Incorporated: 1995 as NetStart, Inc.
NAIC: 561310 Employment Placement Agencies
SIC: 7361 Employment Agencies
CareerBuilder, Inc., is an Internet recruitment company that currently runs the largest online job site and manages job listings for a large network of web sites, including MSN, and newspapers around the nation. CareerBuilder also provides tools for employers and aspiring employees to manage recruitment materials, including resumes.
Starting NetStart: 1995-96
CareerBuilder began doing business in 1995 as NetStart, Inc. NetStart was founded in Reston, Virginia, by Robert J. McGovern, a longtime executive in the computer industry, who had formerly worked for Hewlett-Packard and then at a software development company called Legent Corp. As McGovern later recalled, the initial idea of beginning a company focused on online job recruitment came to him while he was vacationing on a Delaware beach in the summer of 1994. "By the third day of the vacation, I was typing up the business plan," McGovern recounted in a 1996 Washington Post article. "By the fourth day, it wasn't a vacation anymore."
Eventually, McGovern received a generous buyout when Legent was sold to Computer Associates International. He used these funds to help him begin NetStart. The company was initially a modest enterprise. During its first year, it consisted of McGovern and five software engineers. Like many other young start-ups, NetStart initially lacked any tangible product. Nevertheless, McGovern's efforts attracted outside investment. A California-based venture capital firm called New Enterprise Associates contributed funds. In 1996, NetStart received $5 million from 21st Century Internet Venture Partners.
By that year, however, NetStart did have something to sell. Its TeamBuilder software, which sold for about $5,000, enabled human resources staff, rather than information technology (IT) experts, to manage online job listings and the recruitment data received from applicants. About 30 companies were using TeamBuilder at the end of the year. NetStart also worked to develop its CareerBuilder.com web site. Meanwhile, the company itself was growing. It employed around 25 people and had opened a second office across the country in San Francisco. It had further plans to open another office in New York, as well as three more, and to increase its sales force fourfold.
Creating and Establishing CareerBuilder: 1997-99
In 1997, NetStart released TeamBuilder 2.1 and launched TeamBuilder Online. It also achieved revenues of $7 million. However, it was through CareerBuilder.com, which included job listings and, unlike many other recruitment sites, tools for managing application materials such as resumes, that the company made a name for itself. In fact, at the beginning of the year, NetStart renamed itself CareerBuilder. It also extended the CareerBuilder brand by inaugurating the CareerBuilder Network along with 16 online partners, including American Banker Online, Yahoo!, AOL Digital Cities, Hispanic Online, Black Enterprise Online, and Women's Connection Online. Two more partners eventually joined the network, which grew to include job listings from over 800 employers. CareerBuilder.com itself reached the 1,000 customer mark.
Over the next several years, the CareerBuilder Network grew dramatically. In 1999, the company joined with NBC Interactive Neighborhood to create the NBC CareerBuilder Career Center. It also reached an agreement with Lycos Network to give CareerBuilder.com a prominent place on Lycos's sites, especially those that reached out to the IT industry. One of the company's main objectives was to replace massive job boards with sites limited by geography, profession, and diversity. It was named among the "Best of the Web: Jobs" category by U.S. News & World Report in 1999. A September 7, 2000, press release depicted CareerBuilder as offering the "industry's most targeted recruiting results." Toward that end, it entered into partnerships with Medical Economics CareerPulse, a site devoted to the medical industry, and QuestiLink Technology Inc., an online source aimed at manufacturing professionals and engineers.
CareerBuilder's success included an initial public offering (IPO) of stock in the spring of 1999. The company's fortunes initially inspired high hopes among investors, but within weeks, its stock began to decline in value, partly due to a general downturn in tech stocks and partly because of the large number of Internet recruiting firms. One analyst noted in a 2000 issue of Editor and Publisher magazine that there were "too many players [in the online recruitment industry] to get the awareness of the limited audience." Some investors still expressed optimism about CareerBuilder. One observer in a 2000 Washington Post article considered it "the fastest-growing and smartest and most media-savvy" among its competitors. Nevertheless, by the spring of 2000, its stock had plummeted in value and McGovern was himself bothered by what he saw as investor apathy.
