This week we are reducing our workforce by 25%. This was an incredibly painful decision for me and the leadership team, but, in the end, we concluded that we had no choice but to securely batten down the hatches as we sail into a major economic storm.
The unprecedented economic events that are playing out on a global stage began in our own industry and have made a prolonged recession likely, in our judgment. We are a young company that is not yet making a profit. Despite having sizeable 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.
Saying goodbye to dedicated colleagues, who we have worked with side by side, is miserable. This is a group of incredibly smart and talented people who helped build and support a product they can be proud of. I want to thank these folks for their service and contributions and offer my apology for the having to make this decision. I wish the circumstances would allow us to continue having them contribute to Zillow’s success.
One of the reasons this is so difficult is simply because the business continues grow. In the midst of the madness that surrounds us, we counted 5.4 million unique visitors to Zillow.com in September, which was a 42% increase in traffic over this time last year. Fear, value-shopping, and curiosity are driving people in record volumes to our site. 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). While our revenues do not yet cover our expenses, those revenues have been growing at a rapid pace and we will continue to have open positions in areas that are directly tied to revenue, such as advertising salespeople.
So, this is a jolting and sad week for us here at Zillow – both for departing employees and those of us who will be adapting to a smaller organization. However, given the potential for an extended recession, we firmly believe that we are doing what is painful but necessary to ensure a bright long-term future for a company that, in a very short period of time, has become an important resource and a household name for all those interested in homes.