After the Layoffs

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By Jason Freedman

For the past few months, I’ve been trying to decide whether I should write about what happened with 42Floors.   I’ve been open about everything thus far. Can’t stop now, even though this is hard.

In April 2014, we added a brokerage to our business, making it so anyone could search for office space on our website and work with our brokers to finish the transaction.

In March 2015, we shut that brokerage down. I had to lay off a lot of wonderful people.

In the course of running a startup, we do lots of experiments. Some succeed and some fail.   But it’s different when these failures cost people their jobs. These last few months have been incredibly painful for me, but at least I didn’t have to worry about how to pay the rent. They did worry about rent. I fucked up and my employees paid for it.

Of everything that’s been hard about running 42Floors, laying off people has been the worst. It almost feels worse than if the entire company had failed.

I’ve been hesitant to write this post because I worried people wouldn’t want to hear from a company that just went through layoffs. But, I hope someone will get value from hearing what we went through. I had never been through layoffs so I didn’t know what to expect.

I want to focus on the obligations that quickly emerged once we decided to shut down this part of our business.


Obligation #1: Take care of the former employees


On March 2nd, we did the layoffs.

This was the type of layoff where none of them were at fault. They did their jobs, but our strategy of being a brokerage instead of a real estate search engine was simply flawed.  This was my fuck up. So without too much prelude, I apologized for the pain and hardship I knew this would cause.

I cried and many of them cried. It was emotional for everyone. Some were angry and some were already focused on what to do next.

We had the paperwork and severance packages ready to go. We extended everyone’s health care for 3 months so they wouldn’t have to pay for COBRA right away. We stuck around for one-on-ones to either be a sounding board if people were mad or to start brainstorming next steps and offer introductions.

It was awkward and shitty for everyone involved.  The only thing I know with certainty is that keeping everyone employed under a failed business strategy would have been worse.

A few of our people went on to start new companies. A few ended up at some of our close friends’ companies. A few joined competitors, and we supported them all the same.

I’m especially thankful of the work Alison and Justin did as reverse recruiters. They basically made it their full time job to do everything possible to help the people we let go find new jobs. Even still, I know it was really hard on everyone, and no one came out unscathed.


Obligation #2: Take Care of the Remaining Employees.

The night before the layoffs, after talking with my cofounders and the Board, I called up each of the people who were going to be invited to remain with us and told them what was about to happen. Many of them knew the brokerage model wasn’t working for us but all were stunned to hear how quickly everything was about to move.

I told them that our new strategy would be as a pure commercial real estate search engine. I told them it would still be hard and that I wouldn’t fault them if they chose to leave. I told them that it would be like going back to the earlier stages of the company – a small team figuring it out together.

I couldn’t get everyone on board. I also couldn’t keep everyone I wanted to because that’s the reality of bringing our burn rate down.

But I had a core group that was on board. When the last post-layoff one-on-one finished and it was just the remaining employees in the room, we kind of just sat there stunned. It felt weird just to go back to work. I thought about closing the office for the rest of the day, but no one really wanted to go home.

So we spent the afternoon moving around desks. We broke down desks that weren’t being used because it was depressing to look at them. We pushed all of our desks as close together as possible inside of our now way-too-big-office. The manual labor was fairly therapeutic.

With everything rearranged, we sat down and we brought out our 100-Day Goal sheet from our last company strategy session. This is the system where we make goals for every hundred days and then mark the end of the hundred days as a success or failure. We put a big red failure X through the previous 100-Day goal, signed it and put it up on the wall. We then agreed that tomorrow would be the beginning of a 100-Day session, and we would need a new set of goals.  And we got to work.


Obligation #3: Take Care of My Family and Myself

I have a wonderful wife and an adorable kiddo at home. More than anything else, they have helped put this difficult professional experience into perspective.

Fear, specifically fear of failure, can be a very healthy emotion when it’s small enough in size that you can set the direction of your own response. When it finally dawned me that our business model as a brokerage wasn’t working, months of doubt crystalized instantly into an overwhelming fear of failure. I remember sitting up late with my wife discussing our options.  From that one moment in time, it seemed like the best direction was to just give our remaining money back to the investors and shut down. I wanted to take this fear of failure and chop off the fear part and let it just be failure. At least then, I wouldn’t have to summon the energy to keep fighting.

I talked at length about it with my wife that night and then with an old friend the next morning. Each conversation helped me ratchet down the fear until finally it felt like a tough road ahead instead of an impassable ravine.

My whole outlook truly turned around when I talked with my cofounders. They too had doubts and fears, but they were really excited about what we still had left to accomplish.

We’ve already been through a lot together as cofounders. Failing our first company. Selling our second. Living together 4 different times. We’ve fought with each other and made up many times over. And we’ve always had the deepest respect for each other and what we bring to our partnership.

In this case, the brokerage had been my idea. And I had fucked up.

And their only response was to talk about all the really cool things we could do as a pure search engine. We could expand across the country and internationally. We could open up the API. We could automate a bunch of our data processes as we scaled. Sure it would be tough, but we could get back to our initial motivation for starting the company, that anyone anywhere should be able to search for commercial real estate online.

They put me on their shoulders that day. They turned my fear into grit. And with that grit, I was able to get through the layoffs, the Techcrunch story, the criticisms, and the self-doubt. And then finally to a new plan of the company.






After the layoffs, we have a new chapter of 42Floors. One with plenty left to be written.

In the past 3 months:

We’ve expanded from 2 cities to 20. We’ll soon be fully nationwide in cities big and small.

We’ve talked to 1000+ brokers and landlords.

We’ve dramatically increased the number of listings on our site

We’ve dramatically decreased our cost per listing.

We’ve changed our entire data infrastructure.

We’ve built a new business model around advertising and featured listings.

We’ve built a new featured vendors section.


Four years ago, we were searching for an office, and we thought it was annoying that we couldn’t just search online. So we decided to build it ourselves.

And we’re still building it…