A Very Tough Day…
Today Redfin laid off roughly 20% of our employees.
Unlike other startups, our industry’s recession started a year ago, when home prices first plunged.
Since then, we’ve fought like starving animals, and with some success: while industry-wide transaction volumes dropped 33%, we grew revenues by nearly 50%. Traffic grew more than 300%.
Even a month ago, we were raising 2009 revenue projections. All our markets, now including Chicago, contributed profits.
But the past few weeks have seen a major reversal. As the stock market wiped out prospective down-payments, tours and offers dropped 30%. Transactions that were done came undone. October will still be pretty good, then we’re headed for a big dip.
Hence the layoff. Layoffs are painful for any company, but especially for a startup and especially, I think, for Redifn.
Another sign of the times and the inability to adapt when you’re running a razor thin margin already. We’ve heard for some time that Redfin’s San Diego office was essentially a ghost town being run remotely by a single agent, we knew it was a matter of time before something happened, but the opening of the Chicago office masked the inevitable reality.
We suspect this is only the beginning of a trend in the space of startups within and outside of the real estate space beginning last week with Seesmic laying off 1/3 of its staff.
Glenn says it best, “Redfin’s whole business will struggle and fight and may yet fail. But the only way it is possible for us to succeed – and, even today, I believe we will – is if we adapt.” I think this is a great reminder to everyone in the real estate or technology industries.