Wednesday was the day of reckoning for Jobster, a darling of the Web 2. 0 age. After a soap opera-like drama unfolded online over the past...
Wednesday was the day of reckoning for Jobster, a darling of the Web 2.0 age.
After a soap opera-like drama unfolded online over the past two weeks, Chief Executive Jason Goldberg said Wednesday that 60 of the online recruiting company’s 145 employees will be laid off in an attempt to reach a goal of becoming cash-flow positive by year end.
Unlike most layoffs, which happen behind closed doors, this one was far from secret. Dozens of people in the recruiting and technology communities started blogging about the company, which develops technology to help corporations recruit employees, about two weeks ago.
Goldberg added to the speculation by blogging about it himself, saying that the company is entering a phase of restructuring and that his goal is to create a profitable company in 2007.
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Jobster, which Goldberg founded in 2004, has grown fast. The company raised $48 million in venture capital from well-known investors, including Reed Elsevier, the London publishing company that owns LexisNexis, as well as Bellevue’s Ignition Partners, Mayfield Fund and Trinity Ventures. The company moved from its Pioneer Square digs to a larger office in October.
“In hindsight, do I wish I didn’t hire 10 to 20 people? Sure, but at the time, we were following strategy,” Goldberg said.
Goldberg has faced criticism — much of it through anonymous comments posted on blogs — for the way Jobster’s restructuring has unfolded.
First, Jobster’s viability was put into question. The company was supposed to be part of a new era of business models, called Web 2.0, which values substance over glamour, unlike the dot-com days of the ’90s. Second, Goldberg faced criticism over sensitivity toward employees, who claimed they found out more online about their fate than through internal communications.
Goldberg defended the way he approached the situation.
He wrote Friday in his blog, hosted on the Jobster Web site: “Why would a ceo be so public with his thoughts and open himself to so much public scrutiny and criticism? Answer: Shouldn’t we actually ask ourselves: ‘Why not?’ Why am I so comfortable blogging here right alongside the right hand column on this blog which has feed after feed of public comments and criticisms? Answer: transparency. Embrace it. Don’t run from it.”
At noon Wednesday, the company embraced transparency even more and gave an update to select members of the media.
Jobster confirmed that as part of the layoff, a handful of executives were let go, including Tracy Lawrence Burman, president of business operations; Todd Leeson, vice president of marketing; Brad Kendall, senior vice president of sales; and Kerry Rupp, vice president of business development.
As for the rest of the employees who were laid off, 40 in the Seattle office were told Wednesday morning by the executive team. Others were told on a conference call. On average, the employees will get four weeks of severance based on their tenure.
Goldberg said the layoff came because adoption of Jobster’s business among bigger clients was slower than expected.
Most of the laid-off employees were part of Jobster’s in-person sales team, which was part of a three-pronged sales approach also consisting of telephone sales and online sales. He said an evaluation determined that the in-person sales team was the most costly and unnecessarily created a consulting business within the company.
“We began experimenting with over the phone and found you could sell the exact same customer the same product in a different manner,” Goldberg said. “I did not take $48 million to become a consulting business, but to become a technology company.”
Tricia Duryee: 206-464-3283 or firstname.lastname@example.org