My Posts

Glassdoor’s Acquisition by Recruit Holdings is the Best Possible Outcome for Everyone

I haven’t always been positive on Glassdoor. I feel like their review system is problematic and that they aren’t really part of the employer branding ecosystem they desire to be. They may be a great job board with an interesting value proposition but that was it.

After their last round of funding in 2016, I predicted that they would be acquired or go for an IPO within 18 months. Glassdoor talked openly about preparing for the seemingly inevitable IPO.

I was off by a few months but that IPO will very likely never happen. Barring regulatory approval, Glassdoor will become part of Japan-based Recruit Holdings. The same company that owns Austin-based Indeed will add Glassdoor to its expanding portfolio of companies.

No Doom, No Gloom

I’m bullish on this deal for Glassdoor. I never felt like an IPO was inevitable because, as any observer knows, IPOs are particularly painful and risky. The level of regulatory and financial scrutiny is probably a little uncomfortable to a company that is as notoriously private as Glassdoor has been. A failed or withdrawn IPO is monumentally bad and there’s no way to control the story.

On the other hand, an acquisition is a deal that’s limited to a few players and a small army of lawyers. If an acquisition falls through, most will go unnoticed if they get out at all.

Rather than answering to shareholders who demand quarterly YOY growth, Glassdoor will be answering to Recruit Holdings. While growth is expected, they will be looking for long-term growth rather than the myopic, Wall Street version of short-term results.

Look to Indeed

One need to look no further than Indeed to see what Recruit Holding’s hands off approach can do. Indeed’s annual revenue is now eclipsing their acquisition price in 2012 (somewhere around a billion dollars). They’ve become one of the dominant brands in talent acquisition under their wing and they’ve vanquished the once powerhouses.

Indeed was even a bigger success story because they were largely bootstrapped before the acquisition. Glassdoor on the other hand took on about $200 million in venture funding.

None of that matters after the acquisition closes.

I expect Glassdoor to be around for a long time but I could see their business model shift. Maybe they lead more with the job board component. Maybe they make some technology acquisitions that gets them beyond reputation management.

These decisions will come deliberately, even if they involve some short-term growth challenges. That’s the beauty of answering to a conglomerate and not (direct) shareholders.

The Price is Right

The price of $1.2 billion (all cash) is probably right on the money, which is why this deal got done so quietly. It’s a good value for Recruit Holdings (Glassdoor was valued at around $860M-$1B after their last round of funding in 2016). Glassdoor investors likely get their piece and get a unicorn exit in their portfolios.

Was there a better time to do this for Glassdoor? Maybe. I don’t think they could’ve got this deal done in 2016 and their round of funding was clearly to buy time. Only Glassdoor knows if they could’ve done better but my guess is they couldn’t do it better by much.

What’s more exciting is getting more insight into the business and its workings. Recruit Holdings is a public company and the wealth of information on Indeed and its growth has been helpful in assessing the market. Seeing where Glassdoor fits in will be another useful piece of information for market observers and will ultimately tell us if Recruit Holdings made the right bet here.

My Posts

Lay Down Your Arms: There Is No War For Talent

The war for talent is over. I don’t know if it ever began but it certainly hasn’t existed for years. And every time I hear the phrase, I bite my tongue just a little bit.

It’s not just that war as we know the word to mean is a ridiculous oversimplification of the complexities of the labor market. But I’ll be honest with you, that is definitely part of my frustration. We have a multi-faceted economy and we’re breaking it down to the idea of war? War assumes conflict. War assumes winners and losers. War often implies black and white problems and solutions. Thousands of companies have already conquered the war for talent. They have the talent they need and if they need more, they know how to identify them and bring them on board.

That doesn’t sound like any war I’ve ever heard of. There are competitors in the same industry, going after the same talent, that both hire good talent, produce goods and make money. What kind of war is this?

There is no ground more sacred than the war for engineering talent in the Bay area. If you ask Jon Marcus, a tech recruiter in the Bay area, the problem goes beyond the supposed talent mismatch (via VentureBeat):

“It’s the fear of the unknown,” he says. ”Everyone is afraid of hiring the wrong person, and if they would just trust that they know how to ask the right questions, then everyone wouldn’t be complaining as much about recruiting.”

But instead of asking the right questions and hiring a candidate who’s qualified, Marcus says that startup founders will take a candidate in based on a personal recommendation or an impressive company name on a resume, usually branching outside the original specification they wrote and usually regretting the decision in the long run.

Marcus acknowledges that engineering talent is difficult to find and that more will continue to be needed. But he doesn’t sound like a soldier ready to go to battle. In fact, he seems more willing to turn it around on a hiring manager and tell them we’ve focused on the wrong thing. We’ve let perfect be the enemy of great when it comes to talent. We’ve let unrelated factors earn a place in our perfect hiring decisions.

While you were busy trying to find the perfect purple unicorn with rainbow colored wings, smarter companies just bought a horse, a bird and some purple paint. They also upgraded and added glitter.

Everyone loves glitter.

Recruiting’s war for talent has become a lot like HR’s seat at the table. It’s a mode of justifying your existence as a part of an organization. And if I never have to hear about either one of them ever again, it will be far too soon.

If you are in talent acquisition, your role is clear without the war that doesn’t exist: be smart, do things other people aren’t doing, network, and get in your prospect’s head to figure out what they want. Maybe most importantly, though? Push back on the purple squirrel searches. Push back on the A+ talent requests. Push back on the fear that organizations have when they can only check 8 of the 10 boxes on their ultimate candidate search form.

Are there difficult searches out there? Certainly. But let’s push back on the idea that finding truly one-of-a-kind talent is the only important differentiator in business success.

Your goal should be to deliver great talent within this decade. And if your client or company is sending you on wild goose chases rather than making and closing on offers to candidates that actually exist in this world, it might be time to push back or disengage.