Opendoor to Slash Workforce by 85% in dramatic Restructuring
NEW YORK - September 12, 2024 – Opendoor Technologies is enacting a massive restructuring that will reduce its workforce by approximately 85%, according to sources familiar with the matter. The drastic cuts signal a significant shift in strategy for the real estate technology company, which has struggled with profitability despite a surge in market activity during the pandemic.
The move impacts a vast majority of Opendoor’s employees adn reflects a basic reassessment of its business model. Opendoor, which buys and sells homes using technology to profit from the difference, has faced challenges stemming from rising interest rates and a cooling housing market. The company’s continued cash burn and low margins prompted the overhaul, led by new leadership focused on returning to in-person work and a revised approach to company culture.
The restructuring follows the appointment of new leadership, including Danny Rabois, a partner at Founders Fund, who has publicly criticized the company’s previous direction. Rabois stated the “culture was broken,” citing remote work policies and a focus on diversity, equity, and inclusion (DEI) initiatives as contributing factors. He indicated a return to in-person collaboration is central to revitalizing innovation.
“These people were working remotely. That doesn’t work,” Rabois saeid. “This company was founded on the principle of innovation and working together in person. We’re going to return to our roots.” He also stated the company would be ”fix[ing]” its approach to DEI.
The cuts are intended to address Opendoor’s considerable cash burn, according to Rabois, who added he has a “high level view of the strategy” needed to transform the business. Nejatian,also part of the new leadership,confirmed his commitment to returning to the office,stating on X (formerly Twitter) he would be “in the office first thing Monday morning and first thing every Monday morning.”
Opendoor initially went public through a special purpose acquisition company (SPAC) deal with Social Capital Hedosophia II in September 2020, valued at $4.8 billion.Despite the initial optimism, the company’s stock has faced volatility, currently trading around $2.40 as of market close September 12, 2024.The future of opendoor hinges on its ability to execute this restructuring and achieve lasting profitability in a challenging real estate environment.
