that it's often overlooked and your dice story kind of reminds me I don't know if this happened with dice. But it certainly has happened with other organizations where you see management buyouts or when publicly traded companies go private. And then four years later, they go public again, and then three years later, they go private again. And it's like, you know, the pendulum is swinging back and forth. One of the reasons for that is it's it's a way of putting money into the pockets of the executives, and their investment bankers, because there are enormous fees that are generated when companies go public and private. So sometimes when you look at a company, it's like, why the heck is this public. And the reason is, it was an opportunity to extract money from basically from the company and put that money into the hands of the shareholders or their investment bankers. And there's sometimes there's no other good reason, it's not actually for the corporate benefit, it's for the benefit of the insiders.

Jeff Dickey-Chasins  8:18  

And I will say to add to that having, I've lived through two situations where I worked for the company when it was private, and then it went public. And the second one being dice. And the drawback that I saw for the company was that instead of having a long term focus, which every private company I've ever worked with, had a fairly long term focus, and they were continually pumping money back into the company and looking at a one year two year five year goal that they're trying to achieve, you suddenly become ruled by quarterly reports. And depending on the switch on the type of company and the expectations of the investors, it can really distort what the company can do in the market. And you see companies do all sorts of stupid stuff, just so they can prop up their quarterly report, and you know, then get the stock pump and get the investors happy. And then you run back and do another three months of work. And, you know, as an employee for a company, you know, if you've worked on both types of companies, it can be a little, I don't know, depressing. Because you have such a short term focus, and a lot, you know, a lot of times the rank and file and these companies are not being that well rewarded for whatever the company stock may be doing. It's typically just the upper level of the company. Yeah, there.

Steven Rothberg  9:35  

It is. Definitely, both a strength and a weakness, I think of sort of westernized economies where we tend to be more short term focused. And you and I have had conversations over the years about some of the European and Asian players in the marketplace where they're really not looking at q2 2022 and trying to decide what they should doing in order to hit their numbers, we're making a 2020 2030. Where do we want to be eight years from now. And that changed perspective is, is enormously powerful when you're investing for the long term in your people in your product. In your process, you you're investing for the long term really hurts you in the short term. But a year from now, five years from now, 10 years from now, it really pays off. You know, I was glad to hear when, a couple minutes ago when you talked about the research that you did for a week, and that you uncovered some publicly traded job boards, because when I read your article, and like, it's like, Who the heck are these people? That I think they were in Finland that when I looked at, it's like, wow, that's a really interesting business. Right. You know, my, my Finnish language skills are not, you know, terribly good. So I'm not all that surprised that I haven't heard of them. But I just I thought it was interesting. It's not an American phenomena. It's not a European phenomena. This is it was very, very global, much more so than I anticipate. 

Jeff Dickey-Chasins  11:04  

Yeah, there were I mean, you know, that there's publicly held companies in Brazil, Australia, Japan, Russia, although I will say the headhunter.ru, which listed on NASDAQ and tuna, 2019, because of the war, it stock has just gone in the tank is kind of horrifying to look at the at a chart of their stock value at this point, I think they may have even withdrawn it from trading. So it's, you know, you never know, one of the things I think that's also interesting about this phenomena of publicly held job boards is that with a very, very few exceptions, they're all what I call generalist sports. And you know, DICE is definitely an oddball in the sense that it was a niche site, you know, it focused on the tech industry, and it was public. But you know, you look at this, like, you know, info edge running a query, that's Indian, that's a broad, broad market, you know, monster with Randstad, that's a broad market. LinkedIn is broad market, all of these sites are very much generalist sites. And I think that has more to do with scale than it does. You know, because if a company is going to go public, they're going to expect a certain level of revenue. And, you know, a good niche site, you know, I know many, many niche sites there that can make anywhere from 10 to $30 million a year, which is nice. But that's not stock market. Nice. That stock market wants a lot more than that.

Steven Rothberg  12:29  

Yeah. If you were to go to Goldman Sachs and say, I've got a $10 million business, will you take us public, right, they probably hand you a broom and ask you to sweep up, right? I mean, there's just there's a good friend of mine likes to use the expression, I think I actually use it more than he does. But the juice is not worth the squeeze, you have to be of scale, you have to be large enough. And I think that some of the job boards in related companies like say, a recruiter.com, like a dice that are that are on the smaller size, that it's certainly not their end game to stay at that size, they absolutely want to get bigger and get bigger, faster, being publicly traded, is it will help them do that there. They don't have to sell as many you know, frickin job posting ads in order to put money into the bank so that they can go out and then acquire another company or build out a new product line, they can go to the market, and they can raise 10 million or $100 million, and then use that for acquisitions or, or building out their product line. So it really allows them to scale up. It's a little bit of a chicken egg and egg thing. I think, though, Jeff, isn't it it's like, you have to be big in order to be big. And but the the amount of money that those smaller companies must be spending on legal and accounting fees, percentage wise is gotta be just enormous as compared to an indeed where their legal disclosure costs. You know, they're the cost that they're paying their accountants and their lawyers to do all the SEC SEC filings. It's a rounding error for that. But it's not for a small publicly traded company.

