3 Reasons to Steer Clear of the Rumored Upcoming Glassdoor IPO

Bloomberg is reporting that Glassdoor is planning to go public in the second half of this year, even though the company wouldn’t comment on “unsubstantiated reports.” In addition to an anonymous source, Bloomberg outlines the addition of a new CFO with IPO experience and funding that has recently passed the $200 million mark.

The pressure for any company with that kind of funding to go public must be immense, and Glassdoor has been rumored and predicted to hit the public markets for some time. The Bloomberg story ups the ante and means this likely event will be a discussion point for pundits in the months to come.

As one of those pundits, I’m going to cut right to the chase and give you three reasons to run as far away from Glassdoor stock as possible, even though Bloomberg says the company is growing about 30 percent year over year and now breaking even.

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  • The commoditization of employee reviews. When Glassdoor launched in 2007, the “Yelpification” of the workplace hadn’t taken hold. There were a few others, like Jobvent, but Glassdoor rose to the top, enjoying some positive PR and search engine traffic along the way. While Glassdoor is still the brand many think of when they want employee reviews, competition is heating up. Indeed already holds its own head-to-head, LinkedIn is dabbling in reviews, Google for Jobs showcases a variety of competitors in search results, and would anyone be surprised if Google gets into the game, much like it did against Yelp? As Glassdoor loses its hold on this content, its value decreases exponentially.
  • The commoditization of jobs. Around 2010, Glassdoor added Indeed backfill to its site in order to start monetizing the loads of traffic anonymous employee reviews were generating. Reviews are great for traffic, but they don’t do much in terms of driving revenue. It has since moved away from backfill and embraced original content, but the job-posting game is no growth engine. Exemplified by the slow death of traditional players like Dice and Monster, Google for Jobs is hammering in the nails faster than ever before. The rise of programmatic ad buying isn’t helping either.
  • Ongoing legal battles. It doesn’t get reported enough, but Glassdoor’s time in court is a merry-go-round that never stops. Employers, it turns out, hate bad reviews, especially when they think slander is involved, and are willing to sue Glassdoor in order to reveal IP addresses. One of my sources, who prefers to remain anonymous, told me about a year or two ago that legal battles and privacy issues were the biggest hurdles to an IPO. A November 2017 ruling in Arizona, which said Glassdoor must provide the identities of certain users, is bound to make investors skittish. Businesses based on anonymity aren’t likely to mesh very will with Wall Street.

I have to imagine the braintrust at Glassdoor feels a little bit like Fitbit or Pandora before they went public. “Oh crap, the Apple Watch is coming! We’d better get ours while we still can.” In other words, there’s no more moat around the thing that made Glassdoor so special in the first place, and companies with deeper pockets are beginning to smell blood while the barrier to entry is getting lower with each Google search.

I hope I’m wrong. It would be nice to see a company in our space go public and do well, since, ya’ know, it hasn’t happened in, well, a long time. And sure, depending on the actual stock price and valuation, Glassdoor could be a great place to put your money. However, I don’t expect a penny of my retirement to go into $GSDR, or whatever its eventual ticker symbol will actually be.

Joel Cheesman has over 20 years experience in the online recruitment space. He worked for both international and local job boards in the late ‘90s and early ‘00s. In 2005, Cheesman founded HRSEO, a search engine marketing company for HR, as well as launching an award-winning industry blog called Cheezhead. He has been featured in Fast Company and US News and World Report. He sold his company in 2009 to Jobing.com. He was employed by EmployeeScreenIQ, a background check company. He is the founder of Ratedly, an app that monitors anonymous employee reviews. He is married and the father of three children. He lives in Indianapolis.

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3 Comments on “3 Reasons to Steer Clear of the Rumored Upcoming Glassdoor IPO

  1. Interesting information. Thanks for putting it together. Hope all is well. I need to get you down to Dallas in September to speak at my conference again. I am sure you have some new, fresh, and innovative material. Drop me a line. Good luck on your Browns getting it right in the draft this year 😉

  2. Hi Joel,

    Good point raised on legal risks. Didn’t know about that new case. Can’t think of a public company with anonymous-to-user content yet either.

    The other points though were soft:

    1) All popular things become a commodity. You can say the same for hotel booking sites or real estate listing sites. Smartphones are now a commodity… So should people stop investing in Priceline, Expedia, TripAdvisor, Zillow, Apple?

    2) The larger macro trend is this continued shift in offline to online recruiting spend which will allow for multiple tech companies in the recruiting space to co-exist. There are so many large recruiting agencies in the world to disrupt with online. One of them even bought Indeed.

    3) You didn’t mention salaries. Glassdoor has something pretty unique called Salary Estimates for lots of job listings in The US. It’s a content derivative that’s harder to copy. Zillow came out with Zestimates and it was a big differentiator for a long time. People love this kind of information.

    4) Job listings have been a commodity for a long time already. The job boards died because consumers wanted a more comprehensive experience where you had to become an aggregator. On the Google point, they have their toe in every pond and their traction in the jobs space is very early days. They might need a Glassdoor to accelerate their progress. There is so much imperfect data in this space: job descriptions and resumes… Google’s fancy machine learning models aren’t going to yield much. Junk in, junk out.

    I’m surprised you mentioned Jobvent to reinforce a point because that never really became a thing 🙂

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