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Spencer Rascoff, Zillow’s co-founder and former CEO, said that when the now-giant portal first started, Realtor.com had far more traffic.
The rival company seemed, “like an impenetrable competitor,” he said Thursday.
But Rascoff said that over the years that changed — Zillow now has far more traffic than any other portal including Realtor.com, and its lead is growing — thanks to one realization.
“The reason Zillow was able to pass Realtor.com was by prioritizing the consumer,” Rascoff said.
Rascoff made the comments during a webinar with Ryan Frazier, CEO of rental investment firm Arrived. Midway through the conversation, Frazier asked Rascoff — who after leaving the helm of Zillow has become a prominent investor, among other things — about where he likes to put his money. Rascoff replied that he looks for industries where there is “a lot of money sloshing around,” but in which many users are dissatisfied. And he said real estate fits the bill — a fact that contributed to the creation of Zillow.
“Everyone is unhappy but there’s a lot of money in the category,” Rascoff said.
He later went on to describe Zillow’s origins. The company launched in 2005, a period in which the internet lacked tools for consumers, according to Rascoff. At the time, real estate’s online presence was focused on commercial uses. Broker websites were for other brokers, for example, and consumers couldn’t find information, such as days on market or price history.
“There was nothing out there that was empowering the consumer,” Rascoff said.
Realtor.com already existed during this period, and Rascoff said the site had “10 to 20 million” users. That seemed like a lot. But Rascoff said Realtor.com was geared toward real estate professionals, and Zillow ultimately surpassed the site by adopting a consumer focus.
“That one simple insight allowed Zillow to beat Realtor.com,” he added.
As Inman reported earlier this week, Zillow averaged 212 million unique monthly visitors between January and March. By comparison Realtor.com — now the second-largest real estate portal — averaged about 72 million monthly users in the first quarter of this year.
Rascoff ultimately compared the situation to the competition between TikTok and Instagram, saying that the former eclipsed the latter due to the realization that “it’s more interesting to see content that the [algorithm] thinks you want to see than your friends’ content.”
It was, in other words, a relatively simple insight that allowed the newer company to vanquish the old.
Another successful move Zillow made, Rascoff recalled Thursday, was pivoting to mobile. Rascoff said the very same day that Apple founder Steve Jobs debuted the app store Zillow dropped the “.com” from its name in order to be more mobile friendly. And Rascoff announced internally that he would walk out of company meetings in which presenters showed desktop versions of Zillow’s sites before mobile versions.
“I only had to do it one or two times before the company got the hint that we were going to be a mobile-first company,” Rascoff recalled, crediting Zillow’s success in part to the company’s mobile pivot.
Among other things, Rascoff also talked about Zillow’s impact. He noted that in the early days, many consumer-focused real estate tools didn’t exist on the internet, because “the industry didn’t want consumers to know how long a home had been sitting there.”
Zillow changed that, but Rascoff said he sometimes faces criticism from business students who argue that Zillow had the chance to fundamentally disrupt the industry but ultimately stopped short and “copped out.”
Rascoff said such criticisms aren’t without merit, but he argued that the amount of information Zillow has put in consumers’ hands amounts to a major change in how real estate functions.
“There’s a lot to be said for consumer empowerment and information,” Rascoff said.
And he also argued that Zillow has changed the calculus for agents.
“What Zillow has done is created tens of thousands of super agents who have much more market share than they used to,” Rascoff said. “And they do that by buying leads from Zillow.”