PropTech/Fintech Delights & Distresses

David Goldsmith

All Powerful Moderator
Staff member

Proptech startup Rhino lays off over 20% of its staff​

Company that offers alternative to security deposits cited market volatility, desire to reach profitability faster​

Rhino, a proptech startup that offers an alternative to security deposits, has laid off 57 employees, or more than 20 percent of its staff, The Real Deal has learned.
Employees were informed of the cuts in an email Thursday morning from CEO Paraag Sarva. Those to be let go were invited to a noon meeting, according to a laid-off staffer who spoke on condition of anonymity.
The layoffs were effective immediately, and those let go were offered severance packages, the source said, declining to offer specifics. Many were recent hires.

The cuts come a year after Rhino raised $95 million at a $500 million valuation in what was described as a “pre-IPO” round — the last private raise before the company goes public — led by Tiger Global Management with participation from Kairos and Lakestar.
A company spokesperson confirmed the layoffs in an email, citing the company’s desire to achieve profitability more quickly, and the need to remain nimble in a volatile macroeconomic climate. No executives were let go.

“Part of building a high-growth company like Rhino is understanding the macroeconomic environment and being able to respond,” the spokesperson said, later adding “[W]e’ve decided to restructure the company to accelerate our path to profitability and make us less reliant on the capital markets through whatever volatility we all see this year.”

After the layoffs, 198 employees will remain. The company is continuing to hire for “key technology roles,” the spokesperson said.
The New York-based startup, co-founded by Sarva and Ankur Jain in 2017, allows renters to pay their security deposits in small, incremental amounts rather than in a single lump sum. It claims to have saved renters $500 million so far on move-in costs.

Proptech investment soared in 2021. But inflation, labor shortages and a host of other macroeconomic issues have roiled markets in recent weeks, deflating the value of many proptechs that were already struggling in the public sphere.

David Goldsmith

All Powerful Moderator
Staff member

Executive exodus at claims more casualties​

Three more top employees have left in recent days​

The next time CEO Vishal Garg hops on a call with the company brain trust, there will be fewer boxes on his screen.
Three more executives have left the company in recent days, including senior director of partnerships Sean Baddeley, who posted a message on LinkedIn that his last day of work was Monday.

The company has had a rash of employees leave, both in the wake of Garg’s controversial layoffs and his return after a brief leave of absence last month.

“After 49 months, 14 partnerships, 3 offices, 2 teams, and countless memories, today is my last day at Better,” Baddeley wrote. “To my former colleagues, partners, and clients; thank you for all that you’ve taught me and the fun we had along the way. I’ll continue to cheer you on, always.”
Baddeley’s departure comes less than two weeks after TechCrunch reported the departures of Sarah Pierce, who was executive vice president of customer experience, sales and operations, and Emanual Santa-Donato, who was senior vice president of capital markets and growth. Both have since revealed their departures on LinkedIn, Inman reported.

According to TechCrunch, Pierce was particularly bothered by Garg’s disparagement of the laid-off employees, whom he had let go in an infamous Zoom call. She attempted to stand up for those who were fired, which reportedly created tension among her, Garg and the company’s board.

TechCrunch has reported employees are leaving the company in “droves.” Among those to depart in recent weeks: vice president of communications Patrick Lenihan, head of public relations Tanya Gillogley and marketing head Melanie Hahn. Board members Raj Date and Dinesh Chropra have also resigned. hasn’t commented on most of the departures, but told its staff in an internal email that “Raj and Dinish did not resign because of any disagreement with Better,” according to TechCrunch.
Garg apologized after he announced the firing of more than 900 employees over Zoom in December and, in an anonymous online post, accused the laid-off workers of being unproductive. In late 2020, Forbes reported Garg had been accused of improper management of funds at past startups and had been blamed for creating a hostile work environment.

In January, Garg returned to his post as the head of the company after more than a month away. An independent review prompted a search for a new board chairman, president and chief human resources officer, as well as a training program for “a respectful workplace” and the formation of an ethics and compliance committee.

Last year, the startup’s valuation swelled to $6 billion after SoftBank made a $500 million investment. The company has plans to go public through a SPAC merger with Aurora Acquisition Corp. According to Inman, the company’s deadline for the merger has been extended to Sept. 30, 2022.

David Goldsmith

All Powerful Moderator
Staff member

Buyer beware: Proptech SPACs have lost their shine​

No more free lunch as investors, sponsors become more discerning​

For proptech companies considering going public, it may be prudent to wait.
Most of the proptechs that did so over the last 18 months the fashionable way — via mergers with special purpose acquisition companies, or SPACs — have been duds, their stock prices today in the gutter.

The caution that now surrounds SPACs has dampened a market that a year ago was blazing, fueled by pandemic-era spending on technology and investor enthusiasm for the next new thing.
“The market as a whole has taken a look at SPACs and said, ‘Wait a second. Not all these deals look as good as we thought,’” said Jeffrey Berman, partner at proptech-focused venture firm Camber Creek.

Opendoor, an iBuyer that went public in late 2020 through a merger with Chamath Palihapitiya’s Social Capital Hedosophia II, was initially one of the more successful proptech SPACs. Its valuation more than tripled, to $18 billion from $5 billion, after the merger closed, and its shares, which began trading at about $31 in December 2020, peaked at around $35 in February of last year. Today, Opendoor trades below $10 despite reporting steady revenue gains throughout 2021.

SmartRent has had a similar, though less dramatic, trajectory. The smart-home startup’s stock, which began trading in August at around $12 after merging with a blank-check company sponsored by proptech venture firm Fifth Wall, reached a peak value of about $15 before falling off a cliff. Today, the stock trades around $7.

The keyless-entry company Latch, a darling among the industry’s leading lights who see access control as one of proptech’s most promising niches, also experienced a share price spike before coming back to earth. The company merged with a Tishman Speyer-sponsored SPAC in June, and its stock price hit $14 in September. Today, it trades at just $6.

Shares of both Doma and Hippo, two insurance technology companies, are also down drastically — more than 60 percent and 80 percent, respectively — since their SPAC mergers last summer.
And shares of Sonder, the short-term rental company, dropped around 10 percent the day they began trading on the Nasdaq in mid-January, following shareholders approval of its merger with the SPAC Gores Metropoulous II. The company lowered its valuation expectations last October in the face of another pandemic-related travel crackdown and SPAC market headwinds.

“The market has shifted — and we totally get that,” Alec Gores, the sponsor, told DealBook at the time. “As long as you have a great company, the market is going to go in 100 different ways, and we just have to be smart enough to recognize where the market is.”

Let’s just pay whatever​

SPACs, also known as blank-check companies, have been around for decades, but have become increasingly popular investment vehicles over the last two years, functioning as a back door for retail investors who would not otherwise be able to access such high-growth opportunities, and as shortcut to the public markets for promising young companies. A record 613 SPACs pulled in a total of $145 billion in 2021, up 91 percent from the amount raised in 2020, according to the accounting firm EisnerAmper.

The SPAC sponsor raises capital by offering investors “units” of the SPAC that consist of shares and warrants — contracts granting the investor the right to purchase additional shares in the future at a fixed price. The SPAC then has a window, typically two years, to find a promising company to merge with, and thereby take public. Up-and-coming proptechs with a huge total addressable market, or TAM, have been attractive targets.

