Opendoor, perhaps the most prominent and well-funded startup in the instant-homebuying business, just laid off about 600 employees, a month after the coronavirus pandemic forced it to abort home purchases.
“Though this was difficult news to deliver, our focus here at Opendoor remains the same,” Eric Wu, the company’s co-founder, told The Information, which broke the news. The layoffs equate to about 35 percent of the company’s staff.
The company was valued at $3.8 billion after a $300 million funding round led by SoftBank’s Vision Fund last March, and has also raised funds from the likes of homebuilding giant Lennar and Fifth Wall Ventures.
In October, Wu told Recode that he has discussed the possibility of going public with his board. His company, he said, looks to at least partly replace agents, and lets buyers “get a personal open house without a realtor.”
The coronavirus pandemic, however, has dealt a crippling blow to the iBuying business, which also includes players like Redfin, Realogy, Zillow and Keller Williams. Many of these firms have suspended their iBuying activity during the pandemic. Since Opendoor’s main source of revenue is home-selling fees from iBuying, it has been forced to make cuts. The suspended activity also leaves Opendoor with a number of homes that the firm may have to sell for a loss, or spend money to maintain before sales resume, according to The Information.