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“There’s no way you need 1,400 employees,” Co-founder and newly appointed board member Keith Rabois told CNBC, adding, “we’re going to return to our roots.”
Opendoor’s workforce is “bloated,” according to Co-founder and Chairman Keith Rabois — but it may not stay that way for much longer.
“There’s 1,400 employees at Opendoor. I don’t know what most of them do,” Rabois said during a Sept. 12 interview with CNBC. “We don’t need more than 200 of them.”
Rabois, who recently rejoined the company’s board of directors alongside fellow Co-founder Eric Wu, suggested that several things need to change culturally and operationally at Opendoor for the iBuyer to be successful.
The company has already begun making some of those changes following former CEO Carrie Wheeler’s exit last month. Kaz Nejatian, the former COO at Shopify, was named Opendoor’s new CEO earlier this week.
How we got here: Upheaval at Opendoor neared a boiling point in late May when the iBuyer announced that it was at risk of being delisted from Nasdaq. Following a push from activist investors like EMJ Capital Founder Eric Jackson, Opendoor’s share price rebounded enough for the company to dodge delisting — but by that point, calls for Wheeler’s resignation had already begun.
Wheeler stepped down on Aug. 15, and on Sept. 10, Nejatian was appointed to replace her. In a press release announcing the news, Rabois dubbed Nejatian “the right leader to unlock Opendoor’s unique data and assets as we build on Opendoor’s original mission, now enhanced as an AI-first company.”
Are layoffs coming? Though Rabois suggested that Opendoor’s workforce needs to drop by about 85%, he did not specify when cuts would be made — if they are made at all.
“I haven’t yet dug into the financials,” Rabois said. “I won’t opine about the future, financial future, etcetera. I know the strategy; I have a high-level view of the strategy of things that can be improved. But there’s no way you need 1,400 employees.”
Opendoor’s financials have been improving in recent quarters, with the most recent earnings report showing year-over-year revenue gains and adjusted EBITDA profitability for the first time since 2022.
Other changes possible: Opendoor’s “culture was broken,” Rabois said, suggesting that its embrace of remote work and DEI initiatives was part of the problem.
“This company was founded on the principle of innovation and working together in person. We’re going to restore it. We’re going to return to our roots.”
Bringing ‘discipline and rigor’ to Opendoor: The “problem” Opendoor has faced amid the market downturn is with its general and administrative (G&A) expenses, according to Rabois.
“The bloated G&A was a real problem because, as people stopped transacting as interest rates went through the roof, the company’s G&A made no sense, and so the burn rate made no sense,” he said. “But you can fix that.”
Nejatian oversaw a drop in G&A during his time at Shopify, according to Rabois, who said this is “one of the reasons why we are so excited to recruit” him. “We need to have the same discipline and rigor in Opendoor.”
Opendoor’s ‘incredibly compelling’ value proposition: “We’re going to transform the way people buy and sell houses,” Rabois said, adding that it was retail and activist investors who “figured out” that “the potential of the company is infinite.”
Rabois brushed off a suggestion that iBuying went “out of vogue,” arguing instead that “it’s very complicated and very difficult to do iBuying well.” Major players including Zillow and Redfin shuttered their iBuying programs in recent years following significant losses.
“We give you certainty, peace of mind, convenience,” Rabois said, adding that Opendoor’s value proposition “is incredibly compelling to Americans” and “we just need more awareness.”
Real Estate News has reached out to Opendoor for comment.
