Zillow’s CEO Just Fired 500 People Because He Says The Company is More Efficient Without Them
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Zillow’s CEO Just Fired 500 People Because He Says The Company is More Efficient Without Them<br>Zillow just posted the best financial year in its two-decade history, then cut seven hundred people. It has not published a single number showing the company works better without them.
Gal Ratner<br>Aug 05, 2026
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On Tuesday morning, August 4, 2026, just over five hundred people at Zillow Group learned they no longer had jobs. Their managers learned at the same moment they did. Nobody was pulled aside the day before, nobody got a conversation, nobody got a warning. In a company that has spent five years celebrating itself as a distributed, remote-first workplace it calls Cloud HQ, that is what a layoff looks like now. A message arrives on a laptop somewhere, and then access to everything goes away.<br>The cuts amounted to roughly seven percent of Zillow’s global workforce. They landed one day before the company reports second quarter earnings. And they came at the end of the most financially successful stretch in the company’s twenty year existence.
That last sentence is the whole story, so let me put the numbers behind it.<br>A Record Year
In 2025, Zillow generated $2.6 billion in revenue, up sixteen percent. It reported $622 million in adjusted EBITDA at a twenty four percent margin. It produced $420 million in free cash flow, up thirty six percent year over year. It ended the year with $1.3 billion in cash and investments.<br>And it posted $23 million in GAAP net income. That was Zillow’s first annual profit since 2012, when it was a much smaller pre-merger business, and it ended twelve consecutive years of losses running from 2013 through 2024, a stretch that includes the $528 million wipeout in 2021 when the company shut down its house flipping operation.<br>The first quarter of 2026 was better still. Revenue rose eighteen percent to $708 million against a residential real estate industry that grew two percent. Net income came in at $46 million, double what the entire prior year had produced, on diluted earnings per share of nineteen cents against three cents a year earlier. Adjusted EBITDA hit $182 million. Operating cash flow nearly doubled to $200 million.<br>This is not a company in distress. This is a company outgrowing its own industry by a factor of nine, generating cash at record rates, and telling investors every quarter that its strategy is working.<br>Then it cut seven hundred people in six months.<br>The Claim With No Evidence Behind It
Chief Executive Jeremy Wacksman explained the decision in a blog post. The cuts, he wrote, were about a disciplined cost structure and getting more efficient, with the right people in the right positions. Continuing to grow at scale, he added, requires the company to work differently than it does today.<br>Read that again and notice what is missing. There is no metric. There is no baseline. There is no target. There is no identification of which functions were redundant, which processes were consolidated, which tools replaced which work, or what the company expects output per employee to look like on the other side. There is no before and after. There is nothing a reader could check.<br>Getting more efficient is a testable claim. Efficiency has units. Revenue per employee is a number. Cycle time is a number. Support tickets resolved per head is a number. Listings processed, leads routed, code shipped, loans originated per loan officer, all of them numbers, all of them tracked internally with considerable sophistication, because Zillow is a data company that has spent twenty years building measurement infrastructure and reports operating metrics to Wall Street every ninety days.<br>Zillow did not publish any of them. It did not publish one.<br>I have spent close to thirty years shipping production software. I have run engineering organizations, sat in the meetings where headcount gets decided, and made the case both for and against specific roles. I know what a real efficiency argument looks like, because I have had to build them and defend them. It looks like this. Here is the work. Here is what it costs today. Here is the mechanism by which it costs less tomorrow. Here is the evidence that the mechanism works. Here is what we measure in ninety days to know whether we were wrong. Five sentences. Any competent operator can produce them in an afternoon.<br>When a company cuts seven percent of its workforce and will not produce those five sentences, the honest conclusion is not that the analysis is confidential. It is that the analysis was never the point.<br>The January Tell
There is a piece of evidence that settles this, and almost nobody has picked it up.<br>In late January 2026, Zillow cut approximately two hundred people. The company characterized those cuts as performance related, part of its normal annual review cycle. The framing was straightforward. These were underperformers,...