Zillow lays off 25 percent of workforce
Most of 40 workers affected in Seattle
By Inman News, Friday, October 17, 2008.
Online valuation and listings site Zillow.com announced today it is laying off 40 people, or 25 percent of the company's workforce, in order to cut expenses in anticipation of a prolonged recession.
"Unprecedented economic events ... have made a prolonged recession likely, in our judgment," said Rich Barton, Zillow founder, chairman and chief executive officer, in a post on the company blog. "We are a young company that is not yet making a profit. Despite having sizable cash reserves, we deemed the responsible course was to meaningfully reduce expenses, so that Zillow emerges from the other side of the recession in a very strong position, even if the recession lasts many years."
Barton said the decision to cut staff was a difficult one because although the company's revenues do not yet cover expenses, Zillow continues to grow. The 5.4 million unique visitors to the site in September represented a 42 percent increase over the same time last year, and revenue is growing "at a rapid pace."
Zillow has a New York advertising office, but the majority of the layoffs are in the company's Seattle headquarters, the company said. Departments that saw cutbacks in staffing included marketing and engineering. Barton said the company will continue to fill open positions in areas that are directly tied to revenue, such as advertising sales.
According to the online metrics company Hitwise, Zillow.com was the third most popular real estate related Web site in September, with 2.52 percent share of all traffic in the category (see story).
"Fear, value-shopping, and curiosity are driving people in record volumes to our site," Barton said. "The fact that we have never spent any money on advertising gives me tremendous confidence in our consumer-centric product vision and in the long-term leverage in our business model -- free, open access funded by targeted, relevant advertising."
Last month, Zillow.com and a consortium of 11 newspaper publishers announced an alliance allowing them to offer advertisers access to each other's audiences.
The Zillow Advertising Network allows newspaper advertisers to reach Zillow's national audience, the companies said, and Zillow advertisers get access to local audiences through real estate sections of newspaper Web sites (see story).
Launched in February, 2006, the company has raised $87 million in venture capital from employees, individuals and several leading investment firms including Benchmark Capital, Technology Crossover Ventures, PAR Capital and Legg Mason Capital Management.
According to an Inman News profile of the company published in July, about 90 percent of Zillow's visitors own a home, and two-thirds are buying or selling. Zillow "provides numerous free and paid opportunities for real estate and mortgage professionals to market themselves and their listings to these engaged consumers," the company said.
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Submitted by Fran McGrath on October 17, 2008 - 1:23pm.
Not suprised that Zillow has had to cut back. The amazing thing is that they are in business at all. While their aerial photos are decent, their evaluation zestimates are usually so far off the mark that it doesn't warrant comment. I have been in the real estate business with Re/Max in the Denver area for 30 years. I am amazed how far off their numbers are. Most of the time 15% or more in either direction. My opinion, another worthless site just trying to get eyeballs to sell advertising. The venture cap boys have learned nothing from the tech & dot.com bust in 2000.
Submitted by RK Ruthman on October 17, 2008 - 1:30pm.
Traveling light in this economy is how to survive in this economy.
Cutting the fat of a company usually starts at the bottom, so that those in upper management can continue as long as possible untouched by economic hardships.
For better or worse, Zillow is in place. I don't expect it to go anywhere...if anything this news probably has peaked the interest of those waiting to acquire it.
Submitted by Larry Wright on October 17, 2008 - 1:32pm.
Zillow has a good concept but for some time has needed to trim the fat and improve the value of its services. Inovation has brought them this far and I suspect will provide the required momentum to weather this market correction.
Larry Wright
Washington Real Estate
Seattle Real Estate
www.nwRealty.Net
Submitted by The Campbells of RE/MAX Bellingham on October 17, 2008 - 1:52pm.
Interesting to boast about not ever spending anything on advertising in one paragraph, while having a Madison Avenue agency in their employ noted in another. How does that work? I'd love to spend nothing, too.
Submitted by Mott Marvin Kornicki on October 17, 2008 - 1:53pm.
As a REALTOR®, I have surfed Zillow.com and have a profile, updated listings and have added features to improve the "Zestimate". All in all, I see the benefits that Zillow offers- but something is missing...
I guess the competition gets more and more creative ala CyberHomes and Trulia®.
http://www.zillow.com/profile/WaterwayRealty.com
http://www.trulia.com/voices/profile/Real_Estate_Pro-Miami_FL-86075/
Mott Marvin Kornicki, Broker
www.WaterwayRealty.com
www.Hybrid-MLS.com
305.935.3533 Main Line
Submitted by Barry Noble on October 17, 2008 - 2:09pm.
I cannot be unhappy about this - the Zillow attempts at valuation of properties is ludicrous and an insult to appraising. They were $125,000 off on a property I had recently appraised in a price range that meant they were 48% off. So much for instant gratification.
Submitted by sean fields on October 17, 2008 - 2:15pm.
bye, bye Zillow...and good riddance.
In the resort/ retirement market of Cape Cod,this site just proved to be a pain in the neck..
I personally had two clients make Zillow based offers over the past few years...both were told to go away and missed out on tremendous deals...
Submitted by LookRealty on October 17, 2008 - 2:32pm.
Zestimate's were a problem for my client who chose their Zestimate over my quote. The home later sold at my quote when my client adjusted the price. I am willing to provide proof. In response to what happened I just launched LookRealty.com 2 days ago. It is meant to put the numbers and valuations back in the hands of Realtors on a local level. Not large companies. Please don't flag this as an advertisement. It is in relation to this article.
