Zillow opens at $20 per share
Zillow exits the quiet period as their stocks have gone public and Spencer Rascoff, current Zillow CEO rang the opening bell at NASDAQ as their shares hit the market for the first day, after a long process toward their initial public offering (IPO).
Drew Meyers, worked at Zillow from 2005 through January 2010, managing Zillow’s API program and various online partnerships. Over the course of that time, he worked with Zillow’s PR team and served as a spokesperson for the company in various fashions via social media.
Today, he shares his his predictions with AGBeat based on his many years at Zillow and begins by saying, “I’m not a reporter. As such, I left out the typical BS you can read in every single other article out there about the Zillow IPO. If you want to find out the share price, history of the company, revenue, etc – do a few Google searches and you’ll find all the basics that 50 others have all repeated already. If you want some thoughtful analysis, read this instead.”
Thoughts on Zillow from Drew Meyers
The interview below is in Meyers’ own words:
The day has finally arrived – Zillow is publicly traded on NASDAQ under the ticker symbol “Z” (and it’s already soared from $20 to $60 per share according to Bloomberg). It’s the day every employee at an early stage startup relishes; the day all those years laboring away for the chance at an initial public offering is finally realized. The day liquidity goes from dream to reality.
I’ve been away from Zillow for over a year now since my departure in early 2010, but that gives me the unique perspective of seeing Zillow from the inside as well as from the outside while still working within the industry. Though of course I am biased (I am a shareholder in the company), I’m more than bullish on the companies long term prospects. Part of that bullishness comes from the fact that I know the people running Zillow quite well, and know they are top notch individuals with a vast amount of business experience under their belts already.
However, a large part of my bullishness also comes from the fact that the residential real estate vertical is a massive massive market that involves the single largest investment the majority of main street ever makes. Combined with the mortgage side of things, you have an extremely lucrative niche to capitalize on.
Predictions on what’s next for Zillow
I wanted to put together a few predictions regarding where Zillow will invest following their IPO. I don’t claim to have all the answers by any means, but these are the most strategic investments I can see them making:
1. Invest internationally
Even though the United States online real estate progressed quite a bit in the United States market over the past 6 years since I entered the industry in late 2005, the online real estate arena abroad is still noticeably a few years behind the curve. For instance, look at the websites that rank #1 for greece property for sale (https://www.apropertyingreece.com/) and Madrid Spain property for sale (https://www.thinkspain.com/properties-in-spain/3/15). Zillow has a chance to take a sizable chunk on that rapidly growing market by strategically investing in the right companies in the right geographic markets.
Delivering a better consumer experience and investing in the SEO side of the equation can beat those incumbents who haven’t innovated in a decade. Couple that with the fact that commissions in many places overseas are considerably higher than in the United States means that the leads generated off of that traffic would be worth a pretty penny to international real estate agencies.
2. Acquire agent subscription products.
I think (hope) it’s a given that Zillow’s sales team will eventually run out of ad space on Zillow and Yahoo! Real Estate to sell to agents and brokers. At that point, they will need additional products to go to agents with — or they need to find more ad space to sell by acquiring it with strategic partnerships with other media companies.
I personally think acquiring companies with existing subscription revenue from technology and marketing products vital to agents and brokers success (such as a CRM, website, or IDX) is a more viable growth strategy because there are only so many “premiere” national online properties that agents would be willing to pay an additional monthly advertising expense to be on.
There’s a reason Move, Inc owns Top Producer; it’s a subscription service sold to many of the same agents they already reach via their Realtor.com – I strongly suspect a lot of cross promotional marketing occurs between Realtor.com advertisers and Top Producer clients.
Here are two possible candidates for an acquisition:
- Altos Research – I’ve long thought Altos would be a perfect acquisition for Zillow given they specialize in the same thing; data. I obviously have no insight into Altos’ subscriber numbers, but it seems there could be considerable savings from using Zillow data to power Altos and sharing a sales team.
- WiseAgent – we all know a CRM is essential to any agent and brokerage looking to grow their business; an email inbox can only get you so far. There are a number of CRM’s out there (none of which are perfect), or Zillow could build their own of course, but from what I’ve seen WiseAgent has built a product their clients love and has a very loyal following as a result.
3. Partner with a consumer banking site
3. Form a joint venture or very strategic partnership with a consumer banking site. This one certainly isn’t an obvious move, but hear me out before you discount it. A new company in the banking industry could then take on Bankrate (the clear leader in the industry) by combining Zillow mortgage data with auto & bank loan information from another provider.
Right now, Bankrate, Quinstreet, and Informa are the primary games in town when it comes to mortgage and other bank rate information. Distribution of mortgage data to other sites is a massive revenue opportunity for Zillow, but my gut is that to get the really strategic media deals with sites such as Wall Street Journal or CNNMoney who already have boatloads of traffic, Zillow (or a partner company) is going to need to be able to serve as the primary data provider for all their rate information — autos, CDs, mortgage, etc. Those companies don’t want to work with 3 different providers for that data. Bankrate was taken private for 571 million in 2009, so there is clearly a sizable opportunity in the consumer banking space worth chasing.
Now is the time for Zillow’s moves
I think now is the time for Zillow to make some strategic investments and make a real run at burying their competitors. It was a race to the IPO for this exact reason (getting access to the liquidity that can be easily used for acquisitions) between Zillow and Trulia, and Zillow beat them to the punch card. It’s my strong hope that Zillow uses this fresh capital and liquidity to really turn the corner and, as a result, ends up as the next Amazon or Expedia of the web. It’ll certainly be interesting to watch over the course of the next few years — and I’ll be rooting for the Zillow stock chart to continue tranding up and to the right as it has thus far today.
Drew Meyers worked at Zillow from 2005 through January 2010, managing Zillow’s API program and various online partnerships. Over the course of that time, he worked with Zillow’s PR team and served as a spokesperson for the company in various fashions via social media.
Current Marketing Director for Virtual Results, a boutique website design firm in the real estate vertical, and maintains a personal blog where he shares his thoughts on his passions of travel and microfinance (among other things).
A social media marketing enthusiast, he founded the Carnival of Real Estate and is the founder and managing editor of Geek Estate Blog, a multi-author blog focused on real estate technology for real estate professionals. He has spoken on panels at Inman’s Real Estate Connect conferences and has led sessions on Social Media Marketing and Search Engine Optimization at numerous Real Estate BarCamps across the country.