Casual observers might consider the acquisition of Monster by Randstad as just another example of capitalism at work. It falls at the heels of Indeed’s recent acquisition of SimplyHired and Microsoft’s acquisition of LinkedIn. Many analysts and talking heads suggest it is market consolidation. The real reason is one worth hearing. It’s an Epic Fail.
“It’s the economy, stupid” was President Clinton’s slogan that he rode to the White House. Today, it could be “it’s the data, stupid!” The sale of Monster is a classic example about how far the sophistication of recruitment has come and how out of touch many organizations are.
Monster started in 1994 providing searchable job ads. It changed the way employers promoted job openings and how candidates applied. It literally and figuratively killed the print classified ad business for jobs. By 1996 it went public at an IPO price of $7. By the year 2000, Monster (or more appropriately TMP/Monster) was valued at more than $8 billion with a stock price of $91, a 1300% return! It was a cool and incredibly profitable idea.
But 20 years is an eternity in today’s world. With exponential change the norm, market leadership evaporates faster than mist on a hot summer day. Ranstad paid $429 million, about 5% of Monster’s peak value, or $3.40 per share, half its initial offering.
What happened? More importantly why should every employer care?
Look no further than Harvard professor Clayton Christensen for part of the answer. In his bestselling book he makes the case that successful companies fall behind because they often put too much emphasis on customers’ current needs, and fail to adopt new technology or business models that will meet their customer’s’ unstated or future needs.
Monster is still one of the most popular places for employers and candidates to post jobs and resumes respectively. Millions of jobs are still filled using Monster as the medium. But when Monster started, there was no such thing as “social media.” In fact the World Wide Web was a mere toddler. The first web site was put online just 3 years earlier.
Today the war for talent is fierce. And the quality of good jobs and skilled workers got diluted in a business model based on generating large volumes of online traffic. Monster simply failed to adapt, attempting to squeeze a few more coins out of an aging business model. Meanwhile disruptive competitors like LinkedIn and Indeed shifted the marketplace.
Like many other organizations, Monster had the job market by the tail. First it had an incredible platform to connect people. When social networking sites likes Facebook and LinkedIn exploded in the early 2000s, Monster missed the boat. The days of matching open jobs with available candidates using a dating service model are over. Imagine having all those employers and candidates hanging out on your website each and every day and ignoring the phenomenon of social networking as a value-added asset As is the case so many times, arrogant management and complacency is really the biggest threat to innovation and survival, not the new competitor.
The bigger misstep is one that all organizations should heed. Data and predictive analytics is king.
Worldwide, Monster added over 1 million NEW resumes each month in 2015. Imagine what one can do with that data. Imagine how good Monster could be if it had focused on quality matches, using advanced predictive analytics, instead of quantity. Unfortunately their revenue model was based on high volume traffic not outcomes.
Ironically LinkedIn which is still not profitable was purchased for a tidy sum of $26 Billion, 21 times more than Monster! And LinkedIn is far from the pinnacle of job search. But they figured out that customer needs had change and realized they were a data analytics company that just happened to be in the networking business. Monster remained a depository of classified ads and resumes,
The acquisition of Monster was NOT the acquisition of a competitor. It was the acquisition of one of if not the largest job related databases in the world. Their days of an industry leader and market disrupter faded years ago.
Lesson learned: Data is more than just a backup system to support a decision. Too much is at stake these days to ignore the value of data and predictive analytics, whether it is strategy, marketing, or recruiting. Rely on your gut and past success at your own peril. Monster became irrelevant because they kept doing what they always did. Employers too must accept that talent is scarce, that it will grow scarcer, and the margin for error is shrinking. The key to future success will be based on reliable and predictive data. Ignore the data and trust your gut at your own peril.
Ira: I think this is an absolutely brilliant post that sums up the current hiring ecosystem (from a technology standpoint) in extremely accurate fashion. 10 years ago, you’d see innovative new sites coming out almost daily within the career services and management space. Now we’re going through a period of consolidation where only a few key players seem to control all the main tools and data — but the average unwary job hunter fails to realize this and still checks dozens of redundant or outdated sites, each day, hunting for leads. So for those who haven’t yet realized this, running just three searches on Indeed.com, LinkedIn, and Craigslist will cover the lion’s share of the published job market — and then one should concentrate their remaining time/energy on tracking down less public opportunities via networking and other means. But yes, there have been some tectonic shifts lately in this segment, which I’m so glad you’re chronicling and helping explain to new job hunters and those who don’t track this stuff on a daily basis. Keep up the great work!