With its acquisition by Zillow expected to close today, Trulia has laid off hundreds of employees.
The bulk of the 280 firings occurred in San Francisco, where Trulia was headquartered, and Bellevue, Washington, the headquarters of Trulia’s Market Leader division, according to a press release from Zillow announcing the close of its Trulia acquisition.
Zillow Group, the new entity formed by Zillow to house Trulia and its other brands, will eliminate an additional 70 positions by the end of the second quarter when the company expects to have approximately 2,000 employees in its ranks.
Former Trulia CEO Pete Flint is now a board member of Zillow Group.
The trimming by Zillow and Trulia means the real estate tech and sales talent pool got a big infusion and firms are looking to take advantage by snapping up some valuable human capital.
Andrew Flachner, CEO of RealScout, a collaborative search platform branded to brokers and agents, reached out to one former Trulia employee who he said already had three job interviews scheduled.
While Zillow is expected to keep the Trulia brand and website alive, the deal paves the way for it to make cost reductions in areas where there are redundancies, and potentially boost revenue by raising rates it charges real estate industry players for ads and leads across sites, including Yahoo Homes, AOL Real Estate, HGTV’s FrontDoor, HotPads and MSN Real Estate.
At the time of the acquisition’s announcement, Zillow predicted that the cost “avoidances” gained by combining the two companies would be $100 million in 2016. Some of those savings will come from a streamlined workforce. Before the deal closed, Zillow and Trulia each had over 1,000 employees in positions ranging from tech to sales.
Deutsche Bank analyst Lloyd Walmsley sees opportunities for Zillow to achieve nearly $150 million in “cost synergies” — spending cuts that will be largely achieved by cutting workers in areas where the two companies have redundancies, such as general administration, sales and marketing, and research and development — this year and next.
Walmsley estimates there could be $43.5 million in deal-related expense reductions this year, and $104 million in potential “cost synergies” next year. He also sees opportunities for considerable “revenue synergies” by increasing agent pricing, selling ads around Trulia’s rental inventory, and doing a better job monetizing Trulia’s mortgage ads.
Deutsche Bank is maintaining is neutral “hold” rating on Zillow shares, acknowledging risks such as continued access to listings, potential slowdown in traffic growth, and competing portal initiatives. But Walmsley says those risks are offset by “extreme short interest” in Zillow’s common stock. With so many shares sold short, there’s “high squeeze potential,” Walmsley notes. Good news could send the company’s share price soaring if short-sellers need to scramble to cover their positions.