The deals are alluring for the startups, too. They get to skip the laborious and costly process of undertaking an IPO themselves, and the SPAC’s sponsor — technically a partner, not a buyer — brings, ideally, significant industry acumen and financial resources to the table to help grow the business.

Judiciously executed, a SPAC merger is a useful tool, insiders say. The sponsor serves as a kind of shepherd, plucking the most promising startups from the flock and guiding them into the public sphere, connecting them with long-term capital partners.
But the market euphoria in 2020 and 2021 — even politicians and celebrities were forming SPACs — seemed to have made everyone a little drunk. In some cases, sponsors with no real estate experience were merging with proptechs, which themselves were still working out kinks in their businesses.

There was a glut of SPACs, and a shortage of viable targets. During the mania, people began to speak of “SPAC-offs,” where sponsors were outbidding one another, said Eric Gomberg, who heads SPAC investment banking at Odeon Capital Group. It was a “let’s just pay whatever” period, he said.
“That’s kind of antithetical to what a SPAC is supposed to be,” Gomberg said. “If you’re a sponsor, you’re supposed to be bringing a good deal to the table at a compelling price, not at top dollar.”

Structural issues​

The very structure of SPAC deals has contributed significantly to investors’ present-day skepticism.
Unlike a traditional IPO, whose pricing varies depending on business fundamentals and investor demand, SPACs going public are almost always priced at $10 per unit, based on no underlying operations (since they have not yet acquired a target). When sponsors announce a proposed deal with a target, they give long-term performance projections that hype investors before the merger even closes.

”The crazy thing is SPACs would give investors a runway to 2025, 2027,” said Evan Ratner, a SPAC portfolio manager at Easterly Alternatives. “But are you really going to want to underwrite a potential business that won’t have meaningful revenue until then?”
When, in the months after going public, target companies began reporting earnings, the revenues and profits didn’t always match the valuations. Some were plagued by the supply chain squeeze. Two things occured, Ratner said. “One, multiples contracted. And two, people didn’t believe projections as much anymore.”

In May, Opendoor, which buys homes in bulk and hopes to resell them for a profit, reported a 200 percent increase in revenue from the previous quarter — but on a year-over-year basis revenues were down more than 40 percent. Analysts interpreted the results as an early sign that the runaway housing market could be cooling.

Doma’s revenue grew 29 percent year-over-year in the second quarter but the company still recorded a widening net loss — $23 million, up from a net loss of $6 million the prior year. Doubt rose that the new batch of so-called insurtechs could turn a profit, and more than four-fifths of the investors in the SPAC that would acquire Hippo in early August wound up redeeming their shares. The smaller stock float and selling pressure has weighed on Hippo shares ever since.

SmartRent reported strong revenue growth in its first earnings reports in 2021, but supply chain disruption later entered into the picture. Analysts in October downgraded Latch, a competitor, for the same concerns. If housing construction dried up, the companies couldn’t grow.
Ratner said many retail investors fled SPACs for the crypto market in 2021, which was experiencing its own mania. Famously, Dogecoin, a cryptocurrency based on a Shiba Inu dog meme, rose more than 6,000 percent from January to May after it caught the attention of Elon Musk.

Regulatory issues also helped deflate the market. In April, the SEC issued a statement making it clear that many SPACs were improperly classifying the warrants issued in their IPOs as equity rather than liabilities, creating a slew of new accounting pain points. SPACs would need to perform ongoing valuations of the warrants, and refile investor documents and financial disclosures.

Additionally, in recent SPAC deals, it hasn’t always been clear that sponsors’ and investors’ interests were matched up. The economics of SPAC mergers are “extremely compelling” for sponsors no matter how the stock trades, said Patrick McGrath, chief information officer at Savills. That’s because of the so-called “promote fees” they receive for taking the risk of setting up the SPAC in the first place — often 20 percent of the total shares of the new public company free, or at a deep discount.

Sponsors score no matter what. Meanwhile, retail and other investors lock up their capital for as much as two years, with no certainty their investment will pan out.
“The investor economics don’t work if you’re not outperforming the S&P 500,” McGrath said. “The longer the lockup, the more the upside has to be.”

SPAC investors, notably, have the opportunity to redeem their shares — to back out of their investment — when the time comes to approve the deal. According to Dealogic, the redemption rate for SPACs overall in 2021 was around 50 percent, up from 20 percent in 2020, suggesting investors’ confidence in sponsors’ decision-making has deteriorated materially.

Slowing down​

Opinion is mixed about the near- and medium-term outlook for the SPAC market. Ben Kwasnick, founder of data firm SPAC Research, expects there to be a high number of SPAC liquidations in the coming months after sponsors fail to identify viable targets and are forced to return proceeds to investors.
Historically, the liquidation rate has been “infinitesimally low,” he said.

Going forward, sponsors without a strong track record probably will have difficulty raising capital from investors, who are now far more discerning, Kwasnick said. “People are no longer buying stuff just because the word SPAC is attached, so deals have to stand on their own merit.”
As of mid-January, there are seven SPACs scouting a proptech target, and at least three additional SPACs in the pre-IPO phase that will eventually do the same, SPAC Research data shows.
Proptech niches that offer rapidly scalable solutions to the housing crisis, like modular housing and 3D printing, could be fertile ground for SPAC deals, according to Easterly’s Ratner. Similarly, the smart-home category — technologies that make homes more intuitive and efficient — is ripe for new public market players, he said.
“The proptechs can partner with a homebuilder, build the technology into every home, and people will pay a monthly subscription for it,” Ratner said. “These are services people want, and there will be recurring revenue and compelling growth rates, because it’s a very large TAM.”
Yen Lee, JLL’s chief strategy officer, said SPAC market headwinds likely will push proptechs to pursue a traditional IPO or merge with an already-public entity. “If a company has a really well established go-to-market, then they probably have the credibility and differentiation to go public directly,” he said. ”And if not, the traditional M&A route is, as you know, as robust as ever.”
Camber Creek’s Berman said greater caution will reign over the SPAC market for the foreseeable future. And proptechs are likely to stay private longer, while they carefully consider whether they are actually ready to take on the “very different exercise” of being a public company, he said.
“The SPAC market turbulence has essentially signaled to the private companies, ‘Not so fast — but maybe when you’re ready,’” he said.

David Goldsmith

All Powerful Moderator
Staff member

Real-Estate Venture Boom Is Tested by Stock Market’s Slide​

Valuations at some recent funding rounds have dropped by as much as half, investors say​

Property startups emerged as one of the hottest tickets for venture investors during a record-breaking 2021. The recent stock-market selloff is testing the limits of that boom.

Real-estate companies collected $12.2 billion in venture funding last year, according to private company data tracker CB Insights, up 34% from the previous peak in 2019.

The number of funds investing in the sector is also growing. Wilshire Lane Capital, based in Los Angeles, said Tuesday it has raised $40 million to date for its first vehicle, joining an expanding list of real estate-focused venture-capital firms. The fund’s backers include landlord Morgan Properties, J.P. Morgan Asset Management and private-equity firm Nile Capital Group.

