Let's Applaud the Encore of Salary.com!
HR technology is full of "Second Acts," most famously Dave Duffield starting Workday with Aneel Bhusri after losing PeopleSoft. But I don't know many encores we've had like Kent Plunkett buying back Salary.com: the company he founded in 1999, lost 11 years later and is now busily re-inventing. It's quite a yarn.
By Bill Kutik
You may recall back in 1999 that every start-up seemed to be required to have ".com" in its name, or no venture capitalist would invest in it. One symptom of the dot-com boom.
The fact that so few companies still do today (even the most successful, salesforce.com, managed to shed it) is a result of expensive renaming and rebranding campaigns, but mostly of the dot-com bust that followed soon thereafter and drove so many out of business.
It was more than just a greedy fad, though I'm not sure about Pets.com. It was the first time people realized that an entire business could exist more or less solely on the Internet. It's a trend we see taking over our commercial lives today. When did you last see a music store? Where did they all go? (Insights courtesy of analyst Ray Wang.)
One of the survivors in our world has been Salary.com. Kent Plunkett started it in 1999, most visibly with a website where everybody could (for free!) discover the salary range paid for their particular job by zip code anywhere in the country and, sometimes, around the world.
I mark it as the first leveling of the playing field between candidates and potential employers, eliminating that tiresome interview dance: "What does the job pay?" "Well, what are your requirements?" It started the growing transparency in the hiring process, where power in some industries has now shifted completely to the candidate!
As with all Internet-based businesses, the question always was, "Yeah, but how do you make money?" Of course, the people swarming over the Salary.com website were all active job candidates and thus attracted a lot of recruitment advertising. But mostly it was the same answer every company giving away a business-to-consumer service said: Sell to businesses!
Only Salary.com didn't sell information about its free customers, as LinkedIn famously did after reaching the tipping point in total members. Instead, it sold a unique combination of salary data and compensation analytic software. Called CompAnalyst, the package today has 3,600 enterprise customers (each with anywhere from 300 to 5,000 employees) plus a version for smaller companies.
Beyond that, Kent was one of the first in 2005 to join the gold rush to build out the talent-management suite. As we all know about the California Gold Rush, most of the money went to the modern equivalents of Levi Strauss and the guys selling pick axes and gold pans.
Kent went a step further than most competitors. Long before the current emphasis on "the unified system," he bought Genesys, a grizzled veteran of the mainframe era with a rock-solid payroll previously used by service bureaus throughout North America plus core HR functionality that was adapted as his HRMS.
He took the company public in 2007, before being badly damaged during the Great Recession. By 2009, though, Salary.com was doing well with its application build out, missing only recruiting and learning from the suite, just like Workday until recently.
In October that year, in his second try, Kent beat Plateau, SAP and Lawson to win the "Second Annual Integrated Talent Management Shootout" at the HR Tech Conference, the 13th such event there. His software was praised in 2009 for its integrated content and functionality in blogs by Josh Bersin (now founder of Bersin by Deloitte) and Ron Hanscome (now Research VP at Gartner).
Four months later, Kent was forced out as CEO.
The story behind that, and the company's subsequent (white knight) sale to Kenexa in 2010 for $80 million, involves four activist hedge-fund investors, one aggressive uninvited suitor and riveting details of corporate intrigue smothered under non-disclosure agreements.
Kent moved on to other worthy pursuits with his proceeds from the sale. But when IBM bought Kenexa in 2012 for $1.3 billion, he almost immediately started knocking on the door of its mergers and acquisitions department offering to buy back Salary.com!
"I said it just didn't fit with their software portfolio," he says. "IBM doesn't want to be telling people what they should get paid. M&A said they saw the logic and would call when, and if, the operating unit [eventually IBM Kenexa Smarter Workforce] agreed and wanted to sell."
Two years later in 2014, Kent got the call, beat out other bidders and, on the last day of 2015 -- backed by private equity firms H.I.G. Capital and Prudential Capital Group -- he owned major pieces of Salary.com again! He got back the website, CompAnalyst and IPAS, his own acquisition from 2007 for global pay surveys.
IBM kept the enterprise module Talent Manager, which uses the enormous competency library Kent originally purchased and is part of its new offering. Details on that in the next column.
What drove Kent? "There was still so much unfinished business," he says. "I hold a CCP designation [Certified Comp Professional], so I know how much comp still needs to get done."
You can't play a proper encore without getting members of the old band back together. Most notably Salary.com's original tech partner (and later president and COO) Yong Zhang. He and Kent spent nearly $1 million during the interregnum developing nexgen compensation products, which they were ready to start coding and shipping last spring. Now they will debut under the Salary.com label.
Also former CMO Carol Ferrari and 118 employees came along with the purchase, more than half original employees. Also brought on board were Oracle veteran Rob Merklinger, to run sales, and Steve Bell to run finance.
Kent's immediate plans include talking to lots of those 3,600 CompAnalyst customers to get their input to produce a new product road map. By far they represent the biggest source of company revenue, many on untypically short two-year SaaS contracts
The next step is then to integrate their hopes and dreams with those nextgen applications from Yong Zhang and begin to ship them in six to 18 months. Plus shore up relationships with a bunch of resellers I never knew about and syndicators for CompAnalyst.
Finally, the website has never stopped running for 17 years and now boasts 6 million unique visitors a month. It's become as much a job board as a source of salary information. Ask for your data, and you get back dozens of job offers.
Kent is proud that no salary number ever appeared there until it was verified by three different surveys, most of which the company bought from third parties, normalized and re-used. Some, like IPAS, Salary.com conducted itself.
Of course, Glassdoor has become incredibly popular since 2010, but it offers employee-provided salary data, rather than data from the companies writing the checks. However, it is a big brand and competition Kent never faced before. He plans to re-invent his site and re-launch and market it next year.
I'm looking forward to seeing all of it, and only occasionally worry whether Kent's encore will be like attending a new Crosby, Stills, Nash & Young concert. But happily, he's not nearly old enough for that.
HR Technology Columnist Bill Kutik is co-chair emeritus of the 19th Annual HR Technology® Conference & Expo, back at Chicago's McCormick Place, Oct. 4-7, 2016. Watch the 13th episode of his broadcast-quality video series, Firing Line with Bill Kutik® to learn how manufacturer Owens Corning got its employees to use their new talent-management applications!