The day after I spoke to Rich Barton by phone last week, he laid off 25 percent of his staff at Zillow.com.
According to New York Times blogger Damon Darlin, Zillow “has been the envy of many a Web entrepreneur because it has a healthy $87 million in financing (about $540,000 per pre-layoff employee).”
The company, founded in 2006, boasts 5.4 million monthly visitors, but has yet to turn a profit.
The elimination of 40 employees brings staffing at Zillow to about 105 employees. The layoffs come amid a small wave among e-commerce companies this month. On Oct. 6, eBay laid off 10 percent of its employees — 1,600 — and Yahoo let go 10 percent — 1,500 — on Tuesday. As Times reporter Brad Stone wrote on Oct. 12, e-commerce “was once thought to be a refuge from economic storms. People who stay away from the mall might actually be more tempted to shop online and hunt for deals.”
Not anymore. The current economic woes seem to extend everywhere.
In an Oct. 17 company blog post titled “Difficult times, difficult decisions,” Barton said the cuts were necessary to prepare for a prolonged recession:
“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,” he wrote.
The company’s business, based on ad revenue, continues to grow, he wrote. “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.”
At a Liberty Media sponsored forum of e-commerce execs earlier this month, Russ Fraden, CEO of Adify, warned that some of the biggest advertisers…