Venture investors say in the past real estate was slower to adopt new technologies than other major industries, such as finance. That is creating growth opportunities now for property startups—sometimes referred to as proptech companies—which the Covid-19 pandemic has accelerated.

Low interest rates and rising stock prices made startup investments more appealing, while landlords looking to fill malls and office towers have been more willing to pay for new technologies such as touchless doors, lunch-delivery apps and clean-air filters.

“2021 was a watershed year,” Wilshire’s founder Adam Demuyakor said.

Now, the recent rout in technology stocks is putting venture appetite for real estate to the test.

Share prices for some of the biggest real-estate companies that went public last year, including co-working company WeWork and property brokerage Compass Inc., have fallen significantly. That has made high valuations of private companies harder to justify.

Although money is still flowing, valuations at some recent funding rounds have dropped by as much as half, investors say.

Mr. Demuyakor said he is mostly shying away from larger, older companies, where the growth in valuations has been strongest, and instead focusing on newer startups. The company’s investments include real estate-fintech companies Esusu and Jetty, and metaverse real-estate firm Everyrealm.

Real-estate companies used to get little attention from venture investors. That changed in the late 2010s, when SoftBank Group Corp. and other fund managers began pumping billions into companies such as WeWork, Compass and construction firm Katerra Inc.

Venture investment in real estate dropped in 2020 following WeWork’s botched IPO attempt and the start of the Covid-19 pandemic, but came soaring back in 2021.

As in other industries, real-estate startups have benefited from central banks opening the cash spigot during the pandemic. A boom in blank-check companies targeting real-estate firms brought in new investors, said Allison Sedrish, who heads proptech coverage at

Startups also are getting more funding from landlords. Blackstone Inc., Brookfield Asset Management and RXR Realty have emerged as major backers of property startups.

“A lot of these traditional real-estate companies have immense cash balances, and one use of it is to invest in innovation,” said Merritt Hummer, a partner at startup investor Bain Capital Ventures.

Brendan Wallace, co-founder of Fifth Wall Ventures, a real estate-focused venture-capital firm, said about half its $3 billion in assets under management comes from real-estate firms. Last week the company said it raised a new 140 million euro ($159 million) European fund.

Mr. Wallace said he expects the boom to continue in part because the sector is newer and hasn’t attracted as much funding in past years. “I don’t think you’ve seen the same run-up that you have in other categories of venture,” he said.

Other investors say they see similarities to the dot-com bubble. “It feels the same to me,” said Craig Spencer, chief executive officer of real-estate company Arden Group, which recently launched a proptech investing venture. “Before that bubble burst, there was a euphoria and a sense of things can only go up.”

The real-estate sector also poses challenges to entrepreneurs and their financial backers. Fields like property brokerage and office management have historically had low profit margins, and efforts to juice returns by leasing space long-term and subletting it short-term can backfire.

Flexible-office operator Knotel went bankrupt last year in part because of its massive lease obligations; WeWork narrowly avoided the same fate in late 2019. WeWork said it has since managed to get more longer-term commitments from its customers, reducing risk.

Katerra went bankrupt last year after raising almost $3 billion, in part because it underestimated the complexity of the construction industry, former employees said. Sellers of software often depend on a few big landlords as customers, who may have little incentive to spend on technology when rents—and profits—are high.

David Goldsmith

All Powerful Moderator
Staff member

Real Estate “disruptor” cuts staff by 28 percent​

Homie, a start-up that wants to become a one-stop-shop for buying homes, has hit a bump in the road​

Homie, the real estate industry disrupter selling properties in Utah, Arizona, Colorado, Idaho and Nevada, laid off 119 employees this week — 28 percent of its staff — claiming it was struggling in a market bereft of supply.
“Record low inventories have absolutely played a role in this,” Homie co-founder and CEO Johnny Hanna told the Deseret News. “2021 was already an incredibly competitive year and we started out this year with even fewer homes than the same time last year. And it’s even more competitive.”

Hanna told the publication the huge growth in homeowners’ equity amid skyrocketing values of homes also played a role in the cutbacks, as newfound house wealth is reducing worries among sellers about how much they’re paying out in traditional real estate agent contracts, which can run as high as 6% of the home’s sale price.

That would play a big role in affecting Homie’s bottom line, considering it’s business model is based on driving sellers to a service that promises a lower, flat-rate fee on sales of homes.
Founded in 2016, Homie charges just $1,500 to sellers, betting that its low rate and combination of computer software and professional agents and lawyers makes buying and selling a home a more efficient — and easily scaleable — experience.

The company subsequently launched three offshoots — Homie Loans, Homie Title and Homie Insurance — in an effort to create a one-stop-shop for all real estate sales needs.
Since 2018, the company has raised more than $33 million in venture capital to help it grow.
To help compete in a market that has become awash in cash offers for homes, Hanna said his company was now looking to help buyers make bank-backed cash offers — something he claimed is practically required thanks to the amount of competition there is for just about every home that hits the market.

David Goldsmith

All Powerful Moderator
Staff member
Even the earliest and biggest is having issues.

CoStar shares tank on weak 2022 outlook, increased resi investment​

Real estate data giant downplays staff exodus, surveillance complaints from employees​

Net sales bookings during the quarter hit $67 million — an all-time high that represented a 37 percent gain over the same period in 2020.

But for 2022, the company expects adjusted earnings per share to hit a range of $0.95 to $1.02, far below analysts’ expectations of $1.35 per share.

As of midday Wednesday, CoStar’s stock was trading around $57 — a 10 percent decline from Tuesday. Shares in the company reached an all-time high of $101 last fall, but are down 28 percent this year.

CoStar Group’s stock cratered in Wednesday trading after the real estate data giant offered a lackluster outlook for 2022 and outlined significant investments in residential products. Its share price fell 15 percent on the day.

The company’s disappointing guidance overshadowed its strong fourth-quarter showing: 35 cents of adjusted earnings per share, which beat estimates by 6 cents, and revenue that climbed 14 percent year-over-year to $507 million, ahead of the $503 million consensus
CoStar, which was reported on Tuesday to be dealing with a mass staff exodus amid allegations of employee surveillance and an exacting work environment, said it would invest $300 million to $320 million
in “residential products, content, sales and marketing” this year — a $200 million increase it said could potentially add billions in revenue over the medium-to-long term.

For years a dominant player in commercial real estate data, CoStar’s stepped-up investment in the residential sector will focus primarily on “breaking down the walls” that exist between homebuyers and agents, and fostering transparency and collaboration by bringing to market tools that allow them to share listings and feedback, CEO Andy Florance said on an earnings call Tuesday.

“Agents and buyers need to share information and feedback about home listings, but that’s difficult today because they operate in two separate, essentially closed and disconnected systems,” Florance said.
The residential investments also will prioritize “powerful and professionally produced rich media and content” on neighborhoods for prospective homebuyers.

Florance called the residential market opportunity “huge” — a potential $72 billion business in the U.S. and a $210 billion one globally.

“We believe our residential revenue will one day eclipse the revenue that we generate in the commercial property sector,” he said.

