How Jasmeet lost ₹14 lakh in his failed startup Jobridge

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Jasmeet Singh, a software engineer by qualification, started Jobridge as one of the few job portals in the country that helped job seekers find a job in various Indian industrial cities. Using a mixed online and offline business model, the startup provided membership to job seekers as well as sold job postings to companies.

The paid job seekers received notifications about new job vacancies before the free users and their resumes were sent first to the employers. Jasmeet worked towards creating the business plan as well as marketing the firm and closing sales.

The job market in India is evergrowing. Before starting Jobridge, Jasmeet already owned a business directory for his city. After his city was declared an SEZ, more than 300 companies started setting up industrial units there. Jasmeet saw this as a huge opportunity as the traditional billion dollar job portals were not quite active and popular in smaller cities like Jasmeet’s.

Jobridge’s unique selling proposition was the ability to cater to those job seekers who did not have the facility of internet.

He came up with a business model in which the jobs were posted by them on the portal and the job seekers will get the updates via text messages on their mobile phones.

At that time, the business directory that Jasmeet owned was unable to make much money and he was looking forward to creating an additional revenue stream for his business. And starting Jobridge seemed to be the perfect move.

After launching and successfully getting initial traction, Jasmeet planned to grow the company using franchises in various Indian cities. He approached various small businesses in these cities and pitched them their business model. The plan was to get paid job postings with the help of the franchises and give them a commission on every sale. The investment at franchise’s end was also set to be minimal including some branding cost and two-three trained professionals. Jobridge handled the backend and technical processes.

Initially, the job portal was launched as an extension of the existing business directory and when the concept started gaining popularity, Jobridge was moved to a separate entity. Jasmeet outsourced the technical part including web development work and it proved to be the worst decision. The agency hired for the work was ignorant and did not meet the expectations. This problem delayed the work by two more months.

So Jasmeet decided to build the product himself. He hired a team of three employees to handle the programming, operations, and sales. He handled business planning while his co-founder handled the design and operations. They altogether built a basic job portal in two to three months and launched.

In the next three months, they improved the design and added new features including membership panel and integration with SMS. After the web-based system was ready, they started training the sales guys to handle job seekers and sell job posting packages to industries.

The price for posting one job was $10 while the jobseeker premium membership was priced at $15. At the franchise end, the owners had to pay a one-time fee of $200. Jobridge kept 50% commissions from each sale brought in the franchise.

In the beginning, Jasmeet read job postings published in the newspapers and called them to pitch about Jobridge. He offered free job posting to some of them. With the flow of time, he started getting paid employers. He also used bulk SMS to promote premium services to a huge audience.

Everything sounds good. So where was the flaw?

The company’s premium job seeker base started growing. And Jasmeet felt that for such a low premium package price, the job seekers were expected more features. They started walking in the office of Jobridge and asked the status of their job application.

This was the time when Jobridge started to increase the price. A lot of job seekers accepted this change and started paying a higher price but now they requested Jasmeet to add more features and looked upon to get similar services offered by recruitment agencies.

The same happened with the employers. They expected Jobridge to deliver resumes to their offices showing the status of each of their application.

Jobridge’s operational cost started skyrocketing and going ahead of the revenue due to all the support services they provided to job seekers and employers. The revenue model started turning unsustainable and they were left with two options, either go offline and turn into a placement consultancy or go online and turn into a job portal. But both of them already existed in and dominated the market.

The issue grew and to an extent that Jobridge was unable to pay salaries to the employes. This was the time Jasmeet decided to shut down. Jobridge refunded existing job seekers and employers and finally shut down operations.

More often, the employers were used to working with traditional placement agencies who charge 8.3% of the salaries for helping them recruit new employees. The companies kept confusing Jobridge with placement consultancies and expected the same services for such a small fee. Educating and explaining the customers was a tedious process as it took a long discussion to finally close sales.

After working for one year, Jasmeet lost around ₹14 lakhs (without including his and his co-founder’s salaries). Most of the money was spent on salaries on one marketing executive, one support executive and one developer, the server fees including web development charges, allowances of the employees and the marketing expenses.

He is planning to exit from his current company and pursue a writing career and train people on entrepreneurship and digital marketing.

So, what did you learn from this failure story?
Tell us in the comments.

Learn from the Failure Stories of Entrepreneurs. Don't Repeat Mistakes.

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