SoftBank-backed iBuyer Opendoor just slashed 35% of staff after the coronavirus forced the startup to halt its home-flipping operations
- SoftBank-backed iBuyer startup Opendoor laid off 35% of its staff, or roughly 600 employees, on Wednesday.
- The move comes less than a month after the company paused the purchase of any new homes.
- Opendoor was last valued at $3.8 billion, and has raised $1.3 billion.
- Visit Business Insider's homepage for more stories.
SoftBank-backed iBuyer startup Opendoor laid off 35% of its staff, or roughly 600 employees, on Wednesday, The Information first reported.
Opendoor CEO Eric Wu confirmed the layoffs in a statement provided to Business Insider.
The move comes less than a month after the company paused the purchase of any new homes, as the coronavirus hits both consumer demand for new homes and makes the company's regular workload more challenging.
Laid off employees will receive 8 weeks of pay and 16 weeks of health insurance coverage, according to Wu's statement. Wu will be donating his 2020 salary to an Employee Relief fund, and will be joined by other executives.
"Given the shelter-in-place guidelines, we've seen declines in the number of people buying, selling, and moving during this time of uncertainty," Wu said in the statement. "In response, we've announced to the company that we've made the difficult decision to reduce our team by 35%. This was necessary to ensure that we can continue to deliver on our mission and build the experience consumers deserve."
The coronavirus and the shutdowns that've followed have hit the previously-humming US housing market hard.
Other companies in the residential real estate world have been slammed too, with Compass, a SoftBank-backed brokerage, laying off 15% of its staff last month and Redfin furloughing almost half of its agents and laying off 7% of its staff.
SoftBank earlier this week said that it expects its $100 billion Vision Fund to book an annual loss of $16.5 billion as its tech bets sour.
House-flipping is a low-margin business and profitability is closely tied to market conditions and the ability to shave off operational costs. iBuyers use technology to quickly evaluate a home's value and purchase the home with all-cash offers, rapidly renovate and repair it, and then sell it at a profit.
Opendoor, last valued at $3.8 billion, was the first iBuying company, but has attracted some competition. Zillow launched its iBuyer business, Zillow Offers, in April 2018 in Phoenix, Arizona, the home of the iBuying phenomenon, and real estate brokerage Redfin launched its Redfin Now program in January 2017 in the Inland Empire region of southern California.
Zillow lost roughly $5,000 per home it sold in 2019 and finished the year with 2,707 yet-to-be sold homes on its balance sheet.