The slowdown in revenue growth and sales bookings that CoStar subsidiary experienced earlier in the year amid historically low vacancy rates recovered substantially during the fourth quarter, due in part to “modest improvements in the macro backdrop,” Florance said. The company expects that segment to return to double-digit revenue growth in the second half of the year

In prepared remarks, Florance downplayed criticisms from current and former employees who accused the company of engaging in authoritarian-style surveillance while they worked remotely and publicly humiliated them for poor performance. Insider reported this week that 37 percent of the firm’s 4,200 workers left the company last year — a figure Florance confirmed Tuesday.

The company has exacting standards that require use of performance measuring technology “like any organization should have,” Florance said.

“Like any company, we have people who decide the demands of our environment is not for them, and that’s fine,” he added

David Goldsmith

All Powerful Moderator
Staff member
Better, after firing 900 employees over Zoom, is laying off 3,000 more workers, the embattled online mortgage company, announced Tuesday that it's taking the "difficult step of streamlining" its operations and laying off about one-third of its workforce, amounting to roughly 3,000 jobs.

The company, which gained notoriety last year after its CEO fired 900 employees over Zoom just before Christmas, expanded rapidly during the pandemic when interest rates were low. However, in a letter posted on Better's website, the company said Tuesday's layoffs were prompted by a "dramatic drop in origination volume due to rising interest rates," said Interim President Kevin Ryan.
"Unfortunately, that means we must take the difficult step of streamlining our operations further and reducing our workforce in both the US and India in a substantial way," Ryan wrote. "This decision is driven heavily by the headwinds affecting the residential real estate market," he added.

Mortgage rates recently jumped again, rising to a level not seen since the summer of 2019. The 30-year fixed-rate mortgage averaged 3.92% in the week ending February 17, up from 3.69% the prior week, according to Freddie Mac. Rates are increasing because of high inflation and stronger than expected consumer spending.

Better said that affected employees will be notified personally over the phone, potentially averting another public relations disaster like the one that followed CEO Vishal Garg's decision to conduct a mass firing over Zoom. They will also be eligible for extended medical benefits, severance and a "suite of services" to help them find a new job.

David Goldsmith

All Powerful Moderator
Staff member
Better, after firing 900 employees over Zoom, is laying off 3,000 more workers, the embattled online mortgage company, announced Tuesday that it's taking the "difficult step of streamlining" its operations and laying off about one-third of its workforce, amounting to roughly 3,000 jobs.

The company, which gained notoriety last year after its CEO fired 900 employees over Zoom just before Christmas, expanded rapidly during the pandemic when interest rates were low. However, in a letter posted on Better's website, the company said Tuesday's layoffs were prompted by a "dramatic drop in origination volume due to rising interest rates," said Interim President Kevin Ryan.
"Unfortunately, that means we must take the difficult step of streamlining our operations further and reducing our workforce in both the US and India in a substantial way," Ryan wrote. "This decision is driven heavily by the headwinds affecting the residential real estate market," he added.

Mortgage rates recently jumped again, rising to a level not seen since the summer of 2019. The 30-year fixed-rate mortgage averaged 3.92% in the week ending February 17, up from 3.69% the prior week, according to Freddie Mac. Rates are increasing because of high inflation and stronger than expected consumer spending.

Better said that affected employees will be notified personally over the phone, potentially averting another public relations disaster like the one that followed CEO Vishal Garg's decision to conduct a mass firing over Zoom. They will also be eligible for extended medical benefits, severance and a "suite of services" to help them find a new job.

David Goldsmith

All Powerful Moderator
Staff member

Digital mortgage startup Tomo expands as competition pulls back

Lender focused on purchase-mortgages raises $40M at a $640M valuation​

Digital mortgage lender Tomo is growing, even as rising interest ratings threaten to derail the runaway housing market and a beleaguered competitor pulls back.
Tomo, co-founded in 2020 by ex-Zillow executives Greg Schwartz and Carey Armstrong, raised $40 million in a Series A round and expanded into two new states, the company said this week.

The Stamford, Connecticut-based startup claims to have more than doubled its valuation to $640 million with the fundraise, which follows a massive, two-part $70 million seed round in late 2020 and brings its total equity funding to $110 million. A $312 million valuation attended the earlier funding round.

Tomo now operates in nearly a third of the U.S. After expanding into Michigan and Ohio, the company said it expects to cover half of the national market by year-end, as well as double its headcount to 300.
The company, which aims to cultivate an “ecommerce-like” experience for its customers, is hoisting its sails in a tempestuous mortgage market, whipped up by unprecedented demand, record home prices and rising interest rates, which have reduced demand for refinancings.

“It’s a rough neighborhood, with sharp elbows,” Schwartz said. “Ultimately, we’re focused on winning on speed, cost and experience.”
Earlier this month, competitor laid off roughly 3,000 employees, or about a third of its staff, citing a “dramatic” drop in mortgage origination volume — although the public relations fiasco surrounding CEO Vishal Garg’s missteps with earlier firings may also have played a role.

Tomo and its investors are betting that by focusing on purchase-mortgages, guaranteeing on-time loan closings, and bypassing the “easy money” of refinancings — where both and Rocket Mortgage, its other main competitor, focus — it can grow the business and capture market share, Schwartz told The Real Deal.

It may only need to keep an even keel. The Mortgage Bankers Association expects purchase-mortgages volume to continue to grow despite rising rates — even as refinancing demand shrinks. The association recently forecast $1.77 trillion in purchase mortgage volume in 2022 and $1.85 trillion in 2023, up from $1.65 trillion in 2021.

Schwartz cited finding and retaining skilled labor as a challenge and priority. “It’s pretty rough hiring world-class technology, sales and marketing talent right now,” he said. “I spend half of my time hiring and coaching.”
SVB Capital led Tomo’s Series A, with participation from existing investors Ribbit Capital, NFX and Zigg Capital. Telesoft Partners and the proptech venture capital firm Parker89 joined as first-time investors.

With the new funds, the company plans to up its investments in “software development, data science and industry relations,” it said.

David Goldsmith

All Powerful Moderator
Staff member

SmartRent acquires SightPlan for $135M​

Latest M&A move for the public smart-home company, which earned $110M last year​

SmartRent, the smart-home startup that went public via SPAC last summer, continues to use its access to the capital markets to swallow up competitors.
The company is buying maintenance and resident service software SightPlan for $135 million in an all-cash transaction, it announced just after releasing its earnings Thursday.

SmartRent estimates the acquisition will add $10 million to its revenues in the remainder of 2022, meaning the deal is happening at a revenue valuation multiple of roughly 10x. That’s in line with how the market tends to value high-growth SaaS business, but the deal will depend on how successfully SmartRent can scale a product that has been in the market since 2013, but struggled to post big numbers.
“Where their pipeline is today, and where they are in portfolio conversion, we feel very good about it,” SmartRent founder and CEO Lucas Haldeman said in an interview Thursday. The pandemic brought about what Haldeman called a “monumental shift” in how real estate operators adopt technology.

