Indeed

Last year, when Brad and I were on the road raising our
fund, we used to talk a lot about web services that should exist but don’t.

One of Brad’s favorites was “paid job search.”

Brad would say that job classifieds on the Internet worked
like job classifieds in the newspapers, you had to pay for a listing. Then he’d point out that the business model
of choice on the Internet was list for free, pay for clicks. And we’d wonder why nobody was doing that.

We did a little research and found out that Flipdog.com had
tried it in the heyday of web 1.0 and had a hard time making it work and sold
out to Monster.com in the spring of 2001. We looked at what Monster had done with Flipdog and it appeared that
they hadn’t done much.

We noticed that there were a few small companies trying to
make a go of the paid job search business model but none seemed to be getting
much traction. So we just shook our
heads and filed it away as something to figure out.

Then in mid December, as we were in the process of closing
our fund, I read this post about Indeed on John Batelle’s Searchblog. I emailed the link to Brad (we weren’t using delicious back then) and he
called Paul Forster, the CEO and
co-founder of Indeed.

That begun a seven month courtship that culminated last
Friday in an investment by Union Square Ventures into Indeed. Not all of our deals take seven months but
Paul and his partner Rony Kahan took a lot of convincing. They had built and
sold their last business (another jobs business called Jobsinthemoney) without
venture capital and had to be convinced that they should sell a meaningful
ownership interest to people they didn’t even know.

I guess we did a pretty good sales job because we got them
over that, finally. We were joined in
our investment by The New York Times Company and Allen & Company, two top
notch organizations that we’ve invested and built companies with before.

To Paul and Rony’s credit, during that seven month courtship,
they have built Indeed into the leader in the job search market. Their competitors will probably take
exception to that comment, but our analysis of traffic, jobs indexed, and name
recognition indicates that Indeed is the leader in pure job search.

So, why did we make this investment, beyond the fact that
this was one of the sectors that has always interested us?

For one, we are big believers in the fragmentation of the
Internet. We don’t believe that there are going to be several large “destinations”
where employers will go to list their jobs in the coming years.

We are a believer in what some of us are calling “sell side
advertising”. That’s the idea that
advertisers will put their ads on the Internet for anyone to find and
display. And if the advertiser gets clicks
back, they will pay for the clicks.

Job search is one of the first places that sell-side
advertising is going to happen because most employers already put the jobs they
are currently looking to fill on their web sites. Those jobs are the “sell side” ads. Indeed and others are crawling the Internet, grabbing
those “ads” and displaying them.

It just makes so much sense. Most large employers have HR systems in place which allow managers to
automatically post open positions to the web. Those systems then take the incoming applications/resumes they collect
on their web sites and process them into the hiring workflow.

In our due diligence, we talked to these employers. They
don’t really want to list their jobs in newspapers, job boards, or anywhere
other than their website because that’s where they want to collect the
resumes. What employers want is the
ability to buy traffic to their website, and direct it to the jobs they most
want to fill. And they want to buy that
traffic on a paid for performance basis, not a fixed price basis.

That what job search does for employers. It’s really simple. Job search delivers traffic to employer’s
websites more efficiently than any other method.

The value proposition for job seekers is equally strong. As Indeed says in its tag line “one search.
all jobs.”

In the old model, a job seeker needed to scour all the major
job boards, the local classifieds, craigslist, and the web sites of the
companies they are interested in working for. That is because nobody had a
comprehensive list of the open jobs.

Now, it’s much simpler. The job seekers just go to
Indeed.com, they do a search, and they get all the jobs that are listed on the
Internet, no matter where they are listed.

But on top of that, they get advanced search functionality,
the ability to store searches, turn them into RSS feeds, and be alerted when
new jobs show up in the index that meet their criteria.

This is a revolution for the job seeker and the traffic
growth that Indeed has been seeing since launching in beta last November
indicates that job seekers love the idea of job search.

So Indeed has a strong value proposition for both job
seekers and employers. That’s
critical.

But on top of that, there is something really interesting
going on with paid job search. One of the central tenets of Web 2.0 is the
notion of syndication of content and commerce. Indeed facilitates that in a big
way for the existing job classified providers. Because Indeed and some of the
other job search services “play nice”, job boards and other job publishers have
been supportive of the efforts of these services.

In fact, one of the leaders in the job board market,
Yahoo!/Hotjobs, recently embraced job search in a big way. Yahoo!’s
implementation of job search is really interesting. They are backfilling their
Hot Jobs service with a job search service that is similar to Indeed’s. It will be interesting to see whether job
seekers prefer search results that are filtered exclusively by relevance
(Indeed) or by paid/free (as Yahoo! is doing).

But regardless of the business model, the fact that
Yahoo!/Hot Jobs is embracing job search means to us that this model is here to
stay and is likely to be the front end for most job searches in the future.

It will also be interesting to watch Yahoo! to see if the leaders in traditional web search can do vertical search as well as the companies who are focused exclusively on vertical search. The requirements of job search or travel search or some other form of vertical search require different crawlers, different frequency, different results alogorithms, etc.  So Yahoo!’s entrance into job search is going to be interesting on multiple dimensions.

Another really valuable asset that the job search players
own is an index of all the jobs that are available at any time. Indeed keeps jobs in its index for 30 days
and currently has over 3.5 million jobs, a figure that is growing daily as new
sources are added. That compares to
Simply Hired, one of Indeed’s competitors, which keeps jobs in its index for 45
days which boosts their total jobs number. But whatever the policy of keeping jobs in the index, Indeed and Simply
Hired have way more jobs available to search than the job boards. The largest job board has less than 500,000 jobs
in the latest 30 day period.

Longtime readers know that I have been running an Indeed
Jobroll on the right sidebar of this blog for about six months. Anyone can do
that by visiting Indeed and doing an advanced search. The results of that search (in my case
venture capital and web technology jobs in New York City) will be displayed in a job
roll that can be run on any website or blog.

The jobroll is a good example of the way that the Indeed
index can be syndicated to provide value to publishers and other operators of
web services. In a Web 2.0 world, apps are built on top of apps, and at its
core, Indeed is a web service. We look
forward to lots of innovation in this area over time.

Like any early stage investment, there are lots of risks and
challenges for Indeed and its investors in the coming years. But we are prepared for that because that’s
our business.

We are really looking forward to working with Paul and Rony
and their team to build the next big thing in the jobs business. Brad is joining the board and will be our
point person on the investment, but our style is that every person at Union
Square Ventures is involved in every investment and we certainly hope to be a
“value added investor” in every sense of the word.

If you are interested in learning more about Indeed, I’d
encourage you to go there and do a job search, subscribe to a job search or two
with RSS, and put a Indeed job roll on your blog. I think you’ll be as impressed as we have
been.