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Glassdoor is a great career tool, but raising $6.5 million could be a bad thing for the company

November 13th, 2008 · No Comments

I love glassdoor.com. I have recommended it to a lot of my friends. It has become my favorite career site beside Linkedin.com.

Glassdoor fills a market need that neither Salary.com nor Payscale.com provides. It offers salary and work environment reviews at company level. For example, you’re offered a product manager job at Microsoft. You want to know how much product managers makes at Microsoft, and how people like or dislike the work environment at Microsoft. Go to Glassdoor and you will get the information you need.

I, and other friends have checked Glassdoor’s salary data — based on what we know about salaries in the companies we work for, we feel that Glassdoor’s data are pretty accurate. Glassdoor uses a "give and take" model — as a user, you provide your own salary data and employer review in return for other companies’ information. Glassdoor is like the "amazon.com reviews" for company-specific salary and work environment.

This is all great. TechCrunch reported that Glassdoor raises another $6.5 million. But, what’s their business model? How are they going to make money?

I can think that one model would be to provide employee feedback to corporations — there are some really honest review of company management. However, in this economy, when employees are trying to hold onto their jobs, will corporations really care about how frustrated their employees are? I’m not sure if companies would be willing to pay big bucks to glassdoor to conduct employee satisfaction/feedback surveys although it’d be quite valuable.

Glassdoor could sell salary data to HR departments. However, they’d be in direct competition with payscale.com and salary.com. It’s a pretty crowed space.

There is also the advertising model — google ad sense plus contextual relevant display ads. But, an advertising supported model is not a solid business model in this economy.

Glassdoor has done a great job building a community of users who passionately provide company reviews. They also have a valuable database of salary and company review data. But, their data have a down side — salaries and company work environments changes over time. A new CEO and management could bring a lot of changes to an organization. Salaries also change over time. A review from two years ago might not be relevant today. Company reviews are different from book reviews — company review data need to be updated frequently.

Don’t get me wrong. I love Glassdoor’s site. But, I think they’d be much better off if they’re acquired by a large company and become a feature of another product/service.

Unfortunately, they just raised $6.5 million — it’ll make it very hard for them to sell the company — VC will demand a very high valuation.

Raising a large round is a double-edged saw — it makes exit much harder for entrepreneurs.

I love Glassdoor as a tool. I hope it will succeed. But, I have doubts. 🙂

Tags: Company Analysis

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