“We’re already integrated with them, we know this company intimately,” Haldeman said of SightPlan, which has about 6,000 properties – mostly multifamily but also some student and senior housing – under management and will continue to operate out of Orlando. The entire team is coming on board, including CEO Terry Danner and president Joseph Westlake, and Haldeman said he expects them to play a key role in the combined firm going forward.
“SightPlan was at a crossroads in its evolution, deciding between raising additional equity or joining forces with a complementary provider of real estate enterprise software,” Westlake said in a statement. The company was backed by RET Ventures, the same venture capital firm that was an early investor in SmartRent.

The deal, which follows SmartRent’s acquisition of rival smart-home firm iQuue for an undisclosed price in January, is part of a wave of consolidation happening in proptech.

Founded in 2017 by Colony Starwood Homes alum Haldeman, SmartRent went public last summer in a $2.2 billion merger with a Fifth Wall-sponsored blank-check firm. The deal remains one of the largest in the proptech space, though many startups that went public via SPAC have taken a hit over the past year.

SmartRent reported that its revenue for Fiscal Year 2021 was $110 million, more than doubling its $52 million total for 2020. Haldeman said it now has over 300,000 units on the platform as of the end of 2021, also more than double the amount it had in the previous year. Its losses, however, also grew to $71 million.
SmartRent’s market capitalization as of Thursday was $1.2 billion. Its stock briefly traded at around $14 a share in September, but is down to just over $6 a share today.
When asked about SmartRent’s steep drop in share price, Haldeman pointed to the overall trend in the public markets, where many major tech firms and proptech firms are experiencing similar drops in value.
“The market is moving away from growth – you’ve seen it among all our peers and high-growth software companies,” he said. “We think this is an amazing business, and 100 percent growth is nothing to shake a stick at. We think the stock price will take care of itself as we continue to execute.”

David Goldsmith

All Powerful Moderator
Staff member

Mortgage tech firm lays off 200 as rates surge, industry slumps​

Blend Labs sheds 10% of staff — and it’s not alone​

A digital lending platform is laying off 200 employees as a historic surge in mortgage rates tamps down applications.
Blend Labs is letting go of roughly 10 percent of its staff to shed $34.5 million in annual payroll, according to a regulatory filing reported by Inman. Company leadership previously forecast cost-cutting measures as interest rates climbed and the industry braced for a dive in mortgage applications.

Co-founder and CEO Nima Ghamsari said the laid-off Blend Labs employees are eligible for at least 18 weeks of pay and continued health insurance among other benefits, which will reportedly cost the company around $6.7 million in severance and stock-based compensation.
Rising rates means less refinancing and fewer employees needed to process applications. Fannie Mae analysts said this week that they expect lenders to refinance $889 billion in mortgages this year but only $558 billion next year, an 80 percent drop from the $2.8 trillion in 2020.

Home sales are also slipping because of a drop in listings, resulting in fewer mortgages. A rise in the percentage of cash buyers has also been a headwind for the mortgage industry.

Layoffs have swept the industry in recent months, most visibly at, where waves of badly handled cuts generated unwanted publicity for the firm.
The online mortgage startup laid off 3,000 workers, or more than one third of its headcount, in March. Some of the New York-based company’s affected employees found out about the layoffs when severance payments were released prior to an official announcement.

Movement Mortgage in April laid off around 170 employees, primarily affecting employees in the processing, underwriting and closing departments in the South Carolina-based company. Interactive Mortgage and Freedom Mortgage had previously reduced headcount.

David Goldsmith

All Powerful Moderator
Staff member
Katerra bosses sunk company with “self-dealing”: Lawsuit

Execs allegedly spent funds on private jets, basketball games​

While Katerra floundered, its executives diverted the firm’s business to their other companies and used its funds for private jet rides and basketball games, according to a new lawsuit.
The lawsuit, filed by Katerra and some of its creditors, accuses ousted CEO Michael Marks and others of “self-dealing and self-interested transactions.” The complaint points to Katerra building apartments for the Wolff Company at a low cost. Wolff was owned by Paxion Capital, a firm run by Katerra co-founders Marks, Jim Davidson and Fritz Wolff. Marks also allegedly “rubber-stamped” acquisitions of companies that benefited him or other executives, who in some cases owned stakes in the firms being acquired.

The complaint also accuses executives of using company money for personal perks, including a private box at Golden State Warriors games and rides on a private jet. In one case, the company paid $12,500 each month to lease a house for one of its senior executives, according to the lawsuit.

A spokesperson for Marks told The Information that the lawsuit contains several inaccuracies and that the former CEO is “confident in our case against these meritless claims — demonstrating that Michael always acted in the best interest of the company and left the company in July 2020 with a clear plan for success.” The Information first reported the lawsuit.
The Real Deal previously highlighted some of the founders’ business arrangements, including those involving Paxion and investment fund Kandle, and how they potentially raised conflict of interest concerns akin to those that ensnared another SoftBank-backed company, WeWork.
Katerra filed for bankruptcy last year, following a meteoric rise fueled in part by nearly $2 billion from SoftBank. The company launched in 2015, billing itself as a tech-first construction management firm. It opened its own factories to manufacture innovative building materials — such as cross-laminated timber and modular building components — and rapidly acquired more than 20 other companies.

But the firm was plagued by cost overruns, allegations of construction defects, factory closures and changes in leadership. Despite repeated public assurances from executives that profitability was around the corner, Katerra hemorrhaged capital and filed for Chapter 11 protection in June 2021.

David Goldsmith

All Powerful Moderator
Staff member

Ral estate tech is coming for your business​

Investors warn about ignoring innovation; brokerages at risk​

Ignore proptech’s advance at your own peril.
That central message emerged from an afternoon panel discussion at The Real Deal’s New York City Showcase + Forum Thursday, where the real estate industry was said to be undergoing its most profound transformation in decades.

“I think we are actually in the midst of one of the most significant shifts in and around the real estate industry than we have probably been through since the Industrial Revolution,” said Clelia Warburg Peters, managing partner at Era Ventures. “And it’s on us in this room, whether we’re investors in that innovation or participants in the incumbent industry, to recognize that that’s happening.”

Only a few years ago, fundamental change in real estate, one of the last holdouts of the digital age, wasn’t a given. Owners with mostly occupied buildings felt little need to alter course. But radical shifts in consumer behavior, particularly around retail and the workplace, and the push toward a net-zero carbon economy made it inevitable.

Panelists put the fork in the road around 2017 or 2018.

“To adapt to a changing environment, to adapt to changing consumer needs, to adapt to a changing climate — these are elements you didn’t have to deal with before, or at least they weren’t at the top of the list,” said Brad Greiwe, co-founder and partner at Fifth Wall.
Panelists emphasized a distinction between proptech that “enables” — makes existing business models easier or more efficient — and proptech that disrupts. Industry incumbents may be too focused today on the former and unprepared for the latter, which can come quickly, they said.

Armed with a record amount of capital from proptech-focused venture firms and, increasingly, generalist investors, a new generation of founders, many spawned from the ranks of proptech pioneer companies like Zillow and Trulia, have created a self-sustaining “flywheel” of innovation, according to Era Ventures’ Peters.
The recent reset in tech valuations is likely only a temporary setback, and a culling of the field will make room for more dominant players to emerge.
“As that flywheel starts to spin faster and faster, it grows out of each point,” Peters said. “You don’t want to be on the wrong side of what I think is an inevitable and very powerful push forward.”

