Glassdoor Business Model & Revenue Model to Consider For Own Startup

The idea behind the Glassdoor business model can inspire many startup owners to create their own startup. One of the Glassdoor founders, Rich Barton talks quite passionately about his drive to create Glassdoor: 

“… providing new software, new sites, and new apps that give consumers power that they didn’t have before to make really big, scary decisions in their lives, maybe exciting decisions as well that involve money, so that they can make those decisions better…” 

This co-founder focuses particularly on creating products for consumers. Thus, Glassdoor is a direct-to-consumer business model. The decision to implement this philosophy was novel and even controversial for the recruiting market. Yet, the overall philosophy had been previously applied to the traveling market with Expedia and the real estate market with Zillow. On Expedia, travelers could now see information previously restricted to travel agents only. On Zillow, first-time buyers could learn information about homes previously restricted to real estate agents only. 

There are many more areas where consumers do not have enough credible information. For instance, healthcare or finance. Though, Rich Barton has been already implementing this philosophy in the cosmetic procedures field with RealSelf. These markets represent a wide array of business opportunities for your startup. 

So, let’s dive into the Glassdoor business model & revenue model. It will provide insight into strategies and practical lessons for your new successful venture.

About the Glassdoor Business Model

One more co-founder Robert Hohman who took an executive role at Glassdoor explains the Glassdoor business idea in this way:

“We really liked businesses where you start with an information asymmetry, where there’s a transaction taking place and one side knows way more about it than the other side.”

In the world of hiring people, an HR person always knows a lot more than a candidate. Information about salary and benefits is often kept secret until the candidate reaches the offer stage. Yet, to get there, candidates often have to spend a lot of effort on interviewing, test tasks, and sometimes trial periods. It is a lot of energy for a potentially undesirable job offer. 

Surely, it was a problem for candidates even before the Glassdoor business model appeared. To solve it, job seekers often will try to find someone who has worked for this company. If they find them, a whole range of additional questions emerge. What are the hours like? Are there internal promotions and pay reviews? What is management like? What is the interview process like? And so on. 

Thus, Glassdoor solved the information asymmetry by allowing employees, current or past, to leave all this information as anonymous feedback. And those who seek a new job can freely review this information and make an informed decision. 

• At present, Glassdoor has reviews and salaries for more than 600,000 companies worldwide. 
• Its website generates 55 million unique monthly visitors. 
• In 2018, Recruit Holdings acquired Glassdoor for $1.2 billion.
• Glassdoor operates across 20 countries.

From Idea to Success: Glassdoor Business Model Development

Originally, it was Robert Hohman, Rich Barton, and  Tim Besse who founded Glassdoor.  The main idea came from a brainstorming session between Robert Hohman and Rich Barton. Robert Hohman has this philosophy inspired by his mentor Rich Barton. The other co-founder was invited later and he was Tim Besse – the VP of Product and Marketing. All three of them previously worked at Expedia. 

Timeline

The timeline for the Glassdoor Business Model appearance is as follows:

• End of 2006 – brainstorming ideas;
• June 2007 – establishing the company;
• June 2008 – launch.

So, it took around 6 months to discuss the idea. It might have included some research, deciding where to source starting capital, and such. 

Then it took a year to develop the first version or an MVP version of the website. It included prototyping, development, and bug fixes. In addition, the website launched with pre-existing content. So, early adopters who generated the first reviews were sourced during this stage. 

The launch was already an event of the company that people knew and waited for. No wonder, traffic within the first 48 hours crashed the website. You can see the original website below. 

Starting Capital for the Glassdoor Business Model

All three co-founders started the company without any outside investors. They put their own money into the startup. Robert Hohman, Rich Barton, and Tim Besse all did well in their previous endeavors, Expedia included. So there was no reason to look for additional financing. 

