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Simply Hired, a privately-owned search engine that aggregates jobs listed on websites across the internet, may be in sales discussions with Mountain View, California-based Google, according to news reports.
Both Google and Simply Hired declined to specifically comment on these reports. “I am aware that there are rumors. I am not in a position to comment on anything. We have a very strict policy,” said Simply Hired CEO Gautam Godhwani said. “Like a lot of start-ups, an acquisition would be the most likely [exit] route followed by an IPO,” he added.
Godhwani told this news service in April that his four-year-old company had a run-rate in the USD hundreds of thousands for 2006. He said this week that the company has 40 employees and he is projecting USD 10m in revenues this year. He also suggested that it will grow 300% by the end of 2007. The company has previously received offers, he said.
Word of Simply Hired’s possible discussions with Google came to light this week in a story run by Alarm:Clock, based on information attributed to Trip Chowdry, a Global Equity Research analyst. The news came on the heels of comments made by Godhwani to this news service in April when he said his company could be acquired within 12-24 months.
Since Google and Simply Hired both have similar cultures and shareholders with links between the companies, a deal makes sense, said one industry executive. Simply Hired investors Ron Conway and Rageeve Modwani are former Google executives, according to reports.
Moreover, an industry executive who has done business with Simply Hired, said that this may be a good time for a deal, with the company’s seemingly soft financial position. For instance, Simply Hired has sought to boost its distribution power by making deals with third parties, such as MySpace, to power job searches for niche internet audiences. The executive did not think the concept was proving successful from his experience with it. “I guarantee you there’s a huger audience looking for jobs just in a general search in a search window than are doing it through any MySpace connection,” he said.
MySpace owner News Corporation invested USD 13.5m in Simply Hired in April 2006 based on a rumored post money valuation of around USD 40m.
A Simply Hired acquisition could also work well in tandem with repeated rumors naming Google as a potential bidder for Monster Worldwide, said Bruce Dorskind, an industry consultant and former Monster executive who helped orchestrate its predecessor company’s sale to TMP in 1995.
As reported by this news service last week, some industry executives and consultants have speculated that a sale of Monster could occur at any time based on sudden management shifts at the company and the company’s need to respond to the increasing popularity of niche job boards.
Monster has not done a good job addressing these market changes, said Dorskind, who noted that the company is still largely operating as a one-size-fits all search engine for jobs. “Monster has never harnessed its database the way it could,” he said; acquiring Simply Hired could help Google change that if it is indeed interested in Monster, he added.
However, the industry executive questioned whether Google really needed a company like Simply Hired to build tools to gain penetration in the online job searching market. Dorskind did not disagree with that analysis: “I don’t believe there are any bells and whistles in the Simply Hired product portfolio that Google couldn’t build itself,” he said.
Still, the time may be right to move into the employment market for Google, said Dorskind; a major reason being that employment dollars are already being pushed towards Google. According to Dorskind, the roughly 200 recruitment advertising agencies have increased business with Google roughly 5x–10x over the last 18 months.
During the same time period, Dorskind said he has begun to see Google giving presentations at trade shows and human resources meetings. The problem is that he said the company did not yet seem to fully understand the employment market. The job aggregator could help with that. “Simply Hired hasn’t been in the job space that long, but they do have some appreciation of what employers are looking for,” Dorskind said.
If a deal is in the offing, the big question is how Google would value Simply Hired. “I wouldn’t venture a guess in a market like this,” said Simply Hired CEO Godhwani. “You are seeing valuations of companies based on revenues,” he said noting his USD 10m projections for the year.
Generally, sources say that deals in the online job recruiting space are typically done for a revenues multiple of 3x to 4x. With only projected revenues in the millions for this year, Dorskind noted that he did not believe the company has enough revenues to make the standard multiple equation satisfactory to Simply Hired’s owners.
If true, Google could be looking at Simply Hired over its chief competitor, Indeed, because its potential valuation may be lower, said the industry executive who has been a Simply Hired business partner. Accroding to Hitwise, the internet analyst, Simply Hired ranked 48 out of the 2,035 online recruiting websites it tracks last month; the company’s chief competitor, Indeed, was ranked six.
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