Fundamental change was said to already be upon the brokerage business, where iBuyers and others who reduce the use of intermediaries, such as agents, could take over swaths of secondary and tertiary markets, Peters said.
So-called “neo-brokers” — tech-enabled employee-agents, rather than independent contractors — are fundamentally changing the business by serving as “quarterbacks for a bunch of other transactions,” she said.
High-performing agents, particularly in high-cost coastal cities where inventory is diverse and idiosyncratic, probably don’t need to worry about their jobs, but the very idea of the brokerage is changing and could be under threat.
“I don’t think agents will be totally disintermediated,” Peters said. “But I think there is a legitimate question about whether brokerages will be.”

David Goldsmith

All Powerful Moderator
Staff member

Fintech unicorn Bolt starts layoffs​

One-click checkout company Bolt Financial on Wednesday announced layoffs, just months after raising $355 million in new venture capital funding at nearly an $11 billion valuation.
Why it matters: Tech startup jobs aren't being protected by strong balance sheets, with Bolt just the latest in a spate of recent "unicorn" cuts.
Behind the scenes: Bolt recently made a controversial decision to offer loans to employees who wanted to buy their vested stock options, with founder and executive chairman Ryan Breslow recently telling Axios that there was wide adoption.
  • If Bolt were to liquidate those shares at a lower price than what employees paid, such as via an IPO or acquisition, then loan-holders could owe the company money. It's worth emphasizing, however, that employee shares are usually priced lower than venture capital prices, meaning the loans aren't tied to the $11 billion (let alone the $14 billion that Bolt floated as a possible follow-on investment.)
  • A company spokesperson hasn't yet responded to a request for information about how those loans will be treated for laid-off employees.
  • Bolt also was recently sued by Authentic Brands Group, whose brands include Forever 21 and Lucky, for breach of contract.
Big picture: Fast, a Bolt rival valued by VCs at over $500 million, last month shut down, costing 450 people their jobs.

David Goldsmith

All Powerful Moderator
Staff member
Tomo cuts almost 1/3 of workforce, dials back expansion plans

Tomo, the mortgage fintech launched last year by former Zillow executives Greg Schwartz and Carey Armstrong to focus on purchase loans, cut its workforce by nearly one-third on Wednesday, and is dialing back its plans to expand into additional markets.

“The recent shift in the mortgage and venture capital markets due to the rapid increase in interest rates has impacted Tomo’s business plans, and led us to make changes to our near-term strategy,” Tomo CEO and co-founder Schwartz said in a statement provided to Inman. “As part of these measures, we have reduced the size of Tomo’s workforce by almost a third. This was a last resort, but ultimately something we felt was necessary to maintain a strong foundation.”

Tomo, which announced a $40 million Series A funding round in March that more than doubled its valuation to $640 million, currently offers loans in Colorado, Connecticut, Florida, Georgia, North Carolina, Michigan, Ohio, Texas and Washington.

According to the Nationwide Multistate Licensing System, Tomo Mortgage is also licensed in Illinois, Maryland, Oregon, Tennessee and Washington, D.C. But plans to open for business in those markets appear to be on hold.

“We will also dial back our market expansion plans and will focus specifically on building a tech-enabled mortgage process that delivers faster, less costly and less stressful experiences for homebuyers and the real estate agents that serve them,” within the company’s existing footprint, Schwartz said.

Although Schwartz was not available for an interview, he provided additional details and thanked employees who were let go in a LinkedIn post.

“This is difficult for any company, but especially one like ours built around the idea of service to others, to say nothing of the difficulty our impacted teammates are now facing,” Schwartz wrote. “And to those teammates: Know you helped build Tomo, and I want to thank you for your contributions. I know the world will scramble for your skills because we have witnessed the wonderful and important work you’ve accomplished.

“The reason we are taking such strong measures is to ensure Tomo has enough of a runway for the business to succeed in its mission. While we explicitly don’t offer refinance mortgages because of the risky boom and bust cycle, we’ve still been impacted by the rapid rise in interest rates that has reduced purchase mortgage margins.

“Venture capital is also pulling back in this chaotic economic environment, and thus, we must map out a stable budget that will rely on less capital for longer.”

Tomo Mortgage matches homebuyers with partner real estate agents through its sister company, Tomo Brokerage. Tomo Mortgage LLC and Tomo Brokerage Inc. are owned by parent company Tomo Networks Inc.

In January, Tomo announced its expansion into Florida, Connecticut and Colorado, and the addition of jumbo mortgages of up to $3 million to its product lineup.

In announcing its expansion into Georgia and North Carolina two weeks ago, Tomo said it had a presence in more than a third of U.S. markets.

A number of mortgage lenders have downsized in recent months to adjust to lower refinancing volume, including Better, Pennymac, Guaranteed Rate, Keller Mortgage, Mr. Cooper and Wells Fargo. The nation’s largest mortgage lender, Rocket, expects buyout offers it has made to 2,000 employees will save $180 million a year, while LoanDepot said it does not expect to turn a profit this year and will lay off workers and suspend its quarterly dividend.

More than a dozen Keller Mortgage employees posted notices on LinkedIn last week that they’d been laid off, with some describing the cuts as “huge.”

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

David Goldsmith

All Powerful Moderator
Staff member

Layoffs delete 29% of digital mortgage lender Tomo’s staff​

Purge in tech, mortgage industry stems from rising interest rates, falling stocks​

Digital mortgage lender Tomo has laid off nearly one-third of its workforce less than three months after an equity capital injection — the latest casualties in a tech and mortgage industry purge.
A total of 44 employees were let go, Insider reported Tuesday. It is unclear if any executives were jettisoned in the downsizing, which management attributed to headwinds in the mortgage and venture capital markets.

“The recent shift in the mortgage and venture capital markets due to the rapid increase in interest rates has impacted Tomo’s business plans, and led us to make changes to our near-term strategy,” CEO Greg Schwartz told the publication.

Stamford, Connecticut-based Tomo, co-founded in 2020 by Schwartz and fellow ex-Zillow executive Carey Armstrong, raised $40 million in a Series A round in March that it said more than doubled its valuation to $640 million.

At the time of the raise, Tomo was pushing into new markets and planning to double its headcount this year. The company, which set out to cultivate an “ecommerce-like” experience for borrowers, had assumed that by focusing on purchase-mortgages and forgoing refinancings that it could bypass the trouble that had befallen competitors like, which has laid off thousands since interest rates began rising last fall, and capture market share in a frenzied housing market.

The severity of recent macroeconomic turmoil, however, has caught many off guard and forced venture capitalists to pull back, causing a dramatic cooling in the capital markets where tech companies, including proptechs, had grown accustomed to sizable funding rounds at higher and higher valuations.
VC firms are now encouraging their portfolio companies to cut costs until more favorable conditions return, which could be months away, according to RET Ventures’ Christopher Yip.

