Last year, sundae speaker and investor Dr. Phil invited the company’s chief executive, Josh Stech, to talk on his show about its business model: connecting buyers with homeowners looking to sell quickly.
But even Dr. Phil couldn’t stop the distressed housing market from collapsing. The startup, which once had more than 500 employees in 26 markets, was down to 135 employees in 11 markets in May, Insider said. report.
The company launched a new round of layoffs in six markets in mid-June.
Gone are the heady days of the sundae boom $135 million in venture capitalwhich includes celebrities from the Peter Thiel Founders Fund as well as actor Will Smith and former Celtics star Isaiah Thomas.
Sundae seeks to connect sellers directly with investors through a centralized auction process. However, complaints from former employees, homeowners and on the Better Business Bureau website have raised concerns about its practices.
Some employees believed they were taking advantage of older or uninformed customers, while others mentioned spamming people and pressuring sundae subordinates to hit unrealistic sales targets, Insider reported.
Sundae expanded beyond older homes, but found itself gaining many potential customers from markets it didn’t serve.
The company adjusted its pay structure and raised fees to boost revenue. Its fees started at 5% of the transaction value, but in some markets charged as much as 11%, well above standard commissions.
The company also revamped its compensation model for sales employees, cutting their base salary from $70,000 to $20,000, according to three former employees and the job posting.
— James van Brammer
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