Zillow turned three last week. I totally missed it until I ran across Simon Baker's post yesterday, which lays out some astute observations about what the young company means.
People ask me about Zillow all the time. What's the strategy? Where's Barton? Where's Frink? Is there any exit?
Bottom line: I have no idea. The company is private. I won't even venture a guess as to revenues. I do know that if they were anywhere near profitable, or had seen a significant increase in revenue in 2008, we would have heard about it.
This leaves me to offer a few of my own totally subjective observations, which I present here merely as points for discussion or debate.
Here goes:
- The real estate industry owes Zillow a debt of gratitude, whatever their fate may be. The backlash against the Zestimate was stoked by those with a competitive agenda and clung to by agents who, perhaps justifiably, had an utter lack of confidence in their own capacity to deliver value. The Zestimate was and remains a very rough measure, but worse, I would argue, was the slapdash pricing guidance offered by the hundreds of thousands of shamefully under-qualified agents running wild during the boom years. True professionals never fretted about Zillow, consumers got more information to aid decisions, and brokers were forced to rethink their own approach to merchandising their valuation services. Everyone that matters comes out ahead.
- Along these same lines, Zillow has been an 87 million dollar test bed for brokers. There are lots of lessons to be taken from the company, but the one that stands above all others is this: Consumers are ravenously hungry for anything that casts light into the darkness of the real estate market. Brokers are just now beginning to leverage this insight. Those that do it right will reap great rewards.
- For all its innovative energy, the company has failed to have the transformative impact many, including myself, saw three years ago. I stated then that Zillow had successfully re-defined the real estate listing, which would send shocks through brokerage, MLS and listing aggregator businesses and from which some would never recover. Not so. About a year in, the company went to brokers looking for listings. Now they are knocking on MLS doors. The brokerage business is being rocked right now, and MLSs are making some interesting moves, but it's not Zillow's doing. The change the company brings will be indirect.
- Traffic is meaningless (beyond a certain point). I don't know about you, but I am really tired of Hitwise versus Comscore debates, blog posts touting monthly numbers, and press releases discussing "stickiness". Traffic is required to build most any kind of web-based enterprise, but at some point I want to know about the other end of the funnel: Conversion rates, traffic quality, revenue. At this point we all know Zillow is great at generating a shitload of traffic. Whether it matters is still up in the air.
- Focus is everything. A paradox: I love Zillow (and so did investors) for the expansiveness of its vision. But I also think it suffers because of it. As Joel pointed out, Rich Barton's vision of a marketplace for all things related to real estate is alluring. But I struggle to find coherence on Zillow.com these days. There's the original valuation play, the mortgage play, community, and little bit of frivolity. These things feel disjointed to me, and, from Zillow's perspective, often require discrete resources. Companies like HomeGain and LendingTree that managed successful exits during the first wave of online real estate innovation did so because that were militantly focused. I think we can all take a lesson from that.
So happy birthday to Zillow. Now what do you think?
– Brian Boero
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Thanks Brian
Zillow benefits and suffers from having had $87 million to spend.
Its allowed them to employ plenty of developers and perhaps endless brainstorming sessions with high priced employees.
They came up with a recycled home valuation tool, directly from the HomeGain vault and brilliantly repackaged it as a "Zestimate" , failing to understand fully why HomeGain abandoned it in the first place – it never made us a dime in its original form.
The challenge for Zillow now is while investors and bloggers cheered them in their free wheeling stage, the applause has died down and Zillow has to revert to more stunts like creating Zestimates of homes not for sale like the White House.
Having determined that traffic and PR were goals in and of themselves and not means to an end, a rethink of their business model might be difficult at this point.
BTW we at HomeGain remain militantly
focused on our customers' satisfaction, not journalists or bloggers opinion.
wow Louis change the tape… I just read sellsius blog before this and you keep saying the same things (see my response there).
I for one wish the Trulias and Zillows a lot of success. As a consumer I love a model that provides me a ton of free information and professionals to interact with and where it's the professionals and businesses that advertise that pay for my free access to data.
As a consumer I have no use for homegain. There are some less tech savy souls that will continue to provide contact info for homegain to sell, but I believe that type of a lead gen model is slowly going away on the internet. Too much free information for a consumer to have to resort to giving away their contact info…
there is a myth that zillow and trulia are "free" alluded to by the annoymous poster above
In order to participate in zillows mortgage market place to get quotes the consumer must fill out a lead form just like homegain consumers do to participate in our agent evaluator program to compare realtors
To participate in trulia voices consumers need to register
Homegain's instant homevaluation tool,home sale maximized tool agent blogs local information listings and agent profiles are all available without registration
Consumers want free information and agents want to meet them
Homegain has set up a meeting place where the attraction is the realtor not the free content
Our customer is the real estate professional not the advertiser and our content reflects that model
Marc,
As you know, some brokers ARE starting to get it. As an agent; I got it. I'm putting it into place, and it's working-big time.
What's the formula? Listings AND local content–which not one of those bigger companies can seem to overcome.
Content, good content, is phenomenally expensive. Those companies, many companies, in fact, have relied on blog content to give them an artificial boost with "quasi-content."
The consumer doesn't want "hit and miss" neighborhood content. I've never worried about Trulia or Zillow, nor R.com.
My info is better, my local info is better–heck MY SITE IS better.
Those sites that need the RE industry to survive are going to be hard-pressed to keep on keeping on in the next 18 months.
I think Realogy should be (by any logical assumption)going bankrupt or Chapter 11 or something, this year.
This is a phenomenal opportunity for the little guy to WIN BIG.
Sorry for the mistake above:
I meant: Brian,
wow Louis change the tape… I just read sellsius blog before this and you keep saying the same things (see my response there).
I for one wish the Trulias and Zillows a lot of success. As a consumer I love a model that provides me a ton of free information and professionals to interact with and where it's the professionals and businesses that advertise that pay for my free access to data.
As a consumer I have no use for homegain. There are some less tech savy souls that will continue to provide contact info for homegain to sell, but I believe that type of a lead gen model is slowly going away on the internet. Too much free information for a consumer to have to resort to giving away their contact info…