“Companies that raised a lot and hired a lot but haven’t quite figured out the unit economics, or a sustainable business model yet. Those are the first ones that are saying, ‘This is the right moment in time to try to tighten the belt,’” he said. “I think you’re seeing a lot of those tough conversations.”
Some 16,000 tech industry employees were laid off in May alone, according to the website Within the proptech field, mortgage-related startups have been particularly hard hit. In April, the digital lender Blend Labs laid off 200 employees, or roughly 10 percent of its staff.

David Goldsmith

All Powerful Moderator
Staff member

CoStar takes action against meme account; fired employees allege retribution​

Layoffs come as firm seeks injunction against Instagram page​

The joke seems to have been lost on CoStar’s leadership.
The real estate data giant, which has come under fire recently for its allegedly draconian managerial style that is said to have included surveilling remote workers, is now seeking an injunction to stop an ex-employee from mocking the company on social media.

Within 24 hours of filing an arbitration demand last week against Nate Peterson, a researcher it fired last year for poor performance, CoStar called employees around the country into private meetings and terminated them, effective immediately, sources said. Some of those let go suspect their firing was a reprisal for engaging with an Instagram account critical of the firm.
It is unclear how many were axed, but Peterson, whose Instagram account CoStar Memes has become a sounding board for the firm’s disaffected employees, said it could be dozens.

CoStar declined to comment on personnel matters, but a spokesperson said that the company “did not terminate any employees for following a social media account.”

An enemy within​

A dominant player in commercial real estate data, CoStar has earned a reputation as an exacting, inflexible employer that, among other things, charges employees for parking at their own workplace and dismisses them for minor offenses. During the pandemic, it reportedly asked its IT staff to track remote workers’ online activity.
CoStar has disputed its negative portrayal in media reports and claimed a conflict of interest at one of its main antagonists, the news outlet Insider, whose parent company, German publisher Axel Springer, competes with CoStar in Europe.

In interviews, two employees who were fired last week described the company’s handling of their dismissal as unprofessional. They were offered severance packages worth several thousand dollars each, but HR gave only vague explanations for their firing — they were no longer “a good fit” for the company — and dodged further inquiry into the rationale, they said.
The employees, who worked in different departments on opposite coasts, claimed to have positive relationships with their colleagues and direct managers and no performance-related issues. Both said they were meeting or exceeding expectations in their roles, and each had been in their positions for a year or less.
It wasn’t until hours after being fired that each recalled, independently, that they had been warned by Peterson against engaging with the CoStar Memes Instagram account using their real names. A professional data scraper reached out to Peterson in April, he said, claiming to have been offered a contract by CoStar to find out who had followed, liked or commented on the meme account’s posts. Peterson relayed the warning to his followers.

One terminated employee, who began following Peterson’s account in March, said he made two stray comments on posts, which he described as innocuous. After the warning, he said he unfollowed the account and “unliked” any posts he’d previously engaged with.
The other, who claims to have never followed the account and visited it only for due diligence purposes (he worked in recruiting), had “liked” a couple of memes back in February.
“This is literally the final scene from ‘Old Yeller,’ corporate edition,” he said.

Defiance and deflection​

Peterson, who worked in CoStar’s Richmond, Virginia, office from June 2017 to July of last year, launched CoStar Memes in December — as a joke among friends, he says, including former colleagues. CoStar has described him as a “disgruntled” ex-employee with an “unhealthy obsession” with the company.

Peterson, who is newly employed, says he was passed over for a promotion before he was let go, but claims to have had no personal vendetta regarding his firing and said he makes no money from the account.
Over the last six months, CoStar Memes has evolved into a forum where current and former employees tell stories and air grievances about the company, which have included allegations of drug use, shady client practices and “creepy Me Too stuff,” in Peterson’s words.
“The memes were just the start of it,” he said. “The stories are where it really took off, because everyone was able to see how shitty the culture was and how badly people were being treated. I don’t write any of the stories. I just make the memes.”

Today, CoStar Memes has more than 2,600 followers, many of whom use anonymous accounts to engage with it, presumably to avoid reprisal. They send Peterson opinions and tales of their experiences, and he reposts them as “stories” — short-format images and videos that disappear from Instagram after 24 hours. The posts are generally critical, often crude, and many are aimed at CoStar CEO Andy Florance, who ex-employees credit as the source of the company’s oppressive policies.
“The fact that this guy is so unhinged over memes…..,” one post reads. “If 1/100th of that energy were dedicated to treating employees appropriately, there would have been no problems in the first place.”

Another reads: “So tired of business being able to just wave away any and all claims someone makes by saying ‘disgruntled former employee.'”
In its arbitration demand — a form of dispute resolution that involves an impartial intermediary, typically a retired judge or lawyer — CoStar is seeking a permanent injunction against Peterson’s social media posts criticizing the company, which it says violate a non-disparagement clause in his employment contract. It is also seeking $1 in nominal damages and compensation for related legal fees.
The CoStar spokesperson cited employee safety as a motivation. In February, after Insider published its investigation, an arsonist set two cars outside of the company’s Richmond office ablaze. Police later arrested an 18-year-old suspect who had no known affiliation with CoStar, Insider reported.

“We are taking action against conduct that glorifies violence against the company’s employees,” the spokesperson said.
Peterson remains defiant, and contemptuous of Florance. His aim is to “bleed them dry for as long as possible,” he said, adding that he may “try to escalate” the situation if his legal counsel advises him to do so.
“I’m looking forward to any fight that [Florance] brings on,” he said. “He can do nothing to me, as I have nothing to give him.”

David Goldsmith

All Powerful Moderator
Staff member

Coinbase lays off 18% of workforce as executives prepare for recession and 'crypto winter'​

