Jobster runs out of ideas… so now they are free

Oh you couldn’t miss it. The news is everywhere: Jobster decided to make all job listings free. All the Web 2.0 cool people have just about wet themselves in excitement. “Brilliant!”, “Stroke of Genius!” – ok so I made those quotes up, but that is the feeling I get reading the coverage.

Please. This is just stupid. Let’s break this down…

  • TechCrunch says “…goal is to do what PlentyOfFish is doing to Match.com”. PlentyOfFish brings in $10,000/day which is an awesome accomplishment (no doubt and I don’t discredit them at all). Ok, rah-rah. Now let’s do the math: $10,000/day averages out to about $300,000/mo or $3.6mm/year. That’s a ton of money (more oohs and aahs from the crowd). But for a business claiming to compete with Match.com it’s a pittance. I don’t want to detract from what Markus has done, but my question would be how do you scale this business? More eyeballs and ad-clicks? PlentyOfFish is a successful anomaly not a successful long-term business model.
  • Now Jobster – keep in mind they just laid off a bunch of peoplewith $50mm in the bank (at least at one point) has the brilliant idea to offer jobs for free. Sorry, but this is a cop-out. They blew through a ton of cash and can’t figure out how to build a business. So instead they just give it away for free. I think the Jobster.com investors said, “We’re screwed on this deal – let’s figure out how we can acquire the maximum number of jobs and resumes so we can sell this dog.” Sorry, Free Product + VC = lots of money for the VC when they sell it off 

  • Google Ads is not the only way to make money – I’m down with Seth. I love Seth. Love his books love his ideas. Yes, Google nailed permission based marketing. But that doesn’t mean it works everywhere. As an employer I don’t want to wade through all of the crap that monster.com lets in (we stopped using them because of the high junk levels). So how in the world is Jobster somehow going to do this better by being free? The answer is they aren’t! The only thing they will beat Monster.com at is collecting more crap and making you wade through it (more eyeballs and ad-clicks). If I was the CEO of Monster.com I’d be thrilled with this news.

  • Why is free always equated with good? This always puzzles me. As a business owner I talk with customers almost every day. One of the frequent questions I get asked before someone buys our software is “what if you go out of business?” Customers don’t want you to go out of business. They give you money to ensure that you stay in business and continue to deliver the value that you are providing them. Businesses burn money – cash is the fuel that allows a business to execute (payroll, leases, insurance, infrastructure, the list goes on). Google works as a free service to consumers because I can use it every day and they monetize those page views by showing me ads that businesses have paid for. So yes “free” does work in some cases. But if it worked everywhere why are people able to bottle and sell water when water is virtually free? Because in most cases free water tastes awful and isn’t as pure as bottled water. In other words, people pay money to get a better and/or higher quality service or product.

You want to impress me? Build something that is sustainable, do something different than everyone else, offer something that adds value, compel me to want to use your services not because they are free but because it helps make something better/easier/simpler. In return I’ll spend money with you.

I can’t help but feel that we’re on the edge of another bubble burst. Venture capital in web applications is expected to reach $1bb this year; it hasn’t been that high since 2001. Business models and venture investments are starting to get silly again about how they spend money. I think in either late 2007 or early 2008 we’re going to have a shake-out for the same reason Web 1.0 failed: because so-called business people stopped focusing on building and growing businesses and instead focused on making VCs happy.

Side note, I’ve got a dog in this hunt with JobBurner.com. We’re not going to be free. In fact we’re going to (gasp!) charge employers $200+ for a 30-day listing (sustainable) for personality based job matching (different). We are going to make sure our quality is excellent (compelling) and that we don’t make you wade through crap (value). Oh and we’ll also have Google ads because we don’t have $50mm in the bank (although I’ll admit it, we are talking to VCs).

So, if you like your water free, take a visit to the Mississippi River (#1 polluted water way in the U.S.) and post your jobs on Jobster.com. Otherwise stop by JobBurner.com, we’re not free, but you won’t get sick from using us.

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10 Comments

  1. >$3.6mm/year

    Uh – 3.6 mil a year running 1 web server, 3 database servers, and no employees? Who cares if it can scale – I’ll take that action in a heartbeat.

  2. Oh definitely. $3.6mm a year rocks — more so because PlentyOfFish is a one man show! But to say that somehow is competing with match.com is a little silly.

  3. You’re an idiot. Jobster was planning this move for a year.

  4. > You're an idiot. Jobster was planning this move
    > for a year.

    It took them a year to figure out to put up a free site? Then why not start free?

  5. What’s that you say? PlentyOfFish doesn’t SCALE? Ha, ha! I get it! :-)

  6. Jason finally came to the conclusion that Corp america will not continue to pay for the Jobster service for more than 4 months, so he decided to change his model to free. They have just shy of 100 employees who are HIGHLY paid working for a company this is offering there product for free = Many layoffs still to come!

  7. > company this is offering there product for

    > free = Many layoffs still to come!

    Exactly, that was my point too. The difference between PlentyOfFish and Jobster is that PlentyOfFish has 1 employee.

    Assuming a base payroll of $85k per-employee the burn rate likely looks something like:

    85,000 * 20% (employee benefits, taxes, etc) =

    $10,200,000/year

    That doesn’t include marketing and other overhead. Even if Jobster could bring in ad dollars like PlentyOfFish they would need to bring in at least 4-5X as much. I guess I just don’t get how Jobster being “free” is so good.

  8. Totally agree with you Rob.

  9. Amen to everything you said. You know why I pay for Match.com? Because since it’s slightly more expensive, the quality of people using it is higher than Yahoo, or that horrible looking fish site (you’d think the guy would at least pay for a designer).

    Free is not always better.

  10. I was looking at an ad by "jobBirn" and thought of this post you made. Took me a while to find it again, and I can’t get JobBurner.com to load. Did that idea die on the vine?