Kaare Danielsen, CEO, Jobindex
Presentation at SlideShare: How Jobindex became market leader in the middle of the financial crisis.
January 29, 2015
I’m Kaare Danielsen, founder and CEO of Jobindex and I’m going to tell you bits about the store of Jobindex. It’s a bit of an old story; it’s actually 19 years ago since I founded Jobindex. I’m going to talk a bit about – growth hacking is about measuring and how you figure out what is worth to gain market share, how do you measure it and how do you decide on how much to invest and so on. That’s some of the questions that we ran into at Jobindex.
Just to prove that I have been a young entrepreneur once, this is me 30 years ago when I started my first company, which did some chess computers, which was quite successful. They’re actually still for sale, so I think I have one of the records of the longest-selling programs in the industry – for 30 years.
I made some money from that and 15 years later, I founded Jobindex, and that’s the first homepage of Jobindex. It started as a one-person company. I was working in the States and saw the Internet Explorer and said, “Well, I’m going to do something similar.” I saw some successful job sites in the States, so I just decided to do the same thing in Denmark. It grew organically, and five years later in 2001 we were a group of – I don’t know – startup, Triple-E startup size, 10-15 people.
Then came some serious competitors – StepStone – which nearly ran us over. They had raised 1.6 billion kroner in venture capital and almost ran us over, so we had to find a new strategy. We were out of money.
Then came the dotcom crash and September 11th, then we ran out of money and had to find a new strategy, and that’s when we started focusing on companies that actually had some money and were willing to pay for that.
Originally, we thought we were going to be an online service like Telmore where you could do everything online. Accidentally, we got some big customers as the first couple customers like Mask and so on. They didn’t care about doing things online; they cared about getting service and so on.
If you are competing against big companies, which I think most of you are, this is a very basic way of finding a new strategy. Focus on your own customers because that’s what you make money on. It’s okay to try a lot of things, but find somebody make money on.
In our case, we make money from Mask and and so on. There are three basic strategies, one of them is to become the market leader and we became that later, but not here. The other one is have some technological advantage. Normally you don’t have that, so the third one that you can always decide on is to focus on some group of companies.
We decided to focus on the big companies. We went out and asked them, “Why are you still buying from Jobindex when StepStone is much bigger and so on. It turned out that they liked us and they like the service that they got from us.
So we said, “Okay, fair enough. Then we’ll increase and do even more service; we’ll proofread your advert, we’ll do all sorts of things for you,” And then when you have a successful group of companies, of customers, you can use that to expand the group of customers and become even larger.
It turns out, there were more companies than the large companies that wanted this service and were willing to pay for it. We’ve continued doing that. I mean, nowadays, it’s probably considered old-fashioned. I think we’re one of the last job databases in the world that’s still typing the adverts for our customers, but it’s worked for us and it makes it harder for the foreign competitors to get into that market.
Anyway, we managed to barely survive in 2001, 2002. At the end of 2002, we had 28,000 Danish kroner left in the bank account. Fortunately, things started looking better in 2003 and we became a Gazelle and we made some money. And then in 2004, we decided, “Okay, what are we going to do about this?” We asked our company to do a marketing survey and test how well-known were we and they created this math which has unknown recognition here and known recognition here.
We were the least known of all the job databases, but basically the main message that came to us said, “Well, there’s nobody who has taken the number one position yet.” It’s not true that you are number five and is number one. There’s actually nobody who’s number one yet. There’s an open position here.
Most markets, there’s somebody who grabs the number one position. But it’s still open. I said, “Okay, what will it take for us to take the number one position?” and they said, “Well, we don’t know, but a lot of money.” So we said, “Okay, let’s start spending some money and see what happens.”
We created our first television advert. We had this job safari theme at that time, so we created this advert and ran it and spent half of the money that we had made in 2003 and 2004. We spent two million Danish kroner, which was a lot of money at first, at that time. We could’ve been unfortunate and wasted all the money, but fortunately this advertising was successful. This was at the time when none of our competitors had advertised on television for three years, so we got a lot of attention from that and gotten a lot of new customers, and those customers more than paid off these adverts.
The next year, we spent five million on television advertisement, which gave us more customers. The next year, 2006, we spent ten million, and slowly – I’m kind of showing you our graph just to show you how we do. This is the unknown recognition. You can see the red one is Jobindex, the blue one is Jobzonen, which was our main competitor in those days, which was owned by Jyllands-Posten, Politiken and TV2 and joint, and so we were up against three or four of the largest media companies in Denmark combined. That’s a serious competitor.
But you can see slowly and gradually we increased our recognition so that in the end of 2006, we were actually as known as Jobzonen. You can see the market map here, we’ve moved from there to there and Jobzonen at the same time, they were conservative. They were focused on making money; we were focused on growing and gaining market share. Actually, they were focused on something else; they were focused on something called, which some of you might remember. They were focusing on something else than us, so we moved from there to there.
