SoftBank-backed real estate brokerage Compass just laid off approximately 375 employees — or roughly 15% of its staff — as the coronavirus slows its business to a crawl, a source familiar with the matter confirmed to Business Insider.
An email reviewed by Business Insider from co-founder and CEO Robert Reffkin detailed a range of cost-cutting measures the company took before layoffs, including Reffkin lowering his salary to $0 and the executive team lowering their salaries by 25%. The email said that the company is now modelling a 6-month decline in revenue of 50%.
Compass was last valued at $6.4 billion, after a $370 million funding round in July 2019 led by SoftBank. The brokerage had rapidly expanded since it was founded through a strategy of acquiring other brokerages and emphasizing its technology stack.
Coronavirus has hit the economy hard, with multiple financial institutions predicting it will cause a recession. The real estate brokerage industry is hit doubly hard by the nature of the coronavirus, which requires social distancing that makes it much harder to show, negotiate, buy and sell homes.
Earlier on Monday, SoftBank said that it would sell up to $41 billion in assets to reduce debt and to buy back shares. Its stock has plummeted over 50% since mid-February. Bloomberg reported last week that SoftBank was looking to raise an additional $10 billion to cover its portfolio companies that are being battered by the coronavirus.
Last week, SoftBank-backed iBuyer startup Opendoor announced that it would halt any new purchases of homes.
The email noted that Compass has also reduced its Concierge program, which provided 0% interest loans to home sellers to make improvements to their home, by 80%, has paused corporate marketing, and "halted non-essential projects."
Laid off employees were offered severance and were allowed to keep their corporate laptops. Reffkin noted that he hoped to rehire some of the laid-off employees when the economy improves.
"I don't have a crystal ball, but I believe that in 100 days the real estate market will bounce back and our customers, company and country will be climbing its way out of a recession," Reffkin wrote.
