Blend Labs is laying off hundreds of employees and reshuffling its leadership in one of the technology vendor's biggest shake ups since going public two years ago.
The firm's "January Plan" as described Tuesday in a Securities and Exchange Commission filing is expected to reduce Blend's annual operating expenses by over $100 million at the end of this year, relative to the third quarter of 2022, it said. Approximately 340 employees, or 28% of Blend's "onshore" staff, will be let go, according to the San Francisco-based company.
"We view these changes as both a response to market realities and also a natural evolution of our strategy," said Nima Ghamsari, founder and head of Blend, in a conference call Tuesday.
Blend will incur approximately $14 million in cash expenditures for severance, employment benefits, payroll taxes and related facilitation costs in the layoff, it said. The cut, expected to be substantially completed in the first quarter, will affect workers in title, research and development, sales, marketing and administrative roles. Executives said Blend is adding offshore resources but would keep roles like sales and R&D positions onshore.
A spokesperson for Blend Wednesday declined to provide updated headcounts for the company's onshore and offshore staff. The eliminated positions represent annual compensation expenses of approximately $43 million, Blend said. It's the company's fourth mass layoff in the past nine months, after
Expenses from the January plan won't be included in Blend's non-GAAP financial measures detailed in its fourth quarter earnings report expected at the end of March, executives said. Company representatives on Tuesday hesitated to speculate on the financial impact Tuesday's initiatives would have.
The tech firm is reeling from a difficult year, most recently posting
Blend's new initiatives include a larger allocation of operating expenses to Blend Builder, its subscription and success-based transaction fee platform with a suite of products that are already part of the firm's non-mortgage offerings. The strategy represents Blend's transition from a "product" company to a "platform" company, it said. Ghamsari suggested the realignment would generate additional revenue and improve product margins.
"A lot of what our mortgage customers ask for is the flexibility and power of something like what Blend Builder offers, which is having the ability to differentiate and create custom workflows to drive additional efficiency," said Ghamsari. "So we are not dialing back in the mortgage industry."
Ghamsari Tuesday also declined to elaborate on Blend's relationship with its major customer Wells Fargo and whether the partnership has evolved since the depository's
Other major moves at Blend include a slew of leadership appointments and departures.
Amir Jafari will serve as Head of Administration effective Jan. 30 and Head of FInance after the company's 10-K financial filing in March, Blend said. Jafari is the chief financial officer at business payments platform Plastiq and is a former executive at fintechs Reputation.com and ServiceNow, Inc. He'll earn a base salary of $400,000 per year, according to the SEC filing, receive a signing bonus of $1 million, a cash bonus of $200,000 based on board-established performance objectives and other equity awards.
Jafari will replace current Head of Finance Marc Greenberg, who submitted his resignation Jan. 9 and will remain employed through April 1.
President Tim Mayopoulos will step down in the first quarter, Blend said, but the former Fannie Mae CEO will continue serving as director of the company. Roger Ferguson resigned Monday from the board, and Blend said the former Federal Reserve Vice Chairman's exit was not the result of any disagreement with the firm.
Former Zillow vice president Erin Lantz was appointed to the board Monday, the firm announced. Lantz, the chief revenue officer at insurance fintech Ethos, served as VP and general manager at Zillow between 2010 and 2019 and was previously a mortgage executive at Bank of America. According to the SEC filing, Lantz is entitled to an annual non-employee director retainer of $300,000, half of which will be paid in cash and 50% paid in restricted stock units.
Head of Legal, Compliance and Risk Crystal Sumner will also resign effective Feb. 1, and Winnie Ling will become Head of Legal and report to Jafari.
Blend's plan is one of the larger reshufflings by a mortgage lender or tech vendor since the mortgage market began its decline with rising rates and home prices last spring. The firm's
"I don't want to say the job's done, in the sense that there's probably always areas where we can continue to be efficient, just like any enterprise," Ghamsari said. "But we've intended to make this a fairly large material effort, because we wanted to get as much of this in place at the same time as we could."
