Amid CoStar’s ongoing blitz into residential real estate and its growing feud with rival Zillow, a new report claims the company has recently suffered an exodus of employees as it cracked down on remote work.
The report, out Tuesday from Business Insider, is based on conversations with 29 current and former CoStar employees, almost all of whom remained anonymous sources in the piece. Many of the claims in the report involve the way CoStar managed employees who were working remotely thanks to the coronavirus pandemic.
For example, sources reportedly said that CoStar’s IT department was ordered to make unannounced video calls with remote employees. The IT workers were allegedly supposed to claim the calls were about testing internet speeds and connectivity. However, according to the report, they were also ordered to gather information on what people were wearing, where they were working and if they enabled their video feed.
The IT workers were also told to make a note if employees didn’t respond after three attempts to reach them, the report states. Two IT workers told Business Insider they believed some workers who didn’t respond were later terminated.
The report also describes a January 2022 all-hands meeting in which founder and CEO Andy Florance allegedly pushed for employees to come back to CoStar’s offices. During the meeting, the report states, Florance showed slides that claimed only one employee was statistically likely to die if everyone came back.
The report also claims managers were instructed to keep close tabs on when their employees were at their desks, and points to an Instagram account dedicated to documenting negative work experiences at the company. A former employee runs the account, and he told Business Insider that “any kind of dissent at CoStar was treated as a sign you were a bad employee.”
The result of the situation, according to the sources who spoke with Business Insider, was that about 37 percent of CoStar’s almost 4,200 employees left the company in 2021. One source specifically said there were 1,546 departures, about three quarters of which were voluntary, the report notes.
Those numbers would mean CoStar’s turnover is higher than the industry average of 32.8 percent, according to Business Insider. They also mean CoStar saw significantly more employee turnover in 2021 than it had in previous years.
During an earnings call Tuesday afternoon, Florance briefly addressed the situation. He said that CoStar does have a “demanding” work environment and that the company did have a turnover rate higher than the industry average during the pandemic — though his figure was slightly lower than the one Business Insider published. However, he also said that CoStar has achieved a “99 percent vaccination rate and our employees have returned to working” in the company’s offices, which has made them more productive.
Florance also described the critics of the company’s work environment as “a tiny, vocal minority of disgruntled employees.” He added that with the company now back in its offices, CoStar’s “attrition rate has returned to normal and has settled below the industry average.”
Following the earnings report, CoStar provided Inman with a memo that Florance had distributed to company employees. The memo describes CoStar’s work as having high standards, and notes that “there are those who decide that the demands of our environment are not for them, and that’s ok.” The memo goes on to mention one “former employee who was fired for cause” and who “has developed an unhealthy obsession with CoStar Group.” The memo describes the employee as “neither credible nor informed,” adding that “some have expressed concerns that this person may pose a security risk.”
“Sadly, this individual directed a fringe reporter to a small but vocal group of disgruntled former employees for whom CoStar Group was not a good fit,” the memo adds. “Rather than being open to learning about the real CoStar Group, the reporter chose to write a sensationalized story that grossly mischaracterizes the employee experience within our company.”
In response to Business Insider’s inquiries, CoStar also indicated in a statement to the publication that it has high expectations for employees and added that “we will not apologize for these standards, nor will we compromise them to accommodate a vocal few who decide that this level of expectation is not for them.” CoStar also referred to the person running the Instagram account as “a disgruntled former employee” with “an unhealthy obsession with the company.”
CoStar has been a force in commercial real estate for decades, but in 2020 acquired residential home portal company Homesnap. The move set CoStar up to compete with Zillow, and in 2021 Florance began openly criticizing other players in the industry. In January, for example, he characterized Zillow as a competitor to real estate agents. Then in October, he he made a thinly veiled jab at the portal behemoth for what he described as “hijacking” listings, blackmail and behaving like the mafia.
CoStar also announced a new New York-based portal last fall called Citysnap that will put it directly into competition with Zillow-owned StreetEasy.
Over the last year CoStar has emerged as Zillow’s most visible critic and rival, with many members of the industry quietly rooting for one side or the other in the emerging cold war.
Update: This post was updated after publication with comments Andy Florance made during CoStar’s earning call Tuesday, as well as with information from a memo the company provided to Inman.
