A note from our CEO

August 10, 2022
0 min read

Team –

I know the past few months have felt uneasy.

After a period of remarkable growth and success in our business, it’s been difficult to watch the rapid cooling in the market and the impact it’s had on our near-term ambitions. I know that layoffs across the industry, and especially at our competitors, have led many of you to wonder whether Homeward would take similar actions. As I shared in June, we’ve taken these challenges in the market seriously. But I did not want us to make knee-jerk reactions, especially one that would negatively impact our people.

However, I am now writing to you with sad news: Homeward will be laying off ~20% of its workforce today. I know that this message is hard to hear, and it’s something I had hoped never to have to deliver. People are at the heart of everything we do here. We have navigated the highs and lows of real estate – together – and built a business that helps people achieve their dreams of homeownership. I’ve always been so proud, and remain proud, of this team.

But, meeting the moment sometimes requires a business to evolve. Despite having a strong financial start to the year, we are currently staffed for more growth than we’re now forecasting. This reduction today is necessary for our future success, but that doesn’t make it easier to part with so many of our colleagues. Layoffs carry real consequences for people, and this isn’t a decision we make lightly.

We are committed to doing everything we can to support the employees leaving today, and those staying. And it’s important that we are as transparent as possible in how we reached this conclusion.

Understanding why

Homeward has built our brand around giving agents and their clients a new and better way to achieve their homeownership goals. In our early days, we helped customers simplify the buying/selling process with Buy Before You Sell. As the market intensified, we launched Buy With Cash to help customers win among a crowded pool of offers. Most companies never find product-market fit once, let alone twice. Our successes catalyzed extraordinary growth – growth that required rapid hiring to simply keep up with demand.

Thanks to your hard work, May was our strongest month ever for the business. At that time, we felt confident that we were armed with the necessary cash to keep the business humming. We planned for a future built upon our strengths and the desire to help more customers, in more states, with more innovative products. Given our Q2 results, I do not believe that our optimism and excitement about the road ahead was misguided.

But – the market has changed dramatically in recent months: high inflation has persisted, interest rates are rising dramatically, and home sales have fallen from historic highs. Coupled with affordability concerns, fewer buyers are seeking homes. There is also less demand for cash offer products that differentiate buyers in the homebuying process.

Our original product, Buy Before You Sell, remains as popular as ever — and we feel confident it will continue to be sought out by buyers and sellers no matter the strength of the market. Still, losing demand in part of our portfolio - specifically, Buy With Cash - has had a sudden and sizable impact on our business.

When we talked with you at the All-Hands in June, we believed our cash runway was sufficient to bridge this period of lower activity. We reduced our non-people costs and planned our spend to hedge against further decline. However, the continuing acceleration and severity of the market shift has forced us to consider deeper changes to our business. It’s become clear that these headwinds are part of broader challenges facing our economy. We don’t know how long real estate will continue to soften, so we must plan for a less active market.

As a result, we are refocusing on our core promise: to make buying and selling homes easier and more accessible. Customers and agents today face very different challenges than only a few months ago. And while we have great ambitions, we must stay focused. Moving forward, we will concentrate investments on more evergreen solutions that provide value to our agents and their clients in any market, while reducing our spend in areas that aren’t as essential to this promise. We're doubling down on efforts to achieve profitability and ensuring our team is properly staffed to match these goals.

I know these changes are painful and disruptive, so our leadership team has made every effort to ensure that our new roadmap can carry us through the next phase of our business.

To our impacted employees

There’s no doubt that these layoffs will introduce challenges to your lives and we want to support you as best we can during this time of transition. First, we will be offering tenure-based severance pay. While your health benefits already extend through the end of August, Homeward will contribute two additional months should you elect to extend further with COBRA.

We also want to support your efforts to find a new role elsewhere. Homeward will be offering outplacement services through our recruiting team and removing the non-compete clause for impacted employees.

Finally, we want to recognize the contributions you made here with two changes to your stock options. First, we are removing the vesting “cliff” for all impacted employees so that your stock options will now be vested based on the number of months you have worked at Homeward, even if you worked here less than 12 months. Additionally, we are extending the time period you have to exercise your stock options from 90 days to one year.

What you can expect moving forward

Over the course of today, those of you impacted by the layoff will receive invitations via your personal email to a 1:1 meeting with a leader in your department and a people team representative to discuss the details of your transition and answer questions.

For those of you remaining at Homeward, we’ll talk more as a team at our All-Hands this afternoon (invite to be sent shortly). I recognize that this news may come as a shock and will mean changes to how you work. We’ll share more about our path forward in org-specific town halls tomorrow, along with details about changes to teams and reporting relationships. We will also hold another All-Hands next Friday (August 19th) to address any questions that arise as you digest the news. It will take time to get everything right – and we want you to feel supported in the months ahead.

Closing thoughts

It is especially difficult to share this news at a time when I feel so proud of this organization. Everyone here has contributed to helping agents and their customers achieve their dreams of homeownership. You all have embodied the “One Team, One Dream” value and brought so much joy and purpose to work here at Homeward. I’m grateful for your contributions and your spirit.

For those of you staying, I want you to feel assured that I have full confidence in our team and in the future of our business. This is an incredible team that can lead us through the coming years. I remain enthusiastic about Homeward’s promise and ability to make real estate more accessible, and a better experience for the homebuyers and sellers of the future. We have a strong foundation to build on. And customers are still seeking us out to help guide them on their home ownership journeys. Your continued partnership will help everyone’s efforts live on as we build the Homeward of tomorrow.

For those of you leaving, I am sorry. I know that you put your faith in us by joining our mission. And I let you down. Please know that your time here mattered and that your contributions will continue to serve as the groundwork for the next chapter of Homeward. We are so grateful to you.

Thank you for believing in us.

Tim

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