42Floors, the startup that’s built a platform for finding and leasing commercial office space, has laid off around half of its staff as part of a plan to refocus on its core search business, TechCrunch has learned.
A total of 14 people across 42Floors’ San Francisco and New York offices were let go today, we’re told. That’s around half of 42Floors’ workforce. The cuts are said to have impacted 42Floors’ brokerage business, which the company had just launched in late 2014. Going forward, 42Floors is ceasing its brokerage operations entirely, to continue building its commercial property listing and search products.
When reached today, 42Floors founder Jason Freedman confirmed the layoffs. “Unfortunately, we’ve had to say goodbye to some awesome people,” Freedman said in a written message. He also provided an official statement on the cuts, which is pasted at the bottom of this post.
It’s a bit of a surprise to hear this kind of bad news from 42Floors, since the company has emerged in many ways as one of the more prominent and promising startups tackling the B2B space in recent years. The company, which launched out of Y Combinator in 2012, has attracted a lot of attention from investors, who have plugged an impressive $17.4 million into 42Floors to date.
Freedman himself has been open in sharing about his experiences building the company, writing candid and widely shared blog posts such as “Surviving The Series A Crunch“. He may well come away with some important lessons from this period of time, too.
Here is a statement on the layoffs provided by Freedman today:
Over the past few months, 42Floors has experimented with being a brokerage in addition to being a commercial real estate data and search website. We’ve decided today to stick with what we’re best at: providing a great online search experience for commercial real estate.
While we enjoyed working with clients directly and helping them find office space, we’ve come to realize that a startup can only be great at one thing. And for us, that’s being a commercial real estate search platform that is powered by accurate data and a passion for design. We want to scale quickly across the country, and we can’t do that while also focused on a being an on-the-ground brokerage.
One of the best parts of our attempt at being a brokerage was working closely with the brokerage community to get deals done. We’re going to step decisively away from that model now and focus only on providing a great search experience. We’ll leave the deal closing to the professionals.
Over time, we’ll develop our new business model, which will be based around premium listing opportunities for those that want greater exposure to tenants. But for now, 42Floors remains free to search and free to list.
During this transition, we’ve had to say goodbye to some wonderful teammates. We’ll miss you and thank you for all your hard work. It’s awful to get a strategy wrong, most especially because it means no longer working with such talented people.
To the brokerage industry that may be exhausted from seeing our startup try new things, all I can say is thank you for your patience. You do great work and we’re excited to play a much more clear role in specifically helping you market your availabilities.
Finally, to our tenants, we’ve loved working directly with you. While we’re no longer going to be an active brokerage, we still want to provide you a fantastic search experience. We’re also looking forward to launching 42Floors in more cities so that more people can search for commercial real estate online.
Onwards,
Jason
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