Last year, Dr. Phil, a Sundae pitchman and investor, invited the company’s CEO, Josh Stech, on his show to talk up its business model: matching buyers with homeowners looking to sell quickly.
But even Dr. Phil has not been able to stop the distressed-home marketplace’s meltdown. The startup, which once had more than 500 employees in 26 markets, was in May down to 135 employees in 11 markets, Insider reported.
The company kicked off a fresh round of layoffs in six markets in mid-June.
Gone are the heady days when Sundae raised $135 million in venture capital, including from Peter Thiel’s Founders Fund and such celebrities as the actor Will Smith and former Celtics star Isaiah Thomas.
Sundae seeks to link sellers directly with investors through a centralized auction process. However, former employees, homeowners, and complaints on the Better Business Bureau’s website raised concerns about its practices.
Some employees felt they were taking advantage of elderly or uninformed customers, while others mentioned spamming people with mailers and pressuring Sundae subordinates to meet unrealistic sales goals, Insider reported.
Sundae expanded its reach beyond older homes but found itself receiving many leads from markets it didn’t serve.
The company adjusted its compensation structure and raised fees in an effort to boost revenue. Its fees began at 5 percent of a transaction but grew as high as 11 percent in some markets, far above standard commissions.
The company also revised its compensation model for sales employees, slashing their base pay to $20,000 from $70,000, according to three former employees and a job posting.
— James Van Bramer
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