After expanding into eight new states and more than doubling its market footprint this year, the Power Buyer is laying off 136 employees in search of an “achievable path to profitability.”
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After expanding into eight new states and more than doubling its market footprint this year, Power Buyer Ribbon said Thursday it’s laying off 136 employees, or about one-third of the company’s workforce.
In remarks to Ribbon employees, company co-founder and CEO Shaival Shah cited the need to adapt to a “very significant shift in the market,” and said the company had “reduced all unnecessary non-salary expenses to minimize team impact” before resorting to layoffs.
“How long this market volatility continues is uncertain,” Shah told Ribbon employees. “We need a financial plan that provides a clear achievable path to profitability.”
Ribbon, which announced a $150 million Series C raise in September, has a presence in 15 states after this year’s launches in Kentucky, Colorado, Ohio, Arkansas, Oklahoma, Virginia, Missouri and Indiana.
Ribbon partners with real estate agents and lenders to allow homebuyers to waive mortgage, appraisal and home sale contingencies by making cash offers of up to $1 million with Ribbon’s backing.
The company, which often enters new markets by partnering with a real estate brokerage or lender as an initial launch partner, had planned to be operational in 25 states by the end of the year.
Asked if that’s still a goal, Shah told Inman via email that Ribbon plans to continue expanding into an unspecified number of new markets.
“We are working closely with our partners and will continue to open new states and go deeper into existing states,” Shah said. “We are working with our partners’ revised market and time needs.”
Ribbon is not looking to raise additional funding, Shah told Inman. But post-pandemic housing behavior masked affordability problems, he said, and “the shape of homeownership will look different when the market returns.”
Shaival Shah
“As first-time homebuyer demand softens, we’re seeing increasing demand from existing homeowners and listing agents looking to provide certainty to sellers,” Shah said. “We are seeing further migration to more affordable areas creating relocation needs. The applications of what we created are wide ranging and we have to be proactive as the market shows its new reality.”
Shah cited the recent launch of RibbonHub, a tool for listing agents that allows them to collect and compare offers, attract buyers making cash offers backed by Ribbon, and negotiate with the buyer’s agent, as an example of the company’s inventive mindset.
“Our conviction for the future of Ribbon makes today even more difficult,” Shah told Inman. “We have to say goodbye to many friends, colleagues and teammates that have been as eager as anyone to shepherd us into that experience. Our primary focus today is providing support and gratitude to our departing team members and ensuring they are set up well for the future.”
In his remarks to employees, Shah said the company will provide two months of base salary and three months of healthcare coverage to affected employees.
Employees who are being laid off will also have one year to exercise any stock options they were granted, and Ribbon is removing the one-year vesting cliff for employees who are within two months of vesting.
Laid off employees will be allowed to keep their laptops to support their job search, and Ribbon will offer career support and guidance, and “proactive introductions” to Ribbon’s network, Shaival told employees.
Rising mortgage rates spur layoffs
Rising mortgage rates have put an end to the pandemic-era refinancing boom and crimped consumers’ homebuying power, leading more than two dozen real estate companies to downsize.
Most of the companies laying off workers so far have been mortgage lenders, but some Power Buyers and vertically-integrated real estate companies have also downsized, including:
- Better, end-to-end provider of mortgage financing, real estate brokerage services, and title and closing services, has slashed its workforce by 72 percent this year, from more than 10,000 employees to just 2,900 as of May 15.
- Seattle-based end-to-end homebuying services provider Flyhomes laid off 20 percent of its workforce on July 20, citing “the largest interest rate hike in nearly 30 years” and its impact on housing demand.
- Agent referral startup HomeLight, which significantly upped its presence in the Power Buyer game in June with the acquisition of cash offer provider Accept.inc, announced that it was cutting an unspecified number of jobs less than two weeks later.
- One year after hiring Goldman Sachs to take the company public at a proposed valuation of $2 billion, Knock announced layoffs affecting 115 employees in March, or about 46 percent of its workforce.
- A vertically-integrated Power Buyer that provides services in 13 markets, Orchard announced June 23 that it was laying off about 10 percent of its workforce, or nearly 100 employees.
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