The Rise and Fall of Monster

Today, Monster is the largest job search engine in the world, with over a million job postings at any time and over 150 million resumes in its database and over 63 million job seekers per month.

In addition, is one of the 20 most visited websites out of 100 million worldwide, according to comScore Media Metrics. Sounds good, right? Wrong. is in Big Trouble. Not because of the economy and a reduction in the number of open positions; rather, they have created an unsustainable business model.

Let’s do the math. If has over a $1 billion dollars in revenue and a market cap of $7 billion dollars, how many job posting does it need to obtain from companies if those postings are only $1 each?

Wait, a dollar each? But they currently charge hundreds of dollars for postings. How can they charge only a dollar? You can put down your calculator. As opposed to those tricky word problems on the SAT’s, the answer to this question is easy – they can’t. Just like General Motors trying to sell big automobiles when Honda and Toyota were introducing smaller and less expensive cars, is faced with a situation in which they have created an enterprise that can not survive against a lethal enemy – social media.

Facebook. LinkedIn. Twitter. Even Craiglist. All are growing more and more each day and are taking larger pieces of’s revenues. You may be thinking, ‘but has all those visitors, they can live off the advertising.’

No they can’t. can’t produce $7 billion dollars worth of advertising. Plus, as people use social media more and more the number of visitors to will actually decrease, thereby causing its advertising revenues to drop.

And we haven’t even talked about free postings. Here’s another math problem that may want to think about. One million postings times zero equals…zero. Zero revenue. Uh oh, what is going to do with all those inside sales people making $100,000 a year?

While there are companies that offer free postings, and the thought does sound attractive, many agree that without some type of financial barrier the quality of jobs on free sites will be diluted through scams and multilevel marketing schemes.

Does a company like GE, for example, want its posting next to a posting for a gentleman’s club? I would guess no. So, we are back at some type of fee – maybe a dollar – per posting. Or if a dollar doesn’t sound right how about posting all of a company’s jobs for an annual fee, maybe a few thousand bucks. Still this price is extremely lower than what can offer – with the same reach. Twitter alone has 19 million users.

And don’t take my word for it. Wachovia investment analysts recently downgraded Monster’s stock saying, “The low marginal costs and incentives for price competition in online recruitment raise concerns over industry fundamentals – pressures have been mounting, with more frequent & larger promos. Channel checks suggest the industry may be on the verge of more price cuts that would further commoditize online recruitment, and the earnings power of the biz model.”

Unfortunately for they have gone away from their entrepreneurial roots. Once run out of an office in a Chinese restaurant, they now have all the typical garbage that most big companies take on as they think the gravy train will never end – fancy offices, sales meetings with buffets that could feed a small country, and all sorts of Vice Presidents with loads of stock options. But the gravy train is ending. And unfortunately for, no bailout money is coming down the road.

The only thing in their path is Twitter, Facebook, and countless entrepreneurs who have figured out that the only difference between and General Motors is that one will be able to say they were in business 100 years and the other will be an organization that didn’t even make it to the age of 20.