I attended a fireside talk featuring Spencer a couple wks back. He’s a genuine house rockstar who preaches servant leadership, & is an extreme distinct force for Zillow & the just about industry…i.e. he’s the blooming manifestation of my together with TIDESnewsletter. Buying houses in Columbus, Georgia.
Strong mentorship is critical to personal growth, & I’ve been personally challenged in consistently surrounding myself following A+ professional mentors. This write-up appropriately hits close to home, as I consider Spencer a intensely compelling exec laboratory analysis from which I can learn a tremendous amount, even if from a distance. His in relation to knowledge base and leadership principles are fantastic and the extent of this write-up amazed me in the end, but it was with ease worth it. burning to share it once you all.
(NOTE: The under is paraphrased from Spencer’s Startups Uncensored fireside talk hosted by Jason Nazar, & is supplemented by online research. quick house buyers in Lexington, KY Company had some great articles upon Spencer here and here).
ENTREPRENEURSHIP IS A family AFFAIR: mother was a not far off from agent. daddy was a famous entertainment biz mgr who redefined the artist touring model, in which artists are hired power by a production co that assumes the tour underwriting risk.
IDEA INSPIRATION: Spencer & co-founders observed 900+ MLS networks where every data was in a B2B format. Vision was to bring this data layer & use-ability to the consumer (similar to how travel aggregators gone Hotwire disrupted travel agencies…Spencer helped co-found Hotwire pre Zillow).
NEW DATA: previously Zillow, lonely avail value data was the sale price, NOT mkt value. at the forefront on Zillow focused solely upon the latter, didn’t even feature listings.
PRODUCT FOCUS: Spent first 2-3 yrs solely on product, did no established mktg. Exceptional product was 100% of further on mktg efforts. Paying cash fast for homes in Bowling Green, KY.
ZILLOW = WEB MD: WebMD is not a healthcare co but a media co; it publishes content to drive site traffic, & subsequently sells ads against that traffic. Similarly, consumers go to Zillow for its data, & agents buy ads on Zillow to generate new customer leads…i.e. Zillow is the “park bench” of the Internet.
WORLD’S LARGEST AGENT CRM: 70% of revenue is from individual agent ad sales.
MOBILE EVERYTHING: Optimized for mobile a few yrs back, as consumer tricks shifted to on-the-go research (75+% of traffic).
MASSIVE with reference to HOLDING CO: Owns Hotpads, Dotloop, Trulia, Hutch (investor), Naked Apartments, RealEstate.com & much more.
ZILLOW AS A “WEAK AGGREGATOR”: Ben Thompson of Stratechery (an unbelievable tech & strategy blog, & the unaccompanied daily newsletter I subscribe to) describes the Zillow biz model via the subsequent to framework (paraphrased): Zillow is a “weak aggregator”, in that the Zillow platform brings on users (home buyers), suppliers (housing inventory / listings) & revenue (agent ads) upon a zero marginal cost basis.
This value chain tilt is a powerful area to be (e.g. GOOG & FB), even if Ben remarks Zillow’s challenge is that it is excluded from the on transaction VS the agents & other encouragement providers who still command all transaction fees (agent commissions, title fees, insurance premiums, mortgage, etc).
CE NOTE: I wonder how much upside exists in solely growing agent ad sales. excited how Spencer thinks just about this vs re-positioning Zillow for greater expansion participation. It’s a unique challenge subsequent to Spencer’s “need for humans” note farther below.
Ben has written extensively on aggregation theory, which he coined urge on in 2015 & which describes how platforms (i.e. aggregators) come to dominate the industries in which they compete in a diagnostic and predictable way to buy houses. Worth a extra read.
(Zillow’s Mkt Value Estimator)
CONSISTENT: Within 4% of buy price (on avg), in imitation of similar beyond / below ratio. Regularly say truthfulness data on website.
ASK THE PEOPLE: The Zillow Prize is a crowdsourced campaign to include the Zestimate algorithm. 2,500 teams submitted using the LA data package.
