St. Louis startup Clever Real Estate has laid off a portion of its team, a move its leader says comes as the firm positions itself for growth in a slowing housing market and amid economic uncertainty.
Clever, which created technology that connects home sellers and buyers to real estate agents, earlier this month made cuts to its customer service and editorial teams, co-founder and CEO Luke Babich told St. Louis Inno. Babich declined to disclose the number of roles eliminated, as well as Clever’s current headcount. In August, he told St. Louis Inno the startup, with an office at 6358 Delmar Blvd., had about 110 employees.
Founded in 2017, Clever developed a platform connecting sellers with local real estate agents who then list the seller’s home for a flat fee of $3,000, or 1% for homes over $350,000. It says $6.5 billion in real estate has been sold through its platform since its launch. And Clever built out an editorial arm that publishes digital content about real estate and other topics, including recent stories about America’s best taco cities and drunkest towns. Since 2020, Clever has acquired digital publishers Anytime Estimate, Real Estate Witch and Home Bay.
Babich said Clever’s decision to trim its customer service and in-house editorial teams comes as it navigates both a slowing housing market and potential economic recession. In the past year, several high-profile online real estate firms, including Zillow and Redfin, have laid off workers. The moves come as what was once a soaring housing market has started to cool as interest rates rise. U.S. mortgage rates last week rose to an average of 6.92%, up from 3.06% a year ago.
“We’ve been evaluating the economic environment every single week as a leadership team trying to see what we need to do to be prepared to be in a position as a company to keep growing through a difficult period for the global economy,” Babich said. “This decision was that we needed to restructure to make sure we can keep investing in the parts of the business that are going to get us to our growth goals next year and that meant not being tied to some of the investments we had made when interest rates were 3% instead of 7%.”
Babich said Clever is still primed for growth, with a goal of doubling its revenue next year. He said the startup is experiencing more demand than ever for its business-to-business solutions it provides mortgage lenders and for new programs it has launched, such as Clever Offers, which matches home sellers to real estate investors. Babich said he believes Clever’s consumer business, which provides the reduced commission rate, has a “tailwind” in the current market, with rising interest rates and persistent inflation leading consumers to seek out savings elsewhere.
Despite its recent layoffs, Babich said Clever plans to add new employees in the fourth quarter of this year, with a focus on hiring for leadership roles and positions focused on its growth areas.
Clever’s restructuring comes as scores of startups, as well as major technology companies, have made cuts to their staff this year. For startups, those decisions coincide with a slowing venture capital market, with the amount of investment pumped into U.S. startups in the third quarter dropping 40% from the prior quarter. Babich said Clever, which in 2021 raised $8 million in a Series B round, plans to grow the company without needing additional venture funding.
“Clever’s strategy is to grow profitably, with no dependance on outside capital,” he said. “We believe that an important aspect of restructuring for this new environment, especially what’s happening in the venture markets, is to be ready to run profitably and achieve our milestones against our own profit, instead of targeting a milestone where we then raise."