Jeff Dickey-Chasins  14:15  

Now, I think you're absolutely right. And I remember that when dice went public. Like I said, it was part of Earth web and Earth web actually was sort of a holding company of a bunch of different recruiting related companies of which dice was largest. But so they had the ability to spread the costs of the, you know, the accounting work across all these properties. But even there, it was, it was burdensome, and it also brings a burden to the management team in terms of what you are not allowed to talk about or do at certain times of the year. But the other thing I was going to point out about this publicly held list is that a number of these companies are companies that hold a bunch of job boards. So originally when when job boards went public, you know in the In mid to late 90s monster I believe was the first it was a single job board. Yeah, it was murder TMP dice was a single job board is the only job board the earth web held at that point. But now you've got companies like seek, you know, that has many, many job boards. You've got companies in Poland like group repressors. You've got what else am I thinking of here? Stepstone is another good example of those steps soon. Okay. So step sounds kind of interesting. Stepstone was part is part of Axel Springer, Axel Springer was publicly held until 2020. And then it went private, the family bought it back. But now they're talking about spinning it off and having an IPO separately this year on the Frankfurt Stock Exchange. So they've sort of bounced in and out of being publicly held privately held, but inside of stepstone, which, you know, like I said, it's part of Axel Springer. But then stepstone is this collection of all these other job boards in different countries, although I guess they just moved out of France, they got tired of only being less than 1% of the market. Imagine that.

Steven Rothberg  16:02  

But that's another topic for another app episode. Podcast Tune in next week, kids.

Jeff Dickey-Chasins  16:09  

Yes, we can we can have the failure stories of different job boards over the decades. That would be a good one.

Steven Rothberg  16:14  

Yeah. Although, yeah, just on a slight tangent, I don't know that if admitting a mistake and cutting your losses so that you can better prosper is, is a mistake or is a bad thing. But so I actually kind of admire organizations when they can when they can look in the mirror and say, You know what, this didn't work out. And we're not going to throw good money after bad, we're going to focus on what we do really well. But you know, another issue with publicly traded companies is, and I've, I've personally run into this a few times over the years is, if you're a publicly traded company, and you are looking to acquire another company, you were mentioning a minute ago about some of these publicly traded companies own a bunch of companies or business lines, if you're talking with an acquisition target, that acquisition current target, can look up the deals that you've done already. And so it undermines your negotiating power, because you're airing your dirty laundry, you can see that, you know, XYZ company purchased ABC Company A year ago, and here is exactly how the deal was structured. Dollars earnouts, you know, restricted stock, what, whatever. And it just becomes more transparent. I'm generally in favor of transparency. But if I was a relatively small publicly traded company, doing corporate development work, aka buying other companies, I would feel to an extent that my hands were tied, that I wouldn't have as much of an ability to underpay potential acquisition target.

Jeff Dickey-Chasins  17:54  

Yeah, I think that's a good point. And I just had one final thing that I wanted to touch on before we stopped for today. But in the process of reading about all of these publicly held companies, I of course, came across the companies that say they're going to go public soon. And it's kind of funny, because, you know, we have this running joke around here about how long Glassdoor was getting ready to go public and how long Snagajob was getting ready to go public. And it just was sort of like when AI suddenly became important, you know, it took 20 years or something. But I guess we have Adzuna, which is the UK based job aggregator is talking about getting listed on the London exchange, either this year or next year, we have talent.com, making a lot of noises about going public in the next year or so. And we have job and talent out of Spain, which is really taken on a lot of funding over the past four or five years and planning to do an IPO and 2023. And then of course, I had already mentioned stepstone. So there's still quite a bit of activity. All of these companies make significant amounts of money. So I mean, these are not small companies or even midsize companies. They they're generating a lot of revenues. So I think there's you know, personally, I don't I don't think the markets overheated. I think the companies that are talking about going public, we'll probably be successful at it, but I think beyond those I'm not sure I know which job boards or job board type job board like companies might be going public or can you think of any off the top of your head?

Steven Rothberg  19:27  

Well, I can think of one that's not and that would be College Recruiter.

Jeff Dickey-Chasins  19:33  

While you guys are too big IPO right?

Steven Rothberg  19:35  

Oh, yeah, yeah, yeah, well, yeah. Too many beers anyway. But then you know, you and I have talked about this in the past where is there a race for the next company to go public? You know, if it does, if Adzuna beats talent calm to go public does Adzuna get an advantage? And I think my my thought on that that I think was kind of the same as yours. So there are advantages to going second. And I don't think that I think that there's so much wealth out there looking for good investments, that it's not like if Adzuna went first that it would be like a black hole where it would suck all of that investment money in and leave none for talent or the other way around. Right? There's, if if both businesses are good, both are going to have probably have successful IPOs and they'll both prosper over the long term. There's there's plenty of room out there for really good businesses public or not,

Jeff Dickey-Chasins  20:39  

I would agree and folks if you want to look at the article that I've been referring to all of this time it was in it's on the job board dr.com website and the blog. It came out on March 22. And you can read it to your own delight Well Steven I think this is probably I think this is probably where we end up things because my tongue starting to get tired. If people want to get a hold of you how did they do that?

Steven Rothberg  21:03  

They can purchase stock and not just shoot me an email Stephen at college recruiter.com. JobBoardDoctor LLC, it has been a pleasure talking to you.

Jeff Dickey-Chasins  21:16  

Well, thank you so much, Mr. College Recruiter. I appreciate it. And as you can guess from our sudden formality in our in our language, this is the end of today's episode of Job Board Geek. I want to remind you that you can subscribe to job board geek via Apple, Spotify, Stitcher Pocket Casts anything else you want. You can always rate us. This is Jeff Dickey-Chasins. I am the JobBoardDoctor and you've been listening to the only podcast about the business of connecting candidates and employers. That's it for now. I'll see you again next time.