Opendoor, the seven-year-old, San Francisco-based company that has from the outset aimed to help people buy and sell homes with the “push of a button” or nearly, just laid off more than a third of its staff.
According to a statement sent to us by cofounder and CEO Eric Wu, the company has laid off 600 of its employees, which constitutes 35% of its overall team, says Wu.
Like so many sectors of the economy, the residential real estate market has taken a hit as U.S. residents are asked to stay indoors and all but essential services are shut down in most of the country. (Florida continues to operate by its own rules and yesterday decided that World Wrestling Entertainment is an essential service.)
Home sales haven’t fallen as far or as fast as one might imagine, thanks to staggered shutdowns around the country and, to some extent, virtual tours. According to Realtor.com, the number of U.S. homes for sale declined 15.7% year-over-year in the month of March, but the national median listing price grew 3.8%, to $320,000. Those numbers are starting to change as the weeks wear on, however, with the number of newly listed properties falling by 13.1% the week ending March 21 and by 34.0% for the week ending March 28.
In his statement, Wu didn’t include details regarding the degree to Opendoor has been impacted by the Covid-19 shutdown, saying only that because the pandemic has “had an unforeseen impact on public health, the U.S. economy, and housing,” the company has “seen declines in the number of people buying, selling, and moving during this time of uncertainty.”
He adds in the statement that the reduction in force is “necessary to ensure that we can continue to deliver on our mission and build the experience consumers deserve.”
Asked if the company was planning to also furlough some employees, as some other tech companies are choosing to do, Wu did not respond to the question.
Every company’s management team is handling layoffs differently, of course. In the case of Opendoor, its separation package seems fairly generous as these things go, with laid-off employees receiving eight weeks of full pay and 16 weeks of reimbursement for health insurance coverage.
Wu says he will also be donating his 2020 salary to a relief fund for Opendoor employees who may be in “more challenging financial or health circumstances” owing to the virus and that an unspecified number of other executives are also contributing to the fund.
Opendoor has raised $4.3 billion in equity and debt funding over the years, including $1.3 billion in equity. Backed early on by Khosla Ventures, then GGV Capital, the company had in more recent funding rounds, strengthened its ties to the traditional real estate market by adding to is backers one of the country’s largest home construction companies, Lennar Corporation.
The idea behind the relationship was for OpenDoor to help get customers into Lennar-built homes faster, as well as to encourage them to “trade up” where possible.
Opendoor was also the recipient of one of the SoftBank Vision Fund’s enormous checks, trading a minority stake in the company in September 2018 for a $400 million check from the Japanese conglomerate, which also installed managing director Jeff Housenbold on the company’s board.
It was roughly one year ago that Opendoor announced its most recent round — a $300 million financing, including from General Atlantic and others, that established its valuation at $3.8 billion.
It’s unclear to what extent the current market will impact that number going forward. It’s also unclear given the scale of its cutback whether OpenDoor will continue to operate in the 21 cities where its services are currently available when the market slowly re-opens.
For now, the company has stopped making cash offers on homes. It says on its site that in the meantime, it is continuing to work with third-party buyers who may be able to provide home sellers with cash offers, as well as connecting customers with listing agents in cases where they are needed.