A difficult decision to strengthen Casavo’s foundations for the future

Our CEO and Founder Giorgio Tinacci shared this message with Casavo employees earlier today.

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Dear Team,

Thanks to all of you for attending our Let’s Talk town hall meeting this morning.

I just wanted to share a note to summarize key messages and next steps.

While we have always been celebrating successes, we know that entrepreneurship is also about trials and failures. Great companies are able to go through difficult moments, change and get stronger out of those.

Today is one of those difficult moments, as we unfortunately have to take some tough decisions which we believe are essential for the long-term success of Casavo. More specifically, we will need to reduce our team by around 30%.

Transparency is one of our core Values, so I’ll try to recap things in the best way possible.

A challenging market context

While we have been innerly focused on constantly improving our business, we are affected in several ways by external market conditions.

As a matter of fact, residential market dynamics affect our business performance and equity capital markets for tech companies affect our capability to access external funding.

Residential markets are expected to go through a down cycle due to the rise of interest rates and the broader inflationary context.

Despite being relatively insulated so far in our markets, we cannot exclude the possibility of reduced volumes, longer sales cycles and potentially decreasing prices. Therefore, we have to be very conservative when it comes to our business performance outlook.

Equity capital markets for high-growth tech companies are in a “reset” phase: valuations have dramatically dropped and investors are extremely cautious when it comes to deploying capital in this asset class. As a consequence, it would be irresponsible to rely on additional external funding in the near term. This implies a need to reach financial self-sustainability as soon as possible, and luckily we are in a solid position thanks to our recent Series D equity round.

How we are going to cope with this

Our mission has always been to change the way people sell and buy homes across Europe, which translated into building a next-generation residential marketplace to connect supply with demand in a seamless way.

We knew since day 1 that this would have been a long-term journey, as the ambition is to redefine the boundaries of one of the largest consumer industries.

We started this journey focusing on solving the problem of home sellers, thanks to a disruptive proposition enabled by our iBuying service. This allowed us to become the first online reference point for every seller, while building technology step by step across the transaction, with a high degree of control.

But this was just a starting point.

Since 2021, we started a transformation journey, expanding our platform offer with additional services aimed at matching sellers with buyers through an integrated end-to-end experience.

The combination of our marketplace results and the contingent external conditions gives us now the opportunity to accelerate this transformation. In order to embrace it, we are going to implement three strategic initiatives this year.

Firstly, we will downsize our iBuying business, keeping it only as a “profitable wedge”. It will remain at the heart of our product offer as a differentiating proposition to attract sellers, but given the market volatility, there will be less strategic effort to expand it.

Secondly, we will re-focus our efforts and resources into core markets. We will suspend business generation in selected markets which are still unprofitable or at low scale, while we will invest more in those with high brand awareness and marketplace track record.

Thirdly, we will shift from a “growth” framework to a “profitability” framework. While we have always had a clear breakeven timeline, the market environment forces us to take more drastic actions when it comes to active cost management.

This set of strategic initiatives comes with a broader re-organization, which unfortunately led us to make a very tough call and reduce our team by around 30%.

This will impact most teams and roles, with a few exceptions (e.g. France) based on the specific re-organizational drivers.

We went through an extensive exercise with the management team, trying to minimize as much as possible the impact for our people. While we deeply care about each of you, we need to take such a decision in a prompt way for the long-term success of Casavo.

I strongly believe this is in the best interest for Casavo and I am fully responsible in this regard, but I definitely don’t take this decision lightly.

We appreciate it’s hard to digest this news, and we commit to do our best to ensure the highest level of fairness and respect for all of you.

As we always say, Human Capital is our main asset in which we have invested since our foundation and it will continue to be so.

Going through next steps together

We are going to care for each of you sticking to our Values, but, due to the fact that separate legal entities within distinguished jurisdictions are involved, and based on local labor law specificities, we’ll have a separate process for Italy, Spain and Portugal and in each single legal entity impacted.

There is no good way to let people go, but, whether you are impacted or not, we want you to feel safe. We are going to assist you during each step.

For this reason, we have designed a specific set of people initiatives to provide both economic and non-economic support, including Career Advisory, Referrals, CVs and Cover Letters reviews and subsidized external Psychological Support.

As anticipated during the Let’s Talk this morning, you are going to receive a calendar invite for specific sessions based on the legal entity in which you are employed and team.

Those sessions will serve to guide you through each step of the process and attend dedicated Q&A moments. In any case, please reach out to myself, Marta, your HR Business Partner or your Manager for anything you might need.

Adhering to our Transparency value, we are going to share this decision externally on our Blog, LinkedIn channels, and through a press note.

I know it’s a bad day, and this might sound almost as a cliché, but it’s important to stay positive even in such moments and remind ourselves that we are doing this to strengthen our foundations for the future.

People join Casavo to live an experience of commitment and adventure, as opposed to ease and comfort. Over the last 5 years, we have changed the paradigm of selling and buying homes, managing around 6,000 transactions for a value north of €2B. Thanks to this, Casavo is today positioned as the European category champion.

We are still in the early innings, and 2023 represents a challenging but pivotal year to continue relentlessly working on our mission. This is not just a message for those that are staying but, most importantly, for those that won’t be part of Casavo any longer. All of you have run our marathon, acting every day as if it was your own. I feel privileged to have worked with all of you – what we have built is the result of all your daily efforts.

I am immensely grateful and I hope that your experience at Casavo will contribute to your future growth.

In the coming days and weeks, alongside continuing to serve our customers with the highest standards, our focus is going to be supporting our colleagues impacted by this decision. Please, take care of yourselves and do not hesitate to ask for support.

Giorgio

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For the sake of this communication, by “Casavo” it is meant the entity Casavo Management S.p.A. and the other entities of the group, including, for example, Casavo Co-Agency S.r.l., Casavo General Contractor S.r.l., Casavo Mutui S.r.l., Casavo Management Spain SLU, Casavo General Contractor Spain SLU and iBuyer Manco Portugal Unipessoal LDA. According to decisions adopted at their managerial level, Casavo entities may follow different processes as provided for in their national regulation.

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