Compass lays off 15% as coronavirus wreaks havoc on real estate
The SoftBank-backed unicorn is already predicting a 50% decline in revenue over six months.
New York-based real estate startup Compass is laying off 15% of its workforce, around 375 employees, as the spread of coronavirus has startups hitting the brakes. The SoftBank-backed real estate company, most recently valued at $6.4 billion, is already predicting its revenue to be cut in half over the next six months, its CEO Robert Reffkin announced on Monday in a company email obtained by Protocol.
"As we continue to hope for the best, we need to prepare for the worst. So we are joining thousands of other companies across the country in making the heartbreaking decision to let some members of our team go," he said.
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Like many startups, Compass is scrambling to reduce its own costs. Not only is it laying workers off, but it's pausing marketing spend and trimming office costs. Reffkin also reduced his salary to $0, and the rest of the leadership team cut theirs by 25%, according to the email.
Real estate in particular has been hit hard amid an economic downturn and orders for people to shelter in place. Startups like SoftBank-backed Opendoor have paused their real estate buying operations at this time to conserve capital, and Zillow and Redfin have since followed suit. Compass, whose agents once preached rising home prices in the Bay Area, has seen demand for showings nosedive. It's also halted programs, like its bridge loans, amid the market turmoil.
"Our own early data is already showing a more-than-60% decrease in showings, and with 'shelter in place' policies likely coming to the majority of markets, we should expect a much larger decrease," Reffkin said in an email to employees.
Still, he took an optimistic tone about the company's future, pointing to being debt-free and having a strong cash position, as well as tech tools to enable remote work and virtual trainings.
"I feel hopeful that China's apparent success at reducing the spread of the coronavirus and restarting their enormous economy may provide a blueprint for our future, as well. And I feel hopeful because of the ways I see people throughout our company and throughout our society stepping up during this challenging time," Reffkin wrote.