White-label brokerage Side says it’s done throwing money into a down market.
The venture-backed firm announced its latest round of layoffs a few weeks ago and recently debuted a revenue-sharing and agent mentorship program as part of its new strategic initiative.
The layoffs were the first to affect Side’s research and development teams, which encompass the company’s engineering, product and design teams, according to a person with knowledge of the move.
A Side spokesperson declined to confirm the number of employees affected.
“There is no shift away from our original model — we have added a new revenue share program that will be a big component of our strategic direction moving forward,” a Side spokesperson said in an email.
Employees were informed of the layoffs in an all-hands meeting on Sept. 23, where CEO Guy Gal told employees that the company plans to invest less in growth, product and research and development to conserve capital in a down market, according to a recording obtained by The Real Deal.
“I continue to see a challenging economic environment,” Gal said. “And it’s going to be more prolonged than anyone maybe had thought before.”
Gal also said the company’s new partnerships and sales efforts have not yielded strong enough returns on investment.
“We will close $10 million in new revenue from partnerships this year, which is a big number,” Gal told employees. “It translates to roughly $5 billion in annual production volume, but it just feels very small compared to the investment we are making.”
Gal told employees that partner referrals will be the “principal path forward” for the company’s go-to-market strategy.
Side announced its new profit-sharing program, PartnerUp Revenue Share, the same day as the all-hands meeting. The program gives agents a piece of Side’s profit after referring another agent to the Side platform and going on to mentor them, Inman first reported.
Side added that agents must do at least $30 million in production each year to be referred to the platform.
Gal added that he expects Side to “lose some of the levels of productivity and business” and he expects it will take between six and 12 months to return to current levels of new business “as the referral program takes hold.”
“We feel it’s starting to be irresponsible to invest in the ways that we are, at the rate that we are, in a market that’s really challenging,” Gal said.
Cuts, cuts, cuts
Side has gone through several rounds of layoffs in the last few years, most recently announcing it had cut 10 employees last November. In May 2023, the San Francisco-based brokerage laid off 12 remote workers from the sales team, which Gal said he planned to rehire as in-market employees.
After the first of two rounds of job cuts in 2022, Gal told employees that Side “expanded the team faster than we could train, support and develop everyone to meet the demands of changing roles and processes.”
The firm is in good company among residential players downsizing backend teams. Compass and brokerage conglomerate Anywhere Real Estate have announced multiple rounds of layoffs since 2022 in an effort to maintain margins during the down market period.
Side was founded in 2017 to provide white-label services to brokerages. Its last fundraising round came in 2021, when the company was valued at $2.5 billion. In 2023, the firm hired Zillow veteran Stephen Capezza to serve as its first president.
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White-label brokerage Side confirms new round of layoffs
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