Virtual and Real World Success: 1999-2001
At the beginning of the 21st century, the company continued to expand its presence on the Internet. Between 2000 and 2001, it forged relationships with a variety of online partners that gave employers access to specific populations of potential job seekers, including those in the IT and healthcare industries. CareerBuilder also established an agreement with YAPA.com, a site focused on young professionals. It also sought to reach out to college students through such web portals as College Central Network and CollegeClub.com, the most visited online college-focused site. In addition, it established links with BlackVoices.com and with QuickHire, which focused on recruitment for federal, state, and local government agencies.
Likewise, the company sought opportunities to develop its online infrastructure. In 2000, it announced an arrangement with Brainbench to deploy software to evaluate the skills of potential employees and with EzeeNet to help automate its job listing process. The company's efforts bore fruit. By May 2000, the number of visitors to the CareerBuilder Network surpassed two million per month, making it the second online recruiting source to achieve that milestone. In 2001, it included over 100 partners, drew more than 5.5 million visitors per month, and listed upwards of 300,000 jobs from 25,000 employers. CareerBuilder.com attracted attention as well.
The period also witnessed a variety of other successes for the company. It received its first patent in 1999. Its number of employees grew to 120. It also benefited from a $17.8 million investment from Microsoft and an agreement to incorporate CareerBuilder's job listings on the MSN network. Finally, CareerBuilder inaugurated its first national multimedia ad campaign, focused on the question: "Where is your future?" Its revenues had risen to $14.9 million, although like many other startups, it had yet to make a profit. Nevertheless, in 2000, it announced a "Hit the Road to Success" bus tour, which planned to visit over 40 college campuses in 13 states to spread the word about the company.
Mergers and Acquisitions: 2000-02
CareerBuilder experienced another major shift in 2000. Media giants Tribune Co. and Knight-Ridder Inc. completed a $200 million deal to each purchase a 47 percent stake in the company, leaving McGovern with the remaining 6 percent, in September. Tribune and Knight-Ridder also merged CareerBuilder with another acquisition of theirs, an online recruitment firm called CareerPath that had been formed in 1995 by a group of newspapers including the New York Times and the Washington Post. McGovern became CEO of the combined company, which took the CareerBuilder name. The new CareerBuilder also promised to be able to list jobs from over 100,000 companies and to contain information on 1.5 million job seekers.
"What we're going to do," McGovern asserted in a 2000 Information Week article, "is combine our online job services with their online job services to take on the No. 1 player in the market," which was at that time Monster.com. CareerBuilder's association with Tribune and Knight-Ridder also gave the company access to nearly three dozen major newspapers in most of the largest metropolitan markets in the country, making it a hybrid between print and online sources and allowing clients to post job listings in a single newspaper, on the paper's web site, or on one of the specialized sites in the CareerBuilder Network. In 2001, CareerBuilder expanded its relationship with newspapers although a deal with Belo Inc., which owned the Dallas Morning News and DallasNews.com.
The company's stock price leapt upward at the news of the purchase. Hopes that the company would make a profit by the end of 2000 also increased. However, not everyone was happy. Some investors filed a lawsuit trying to stop the sale to Tribune and Knight-Ridder based on a concern that company insiders who approved the sale stood to make a profit while ordinary stockholders, who were receiving a price far below that at which many had originally purchased stock in the company's IPO, stood to lose money.
In 2002, CareerBuilder underwent a further and much more dramatic change when it merged with Headhunter, another online recruitment firm that had a particularly strong presence in the healthcare industry and among staffing agencies. This combination followed a similar consolidation between Monster.com and HotJobs and created what McGovern characterized in a 2001 article in Canada's Globe and Mail as a "Pepsi-Coke challenge" between Monster and CareerBuilder. Unlike the merger with CareerPath, however, and even though the new company continued to hold the CareerBuilder name, it was Headhunter's software and practices, both technical and business, that were adopted. Meanwhile, McGovern and his leadership team left the company and were replaced with executives from Headhunter, including Robert M. Montgomery, Jr., who succeeded McGovern as CEO.
Plans to re-create CareerBuilder as Monster's main competitor, however, met with a major setback at the end of 2001. At the last moment, Yahoo! purchased HotJobs out from under Monster.com. This was doubly a challenge to CareerBuilder, first because Yahoo! was already a significant member of the CareerBuilder Network. Ultimately, Yahoo! severed that connection in April 2002. Second, and contrary to expectation, CareerBuilder took up third place in the online recruitment market behind Monster and Yahoo! Instead of battling for leadership, the company found itself fighting with Yahoo! for the number two spot.
