Opendoor Lays Off About 550 Employees, or 18% of Its Workforce — Proptech Companies That Have Had to Lay Off Workers in 2022

Summary

An article by Mary Ann Azevedo reports that Opendoor is letting go of about 550 people, or 18% of the company, across all functions, its co-founder and CEO Eric Wu announced in a blog post. Impacted employees will receive 10 weeks of severance pay, with an additional two weeks of pay for every full year beyond two years of tenure, and Opendoor will pay for three months of health insurance. Wu wrote that before the announcement the company scaled back its capacity by over 830 positions, primarily by reducing third party resourcing. The article says Opendoor went public in late December 2020, and that at the time of writing shares were trading at $2.48, valuing the company at just $1.56 billion, down from a valuation of $8 billion in 2021.

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Opendoor lays off about 550 employees, or 18% of its workforce

Opendoor is letting go of about 550 people, or 18% of the company, across all functions, its co-founder and CEO Eric Wu announced in a blog post today.

The real estate technology company is one of many property technology (proptech) companies that have had to lay off workers in 2022. Online mortgage lender Better.com has had multiple rounds of layoffs and in June, Redfin and Compass shed a combined 900+ workers .

Skyrocketing mortgage interest rates and inflation are largely to blame for the decreased demand that has led to slowdowns in business at such companies. For his part, Opendoor’s Wu said his company was navigating “one of the most challenging real estate markets in 40 years.”

In his blog post, the executive said that his company over the past two quarters had worked to reduce its operating expenses. He wrote: “Prior to today, we scaled back our capacity by over 830 positions — primarily by reducing third party resourcing — and we eliminated millions of fixed expenses. We did not make the decision to downsize the team today lightly but did so to ensure we can accomplish our mission for years to come.”

Impacted employees will receive 10 weeks of severance pay, with an additional two weeks of pay for every full year beyond two years of tenure. All current healthcare benefits will remain active for the rest of the month, then Opendoor will pay for three months of health insurance.

The company also plans to offer “job transition support” and launch an opt-in talent directory to help laid-off team members “connect with new opportunities.”

Opendoor went public in late December 2020 after completing its planned merger with the SPAC Social Capital Hedosophia Holdings II, headed by investor Chamath Palihapitiya. The eight-year-old company closed its first day of trading on the Nasdaq stock exchange at $31.25, “well above the $10 share price at which Social Capital sold shares in an April [2020] initial public offering,” per Crunchbase and Reuters reporting. At the time of writing today, shares were trading at $2.48, only slightly higher than the company’s 52-week low of $2.26. This means that the company is valued at just $1.56 billion, down from a valuation of $8 billion in 2021.

When it comes to venture capital, Opendoor last raised $300 million at a $3.5 billion pre-money valuation in March of 2019. Over time, it has raised about $1.3 billion in equity funding and nearly $3 billion in debt financing to finance its home purchases. Investors in the company include General Atlantic, the SoftBank Vision Fund, NEA, Norwest Venture Partners, GV, GGV Capital, Access Technology Ventures, SV Angel and Fifth Wall Ventures, along with others.

Founders include Eric Wu and Founders Fund general partner Keith Rabois.

Reporter’s note: The information around the company’s stock price on its first day of trading was amended post-publication to reflect its accurate opening and closing prices.

Redfin and Compass lay off a combined 900+ employees as mortgage interest rates continue to climb

Topics

Eric Wu , Fintech , Layoffs , OpenDoor , PropTech , Real Estate Tech

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Mary Ann Azevedo

Sr. Reporter

Mary Ann Azevedo has more than 20 years of business reporting and editing experience for publications such as TechCrunch, FinLedger, Crunchbase News, Crain, Forbes and Silicon Valley Business Journal. Prior to joining TechCrunch in 2021, she earned numerous awards including the New York Times Chairman’s Award and others for breaking news coverage. She holds a Master’s degree in journalism from the University of Texas in Austin, where she currently lives.

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