Then came the time in 2006 and 2007 and 2008 where there was a shortage of labor and we were just typing in adverts as fast as we could and had to pay our employees lots of money to work overtime, and we were really making a lot of money. In 2007, we were listed on First North, which is the stock exchange for small companies and got market value of some 600 million Danish kroner. That was the answer to how much is it worth to gain a market position. It’s actually worth a lot of money, if you are in one of those markets where there is a winner-take-all tendency.
Only five years before that, in 2002, when we were number five and was running out of money, I was offered some five million Danish krone for the company, so I’m glad I said no at that point.
This was actually also a way of becoming more known. Of course, job adverts are all about credibility; everybody wants to advertise on a known company. Of course, Jobzonen had the advantages of being owned by some of the largest companies in Denmark. This was a way for us to go out and show that we are also a big company; we are just as big as the other ones.
And as you can see, this is from – then came –. We spent a lot more money in 2007 and 2008 and we actually moved further ahead. You can see Jobindex here in the beginning of 2009 and we actually surpassed Jobzonen and the other job databases around here.
There’s something called Memory Block. It turns out that people don’t have room for too many job sites. People who are looking for a job can remember two different job sites on average, and people who are not looking for a job, they can only remember one. That’s one of the reasons that this is a winner-take-all. If we move up, then there’s no room for that many competitors.
At that time, you can see we have actually taken the number one position, which was vacant originally. Then came the 2009 financial crisis. We lost half our revenue from one year to the next and the total number of job adverts on the whole market dropped from 33,000 to 13,000/month. So the question here is: What would you do in this situation? You suddenly lost half of your revenue; the customers suddenly have plenty of candidates for all the open positions and so on. What do you do marketing-wise here?
Nobody wants to answer?
What our competitors did was they stopped marketing altogether because they wanted to save money, so they stopped completely all marketing. We were the only ones – you can actually get data about how much money and how much television adverts ones you can see.
The blue one here is Jobzonen; they have some marketing in the beginning of 2008 and this year of 2010, but for two years they have no television advertisement at all. Whereas the red one is Jobindex; we continued our television advertisement even though our customers didn’t thank us because they got 400 applications 300 applications.
But we thought, “Okay, the best time to gain market share is when none of the competitors are advertising and a lot of people were actually looking for a job. We’re not going to make money on those market shares now, but those market shares might be valuable in three or four years. You can only do this if you think three or four years ahead and if you have the money to think three or four years ahead.
Of course, some of the newspapers got into trouble here. Berlingske was owned by a, which had borrowed money in the bank, and the bank ran out of money, and so don’t borrow. I mean, rule number one for entrepreneurs is “Don’t borrow money,” especially not from the bank that runs all the money.
Anyway, we spent a lot of our money on advertisement. Jobzonen didn’t come back until 2010, but in the same graph that we got here you can see that we were actually gaining market knowledge here and our competitors are losing. They are getting some – what you can see here is when they advertise, they gain some percentage point, but they drop back to the same level before. The same thing’s happening here.
And there’s also, I mean, different types of – they spent on some big campaigns, and then they do radio silence whereas we do a lot of small campaigns, and that turned out quite a bit –. Every time we do a small campaign, we get about 1% recognition.
At the end of 2010, we are by far the number one job database in terms of recognition and traffic and revenue and everything else.
What’s also happening is that our competitors are losing money, so at the end of 2013, they say “This is not funny anymore,” so we ended up buying StepStone, which used to be our biggest competitor. So now we have about two-thirds of the market share and the competitors have about one-third, combined.
If you look at the recognition here, remember that people can only remember two different job sites – well now we both own Jobindex and number two, StepStone, so there’s no room for remembering the competitors.
So now we basically control the whole market, except for a small company down here called LinkedIn, which is growing rapidly. That’s a different story; I’m not going to talk about that.
Basically it’s three pieces. It’s a good, free piece of advice for startups. Make sure you have an image, because that makes it a lot easier for people to remember you. We use mass marketing, but that costs millions in spare. Basically, if you have millions of Danish krone, then maybe otherwise just forget about it. Use the tricks from Facebook and Internet marketing, things like that. The main thing is find some loyal employees, because it’s a really tough job. Find somebody who’s willing to fight for the company and make it a success.
So it’s really exciting, it’s not recommended for everybody, it’s definitely not the easiest way to make money; it’s probably the toughest but if you do it, remember that it’s really difficult to be small, but it’s also really, really difficult to be big.
I mean, when I was a small company, I didn’t understand why the big companies just doesn’t wipe us out because they could do that easily. Now I understand because now I have a big company and there are a lot of small companies that do something, and a lot of cases where I say, “That’s a really good idea.” But unfortunately we cannot change our strategy; we have to go that direction and just ignore these smaller companies that start competing and taking some market shares. That’s what you can do with your startup. Do some niches and eat some market share from the big companies.
That was my 15 minutes.