Bad news comes in threes. (Or let’s hope it’s only in threes.) After this week’s layoffs at Seattle-based Redfin and Portland, OR-based Jive Software, Seattle real estate firm Zillow today announced it has cut 25 percent of its staff.
Last month, Zillow’s CFO Spencer Rascoff said the company had 150 employees. That would mean the staff cuts leave Zillow with about 110 workers.
“This was an incredibly painful decision for me and the leadership team, but, in the end, we concluded that we had no choice but to securely batten down the hatches as we sail into a major economic storm,” said Zillow CEO Rich Barton in a post on the company’s blog. Barton called the layoff process “miserable” and “jolting and sad,” but maintained that “we deemed the responsible course was to meaningfully reduce expenses, so that Zillow emerges from the other side of the recession in a very strong position, even if the recession lasts many years.”
We could have seen this coming, especially after Redfin’s cutbacks. The real estate sector has obviously been hard hit by the credit crisis, with many existing deals unraveling, fewer homes going on the market, and fewer consumers able to raise the cash to buy. Zillow, which offers online real-estate searches and mortgage quotes, has a large staff and isn’t profitable yet, meaning it has to subsist on the $80 million venture pot it raised from the likes of Benchmark Capital and Technology Crossover Ventures.
But Barton points out that Zillow’s business is still growing, with 5.4 million unique visitors to the site in September, a 42 percent increase over the same month last year. “The fact that we have never spent any money on advertising gives me tremendous confidence in our consumer-centric product vision and in the long-term leverage in our business model (free, open access funded by targeted, relevant advertising),” he writes. “Given the potential for an extended recession, we firmly believe that we are doing what is painful but necessary to ensure a bright long-term future.”
