Jobster, the bold recruitment startup from Seattle that leverages social networking to find quality workers, is about to receive yet another round of funding, which it apparently needs to keep it in business.
In a letter sent to investors, most of whom are employees and former employees holding options, the company says it lost about $11 million in 2007 and has less than $3 million left in the bank. The new round of funding will add to the shares held by investors and that will mean the value of the shares and options held by others will be diluted.
Since January 2005, just months before Jobster went public, the company has garnered $48 million in venture capital from Ignition Partners, Mayfield, Reed Elsevier and Trinity Partners. The company’s hometown newspaper, the Post-Intelligencer, said the funding made Jobster one of the most heavily funded consumer Internet startups in the nation.
Launched with great fanfare and fueled by its charismatic and highly visible CEO, Jason Goldberg, Jobster quickly became one of the most talked-about recruiting sites. It cleverly merged social networking concepts into an online employee referral program. Brightly written job descriptions were sent to employees – and as time passed, to others who volunteered to join the Jobster network. The idea was that employees would pass along these jobs to friends who could themselves apply or again pass it on to others in an ever-widening circle.
The concept had a lot of appeal at a time when recruiters were furiously hunting for passive candidates. But just a few months after its March 2005 launch, Jobster bought WorkZoo, an aggregator of traditional job postings, causing industry professionals to wonder what change it portended for Jobster.
Later, it acquired Jobby, a startup that had begun to match jobseekers to jobs using tags, rather than the usual keyword resume searching.
By 2006, Jobster still offered its digital referral program, but the site had begun to resemble the traditional job boards it professed to eschew. Then late that year the company took a very public stumble, laying off 60 employees, 40 percent of its workforce, as CEO Goldberg came under intense criticism for his blogging about the company restructuring.
Jobster continued to fiddle with its business model, adding profiles much like Facebook’s, with whom it has a partnering deal, but focused on the user’s worklife; these profiles include tags, which recruiters can use to identify potential contacts. Jobster now also accepts traditional job postings, which employers can post free, paying only for the applicants they receive, or for which they can pay to post; more are spidered from other sites and are made searchable for jobseekers from the Jobster home page.
Despite the layoffs and restructuring, including an overhaul of the company’s sales program, Jobster continued to lose money. Its burn rate (the rate it which the company spent its investment dollars) was better than a $1 million a month, an amount calculated from information contained in the shareholder letter. Details contained in the letter were provided to David Manaster, CEO of ERE Media, which publishes this site.
A Jobster spokesman confirmed the existence of the letter, but said he had not seen it so couldn’t comment. Former CEO Goldberg, who left the company in early January, responded to emailed questions by referring us to the company. “I am no longer an operating exec with Jobster,” he wrote.