The San Francisco-based startup had been on an IPO track but expanded “faster than we could train, support and develop everyone,” according to a company memo obtained by Inman.
Saying it expanded faster than it could train, support and develop recent hires, real estate technology startup Side is shedding about 10 percent of its workforce to prepare for the potential short-term impacts of “volatility in the market,” founder and CEO Guy Gal said in an email to employees Wednesday.
San Francisco-based Side, which provides branding and technology to independent brokerages and often serves as the broker of record for high-performing agent teams and independent brokerages, said last summer that it was on track to go public after raising more than $250 million in funding, including a round that valued the company at $2.5 billion. In March 2021, Side achieved “unicorn” status after announcing a $150 million funding round that valued it at more than $1 billion.
But this year’s rapid runup in mortgage rates has created uncertainty for many real estate and mortgage companies, as economists revise their forecasts for home sales this year and next.
“While demand for what we do continues to grow and our 2022 growth forecast is strong, the accelerated pace of our expansion and hiring brought complexities and challenges that slowed us down,” Gal said in an email to employees reviewed by Inman. “We expanded the team faster than we could train, support and develop everyone to meet the demands of changing roles and processes.”
On top of that, Gal said, “the economy is shifting, with economists forecasting volatility in the marketplace. A softer market could be good news for Side, as it is likely to increase demand for our platform. However, we have to prepare for potential short-term impact, which means we need to focus on investing in our long-term success through this period of volatility.”
In a written statement provided to Inman, Gal confirmed that Side had parted ways with “about 10 percent” of its employees.
“This decision, while incredibly difficult to make, was strategic and necessary,” Gal told Inman. “We took great effort to structure this change such that our agent partners receive the same level of brokerage services that they have come to expect from us.”
In his email to employees, Gal noted that Side has notched “incredible growth over the last five years,” expanding into 15 new states in 2021 and more than doubling revenue.
In January, Side announced it had expanded into Washington, D.C. and Oregon, partnering with veteran agents in those markets.
In Washington, D.C., Side partnered with agent Lindsay Reishman in the creation of Pareto, a company billed as “a modern boutique brokerage.” In Portland, Oregon, Side and agent Drew Coleman formed Opt, a brokerage centered on the brand concept of offering a new “option” for buyers and sellers.
In his email to employees, Gal said the layoffs were “the right decision to serve the long-term interest of our community, partner companies, financial supporters, and shareholders (including all of you).”
In addition to providing severance pay, Gal said Side is extending the time employees who were let go have to participate in the company’s equity program, “from months to years,” and accelerated the vesting schedule for those who had been with the company for less than a year.
Gal characterized that move as “highly unusual … but it is the right thing to do.”
He said Side “is fortunate to be generously funded, continues to grow well, and will keep transforming more of the world’s best real estate professionals into the world’s best real estate companies.”