My Initial Thoughts on The Glassdoor Acquisition

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May 9, 2018

Glassdoor didn’t make much of a splash when it launched back in 2008. Job boards like Monster, CareerBuilder, and HotJobs owned the headlines, while upstarts like Indeed, SimplyHired, and Jobster were grabbing most of the remaining attention.

The business model mirrored Yelp, the online review site for local businesses that thrives on user-generated content, and it wasn’t even the only game in town. Others like Jobvent and Vault looked to take market share in a market that was far from formulated at the time. Eyeballs? Probably. Profitability? We’ll get back to you on that.

So after launching a little over a decade ago, Glassdoor has been acquired. Instead of going public, which is what I expected, Japanese-based Recruit Holdings, the company that made Indeed an offer in 2012 it couldn’t refuse, has done the same here to the tune of $1.2 billion. Glassdoor last raised money in 2016 with a valuation of $1 billion. Indeed’s price tag was rumored to be $1.6 billion.

“Glassdoor’s database of employer information and the job search capabilities of Indeed complement each other well,” Recruit’s chief operating officer, Hisayuki Idekoba, said in a statement. Glassdoor will continue to be led by its current chief executive and co-founder, Robert Hohman, Recruit added.

In addition to being complementary, the move feels more defensive than offensive. The employment arms race is evolving into a three-horse race between Google, Facebook, and LinkedIn/Microsoft. Giving Indeed a counterpunch in Glassdoor is likely necessary to slow down the waves of change and strengthen whatever moat is left. Could an acquisition of ZipRecruiter be next?

Sometimes the best way to beat a bully is to buy make a lot of new friends. Don’t forget Workopolis and SimplyHired are in Recruit’s hands too.

I’m a little torn on the price. On one hand, Glassdoor — basically a job board with reviews – got more than Monster and CareerBuilder when compared to their recent acquisitions. DHI Holdings, which owns Dice, has a market cap just under $75 million. On the other hand, when you raise $200 million bucks, there’s typically a 10x exit, which would put this deal way under. It’s hard to see how an IPO wouldn’t have raised more cash for shareholders.

One final thought: I can’t imagine these two brands remaining autonomous forever. I’m sure everyone at Glassdoor has been told nothing is going to change, but if I feel this deal is a move to be the fourth horse in a four-horse race, then both brands cannot stand alone for long.

My best guess is Indeed will remain the flagship brand with resources and content from Glassdoor eventually coming under one roof. I wouldn’t be surprised to see Hohman, who cut his teeth at Microsoft, Expedia, and Hotwire, running things at some point.

Recruit will fund the deal with cash on hand and expects it to close during the July-September quarter, subject to regulatory approvals. I don’t expect there to be much of a speed bump from regulators, but regulation can be a curious thing.