2) Right time, right place
Another contributor to the company’s success is its great business model, and the timeliness of its introduction to our market. Unlike some other segments of e-commerce, the nature of the advertising business makes it highly conducive to be brought online. There are no physical deliverables, audiences can be targeted and the interactive and multimedia capability of the Internet makes it a wonderful asset for this purpose.
While online advertising in Malaysia however has not taken off compared to the US for various reasons, including structural and cultural differences, online recruitment is another story altogether.
Unlike other ads where consumers are not compelled to view them online, the pull factor for job recruitment ads is a lot stronger. The market for recruitment services is large as Malaysia has a relatively young, educated and fairly mobile workforce. Internet penetration is currently at a relatively low base, but growing fast.
On the employers’ side, usage of the service can only grow with rising acceptance of online recruitment. There are no real collection problems, nor issues with piracy unlike some other online media business.
The potential for JobStreet’s bottomline growth is huge, as it has many legs to stand on. Aside from a supportive business environment, a key potential driver of growth is the economics of its business where the direct cost of incremental sales, marketing aside, is extremely low. Any business in such a situation will enjoy highly interesting possibilities.
Since most costs are fixed, a large chunk of every incremental dollar of revenue flows through to the bottomline and contributes to improved margin. Market share can be gained by aggressively pricing the job postings if necessary. The sustenance of turnover growth, even as the online ad market matures, can come from hiking ad rates over time.
Given the scalability of the business model, the market place for such a service is not confined to the home market, but is effectively that of any country that the company has the resources and capability to expand into. And JobStreet has done that, having expanded into Singapore, India, Philippines and Indonesia.
3) Excellent management
The quality of management of companies is too often an under-rated commodity which investors often pay inadequate attention to.
Despite being young and unassuming, with no proven management ability prior to JobStreet, the management team has proven their foresight, commitment, passion, focus and ability to execute. From starting a company from scratch to raising VC money pre-IPO, the team became multi-millionaires before the age of 30, and plowed it all back into an unproven business.
This was followed by a successful first wave expansion into the region, then a well-received IPO and a tripling of the market capitalization to RM350m two years later. Not to mention doing the community a great service by facilitating the employment process.
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