Trulia, CNN and Zillow
CNN’s Fortune Magazine wrote today a scathing column entitled “Why I’m not buying Zillow” just one day after Zillow announced they have officially filed for IPO status with the SEC and are attempting to go public.
Fortune’s Duff McDonald writes, “Zillow has offered a clarity and transparency that real estate agents, for all their “I’m-on-your-side” fakery, never have and never will. But the news that Zillow has filed to go public forces me to admit that I’m not a buyer of this franchise. Despite noble ambition, Zillow is nothing more than real estate porn, and by planning to raise $51.8 million in an IPO, it is merely looking to cash out its beleaguered venture investors, who have to date sunk $87 million into the business.”
Ouch on all sides. Ouch for his column repeatedly implying real estate professionals are nothing more than greedy, smarmy check collectors and ouch for boiling Zillow down to real estate porn.
Did Zillow admit defeat?
McDonald calls Zillow sell outs who were originally supposed to transform the real estate process and add transparency. “But a giant plank of Zillow’s current growth plans seems to involve signing up agents who want to use Zillow as a listing service. I’m guessing the company’s executives are too smart to bite the hands that feed them. If you and I don’t pay a dime to Zillow, and agents do, you’ve got to wonder how ardent they remain about disaggregating the whole process so that you and I don’t get burned every time.”
Futher, McDonald noted, “The fact is that Zillow, which seemingly could have taken a bite out of the action of real estate transactions by scaring the oligopoly into submission, has demonstrably failed to do so. That they are courting real estate agents themselves is as big an admission of defeat as you might ask for.”
Defeat? Despite the SEC-1 filing revealing bigger losses than we had anticipated, we wouldn’t call Zillow defeated, rather evolved based on market demands to feed their growing media company.
McDonald closes with, “What I’m angry about is that Zillow might have been something that it hasn’t turned out to be. The process of buying or selling a house hasn’t changed at all since they arrived on the scene. The only thing that’s happened is that someone else is taking another piece of the action. If you want a piece of that action, go ahead and buy. But there are better ways to bet on real estate than that.”
Should the article stay?
Consumers see companies like Zillow and Trulia almost like a President they voted for- they cheered for these startups, watched them grow and now that they’re not in line with what they voted for originally, disillusionment ensues.
The quandary we are in is how to receive McDonald’s message- is he an impartial consumer as he implies? The company that signs his checks is in bed with Trulia, one of Zillow’s primary competitors, so is the piece of value or is it designed to hurt Zillow during a period where they are under a virtual gag order?
Why this opinion now, where was this last year when IPO rumors began or several years ago when agents took note of the trend of new real estate search startups (aka media companies) digging into agent pockets and not really revolutionizing any part of the real estate process? How is CNN/Fortune’s partner Trulia any different than Zillow in this criticism? Why now?
Even if it is accurate or depicts consumer sentiment that could be true, is it a fair piece? Should the article remain in light of a complete lack of any disclosure in the article that they (CNNMoney.com/Fortune) are partnered with Zillow’s competitor and it benefits them if Zillow is financially hurt?
There is no reason to believe that this reporter was put up to this or assigned this by CNN, Fortune, or Trulia, but the link has us scratching our heads and it is striking to us that in a recent interview, Trulia’s Pete Flint stated that there is plenty of room for everyone in this industry.
Everyone’s entitled to their opinion and I’m not saying McDonald is right or wrong, but something is wrong here and we’ll leave it to you to decide what that is.
Marlow Harris
April 21, 2011 at 2:31 am
The author is rude and disrespectful of real estate brokers and the industry as a whole. His bitter whining exposes his ignorance….. of course everyone at the table knew each other. If you are an experienced real estate attorney or broker, you've uh… had experience with other real estate attorneys and brokers. Duh. I think I've met almost every agent and escrow officer in town. Doesn't mean I'm in cahoots with them.
His comments about Zillow failing to make the changes in the real estate business they intended to, is actually pretty accurate. Because of Rich Barton and Lloyd Frink’s success of bringing travel to the internet at Expedia.com, they probably assumed that they could do the same thing with real estate. They’ve always claimed they had no intention of disintermediating agents, but Barton did say he thought the role of agents may change and that he thought agents were overpaid.
Barton was quoted as saying that inevitably real estate services and fees will change as online services take hold.
“I’m not implying that we have some new commission model figured out, but it feels like . . . Realtor services are going to be unbundled a bit,” he told Inman Real Estate News back in the day.
Since then, however, Zillow has bent over backwards making nice with real estate agents. In the beginning, it was first thought that home buyers and sellers were their clients. But now it’s apparent that real estate agents are.
Real estate agents and other real estate support services such as mortgage professionals, these are Zillow’s true clients, as they’re the only ones actually, literally buying what Zillow has to offer. While millions of buyers and sellers might come to the website, they’re not spending any money there. But the real estate agents are, so it’s imperative that Zillow makes the real estate agents and real estate related businesses happy. Without the real estate ads, their revenue source would dry up. They’ve taken on the role of agent’s de facto business partners, to augment the information that agents are able to provide to their customers, and to be a portal that brings eyeballs and clicks to those who buy the ads.
What I appreciate the most about Zillow is that they haven’t found success using our product (listings), but creating their own with their unique value algorithms, aerial, street and hybrid maps, statistics and market reports. Where Trulia uses our listings to attract eyeballs, Zillow is actually creating unique content to lure homeowners on to their site. Zillow does have listings, but they still have valuable content without them.
