Bloomberg is reporting that Glassdoor is planning to go public in the second half of this year, even though the company wouldn’t comment on “unsubstantiated reports.” In addition to an anonymous source, Bloomberg outlines the addition of a new CFO with IPO experience and funding that has recently passed the $200 million mark.
The pressure for any company with that kind of funding to go public must be immense, and Glassdoor has been rumored and predicted to hit the public markets for some time. The Bloomberg story ups the ante and means this likely event will be a discussion point for pundits in the months to come.
As one of those pundits, I’m going to cut right to the chase and give you three reasons to run as far away from Glassdoor stock as possible, even though Bloomberg says the company is growing about 30 percent year over year and now breaking even.
- The commoditization of employee reviews. When Glassdoor launched in 2007, the “Yelpification” of the workplace hadn’t taken hold. There were a few others, like Jobvent, but Glassdoor rose to the top, enjoying some positive PR and search engine traffic along the way. While Glassdoor is still the brand many think of when they want employee reviews, competition is heating up. Indeed already holds its own head-to-head, LinkedIn is dabbling in reviews, Google for Jobs showcases a variety of competitors in search results, and would anyone be surprised if Google gets into the game, much like it did against Yelp? As Glassdoor loses its hold on this content, its value decreases exponentially.
- The commoditization of jobs. Around 2010, Glassdoor added Indeed backfill to its site in order to start monetizing the loads of traffic anonymous employee reviews were generating. Reviews are great for traffic, but they don’t do much in terms of driving revenue. It has since moved away from backfill and embraced original content, but the job-posting game is no growth engine. Exemplified by the slow death of traditional players like Dice and Monster, Google for Jobs is hammering in the nails faster than ever before. The rise of programmatic ad buying isn’t helping either.
- Ongoing legal battles. It doesn’t get reported enough, but Glassdoor’s time in court is a merry-go-round that never stops. Employers, it turns out, hate bad reviews, especially when they think slander is involved, and are willing to sue Glassdoor in order to reveal IP addresses. One of my sources, who prefers to remain anonymous, told me about a year or two ago that legal battles and privacy issues were the biggest hurdles to an IPO. A November 2017 ruling in Arizona, which said Glassdoor must provide the identities of certain users, is bound to make investors skittish. Businesses based on anonymity aren’t likely to mesh very will with Wall Street.
I have to imagine the braintrust at Glassdoor feels a little bit like Fitbit or Pandora before they went public. “Oh crap, the Apple Watch is coming! We’d better get ours while we still can.” In other words, there’s no more moat around the thing that made Glassdoor so special in the first place, and companies with deeper pockets are beginning to smell blood while the barrier to entry is getting lower with each Google search.
I hope I’m wrong. It would be nice to see a company in our space go public and do well, since, ya’ know, it hasn’t happened in, well, a long time. And sure, depending on the actual stock price and valuation, Glassdoor could be a great place to put your money. However, I don’t expect a penny of my retirement to go into $GSDR, or whatever its eventual ticker symbol will actually be.