Zillow has laid off over 500 employees and hasn't confirmed whether AI was a factor in this decision.
Zillow terminated over 500 employees on Tuesday, accounting for about 7% of its workforce and marking its largest layoffs this year. The Seattle real estate firm made this decision a day prior to its quarterly earnings report. Throughout the year, the company has communicated to investors its transition towards becoming an “AI-native” organization, though it has not confirmed whether AI influenced the layoffs.
CEO Jeremy Wacksman described the action as a form of housekeeping, emphasizing the need for a “disciplined cost structure” and improved efficiency by placing the right individuals in appropriate roles. He noted that scaling up necessitates a change in operations.
The situation is complicated by the fact that Zillow is not facing difficulties; its first-quarter revenue increased by 18% to $708 million, according to GeekWire, while the industry average grew only 2%. Profits surged from $8 million to $46 million compared to the previous year. Wacksman emphasized that the company continues to exceed expectations in a stagnant housing market.
Thus, the layoffs appear less like a necessary rescue and more like a strategy to reduce expenses. Zillow has been investing significantly in rental listings, loan officers, advertising, and legal costs. In May, the company informed investors that spending would decrease in the latter half of the year, with payroll being a quick way to achieve this. Its earnings forecast on Wednesday may reflect this adjustment.
The company has been notably reticent about AI. In April, Wacksman informed real estate executives about retraining staff in AI technologies, acknowledging that improvements were “small but compounding,” according to Real Estate News. In May, he elaborated during an earnings call that Zillow is rapidly evolving into an AI-native company.
However, when directly questioned if AI influenced the recent layoffs, Zillow offered no response, a lack of clarity also noted by both GeekWire and Real Estate News. This silence has become indicative of a trend, as AI is frequently cited by companies as a justification for job cuts, yet many remain hesitant to link it directly to such decisions.
Zillow is not the only company navigating this situation. Patreon laid off 20% of its workforce while asserting that AI was not a factor. Similarly, Monday.com reduced its staff despite its growth. This reflects a broader trend of job cuts in the tech industry, where firms are uncertain about the role of technology in their workforce reductions.
Moreover, factors beyond efficiency are at play. Despite strong performance, Zillow’s stock has plummeted over 47% this year, a discrepancy described by its finance chief as a “dislocation,” suggesting a temporary misvaluation. Legal firms are seeking shareholders to participate in a potential class action lawsuit. Additionally, Zillow is facing a trial in an FTC antitrust case concerning a $100 million agreement for exclusive rental listings on Redfin's platforms.
The overall property-tech sector is also experiencing contraction. CoStar has downsized its Homes.com sales team, Better’s founder recently resigned as CEO, and Rocket has reduced its workforce following its acquisition of Redfin. Regardless of AI's influence, the industry is reassessing its staffing needs. Zillow's earnings report on Wednesday will reveal the extent of this reassessment.
Other articles
Amsterdam-based startup Ore Energy has secured $43 million to develop iron-air batteries capable of storing energy for several days.
Ore Energy secured $43 million in Series A funding to expand the use of iron-air batteries capable of storing renewable electricity for up to 100 hours, utilizing iron, water, and air.
Cracken provides self-service access to its AI-driven offensive cybersecurity platform.
Cracken introduced a self-service tier of its proactive security platform, with prices beginning at $199 per month, just weeks after AI models transitioned out of testing environments.
The notion of a student "AI revolt" is largely a myth, according to a survey.
A three-year survey by Kogod indicates that the use of AI in colleges has transitioned from being a novelty to a regular practice. Students are not dismissing AI; instead, they are seeking guidance on how to use it effectively.
AI chatbots are willing to generate false news articles, and evaluations indicate that ChatGPT performs the poorest in this regard.
A recent study indicates that the most prominent AI chatbots available today can still produce credible fake news articles, with ChatGPT being identified as the most easily manipulated.
Jeff Bezos has submitted documents to sell approximately $4 billion in Amazon shares following the stock reaching a valuation of $3 trillion.
Bezos submitted a request to sell 15 million shares of Amazon, valued at approximately $4 billion, using a pre-determined trading strategy, just days after the company reached a market capitalization of $3 trillion.
RISION's compact new cameras transform your smartphone into a handy thermal imaging device.
RISION’s latest 24-gram USB-C cameras transform compatible phones, tablets, and computers into thermal inspection devices, with initial prices starting at $119 during the preorder phase.
Zillow has laid off over 500 employees and hasn't confirmed whether AI was a factor in this decision.
Zillow eliminated over 500 positions, marking its largest round of layoffs this year, just one day prior to its earnings report. The company, which describes itself as "AI-native," has not disclosed whether AI was a factor in this decision.