The blue-collar job market puts Babajob out of work

Quikr has set its eyes on its eleventh target—Babajob. The blue-collar job marketplace’s soon-to-be-closed sale brings to an end Sean Blagsvedt’s decade-long struggle. One that started with the idea of creating a LinkedIn equivalent for blue-collared employees. And in return, all Babajob gets for that dream is Quikr’s stock.

Some Great Competition Ahead

The online classifieds’ logic for this acquisition is simple—get the largest competitor out of the way. That way, it can position QuikrJobs as the one with the largest platform in the online jobs marketplace business. But for Babajob, it is a less-than-desired exit forced by an ambition that got too bulky along the way.

Blagsvedt launched Babajob at a time when smartphones didn’t exist. So the only way to spread the word about his service was through partnerships with telecom service providers to offer job alerts and request people to give a missed call.

In its seven years until 2014, little by little, it had enlisted nearly 2.5 million job seekers on its portals like cooks, maids, drivers, accountants, and sales & marketing executives. And got about 100,000 employers, which included households and small and medium enterprises (SMEs) to place job ads on its portal.

In 2015, when every business that had something to do with the internet got funding, Babajob did, too. Australian job placement agency SEEK invested $10 million (Rs 64 crore) in the company.

And that gave wings to the company’s ambitions.

Suddenly it had 625 more people. It had a full-fledged management team, complete with a ‘chief of staff’. It had 450,000 more employers in its database and 7 million more job seekers. This expansion came in just twelve months starting April 2015, says a source close to the development. He requested not to be identified as he is not authorized to speak to the media.

As a result, monthly revenue rose from just Rs 8-10 lakh earlier to nearly Rs 50 lakh in March 2016, its highest ever, says he.

Now that’s what growth looks like. But almost as soon as the numbers soared, things began to go south.

A Downward Spiral

Unlike the organic growth, albeit slow, that it experienced in its first seven years, the 2015 growth spike was fueled by a marketing frenzy to get the word out about Babajob. It did everything—AdWords, search engine optimization, print ads, ads on buses, etc. Think of any kind of below-the-line advertising technique, it was a check.

Its salary expenses, too, rose 10 times to Rs 20 crore in a year, according to its FY16 financials. By the end of that year, it had only Rs 25 crore left in the bank with a runway for just 6-8 months if it had continued on that path. So it had to optimize costs immediately.

As for making money, its revenue rose only about three times from a very small base of Rs 77 lakh in revenue in FY15.

Babajob made money only when employers wanted to view the profiles of the candidates. They could post job descriptions for free. On paying Rs 1,999, they’d get the curated profiles of twenty candidates that were matched by Babajob’s algorithms, within 60-90 minutes. For 100 curated profiles, employers had to pay Rs 5,000.

Getting employers on board and getting them to pay was the biggest challenge.

Households were not turning to be a reliable segment, as most homes relied on the network-effect through security staff and neighbors to find a cook or a maid.

So Babajob focused on its SME clients, who were ready to pay. Vir Kashyap, the co-founder of Babajobs, says that today 65% of its clients are SMEs. And they want assured hires. So the company even launched a guaranteed hire model, where it got one month’s salary as commission.