Is LinkedIn's Worst Nightmare a Facebook Friend?
Keep your friends close; keep your social media friends closer.
That's the hard lesson that LinkedIn (NASDAQ: LNKD) is about to learn. While the inflated stock closed Friday above its year-to-date low, the social media giant is still falling behind the ridiculous highs that it achieved during the summer. What's more, the company is faced with a growing number of competitors that are encroaching on the job and networking market that LinkedIn currently commands.
One of those competitors is Jobfox, a networking site that, according to founder and CEO Rob McGovern, “focuses on helping recruiters and job seekers build online relationships.”
“We have sophisticated matching technology that brings them together based on common interests,” McGovern told Benzinga during a recent interview. “Jobfox is a new generation of job site. It helps job seekers network with corporate recruiters, and vice versa. The world is moving into the social era, and job hunting needs a new round of liberalization. Companies and great talent want to connect, and we've built a product that uses technology to bring them together.”
A veteran of the online job searching and recruiting industry, McGovern created CareerBuilder – one of the largest online employment websites in the world – more than 15 years ago.
“I first became exposed to the Internet in 1994, and my first reaction was, ‘this is going to change everything,'” said McGovern. “As I thought about corporate recruiting, I became convinced everything would change when there is a wire connecting every job seeker with every company. I started CareerBuilder to surf this wave.”
McGovern, who spent the first 10 years of his career with Hewlett-Packard (NYSE: HPQ), said that he created CareerBuilder “to liberalize job information for the benefit of professionals and companies.”
“In the pre-Internet days, jobs were a secret, with only 2-3% being advertised in newspapers,” he said. “I felt that publishing nearly every job would create liquidity in the job market. If people knew what jobs existed, they'd be more able to steer their careers.”
Though he has moved on to new ventures, McGovern said that he is satisfied with the path that CareerBuilder's owners have taken. “I think it's a great company,” he said. “I'm happy the acquirers have continued to invest in the business, and I'm proud 20 million people use the product every month. When I wrote the business plan while sitting on the beach, I hoped the product would be world-changing for the economy.”
Making a Connection
One of the first things that recruiters and job seekers will notice upon visiting Jobfox is that the site openly publishes the number of network connections that have been made.
Which begs the question: how are network connections defined on Jobfox?
“A network connection is when a job seeker or corporate recruiter form a connection on Jobfox,” McGovern explained. “Let's take the example of a corporate recruiter who hires Java software programmers. She would like to be connected to the best 15 or 20 Java programmers in her town.”
At press time, the site had facilitated more than 20.5 million connections, seven million job-seeking members, and more than 5,000 employers who use the service.
More Partners Than Competitors
While LinkedIn may have a lot to fear with the rise of Jobfox, McGovern said that the two sites are “more partners than competitors.”
“We have connected our product to both LinkedIn and Facebook because we believe the new Internet is the Social Internet,” he said. “We think LinkedIn has made a valuable contribution to recruiting. I believe LinkedIn disclosed in their IPO Prospectus that many of their users do not visit their site every month, and many aren't based in the US market.”
However, McGovern warns against the tendency for pundits to look at a market as winner-takes-all. “That's not the way it works in online jobs,” he said. “There are 10 significant job sites, despite what the pundits say. You should expect the same thing in social recruiting. Companies will use multiple vendors, meaning there will be multiple winners in the game.”
The eHarmony of Job Networking
When signing up for Jobfox, McGovern said that users will complete a match profile, “which tells us about their skills, experiences, and career desires.”
“Our matching algorithms then take this data and connect them to the recruiters who are looking for people with their attributes,” he said. “Some people call us the eHarmony of job networking.”
“One difference [between Jobfox and LinkedIn] is that we keep our network connections completely private to protect the employed professional,” McGovern added. “In fact, 79% of our users are currently employed, often referred to as passive job seekers. Many of these people join Jobfox to meet recruiters who could hire them in the future. Some of our members want to be hired tomorrow, and others want to network and learn about companies for a job change 12 months from now.”
As far as growth is concerned, McGovern said that most of it comes from word-of-mouth buzz.
“Much of our growth comes from our members telling their friends about us,” he said. “With that said, we are a significant Internet advertiser, and we market on Facebook and LinkedIn. 2011 was a record growth year for us, and we intend to keep growing through 2012.”
Looking ahead, Jobfox plans to expand internationally. “This is something highly demanded by our employer customers, and we'll have more to say about this next year,” said McGovern.
Jobfox has two sources of revenue. “Employers pay so they can create a network of job seekers,” McGovern explained. “This costs $6,000 per year, per recruiter at a company. Job seekers also pay us for premium services, like rewriting their resume. We're the largest resume writing company in the US.”
While McGovern was willing to talk about Jobfox's revenue drivers, he was not interested in discussing the company's level of profitability.
“We're a private company and [we] don't disclose our financial results,” he said.
That could change, however. When I asked if he could see an IPO in McGovern's future, he replied, “That's a possibility, although it is too soon to tell. At the moment we're focused on building a great company. Don't plan an IPO in the near future.”
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What will become of the future of the online job seeking and recruiting industry?:
- While LinkedIn could be threatened by the rise of Jobfox and other job seeking and recruiting sites, McGovern is convinced that there will be several winners in this space, painting a better picture for LinkedIn's future.
- Despite the ongoing threat of social media, CareerBuilder, which is partially owned by Gannett Co. (NYSE: GCI), is still going strong.
What will become of other, more traditional employment corporations?:
- Monster Worldwide (NYSE: MWW) is providing investors with a short opportunity. The online employment company has been going downhill since the year began, and with little to no signs of recovery, investors won't be returning to the stock anytime soon. (For immediate updates on LinkedIn, Monster Worldwide, and more, take advantage of the lightning-fast speed of Benzinga Pro.)
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