Real-estate valuation Web site Zillow announced it's cutting 25 percent of its work force. The decision was made so the Seattle company, which has yet to make money, can survive a prolonged recession, Zillow's founder said.

Share story

Zillow, the 2-year-old Seattle startup that made U.S. home values transparent by calculating and displaying more than 70 million of them on its Web site, announced Friday that it is cutting 25 percent of its work force.

“One of the reasons this is so difficult is simply because the business continues to grow,” said Rich Barton, Zillow’s CEO, in a note posted on the company’s Web site.

Last month saw 5.4 million unique visitors to Zillow, a 42 percent increase in traffic over the previous September, Barton said, but the rapidly souring economy has “made a prolonged recession likely, in our judgment.”

So Zillow, which has yet to turn a profit, decided “the responsible course was to meaningfully reduce expenses, so that Zillow emerges from the other side of the recession in a very strong position.”

Zillow’s cutback affects 40 people and comes the same week — and for the same reason — that another Seattle real-estate startup trimmed its work force.

On Monday, Redfin, the nation’s first online real-estate brokerage, announced a 20 percent staff reduction.

“We don’t think the next six months will be good, but we want to live to see another day,” Redfin CEO Glenn Kelman said.

Both companies are funded by venture capital, and both still have healthy reserves, their leaders say.

Amy Bohutinsky, Zillow’s vice president of communications, said the staff cuts are effective Tuesday. Most are in the Seattle office; Zillow also has a New York office.

Barton is a former Microsoft executive who also developed the travel site Expedia. He conceived Zillow as free real-estate-information site driven by advertising revenue.

Launched in February 2006, it quickly captured the public’s attention, becoming the Web’s third most popular real-estate destination, according to Hitwise, an online metrics company.

At the same time, Zillow has drawn scorn from within the real-estate community, which quickly weighed in on the company’s staff cuts.

“I cannot be unhappy about this,” one person said on the Inman News Web site. Zillow, the person said, is “an insult to appraising.”

Others, however, praised the firm and predicted that it will survive.

While Zillow’s revenue doesn’t cover its expenses, Barton said its revenue has been “growing at a rapid pace.”

“We will continue to have open positions in areas that are directly tied to revenue, such as advertising salespeople,” Barton said. “Fear, value-shopping and curiosity are driving people in record volumes to our site.”

Elizabeth Rhodes: erhodes@seattletimes.com