Online valuation and listings site Zillow.com announced today it is laying off 40 people, or 25 percent of the company’s workforce, in order to cut expenses in anticipation of a prolonged recession.
"Unprecedented economic events … have made a prolonged recession likely, in our judgment," said Rich Barton, Zillow founder, chairman and chief executive officer, in a post on the company blog. "We are a young company that is not yet making a profit. Despite having sizable cash reserves, we deemed the responsible course was to meaningfully reduce expenses, so that Zillow emerges from the other side of the recession in a very strong position, even if the recession lasts many years."
Barton said the decision to cut staff was a difficult one because although the company’s revenues do not yet cover expenses, Zillow continues to grow. The 5.4 million unique visitors to the site in September represented a 42 percent increase over the same time last year, and revenue is growing "at a rapid pace."
Zillow has a New York advertising office, but the majority of the layoffs are in the company’s Seattle headquarters, the company said. Departments that saw cutbacks in staffing included marketing and engineering. Barton said the company will continue to fill open positions in areas that are directly tied to revenue, such as advertising sales.
According to the online metrics company Hitwise, Zillow.com was the third most popular real estate related Web site in September, with 2.52 percent share of all traffic in the category (see story).
"Fear, value-shopping, and curiosity are driving people in record volumes to our site," Barton said. "The fact that we have never spent any money on advertising gives me tremendous confidence in our consumer-centric product vision and in the long-term leverage in our business model — free, open access funded by targeted, relevant advertising."
Last month, Zillow.com and a consortium of 11 newspaper publishers announced an alliance allowing them to offer advertisers access to each other’s audiences.
The Zillow Advertising Network allows newspaper advertisers to reach Zillow’s national audience, the companies said, and Zillow advertisers get access to local audiences through real estate sections of newspaper Web sites (see story).
Launched in February, 2006, the company has raised $87 million in venture capital from employees, individuals and several leading investment firms including Benchmark Capital, Technology Crossover Ventures, PAR Capital and Legg Mason Capital Management.
According to an Inman News profile of the company published in July, about 90 percent of Zillow’s visitors own a home, and two-thirds are buying or selling. Zillow "provides numerous free and paid opportunities for real estate and mortgage professionals to market themselves and their listings to these engaged consumers," the company said.
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