It is not to say that Glassdoor made it without any financing. Glassdoor sourced late-stage financing later in the company’s development. It was already an established business with 20 million unique visitors per month. The company sourced $70 million for localization predominantly. After all, taking a website globally that operates on user-generated content requires local websites. 

First Customers

Seeing as Glassdoor is a direct-to-consumer business model, their approach to reaching the first customers couldn’t have been more fitting. 

In any MVP, it always takes a lot of creative thinking to find your first users. In this case, co-founders had employees working for their startup. So they asked them to call other engineers they knew and invite them to fill out a questionnaire for a chance to win an iPod. That is how Glassdoor got its first 1,000 reviews along with its first customers. 

Glassdoor did more than that before launch to fill the website with content. On the day of its launch, Glassdoor had a little over 3 thousand reviews on 250 companies.

When Glassdoor launched in 2008, within 48 hours their website went down. And it was the crash of the best kind. One that happened because the company didn’t intend to get that much traffic. 100,000 pieces of content crumbled the site’s capacity. This is why these days Startup Services choose flexible infrastructure ready to scale. 

Glassdoor Business Model & Revenue Model

The overview of the Glassdoor Business Model is shown on the canvas below.

Value Proposition of the Glassdoor Business Model

These days, the Glassdoor value proposition has evolved. 

At first, it was all about righting the wrong in terms of the information for job seekers and also current employees. For one, companies do not disclose information freely which is vital for job-seekers’ decision-making process. Second, even current employees during salary reviews can be better informed for negotiations. After all, current salary data may be drastically different in a year compared to the terms a person originally agreed to. 

However, it is fair to say, the idea of posting salaries online was quite controversial. And one of the concerns was how the companies would react to such an online portal. Yet, most of the companies welcomed this effort for transparency and open access to information. 

Then, seeing the growing pool of job seekers, the Glassdoor business model created a value proposition for HR. Recruiting was a $100 billion-a-year industry.  For HR, Glassdoor gave a platform to evaluate its level of human practices against competitors and make adjustments if necessary.  And companies too, after a while, saw value in Glassdoor. After all, they could also see salaries paid by competitors. Moreover, companies were enabled to advertise their employment opportunities. They could explain their mission, vision, and values. 

To sum up the Glassdoor value proposition:

• For employees, Glassdoor allows users to leave a review and see other reviews. 
• For employers, Glassdoor is a platform to promote their companies as potential employers and find employees.

Channels

The main channel is the Glassdoor website which was launched in 2008.

Then, there was a release of the iOS app, yet its date is unknown, presumably in 2010 or 2011. 

Glassdoor released its Android native app on March 13, 2013. 

Customer Relationships

Job seekers and employees use the platform for free. Therefore, the most scalable and cost-efficient solution for managing this relationship is via self-service. Glassdoor ensures that the services can be used without any direct assistance from Glassdoor staff. If there is an issue, a user should be able to utilize FAQs and the help center. 

Employers are serviced on a subscription basis. Those, who pay premium, have assigned account managers from Glassdoor to assist with any issues or concerns. 

Customer Segments of the Glassdoor Business Model

As a business-to-consumer business model, Glassdoor’s primary customer segment was employees and people looking for a job. This is essentially what made the Glassdoor business model a direct-to-consumer business model. However, as the main revenue started coming from businesses, Glassdoor also focused on employers and businesses as its customer segment. 

Key Resources

• Content: The Glassdoor platform (website with apps) is powered by user-generated content. The key resource is user reviews and the community around these reviews. 
• Branding & Advertising Functionality: Since employers rose to become customers too within a B2B business model, Glassdoor has started developing branding and advertising functionality for them. 
• Matching algorithm: In addition, with both sides of the transaction active on the platform, it made sense to develop a matching algorithm. In addition, to complete the hiring process, CV creation and application functionality for job seekers were in order.