  • Coinbase will cut 18% of full-time jobs, according to an email sent to employees Tuesday.
  • CEO Brian Armstrong pointed to a possible recession, a need to manage costs and growing "too quickly" during a bull market.
  • "We appear to be entering a recession after a 10+ year economic boom," Armstrong says. "While it's hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment."
Coinbase is laying off almost a fifth of its workforce amid a collapse in its stock and crypto prices.
The cryptocurrency exchange will cut 18% of full-time jobs, according to an email sent to employees Tuesday morning. Coinbase has roughly 5,000 full-time workers, translating to a head count reduction of around 1,100 people.
Shares of Coinbase closed down .83%.
CEO Brian Armstrong pointed to a possible recession, and a need to manage Coinbase's burn rate and increase efficiency. He also said the company grew "too quickly" during a bull market.
"We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period," Armstrong said in the email, adding that past crypto winters have resulted in a significant decline in trading activity. "While it's hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment."
Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City.
Steven Ferdman | Getty Images
Coinbase had initially said it was pausing hiring. Two weeks later, the crypto giant announced that it was extending the freeze for the "foreseeable future." Earlier this year, Coinbase said it planned to add 2,000 jobs across product, engineering and design.
"Our employee costs are too high to effectively manage this uncertain market," Armstrong said. "While we tried our best to get this just right, in this case it is now clear to me that we over-hired."
The news comes during a deep rout for Coinbase shares. The stock went public via a direct listing last April during a boom in crypto markets and investors clamoring for high-growth tech stocks. Coinbase's shares are down 79% this year and 85% from the all-time high. Meanwhile, bitcoin has dropped to near $22,000 and has lost 53% of its value this year.
San Francisco-based Coinbase reported a slump in users in its last quarter and a 27% decline in revenue from a year ago. The company gets the majority of its top line from transaction fees, which are closely tied to trading activity.
Employees of Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, watch as their listing is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, U.S., April 14, 2021.
Shannon Stapleton | Reuters
President and Chief Operating Officer Emilie Choi called it a "very difficult decision for Coinbase" but given the economic backdrop, she said it "felt like the most prudent thing to do right now."
Affected employees received a notification from human resources. If so, the memo was sent to a personal email as Coinbase cut off access to the company systems. Armstrong called it the "only practical choice" given the number of employees with access to customer information, and a way to "ensure not even a single person made a rash decision that harmed the business or themselves."
Coinbase employees will have access to a talent hub to find new jobs in the industry, including Coinbase Ventures' portfolio companies. Choi said Coinbase would still be "doubling down" on areas like security and compliance and may be "reorienting" employees to near-term revenue drivers.
"If there are any cuts to new product areas, it's going to be more around experimental venture areas that we're still very bullish on, but that we don't want to invest in in this part of the cycle," Choi told CNBC in an interview at the company's headquarters.
"We will continue to invest in incredible innovative areas of crypto that we think are emerging over the longer term, but we're probably going to do those in a more measured way in this type of an environment."
Coinbase joins dozens of other tech and crypto companies slamming the brakes on hiring. Crypto lender BlockFi said Monday it was cutting 20% of its employees. Open-source tracker estimates that more than 5,500 start-up and tech jobs have been cut in June alone.
Coinbase's intention is "that this is a one-time event," Choi said adding that the company has $6 billion of cash on the balance sheet. The company has lived through multiple bear markets in crypto before, also known as "crypto winters."
"We will power through any macro environment, any crypto winter, or anything that's coming," she said. "The reality though, is that we have to adjust when we feel that there's a very dynamic economic environment in play."
Tech companies have been fighting low morale and attrition as their stocks get slammed. Last week, a petition posted to a decentralized publishing platform called for the removal and a "vote of no confidence" regarding several Coinbase executives, including Choi.
Armstrong called attention to the since-deleted petition, and in a Tweet urged employees to quit if they don't believe in the company.
"We will always encourage our employees to share feedback internally on how we operate as a company — and we have a number of mechanisms in place for them to do so. It's very much unclear if this document came from within the company," Choi said. "However, if it did, we're disappointed that those behind it felt the need to breach the trust of the company and their co-workers by sharing this information in a way clearly designed to drive controversy rather than a meaningful dialogue."
Coinbase has no plans to offer additional company equity grants, or cash compensation amid the price drop, Choi said. The company offers annual grants, partially so employees could "mitigate the swings" and volatility in crypto. For employees and investors, the COO likened it to Amazon or Tesla: a long-term investment with volatility in the meantime.
"We think that anyone who makes an investment, whether they're an employee or investor, will have a handsome return over the longer term," Choi said. "Coinbase is a long-term play — we have very deep conviction in the long-term value of the stock."

David Goldsmith

All Powerful Moderator
Staff member

Mr. Cooper cuts 5% of staff amid lender layoff wave​

Loan servicing giant let go of 420, most in loan originations​

Mr. Cooper has falled in line with a dismal trend set off by rising mortgage rates.
The Dallas-based loan servicing giant, laid off 420 employees, Inman reported. The layoffs, which mostly impacted the loan origination department of the company, follows a round of layoffs earlier this year that effected 250 employees.

Industry publication Asset Securitization Report was first to report on the latest round of layoffs, which affected about 5 percent of the company’s workforce.
In a statement to Inman, Mr. Cooper pointed to “rapidly increasing interest rates and rising inflation, which has resulted in decreased originations volumes.” In a regulatory filing last month, the company lowered the projection for the generation of mortgage originations in the second quarter from $65 million to $85 million down to $40 million to $50 million.

Mr. Cooper’s direct lending business has taken a sharp turn down, declining by 32 percent year over year.
The company also has a big focus in loan servicing. That part of the business is humming along because fewer buyers want to refinance loans in a rising rate environment. These colliding tailwinds had the company predicting it would only break even during the second quarter.
If there’s any solace the recently unemployed workers can take, it’s that they’re hardly alone. Layoffs have swept the tech and mortgage industries as companies have struggled to cope with the changing mortgage rate environment.

A total of 44 employees were let go from digital mortgage lender Tomo, nearly one-third of its workforce. The layoffs came fewer than three months after an equity capital injection.

In April, digital lender Blend Labs laid off 200 employees, or roughly 10 percent of its staff. The lending arm of Keller Williams, Keller Mortgage, recently implemented its second round of layoffs in only a few months. And has laid off thousands since interest rates began rising in the fall, some in more controversial fashion than others.
Mr. Cooper was previously known as Nationstar Mortgage before a 2017 rebrand. In 2020, the company was ordered to pay $73 million to about 40,000 homeowners in a settlement with the Consumer Financial Protection Bureau. The company was accused of failing to provide basic services for the mortgages it serviced from 2012 to 2016.

David Goldsmith

All Powerful Moderator
Staff member

Short-term rental startup Sonder cuts staff 20% after poor public debut​

Chief technology officer among those exiting firm, which went public in January SPAC merger​

Sonder, the short-term rental startup whose shares have plummeted more than 80 percent since it went public in a SPAC merger five months ago, has laid off a fifth of its staff in an effort to cut costs.
The San Francisco-based firm is eliminating 21 percent of corporate roles and 7 percent of “front line” roles, according to a Thursday SEC filing first reported by Skift. Among those departing in what Sonder termed its “Cash Flow Positive Plan” is chief technology officer Satyen Padella, who stepped down on Wednesday but will continue serving in an advisory role “to ensure an orderly transition.”

Sonder reported an $83 million loss in the first quarter, its first as a public company, as its expenses ballooned 72 percent to $176 million. The company expects to incur another $3.5 million to $5.5 million in restructuring costs in a longer-term effort to cut its expenses by $85 million per year.
As of midday Friday, Sonder’s shares were trading at $1.73, down 2.8 percent from Friday’s open and nearly 83 percent from their Jan. 3 debut — though it’s far from the only real estate-related startup to struggle on the open markets in recent months.

Sonder, which says it operates short-term rentals in 35 markets spanning three continents, went public on Jan. 19 in a merger with a blank-check firm sponsored by billionaires Alec Gores and Dean Metropoulos.
The SPAC deal valued Sonder at $1.9 billion; ahead of the merger, the company had raised at least $560 million in venture capital. A Series E funding round in June 2020 valued it at $1.3 billion.
The company, which CEO Francis Davidson founded in 2014, differs from the likes of Airbnb by leasing and managing its rentals itself.
Last year, it became the first tenant at Jeff Sutton’s proposed Midtown hotel, reportedly inking a 15-year lease at the planned 363-room hotel at 25 West 34th Street. The company also signed a long-term lease for the 76-key Gowanus Inn & Yard in Brooklyn last year.

While Sonder may be hurting, its CEO doesn’t seem to be. Earlier this year, Davidson paid $9.2 million for a 6,100-square-foot Hollywood Hills home previously owned by rapper and record producer Pharrell Williams.