Jobster acquires Workzoo - an example of early stage consolidation

Just posted this over on the Glendor blog, but I wanted to make more general comments here: I was reading Charlene Li's excellent account of the launch of HotJobs crawling capability when I spotted that Jobster is buying WorkZoo. According to Charlene:

I spoke with Jobster CEO Jason Goldberg on Monday, and he described their vision of how WorkZoo will allow users to expand their search beyond their network of jobs on Jobster proper and see “every” job. WorkZoo has its cut out for them – in previous testing, they lagged significantly in their parsing ability compared to Indeed.com and Simply Hired. But this combination of Jobster and WorkZoo makes sense as a combined service – it’s also is similar to the partnership that currently exists between professional social networking service LinkedIn and SimplyHired.

It is interesting to see he consolidation has already begun, whereas the space is still in (the early days of) its infancy.

As already blogged quite a bit, it is much cheaper to start a company these days – which means that an interesting space will potentially get filled with a number of startups – competing for market share, eyeballs, attention, etc. At the same time we’ll see some of these companies taken out early by larger ones, we’ll witness early consolidations (like this one) where two players in a market will decide to join forces and share their assets and resources, and hopefully create a larger footprint.

Got to remember that mergers are challenging to execute on, and the “right” fit (of people, products, people, markets, people, platform/technology) is critical (do I need to say people again ?).

Update: here is the post from the founders of WorkZoo, explaining their reasoning beyond the decision to join forces.

Comments

[Greg Linden]

Hi, Jeff. It's true that mergers are tricky, but not when one of the firms is very small.

WorkZoo appears to be two guys running the business from their home. See the comments at the end of this press release:

http://www.workzoo.com/press_releases.html#tough

So, this is a talent and technology acquisition. These kinds of small acquisitions are usually successful and are a great way for a firm to pull in proven expertise and talent.

Larger mergers are more problematic because of the complexity involved. In fact, studies show that large mergers destroy value much more often than they create value.

[Greg Linden]

By the way, Paul Graham has an interesting essay on acquisitions of small tech startups entitled "Hiring is Obsolete":

http://www.paulgraham.com/hiring.html

Long, but well worth the read.

[Jeff Clavier]

Greg> Absolutely, and it was the same with Nick Bradbury joining forces with NewsGator.