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.