Ousting Monster As Number One: 2002-07
In other ways, too, 2002 proved to be a difficult year for CareerBuilder. It cut 30 percent of its 420 employees, a move that reflected staff cuts at Knight-Ridder. Belo Inc. also ended its relationship with the company, complaining that it was promoting the CareerBuilder brand over individual newspaper brands. However, there were positive developments as well. CareerBuilder hoped to gain ground by seeking more relationships with small to midsize newspapers. It was aided in this goal when Gannett Co. bought a 30 percent stake in the company for $93.3 million, bringing with it more than 90 newspapers, television stations, and the USA Today web site.
In 2003, the company achieved two important successes. It replaced Monster as the provider of job listings for AOL, a move that helped it to enhance its presence on the Internet. It reached a similar deal with MSN. The next year, user traffic on its sites more than doubled, allowing the company to capture at least 45 percent of the online recruitment market, more than any other competitor. In June 2005, it recorded 16.6 million visitors to the CareerBuilder Network, placing it ahead of Yahoo! and Monster, listed one million jobs, and featured 11 million resumes. The next year it became the largest online recruitment site in terms of revenue. Meanwhile, the CareerBuilder Network continued to grow, including 1,100 partners by 2006 and relationships with 172 newspapers, and reaching 40 percent of the country.
There were changes within the company, too. In 2004, Matt Ferguson became president and CEO while Bob Montgomery became chairman of the board of directors. CareerBuilder sought to raise its public profile as well. In 2005, it began an extremely successful multimedia ad campaign, including a series of television ads featuring an office full of chimps and the tagline "a better job awaits." CareerBuilder also began building international relationships. In 2003, it established links with international web sites in the United Kingdom, Italy, Spain, Ireland, France, Latin America, Singapore, India, Malaysia, Philippines, Belgium, Netherlands, and Australia. In 2005, it reached an agreement with TimesJobs.com, the online arm of The Times of India Group, the largest Indian media company.
By 2007, challenges did remain for CareerBuilder, particularly from a new generation of job sites that focused on particular industries and areas. However, the company continued to show signs of success and hints of a bright future. MSN acquired a 4 percent stake in the company, and the partnership with MSN was expanded and extended until 2013. CareerBuilder also extended the "viral" advertising campaign begun with Monk-e-Mail in 2006, which allowed people to send talking-chimp e-mail messages to friends, by inaugurating Age-o-Matic, a feature that allowed users to age pictures of their friends by 50 years. Meanwhile, revenues rose and, eventually, there was again talk of another public stock offering at some point in the future.
Principal Competitors
Monster; Yahoo! HotJobs; craigslist, inc.
Further Reading
Chandrasekaran, Rajiv, "Tapping into a Web of Aspirations; NetStart Helps Firms with Online Job Hunts," Washington Post, December 30, 1996, p. F13.
Joyce, Amy, and Peter Behr, "CareerBuilder of Reston Sells for $200 Million," Washington Post, July 18, 2000, p. E01.
Joyner, Tammy, "Deal to Create No. 2 Online Recruiting Firm," Atlanta Journal-Constitution, August 25, 2001, p. 1E.
Knight, Jerry, "Washington Investing; IPO Investors Are Losers in Buyouts," Washington Post, July 24, 2000, p. F07.
"Knight Ridder, Tribune Target Online Recruiting; Competition for Classified Advertising Starting to Heat Up," Florida Times-Union, July 18, 2000, p. F2.
Leibovich, Mark, "Making the Job Search Profitable; CareerBuilder, a Top Online Employment Service, Is About to Go Public," Washington Post, April 5, 1999, p. F05.
Leonard, Bill, "Major Online Boards Jockey for Position," HRMagazine, October 1, 2003, p. 32.
Mearle, Renae, "CareerBuilder Alters Focus; Online Job Site Deepens Ties with Newspapers," Washington Post, January 2002, p. E01.
------, "CareerBuilder Left in Doubt," Washington Post, December 28, 2001, p. E01.
"Media Giants Tackle Monsters," Information Week, July 24, 2000, p. 149.
Moses, Lucia, "KR, Tribune Bid to Create a Classified Powerhouse," Editor & Publisher Magazine, July 24, 2000, p. 7.
"United States: Report on Business," Globe and Mail, August 27, 2001, p. B8.
— Daniel Patrick Thurs
643 (February 2012
