I am writing to share more context about the decision to reduce our workforce last week and to expand on the points I discussed during our all-hands.
Last week’s decision to lay off 44 people, reducing our workforce by 7%, was the lowest point since I started Luxury Presence. I take full responsibility for this outcome, and I am sincerely sorry to our impacted colleagues and each of you, as I fully appreciate how hard it is to suddenly lose colleagues and friends. We are committed to doing what we can to help those who were laid off, including providing severance.
I know this decision surprised many of you, given the company’s strong performance and positive direction. I also know those two things – good company performance and the need for layoffs – can be hard to reconcile. I want to be transparent about the rationale behind the decision and the path forward.
A changing market
Since 2018 we have been on an exceptional trajectory as a company. Our growth has been unusual by every standard. We grew 6x over the last 24 months against the backdrop of a red-hot real estate market. Access to capital was cheap, and like most tech startups, we took advantage by hiring quickly and ahead of growth to take as much market share as possible.
When the market showed signs of cooling, we took several steps to prepare. We slowed hiring and raised a Series B-1, extending our previous $26M Series B to ensure we had a strong cash position going into a likely recession.
In Q2 and Q3 of 2022, while mortgage rates skyrocketed and revenues declined for most companies in our industry, we saw almost no signs of a slowdown in our business. August and September were record months for Luxury Presence. Despite the positive signals, we recalibrated our hiring and approved only critical roles.
The economic environment has progressively worsened over the last few months, and the real estate market has further slowed. Most tech companies have had to cut spending to preserve their cash going into a year of uncertainty. Investor sentiment has also shifted from mandating growth as the single priority to expecting companies to balance growth with efficiency. Despite our performance to date, we are not immune to these changes in the market.
As CEO, my responsibility is to prepare and manage the business to ensure that we are best positioned to weather the harsh economic climate, no matter the duration of the downturn. It became clear when putting together our plans for 2023, that we had to adjust our targets and headcount. We still expect to grow substantially this year, although at a lower rate than in previous years.
We are fortunate to have a robust financial foundation and cash reserves. Last week’s decision gives us the runway we need while allowing us to continue investing in product development, healthy growth, and customer experience.
Our products and services are more critical than ever to the success of real estate professionals who need more ways to attract new business. Last week’s changes ensure that we can continue investing in our customers. In addition, we’ve taken steps to ensure the level of service our customers receive from us will not be impacted.
I’m confident in the team, customer base, and brand we have built, and I know Luxury Presence will emerge from this stronger than before.
Thank you for the extraordinary commitment, energy, and effort you bring to Luxury Presence in service to our customers and building the leading marketing platform for real estate professionals. I appreciate your continued trust in the entire executive team and me as we embark on what will be the most challenging and exciting year ahead for our company.