Key Activities of the Glassdoor Business Model

According to the recent financial statement, Glassdoor’s most costly and primary activity now is Research & Development. However, it is likely to be because Glassdoor is now a part of a business platform and it may power sister services. Besides that, there are these key activities:

• Software development. It also includes maintenance. With a website and two mobile apps filled with a variety of functionality and localized versions, it’s Glassdoor’s key activity to maintain these. 
• Content management. Initially, the platform was governed by its code of reviews. There was a small moderation team that reviewed user-generated content to make sure it followed Glassdoor content guidelines. However, as the business grew and internet business got under more legal scrutiny, Glassdoor had to change its operations in accordance with the law. This now requires more moderation along with verification. 

Key Partners

Being a part of Recruit Holdings, Glassdoor is able to partner within the Group. For instance, there is a partnership between Glassdoor and Indeed. While they remain separate brands, they allow employers to have a combined pool of candidates. Also, job seekers are able to access reviews from both platforms. In addition, Glassdoor can benefit from other internal businesses including financial and legal.

Glassdoor Revenue Model

In the early days, Glassdoor made money only through advertisement displays coming through Google AdSense. 

In 2010, it started offering subscription services to employers. Glassdoor also shifted from generic advertising to targeted one. 

These days, Glassdoor is a part of Recruit Holdings. Their revenue statement is shown in the table below. Recruit Holdings is a Japanese company which has started as a student newspaper posting job advertisements. Then the company expanded into magazines and national newspapers and then into digital. The company has a portfolio of businesses around helping people to find jobs. Its HR technology segment has two online jobs websites – Indeed and Glassdoor and a few other smaller businesses. The company does not disclose the revenue breakdown as well as any costs.

Revenue Sources of the Glassdoor Business Model

For job seekers and employees, Glassdoor is free. For them, the only major change that happened over the years is how much information they should disclose. Before, users could leave reviews anonymously and read reviews without registration. These days, all reviews  are available only after registration. Users should submit and verify a lot of personal data. So, for users, the costs of using the service increased in terms of their private data. Content generated by users is the source of revenues for Glassdoor. 

The revenues come from employers. They pay for:

• Targeted ads for employers and other businesses;
• Subscription for branding, profile enhancement, analytics and insights;
• Job listings;
• Data licensing.

The latter comes from the fact that Glassdoor now holds a lot of current data on salaries and company reviews. A lot of other job boards and businesses in recruiting are ready to pay for the data.

Costs Structure of the Glassdoor Business Model

At the start, Glassdoor had a team of 15 employees in 2009. These days the employee numbers have grown substantially. 

• For instance, moderation team need to oversee large volumes of verification as the volume of personal data about the users increased. 
• Glassdoor had to improve security as it now holds a lot of private data. 

1. As soon as employers became a customer segment, development had to be taken to a new level. Not only in terms of functionality but also the theme of matching algorithms emerged. Employers had to be offered the best matching candidates. This inevitably leads to the need for machine learning. 
2. Moreover, Glassdoor handles a lot of data which requires another layer of development for data processing. Especially, if Glassdoor licenses this data for third-party use. 
3. Then, there are HR, legal, and finance departments. In addition, there is a marketing department with a team of account managers. So, salaries would be another large cost-item.
4. In addition to development and maintenance costs, there are also data storage and infrastructure costs underlying any digital business. 
5. Compliance with regulatory requirements in HR practices and privacy laws across different countries is also a considerable cost-item. 

Summary

Today, the Glassdoor business model includes both a direct-to-consumer business model and a business-to-business business model. The basis for all its paid services stems from user-generated content. Thus, it makes its direct-to-consumer business model fundamental to its success. Since its acquisition, Glassdoor has been operating in partnership with Indeed. They are both now part of Recruit Holdings, Japan. Yet, its success has been strong and sustainable over the decades. The product philosophy behind Glassdoor can be applied in many other businesses. In addition, it can be implemented under an array of business models. You can check out those in the article Top 10 Business Models to Consider For Your Startup.

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