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Zillow’s IPO Announcement Indicates Major Turn of Events

From hiring to firing to IPO

Rich BartonIn Zillow’s earliest days, they invested a great deal in their talent, snatching up the best of the best, then in 2008 announced layoffs and this month announced plans to go public in 2011 indicating a major turn of events. Over the next year, Zillow will be sweet talking investors for their candidacy as an IPO which is being hailed in technology circles as commendable, noting Zillow’s innovations. Others criticize the move as Zillow is not in profit mode, but companies not valuated on the profit model, rather the potential profit of their model and for the critics of Zillow’s current profit mode, I would ask people to compare how many dollars Twitter.com has made versus the millions invested.

Is their innovation debatable?

Companies like Trulia and Realtor.com compete for home seeker eyeballs and are running the same race to be the first to invent the shiniest iPhone app to keep the attention of the A.D.D. prone web users, so Zillow’s level of innovation is debatable, however their chutzpah is not. When was the last time you heard of a major company going public? Those days have been gone for some time.

Trulia announced this week upgrades to their advertising platform to offer hyper-local ads and Zillow plans on altering their ad platform as well to improve their chances with investors to take their Mortgage Marketplace ad income from 10% to 50% by next year via lead generation Zillow’s COO Spencer Rascoff told BusinessWeek.

Why Zillow and not the others?

Did companies like Trulia that avoided remaining loyal to their employees and not laying off their talent hurt themselves by not shedding weight in the toughest times? Did Realtor.com wait too long to get into the iPhone app store? Does Zillow plan to take the route of Redfin and become an industry disruptor with the help of a high powered, high price public relations firm? We can speculate a great deal about the way forward, but what is clear is that Zillow intends on taking a stand.

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

22 Comments

22 Comments

  1. Thomas A. B. Johnson

    January 15, 2010 at 1:05 am

    I hope the kind folks that we all know at Zillow, David Gibbons, Drew Meyers and Sarah Bonert each have a drawer-full of stock options that they can cash out when Zillow goes public. If they can sell it off to Wall St, you know the guys who sold subprime mortgages as AAA bonds to Norwegian villagers, widows and orphans, more power to them. Any one of those guys could take the whole deal with their 2009 bonuses.

  2. Simon Cardash

    January 15, 2010 at 5:28 am

    No surprise here . VC’s have to get a return on capital and provide liquidity or the money will go somewhere else

  3. BawldGuy

    January 15, 2010 at 9:59 am

    I’m still in the dark as to Z’s intrinsic value.

  4. Jason Berman

    January 15, 2010 at 10:41 am

    I agree BawldGuy. One thing is certain, if they go public, Zillow will finally have to start producing financial statements for public scrutiny. Their variable mortgage lead pricing model which to date is ‘clear as mud’ will be of interest to me.

  5. BawldGuy

    January 15, 2010 at 10:50 am

    Gotta wonder how any investor would conclude it’s a good place for their capital.

  6. Russell Shaw

    January 15, 2010 at 11:20 am

    A fool and his money are soon parted?

  7. BawldGuy

    January 15, 2010 at 11:22 am

    Grin

  8. Amy Bohutinsky

    January 15, 2010 at 12:13 pm

    Hi, it’s Amy from Zillow. I just want to make a clarification — Zillow did not announce plans for an IPO. Zillow’s COO was asked in an interview this week whether an IPO is possible in 2011 and he answered it could be a possibility, but it’s not the company’s focus at this time. You can find more information in this TechFlash post:
    techflash.com/seattle/2010/01/zillow_to_ipo_in_2011.html

    • Lani Rosales

      January 15, 2010 at 2:51 pm

      Sounds like Rascoff spoke too soon then, in his interview with Business Week:

      “We’re not a 2010 IPO candidate, but hopefully we’re a 2011 IPO candidate,” Rascoff, 34, said in an interview.

      “The comps are awful,” said Rascoff, who said 5-year-old Zillow is approaching profitability and wouldn’t disclose sales. “We have our work cut out for us. Any company that took venture money in 2007 would.” “We have our work cut out for us” implies that well, in order to get the IPO that Rascoff is announcing, Zillow will have its work cut out for them.

      Then on to your discussion with BusinessWeek:

      The exact timing of Zillow’s IPO plan depends on how well it does this year, spokeswoman Amy Bohutinsky said. Amy, tell me that doesn’t resemble an announcement of impending IPO?!?!?

      The company hasn’t begun interviewing investment bankers, Rascoff said. The Business Week article also noted that, Zillow begins its investor campaign at Goldman Sachs Group Inc.’s Feb. 23-25 Internet conference in San Francisco, Rascoff said. Really, there is nothing unclear about this part of the interview.

      I’m guessing Zillow wasn’t ready to announce and it slipped or perhaps the formal press release hasn’t been made but either way, the interview with Business Week was crystal clear that Zillow has IPO plans.

      Interestingly enough, I’ve learned that Mashable read it as an IPO announcement too:

      From Mashable, In an interview with BusinessWeek, Zillow COO Spencer Rascoff stated that Zillow is looking not only to go public in 2011, but is seeking ways to improve its valuation by courting new investors and solidifying itself as the world’s “fastest-growing real estate site.”

      It wasn’t just a yes/no hypothetical question asked by Business Week, Amy, and regardless of whether or not it’s the “focus” of the company right now, going to a conference to talk to GSG about an IPO and telling Business Week about IPO plans is an announcement to go public, whether it was an official announcement made via press release or not, an announcement from Spencer made verbally or in print IS an announcement from Zillow, no matter how you slice it.

  9. Russell Shaw

    January 15, 2010 at 4:03 pm

    Bless you, Lani!!

  10. Bob Stewart

    January 16, 2010 at 1:37 am

    (standing in the corner eavesdropping)

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