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It is better
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John Sumser

Reality
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John Gall

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If you can't
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John Sumser

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Trend 4: Continued Rumors Of Consolidation

(February 12, 2001)

Spiked by this year's acquisition of CareerBuilder (by CareerPath) and CareerMosaic (by Headhunter.net) and last year's acquisition of DICE (by Earthweb, the public company), dire forecasts of a draconian consolidation continued to fuel the down moments of industry gossip. Monster's recent purchase of JobTrak kept the fires burning. The HotJobs purchase of Resumix seemed to indicate that the trend was spreading beyond the job board industry. Most often, the repeaters of this tidbit of industry talk were the hopeful many who wished that their job board(s) would be acquired.

Peeled back from the hype, however, another story emerges. Today, as always, one company buys another for fit, function or some other obvious purpose. HotJobs needed the revenue (they had an applicant tracking system). Earthweb needed a job board for revenue purposes. Hodes was trying to reclaim market credibility (as an objective middleman) in its sale of CareerMosaic. Monster, busily trying to flesh out its market niches, couldn't resist the JobTrak fit. The CareerBuilder purchase was a quiet way to acknowledge the complete failure of CareerPath (after many tens of millions of dollars). Soon after the transaction, the new entity decided to "keep the CareerBuilder management team" and close the CareerPath Offices. Each was a simple transaction that contributed little evidence that the overall industry is merging together.

In fact, we believe that the industry will continue to fragment for the following reasons:

1.   A Job Board can be profitably executed by a team of four and generate about $1Million in annual billings.
2.   No historical entity has been able to carry off more than four percent of the overall market.
3.   There are no meaningful barriers to entry in the business in spite of what the entrepreneurs are telling their funders.
4.   Like other markets with consumer front ends, the top of the market can have as many as a dozen recognized brands.
5.   The low end of the business (the low 90%) is a microniche relationship endeavor best suited to small teams.

*Excerpt from the 24 Trends In Electronic Recruiting.

- John Sumser

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