Ed Daniels - Metrowest Boston Real Estate
April 21, 2011 at 11:09 am
As a Realtor, Trulia and Zillow don't treat the accurate and fast information stream as gold, and the buyers and sellers will therefore leave the site forever.
The consumer drives everything for them: If customers come to the site, agents and mortgage brokers will advertise (like me), and it will grow.
My listings were recently dumped from my admin page, and one wasn't even on the site (after being live for 3 weeks). Technical gliches like this will eventually cause the sites to die.
David Pylyp
April 21, 2011 at 12:30 pm
For all the talk about leadership and innovation that comes from the United States; I am amused that no one is copying the Canadian MLS system.
MLS.ca is robust and searchable by Province, City [town] (hamlet) whatever you like or Postal code. As long as your system charges for opt in, regardless of the number of listings and the broker participation is made mandatory there will be no cohesive American database from anyone.
MLS.ca posts listings that are available for sale and uses direct data feeds to edit out the duplicates, solds and expired. SO unlike the free for all on independent FSBO and Property Guy site where cross population and old listings are the norm. IMHO.
Real Estate buyers are better informed and want quantified and qualified up to date factual data. If you do not provide it, they will go elsewhere.
I am pleased to fill their real estate needs in Toronto west.
David Pylyp
Accredited Senior Agent
MH for Movoto
April 21, 2011 at 3:56 pm
Yeah, I read that article too….. Whew. Intense.
As companies go, Zillow has my respect while Trulia really doesn't. Zillow actually produces something of its own, and their corporate voice is significantly more vibrant.
But I don't think it's fair to even consider "removing" the article from anywhere.Yes, it would have been in much better taste for the author to provide a disclaimer – but he's an individual first and foremost, and there's simply no way to prove that anything he penned is anything other than his 100% genuine personal opinion.
Robert Hahn
April 21, 2011 at 4:35 pm
Lani, you know I love you and I respect you. So when I say you need to take down this post, or at least clarfiy the living hell out of it, it comes from the heart. This innuendo, hint-hint, conspiracy mongering is unworthy of you and of AgentGenius.
If you think McDonald is carrying water for Trulia, then just say so. If you got proof, post it. Otherwise, this sort of character assassination by inference and hints is totally unacceptable for a respected industry blog.
Lani Rosales
April 21, 2011 at 8:30 pm
A.) The author does not mention Trulia is a partner of CNNMoney who is a competitor of Zillow either in passing or in the form of a disclosure.
B.) CNNMoney.com is a partner of Trulia.com who just called over 1 million Realtors fake and liars, "Zillow has offered a clarity and transparency that real estate agents, for all their “I’m-on-your-side” fakery, never have and never will."
C.) The author advises against buying future Zillow stock via his title and his comment "The only thing that’s happened is that someone else is taking another piece of the action. If you want a piece of that action, go ahead and buy. But there are better ways to bet on real estate than that."
D.) The story's general tone is aggressive and one sided in nature. This author either knew of CNNMoney's connection to Trulia and he omitted such knowledge or he didn't know and spoke out of turn about what he knows not of. Either way, he's in the wrong, it's nothing personal, nor is this about his character.
I stand by the above editorial which made no inferences, rather plainly stated "there is no reason to believe that this reporter was put up to this or assigned this by CNN, Fortune, or Trulia," and asked the AG audience if the piece was fair and called for a standard disclosure.
Ray Schmitz
April 23, 2011 at 10:06 am
The usual disclosure about CNN being partner with close competitor Trulia is a big omission.
Ray Schmitz
April 23, 2011 at 10:36 am
Rob, I thought Lani was fair. No mention of CNN's relationship with Trulia in a disclosure was a mistake.
That aside, because Trulia is exploring a transaction of their own, I doubt management appreciates McDonald's view:
No doubt many users of Zillow and Trulia have a favorite, but how many of them can explain vital differences between the two that make one a much better a business than the other?
Unless the answer is quite a lot more people than I expect, AND a substantial majority of them also say Trulia is better than Zillow, then any bearish view on Zillow has to adversely shape opinions of Trulia, too. The firms are too similar for it to be otherwise, which is exactly what caught our attention.
So how's that for carrying water for your media partner? Oh wait, could this be why there was no disclosure? 🙂
Benn Rosales
April 23, 2011 at 11:37 am
Ray, it's Lani's level headed approach that is the problem. The very piece placed in the article to exactly state that there was no reason to suspect top level conspiracy is exactly the issue taken with the article- crazy ironic as Fortune's article accuses Realtors of collusion. Obviously, Lani gives more consideration to Fortune's Journalist, than is given to 1 million Realtors and another million or so real estate professionals that make up the industry.
The Fortune article is blatant leaving only speculation as to why it is so blatant (this is not our doing, the Fortune article does this fine on it's own). Fortune, CNN Money et al. have editors and protocols so someone in that chain knew (or should have known) of the relationship, and what's worse is Trulia could have been added organically and naturally, but still, it was completely omitted.
This now is really up to the actors in the mistake as well as the stakeholders of Trulia, as well as CNN, Fortune et al. which are those couple of million real estate professionals he skewered, and that's how Lani left it.