ZipRecruiter (Symbol:ZIP) is currently facing a stark reality. They went public in 2021 at $26 but now their shares hover around the $6 mark and each quarter their revenue goes down.
The company’s earnings are about half of what they were at their peak, reflecting not just the cyclical nature of the job market, but also a concerning lack of innovation and revenue diversification. For a company built on connecting employers and job seekers, I believe their current trajectory is unsustainable. It’s time for a radical shift – a move to go private and a comprehensive product overhaul.
In the early 2020’s they were on their way towards becoming a billion dollar enterprise reaching a height of over $900 million. Last year that number was around $474 million. The job advertising market of 2023-24 has taken a heavy toll on them and their competitors.
In this post I’m going to outline 3 ways Ziprecruiter can stop the bleeding, refocus and start to regain its footing. We need Zip to be a buffer against the Indeeds of the world which already has a stranglehold on the job advertising market. As the worlds foremost job board expert, here’s what I would do to change their fortunes.
1. Take Ziprecruiter Private
At this point the company is vulnerable to economic fluctuations. When the job market booms, they thrive. When it falters, they suffer. This reliance on the ebb and flow of hiring creates a volatile business model, punishing shareholders during downturns.
Public market pressures, with their focus on quarterly earnings, hinder the long-term, strategic investments needed for true transformation. Not only that, they are reliant on employers as the sole source of revenue. And those employers have pulled back mightily when it comes to job ads.
History is not on the side of public job boards, just ask Monster how that went!
Taking ZipRecruiter private would liberate the company from the shackles of short-term expectations. It would allow management to:
- Weather Economic Storms: Private ownership provides the flexibility to navigate market downturns without the relentless pressure of quarterly earnings reports. This allows for long-term planning and investment during lean times.
- Focus on Innovation: With less emphasis on immediate returns, ZipRecruiter can dedicate resources to developing cutting-edge technologies and services.
- Restructure and Reorganize: Private ownership facilitates the necessary restructuring that might be difficult to implement under the scrutiny of public markets.
Most industry folks I know also say the same. Joel Cheesman, HR podcaster and frequent Zip critic, is in agreement saying on his show recently, “Look, Zip is a steaming pile of XXX and something’s got to save it. Either an acquisition or private, but they can’t keep going on the road that they’re going.”
2. Beyond the Job Posting: Job Seeker Tools
ZipRecruiter’s current model largely relies on employer subscriptions. To secure its future, the company must diversify its offerings, focusing on adding paid services for job seekers. This is where innovation comes into play. They need to launch tools like;
- AI-Powered Resume and Cover Letter Builders: Leveraging AI to create compelling and tailored resumes and cover letters would provide a valuable service to job seekers.
- Advanced Matching Algorithms: Enhancing algorithms to go beyond keyword matching and consider skills, experience, and career aspirations would significantly improve job-seeker satisfaction.
- AI Interview Coaching: Offering AI-powered interview preparation, including mock interviews and personalized feedback, would give job seekers a competitive edge.
- Skill-Based Training and Certification: Partnering with or acquiring platforms that offer skill-based training and certification would help job seekers upskill and enhance their employability.
- Career Pathing Tools: Help job seekers find what the next step in their career should be, based on their skills and experience.
- Personalized Career Advisors: Offer paid services that connect job seekers with human career advisors.
The next generation of job seekers are willing to pay for tools and services that enhance their job search. And if Ziprecruiter doesn’t have the team in place to build these features they should buy it. A number of new AI based resume tools recently got funding like Final Round and Teal.
Here’s an argument for why ZipRecruiter should acquire an AI resume tool like Teal:
- Completing the Job Search Ecosystem:
- ZipRecruiter excels at connecting employers with job seekers. Acquiring an AI resume tool like Teal would expand their offering to encompass the entire job search lifecycle, from resume creation and optimization to application tracking and skill development.
- This creates a “one-stop shop” experience, increasing user stickiness and attracting a broader audience.
- Data-Driven Matching and Personalization:
- Teal’s AI analyzes resumes and job descriptions to identify skill gaps and provide personalized recommendations. Integrating this with ZipRecruiter’s vast job data would significantly enhance matching accuracy.
- This leads to better job recommendations for users and more qualified candidates for employers, improving overall platform effectiveness.
- Competitive Differentiation:
- The job search market is highly competitive. Integrating advanced AI-powered resume tools would set ZipRecruiter apart, offering a unique value proposition that competitors may struggle to replicate.
- This provides a strong selling point to potential users, and employers.
- Increased User Engagement and Retention:
- By providing tools to improve resume quality and track job applications, ZipRecruiter can increase user engagement and encourage repeat visits.
- Users who see tangible results from using the platform are more likely to remain loyal customers.
- Monetization Opportunities:
- Premium features of the acquired AI tool, such as advanced resume analysis, personalized skill development plans, and in depth analytics, could be offered as part of a subscription package or as add-on services.
- This would generate new revenue streams and increase profitability.
- Improved data collection:
- By having access to more in depth data regarding the job seekers skills, and resume data, Ziprecruiter could improve its own AI algorithms regarding job matching.
- Addressing the “Skills Gap”:
- AI resume tools often highlight skill gaps and suggest relevant training resources. ZipRecruiter could leverage this to connect job seekers with educational partners, addressing the growing skills gap in the workforce.
In essence, acquiring an AI resume tool would allow ZipRecruiter to:
- Enhance its platform with cutting-edge AI technology.
- Provide a more comprehensive and valuable service to job seekers and employers.
- Gain a significant competitive advantage.
- Unlock new revenue streams.
I also think Ziprecruiter should become lead gen for online course providers like Coursera, Udacity and others to help their candidates improve their skill sets. Imagine if a candidate could join the site and have AI analyze their resume and suggest potential courses to boost skills. It’s a win-win for all involved.
3. Helping Employers More
Ziprecruiter also needs a marketplace for employers to search for and find other types of HR & recruiting software/services to purchase. They could use this tactic as lead gen for vendors who participate, thus broadening their revenue stream without having to create or sell anything. Become an affiliate to vendors who want to be listed. Heck, charge the vendors an annual fee. They would love more leads from employers.
ATS platforms have long had marketplaces where employers can go in and browse related software and services from ordering background checks to employer branding services. It would be an excellent value add for Zip to offer its customers.
The Opportunity for Transformation
ZipRecruiter possesses a valuable brand and a vast network of employers and job seekers. By embracing privatization and diversifying its product offerings, the company can transform itself from a cyclical job board to a comprehensive career development platform. This shift would create a more resilient and sustainable business model, benefiting both employers and job seekers alike.
The time for incremental changes is over. ZipRecruiter needs a bold, transformative strategy to navigate the challenges of the modern job market. Only by going private and embracing innovation can the company secure its future and fulfill its potential.