Submitted by None on October 17, 2008 - 3:00pm.
It's happening across web companies back by investors. See
http://www.techcrunch.com/2008/10/17/keeping-count-the-techcrunch-layoff...
Always good to maintain a lean workforce none-the-less.
Would be very interesting to brainstorm on how they "could" monetize given the huge 5.4 unique visitors...that alone is very impressive.
Wonder what Zillow could retail to consumers for say $19.99, if the majority of eyeballs include them. That would be a very interesting poll or fun survey to see Inman host.
Submitted by Jeff Manson on October 17, 2008 - 3:58pm.
I think that is going to happen to a lot more companies like that. Google just came out with higher than expected earning yesterday. This bad economy is not affecting their advertising revenue yet.
Jeff Manson
American Dream Realty
Homes in Hawaii
Submitted by John Rowles on October 18, 2008 - 5:08am.
Quick! Fire up the Waaaaaambulance! Zillow is in a headline.
@ Barry:"So much for instant gratification"? On the Web? Are you kidding?
Get this through your head: Whether or not Zestimates are accurate is irrelevant.
What matters is that Zillow has managed to emerge as the most recognizable brand for automated valuations on the Web and they have used this to concentrate the most desirable Real Estate customers on their site.
You want to talk to that audience, and Zillow has them. That's all you need to know when it comes to deciding how to respond to them.
Sure, it would be nice if Zestimates were more accurate, b/c that would make your job easier, but no one cares about making YOUR job easier except you. Zillow doesn't care, and your clients sure as hell don't care.
@Mr. Perkins has it exactly right -- instead of whining about Zestimates, respond to them. And do it proactively on the Web, not by setting up a form for "Your FREE CMA!". If you think Zillow is hurting, look what they did to HouseValues.com...
John Rowles
Managing Director
MainRhode LLC
jrowles@mainrhode.com
www.mainrhode.com
Google-Powered Real Estate Search Engines
Submitted by Ruthmarie Hicks on October 18, 2008 - 9:04am.
@jrowles - I think BUYERS and SELLERS do care about accuracy and in the long run buyers and sellers should be able to hold Zillow's feet to the fire for producing such misleading and patently poor evaluations in the name of grabbing eyeballs. This type of activity can have a direct impact on the ability to sell a home. Zillow is more than a waste of space - it provides very misleading information that can impact the sales process. It is also horrifying that sellers have no ability to LITIGATE against these misleading zestimates. I hope a way is found to sue the pants off of them for some of this nonsense. Hopefully this financial shakeout will kill a bunch of these third party sites that are essentially useless for anything other than inserting another middle man (and expense) into the process of buying or selling.
Submitted by William Metzker on October 18, 2008 - 9:58am.
Ah, Zillow, the website real estate agents love to hate or hate to love, depending on what day of the week it is. :)
Submitted by (Fort Worth Real Estate Guy) on October 19, 2008 - 5:58am.
If all the agents that link to Zillow would quit they would go away. They will soon be just like Realtor.com and start to charge the Realtors if they dont already. I dont understand why agents link to these sites from their websites. It is a dumb move. When the client goes there they are gone and off to another Realtor website. Get a grip stop linking.
Mike Pannell
Nu Home Source Realty LLC
817-509-1400
http://www.nuhomesource.com
http://www.fortworth-texas-real-estate.com
http://www.dallas-county-texas-real-estate.com
Submitted by warren petter on October 19, 2008 - 6:12am.
What a sad story. Will other companies going to follow the Zillow step?
Its really bad.
http://www.hintpoint.com
Submitted by Tina Fountain on October 19, 2008 - 10:16am.
My issue with zillow is their lack of customer service. I've been trying to correct a feed issue for over two months, my emails to them and my posts on their discussion board are left unanswered.
Atlanta Real Estate
Submitted by Spencer Rascoff on October 20, 2008 - 11:33am.
@Tina - Spencer from Zillow here.
Could you please email me directly with your feed issue? You can reach me at spencer AT zillow DOT COM.
Thank you.
Submitted by Joe Cline on October 20, 2008 - 4:33pm.
Sad to hear that folks lost their jobs, but glad that Zillow is on the down swing. I waste more time parroting the reason why Zillow zestimates are completely irrelevant in non-disclosure states that I care to imagine. ah well.
"Even broken clocks are right twice a day."
Joe
Sonoma, Round Rock
Austin Texas Listings
Apache Shores Home
Submitted by mark langowski on October 20, 2008 - 6:17pm.
We all knew this was going to happen.
I am the CEO of privately funded search engine http://www.beatyouthere.com We anticipated this overspending that the competition has been doing and are keeping our spending tight. We are in it for the long haul!
Regards,
Mark L
Submitted by Bill Fooks on October 24, 2008 - 3:46am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI
Fooksteam.com
Whenever a service is given out free, such as estimates of value, we find that the model can only hold for so long. This is not to say that some services are will carry a charge, regardless. You see, values are not always by the comparison method. It must take into account neighborhoods, condition and the local market economics.
Only an experienced agent has the knowledge to extrapolate all this, and put it inot some meaningful and useful conclusions.
Gues what.!? We get paid well for this when we succeed, and we should!
Now they are going to the failing newspapers for help. I wonder, do, Birds of a Feather always flock together?.