Chop-ster: Jobster Lays Off 60 Employees

It’s official: Jobster has given 60 employees their walking papers.

As of Wednesday morning, “88 employees remain, with 400 customers, and plenty of money in the bank,” says Jobster CEO Jason Goldberg.

Following a holiday break, Jobster employees returned to their Seattle offices to discover that the online recruiting and job search service plans to slash the entire field sales department, including the marketing services that relate to field sales.

As part of a “strategic move to center 2007 strategy around online services,” Jobster is reorganizing, though customers should expect minimal impact, according to Goldberg.

Goldberg points to the successes and challenges in 2006, alluding to a year filled with both growth and learning.

“On the positive side, we signed up more than 500 customers for our paid recruiting services, grew our revenues by 482%, and grew traffic to the site by more than 260% after re-launching it as a Web 2.0 careers site in July. We also raised $18 million in additional financing in 2006.”

On the other hand, he cites slower-than-anticipated adoption among certain types of customers. The company says it was not pleased with the cost to serve via in-person support.

Goldberg says field sales has proven expensive, so the company is choosing “to further our focus in 2007 on helping employees find hard-to-find employees, while decreasing in-person sales and support.”

For current clients, this means an end to in-person support as they had known it. However, the in-person support will still be an option for those who request it, just not a standard part of existing client services.

“We will be publishing the entire pricing schedule on the Web, with support packages, training modules online; phone-based [support]; webinars; and in-person packages,” he says.

A Painful Decision

Goldberg says the layoffs are a painful decision, because it means “saying goodbye to people who helped build this company from the ground up.”

While the company declined disclosing its net loss, it did say affected employees — depending on their position — received four-week severance packages, on average. It spent the morning meeting with employees to walk them through policies regarding severance packages and other paperwork.

“As a recruiting company, we are doing out-of-the-box measures, [including hosting a] career fair, resume writing; counseling; and helping in every way possible. This is not performance-related. It’s to implement a decision to focus business away from field sales toward online and telesales,” he says.

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The company says it made no cuts in product development or telesales. “The remaining team will take this company forward. The people left in our organization — we have the right people on the bus to execute this strategy in 2007.”

As for the rampant blogosphere rumors that had been circulating for the past two weeks, Goldberg says, “I’ve got thick skin. I am frustrated I couldn’t clear the air sooner, but I was trying to be careful.”

He says he is somewhat grateful that the attention has been focused on him, rather than the employees.

He alleges that this round of layoffs does not point to more hurdles for online recruiting services or trouble for social networking. Instead, he says, “the enterprise software/HR market is a challenging market. The decision was to focus on what is more scalable. We’re a technology company and want to invest in technology solutions.”

Goldberg squashes any claims that the company has grown too quickly, too fast.

“That is a misnomer that we moved into this lavish office. We are in a cheap-rent district,” he says.

He explains that the company started with field sales, telesales, and online services, with checkpoints set up along the way to determine effectiveness.

“We felt in September that we had enough data to be able to make sound business decisions, and we put the wheels in motion after that. In hindsight, can I say I wish we hadn’t employed an extra 10 or 20 people? Sure.”

Goldberg claims there will be no further rounds of layoffs in 2007, “as long as we execute on the plan.”

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.