Zillow Layoffs Show the Pitfalls of ‘Disruptive’ Strategies

In tech, sometimes the most ambitious plans crash and burn. 

Just ask Zillow, which thought it could “disrupt” the home-buying market with Zillow Offers, a program that involved the company buying houses and flipping them for a profit. That effort failed, largely because home prices have swung wildly in recent months, with no end in sight due to a confluence of factors; in order to make that profit, the company would have needed to scale Zillow Offers well beyond its current capabilities.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” Zillow Group co-founder and CEO Rich Barton wrote in a statement included in a company press release. “While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers. Our core business and brand are strong, and we remain committed to creating an integrated and digital real estate transaction that solves the pain points of buyers and sellers while serving a wider audience.”

Zillow will lay off some 2,000 workers and take a $500 million write-down on costs related to Zillow Offers.

As you might expect from a company that leverages technology to profit off the real estate market, Zillow pays its software engineers quite a bit. According to levels.fyi, which crowdsources salary data, mid-level engineers at Zillow make an average of $217,749 per year, including $153,583 in base salary, $45,833 in stock, and a bonus of $18,333. Senior engineers make an average of $253,751. That’s competitive with some of the biggest brands in tech. 

Over the past decade, numerous companies have attempted to use technology to disrupt an existing market. Some of these big bets succeeded; for example, Airbnb took what initially seemed like an odd concept (renting out people’s homes) and turned it into a substantial business. But not every effort succeeds, as Zillow proves. Hopefully any technologists who’ve been laid off can find a new position quickly.

2 Responses to “Zillow Layoffs Show the Pitfalls of ‘Disruptive’ Strategies”

  1. Jake_Leone

    People need to understand that engineering isn’t a paradise. Layoffs are common. Most of the new jobs (that Americans are allowed to apply for) are at startups, that fail.

    That’s why when Big Stable Tech companies whine about being unable to find talent, I always knew they were liars. And because of the Facebook massive 2600+ cases of discrimination, documented in a DOJ indictment, we have the evidence (which I have saved to a cloud account, because the Biden administrations is squashing the story, and has removed the original indictment, Breitbart has allowed me to post the link, you’ll find it there in the comments).

    So realize that when engineers need a great salary, that money is there just to attract Americans to work an unstable engineering job. A job with no pension, no severance, no security, no union worker protection… A job that makes home buying problematic, because bankers look for stability in the employment situation.

    I have been lucky, I work at a company that is about the same size as Zillow. We are doing a different area (Database, AI, cloud). But it doesn’t mean there haven’t been layoffs. And you know 1 or 2 bad quarters and there could be a big layoff.

    If I could do it all over again, I’d say choose a medical field. My brother retired with a huge pension from San Mateo country. And massive benefits (the kind that will pay for indefinite long-term care, think about what that means to a family). Oh, and he retired at age 50, and took that pension. Then he took another medical job (after selling his house here and buy 4 back east) (and a 2nd smaller pension).

    How dumb of me to become an engineer. I could be retired right now, with 3 rental homes. I have another that worked for PacBell, same story. Retired, massive pension, sold house, has 2 other rental homes. Moved to Texas to buy a huge house.

    Come on, the reality is engineering jobs are:
    * Unstable
    * Have to pay well to attract STEM talent (say from a medical career, or a unionized blue collar job)

    Those engineers that are laid off at Zillow, maybe they make 200k one year, and 40k the next (or are forced to take unemployment).