Door.com may be opening a new door in the brokerage world, starting with a fresh focus on Texas and a halt to national expansion. Founder Alex Doubet paid a visit to Russia. And he came home hitched.
Last week, as you recall, I had to drive to the company’s Dallas offices at 12570 Dallas Parkway to confirm a flurry of rumors that had erupted before the holidays, that Door was laying off employees. After our story was published and picked up by the Dallas Business Journal (among others), Door.com CEO Alex Doubet returned a phone call Thursday night to the DBJ’s Bill Hethcock, confirming the disruptor flat-fee real estate startup had laid off 34 employees, mainly agents, in its 34,000 square foot Dallas headquarters. He told Bill Hethcock no more layoffs are planned, but the firm’s plans for national expansion are on hold.
A big part of the reason for the layoffs was that a $20 million to $30 million round of funding that Door was targeting fell through last month, Doubet said.
“We did lay some people off, which is really unfortunate,” Doubet said. “We had been working on a national expansion that we just couldn’t figure out the cost structure for. So we had to right-size our employee cost structure and let good people go, which is always unfortunate.”
The plans to expand to all 50 states are on hold, he told Hethcock. On the funding, Doubet said, “We heard (in December) that it was a no instead of a yes, like we were hoping.”
Which is sad. In an interview as recent as October, Doubet told the Business Journal of his ambitious plans to be operating in all 50 states by mid-2020. But he hedged, at the time, Hethcock’s questions concerning new staff to facilitate the expansion, saying what has almost become a familiar refrain: Door “leverage(s) technology to make our agents significantly more efficient than the average agent. That’s why we’re able to charge so much less.”
“As efficiencies have gone up, our agents are able to do a lot more transactions,” he said at the time. “The best answer I can give you is, undoubtedly, we’ll add more people, but we’re also pushing really hard on the product side so that we can make our employees more efficient.”
He went to Russia, which is becoming a huge tourist attraction. And he got engaged to a beautiful NICU physician from Oklahoma. The couple will tie the knot in November.
Sooo… that explains the no-call back. Alex was in Siberia (kidding).
He corrected my original reporting, said 34 folks were laid, employees mostly focused on Door’s national expansion. Alex says Door.com plans to focus on selling and servicing Texas real estate going forward.
“January is looking good for us,” he told me.
So how many homes do you have listed, I asked?
Door.com has about 200 listings across the US, but the majority are in Texas.
And he is moving the company from the current 34,000 square foot office space at 12570 Dallas Parkway.
“The space is too big for us,” he said. “Too big for our needs. I don’t know where yet, but probably in the same area.”
He currently has 35 employees, his agents are paid a salary netting north of $50,000 a year. With the salaries, overhead, marketing and the usual real estate costs on every home he sells for a flat $5000 commision fee, I asked the same question I asked him when I had him on a Disruption panel for the Dallas Builder’s Association: how do you make money?
“I’m still passionate about saving folks money when selling their house, which we have done successfully,” he told me. “And we are still focused on providing something better for consumers. The focus is 100% on the consumer, always. Our formula provides sellers a heck of a lot of savings on a million dollar home.”
That said, he may tweak parts of his business model: stay tuned.
We asked local brokers and agents for reactions to Door.com’s contraction. Ebby’s Chris Kelly said “We are always saddened when a door closes on our fellow real estate professionals. Unfortunately, it’s too often the case when companies are dependent on the next round of venture capital.”
“Anyone can sell houses in a bull market,” says Coldwell Banker’s Kyle Rovinsky, one of the agents who first alerted me to the layoffs.”I told you that back when they started in 2015. But when the market shifts, these guys will find it hard to stay in business.”
Reactions and thoughts are rolling in, feel free to add your’s in the comments.