Frontdesk, a prop-tech startup based in the United States, has initiated a significant employee layoff, affecting 200 individuals, including full-time, part-time workers, and contractors.
The company reportedly conducted the layoff via a brief two-minute virtual call on Google Meet, where CEO Jesse DePinto disclosed the financial struggles and the company’s intention to file for state receivership, an alternative to bankruptcy.
“The startup’s business model, which is leasing apartments at market rental rates and furnishing them for short-term rentals in more than 30 markets, has struggled largely due to the upfront costs involved, associated capital expenditures and variables in demand and rates,” according to sources cited by TechCrunch.
Despite securing approximately $26 million in investments from backers such as JetBlue Ventures and Veritas Investments, Frontdesk encountered challenges persuading investors of its shift towards full building management.
The startup, specializing in overseeing more than 1,000 furnished apartments across the US, took this drastic step merely seven months after acquiring Zencity, a smaller rival based in Wisconsin.
The financial hurdles stemmed from difficulties in property rental payments, leading to strained relationships with landlords due to communication issues.
Faced with these challenges, Frontdesk had to make the tough decision to lay off a substantial number of employees, causing distress among the affected workforce.
This recent wave of mass layoffs at Frontdesk has raised concerns about the short-term rental sector’s viability for similar companies, prompting questions about the industry’s overall stability and resilience.