SHADOW INVENTORY: Can impact pricing, and it’s hard to account for in models. Explained here.
DATA IS NOW A COMMODITY: Products gone Zestimate and nearly agent reviews are differentiating.
NEED FOR HUMANS: Despite every the “tech disruption”, believes home-buying will always increase 1-2 human intermediaries because: (1) loud emotional decision (2) Often the largest single lifetime buy (3) Many components to transaction (title, mortgage, negotiation, insurance, etc)
CROWDFUNDING: Feels “bubbly”.
BEARISH upon BLOCKCHAIN: Wants to wait & see in relation to impact upon RE.
NO FORAYS INTO COMMERCIAL…yet, but that may change. Current dominant artiste is CoStar group which owns Loopnet (largest announcement marketplace), and MUCH more(ForRent.com, Apartments.com, WestSideRentals, etc).
TOP 5 in the region of PRICE DRIVERS
(Zillow data shows US nod is slowing, but is not predicting a recession)
FOREIGN BUYERS: Spencer told a story of an agent pal who has a Chinese buyer client. exceeding the with yr, this client has bought 20 homes at $1mm each in the recess Area, sight unseen.
LOW assimilation RATES: Many standard loans nevertheless under 4%.
STRONG LOCAL ECONOMIES: Many mkts are under 5% unemployment
LOW HOUSING STARTS: deficiency of progress / housing starts publicize recession (2007-2012) have materially impacted supply / demand dynamics.
SPRAWL DYNAMICS: Markets gone limited sprawl potential in imitation of LA (ocean, mountains) vs Phoenix / Denver have exchange price dynamics.
DECISION-MAKING EXEMPLIFIES CULTURE: At Zillow, it’s a data-driven meritocracy.
NODE-BASED DECISIONS: dated assistant professor leadership often meant that unaided execs had permission to supreme data set; subordinates single-handedly had pieces. Spencer believes in pushing decision-making to the nodes to be closest to consumer and client data.
CEO = HR EXEC: (1) Sets strategy (2) Defines mission (3) Recruits, retains & motivates
CORE VALUES: (1) impinge on fast, think big (2) “Turn upon the lights” (empower all but consumers w/ data) (3) Winning is fun (4) Own it (5) accomplishment subsequently integrity (6) Z is a team sport. NOTE: Spencer waited a couple of yrs till culture was firmly standard until they codified it. be in as a result too further on can be a misstep.
KNOW EMPLOYEE ENERGY: HR uses a program called Insights to profile each employee’s animatronics & communication style, & managers are directed to communicate subsequent to tackle reports as seize (in fact, there’s a 10-page leadership playbook every managers must read). Spencer is red…”Be brief, be bright, be gone”.
ZALL WALL: Staff profiles on the company intranet feature personality exam results & “karma points”, which are good exploit shout-outs by fellow employees.
THE HARDEST PART: Managing career development. Lots of ambitious team members. Hurts the worst to ember / lay off.
“HR DEBT”: Extreme accumulation can lead to toxic and destructive cultures (e.g. Uber, SoFi). Be wary.
WORK / computer graphics BALANCE: No email from Fri night to Sun AM, & goes offline from 7-9pm all night for relatives dinner time…sets song for overall org.
WORDS OF WISDOM
BE like YOUR BOSS? question yourself, attain you desire to be behind bosses 15 yrs ahead of you? Spencer started at Goldman Sachs; his respond was no.
BIG EXPECTATIONS: If you lift $10mm at a $60mm valuation, know your investors likely won’t desire to sell for less than $100mm. Know the expectations you’re set up for once that *big, sexy* circular of financing.
CAREER MIRROR: Spencer’s wife gut checks him regularly to assess if he’s truly glad or not. https://purchasinghomesinnashvilletn.wordpress.com
Spencer looks for the following:
Strong co-founder dynamics
Company vs a feature
Minimal “tech debt” (clean going on old, messy code as you grow)