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Zillow’s IPO Announcement Indicates Major Turn of Events

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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.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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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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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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