David Rosenthal: evaluation

Transcript context

…Sure. So, you know, fundamentally what it is, is a subscription-based advertising product where agents pay to be promoted next to “for sale” listings to be potential buyers’ agents for consumers. With the acquisition of Trulia, that advertising is purchased by agents across both properties, so the agents are advertising on both Zillow and Trulia. And it is the workforce of our revenue, definitely the focus of our efforts, our sale efforts as well as our development efforts. It’s been hugely successful. More recently, what we’ve been seeing is really innovative and entrepreneurial agents who are forming agent teams and buying advertising in large quantities and really building big businesses from which to operate. One of the things that we talk a lot about on this show is – we joke about it – Ben Thompson. We’re just huge fans of his writing and his thinking. And he talks about aggregation theory and one of the consequences, aggregation theory being that in kind of the information economy as opposed to the industrial economy, aggregating customers and having the best customer experience and ability to do that, is the winning strategy versus in an industrial economy where distribution is costly and has friction, you want to aggregate distribution and think about customer second. One of the things I love about the Zillow Group business and this merger in particular is it’s such a pure play example of that, like there are these levers in distribution that by being internet-based, you have, and by combining these businesses whether it’s acquiring the data feeds about data on homes and home sales – which we’ll get into in a minute because there’s more drama to come there – or advertising sales or what-have-you, your website back ends, it doesn’t make sense for any of that to be separate. But what does make sense to put the combined effort of the companies into is exactly what you’re saying, is developing these great customer experiences whether it’s the advertising customer or the home owner/home buyer customer. It’s cool to watch. And so when you guys were thinking about the rationale for this merger, as you’re identifying kind of the key levers for this, like was that at the front of your mind? Oh, absolutely. I would say it has unfolded in a way that was even far more beneficial than we could have imagined. You know, we were most focused on the acceleration of our audience growth, which is, you know, natural when you’re running an internet media business. We thought that there would be some other benefits of scale, but those have far exceeded our expectations and real estate listings is a perfect example of that. I mean, we struggled, and I think we’re going to get this a little bit later about the listings drama. You know, we struggled in acquiring listings over the years. There were parties who just didn’t want to provide them to us. Now, it’s pretty difficult for listings providers to look at the dominant real estate brand on the web and say “It’s not in our seller’s interest to have their listings on Zillow or Trulia.” It’s unfathomable to make that argument. So, our ability to attract direct listings was certainly strengthened by this acquisition because of the scale.…

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