The AECOM Building, home to Upright
In what may be a reflection of the precarious real estate economy, Upright, a hard money lender that helped fund billions in investor property buys over the years, laid off roughly half of its staff this week, a source told Scene.
About 95 workers of the 184-person company roster were affected.
Though there was internal chatter about the cuts to come, the source, who preferred remain anonymous, told Scene that Upright's abrupt firing of half its base might be in violation of the WARN Act, a 2003 federal law
that forces companies over 100 employees to give workers at least two months notice before severance.
"It was horrible," the source, who was laid off this morning, said. "As soon as you got the call this morning, within, let's say, five minutes, they kick you out of your Gmail."
A representative from Upright did not respond to a request for comment.
Marketing itself as the country's "premier hard money lender," Upright's services promised potential clientele speedy loans for rehab or construction projects, mostly in Cleveland, the Carolinas and Northern Florida. Formerly called Fund That Flip, the company, which is based in the AECOM Building on East 9th St., rebranded in September after absorbing Flipperforce, a software startup that facilitates quick transactions.
This week's layoffs stretched from the underwriting department to those in closing and event planning.
Up until Upright's new brand unveiling, the company appeared to be financially gleaming in the public eye. In 2020, it was one of Business Insider's "Fintech Startups to Watch." Cleveland.com picked it last year as one of the city's top places to work. Inc. dubbed it 1,068 on this year's 5,000 List, one of the "fastest-growing private companies in America
." (Up 555 percent in the past three years.)
“We want to be the predominant platform where real estate investors transact their business,” Brendan Bennett, Upright’s vice president of revenue, told blog site Purpose Jobs on November 6.
“And, up until maybe a year or two ago, we had only honed in on the lending portion of that. We've just outgrown the name.”
But inside talk tells a different story.
"As we continue to plan for our future, while considering market conditions and the momentum of our business, it has been clear that we are going to need to make considerable changes to the shape and size of our organization," founder Matt Rodak wrote to Upright's employees on Slack, on November 17. "Despite my best intentions, I have done a poor job managing us through this rocky time."
The week after, on November 22, Rodak hinted at untimely bad news, which would take the form of a phone call following the holiday. "Adding to the things I'm sorry for is that you have to carry this uncertainty into Thanksgiving," he wrote. On Wednesday, the call came.
"From what I know, I could just look at the numbers and know we weren't doing well, so it wasn't a shock to me," a former employee told Scene.
They suggested that, even though bigger institutions weren't buying the loans that solo house flippers used to sign onto, upper management did not swing the rebranding and merger as well as predicted.
"The market obviously plays a big part, but I think they could have weathered the storm without the market," they added. "I think there was big decisions that were made that probably shouldn't have been made, per se."
“The layoffs are a product of overly aggressive growth. Upright hires, they grab awards, they layoff and repeat,” another employee told Scene via email. They “want to grow like a Silicon Valley unicorn but simply cannot achieve the lofty goals they have set out for.”
If Upright's late notice is found to violate the WARN Act, it's possible that laid off employees could receive back pay to make up for the untimeliness, along with receiving the month or two of severance some reported they were granted.
There's never a good time for downsizing, but the timing here was especially hard, the employee said.
"It's going to be pretty difficult finding something new right now," they said. " I mean, it's real tough being in the December, before-the-holidays layoff, I'd say for sure."
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