“Critical” is a favorite word of Spencer Rascoff, the CEO of Zillow Group.
He uses it to describe all aspects of the digital real estate platform’s business, from crystallizing a strong company culture to moving fast in decision making to establishing a lead in mobile.
And that urgency has paid off. Since 2011, Zillow has acquired 10 competitors and supplementary companies. It now holds properties in every facet of the real estate business, from home browsing to mortgage paperwork. The Zillow network of sites and apps sees 140 million unique visitors a month, and four out of five homes have been listed on the Zillow platform, Rascoff reports.
Rascoff’s strategy for leading Zillow–which he’s helmed since September 2010–means infusing every level of the company’s business with tenacity and an aggressive company culture. Here’s how he does it:
Much of Zillow’s strategy has been focused on snapping up smaller companies (and would-be competitors). Its acquisitions tend to fall into one of three purposes: extending the size of Zillow’s audience, providing assets the company doesn’t possess, or simply accelerating Zillow’s growth.
“We are a media company. We sell advertising. Having a large audience is critical,” Rascoff says of StreetEasy, HotPads, and Trulia. “What they’ve done is they’ve added another important consumer real estate brand with a slightly different audience.”
Rascoff says 72% of all people shopping for real estate using a mobile device are now using one of Zillow’s brands. “That’s obviously where the home shopper is, increasingly, on a mobile device. So leadership on mobile is critical.”
The company’s most recent acquisition, DotLoop, purchased this summer for about $100 million, gives Zillow digital tools for paperless transactions, connecting the buyer, seller, agent, lender, and other real estate players in one hub. Mortech, purchased in 2012, centralizes Zillow’s mortgage tools.
“M&A can be a terrific accelerant. It allows you to accomplish something that maybe the company could do on their own, but it would have taken 5, 10, or 15 years,” Rascoff says.
Before being scooped up by Zillow in 2013, StreetEasy was the second-largest real estate site in New York. Rascoff estimated it would take years to overtake StreetEasy, so he bought it for $50 million.
“That’s how we look at M&A: really on a buy-versus-build decision tree. And we think about how many years it shaves from our product plan. As you get to know our company better, you’ll know that a core value of ours is, move fast, think big. Speed is critical to our success, and that’s probably why we’ve been acquisitive. A company that really values speed is typically drawn to M&A, because M&A provides a boost–a turbo boost–to one’s ambitions.”
How does Rascoff know when it’s right to make a pricey acquisition? First, he does lots of research. He says he “competed with and admired” Trulia for 10 years before pulling the trigger in 2014. Mortech worked closely with Zillow for five years.
“All of these tend to be long courtships where the principals get to know each other over a long period of time, and the relationships build until an acquisition becomes almost inevitable after several years of partnership and admiration,” he says.
Most importantly, though, is a culture fit between the two companies.
“Our most successful acquisitions have been the ones where the culture of the acquired company was substantially similar to the culture of Zillow. People were seamlessly able to start working together and adding value. Everybody jumps on the same boat and immediately starts rowing in unison,” he says. “It always starts with culture and people.”
For an organization that has 2,200 employees, Rascoff has instilled a list of core company values that read like motivational posters:
1. Move fast, think big
2. Turn on the lights
3. Winning is fun
4. Own it
5. Z is a team sport
“Our culture is a high-performance culture, which means we push ourselves to achieve success. We don’t tolerate mediocrity, and we value individual autonomy and responsibility. Specifically, that means we give high-performing individuals a high degree of latitude and autonomy to be successful. It is a flat organization, which means that individuals are empowered, they’re not managed. It’s a very transparent organization,” Rascoff says, noting No. 2 on the core values list.
The company is both run transparently from the inside, and it also aims to shed light on the workings of the real estate industry for the consumer.
“Just trying to be transparent about things is really appreciated–especially by millennials, who have a very astute bullshit detector and would rather somebody be transparent and authentic with them than pretend like they’ve got it all figured out and be a poser,” says Rascoff, who regularly gives out his personal cell number so Zillow employees can personally text him questions that he answers publicly in company meetings.
But CEOs shouldn’t try to cement company culture from day one–it should come naturally and from everyone.
“We waited a couple of years until the culture was firmly established before we codified and enumerated the core values. And so the other companies I’ve been at, when they’re startups, they say them right up front. And you don’t know what the culture of the company’s going to be. So it’s very inauthentic to say that’s the core value of a company,” he says.
Zillow has information on the few million homes that are for sale on its platform, but it also has information on the 100 million homes that are not for sale, Rascoff says.
Number of bedrooms and bathrooms, square footage, and prior sale history and tax information all come from county records, which Zillow culls and cleans up. But details like renovations often do not make it into those databases. So much of Zillow’s intel comes from its community of users: Tens of millions of homes have been edited by users, Rascoff says.
“As much as Wikipedia is a living database of all the world’s knowledge, we think of Zillow as a living database of all property information in the U.S. It’s constantly being edited and improved,” he says.
People can add or edit their own homes: Nearly 60 million homes have had their property attributes changed on Zillow by owners or realtors in the last 10 years. Besides its process for verifying a user is qualified to provide information about a property, Rascoff says the company doesn’t have strict protocols in place for those that might exaggerate their home’s attributes online, though he insists problems have yet to arise from fraud.
And while at times Zillow’s “Zestimate”– computer-generated pricing for homes–can severely undercut estimates real estate agents provide their clients, Rascoff insists Zillow isn’t an adversary of realtors.
“When you’re not feeling well, you’ll go to the web and you’ll read on WebMD or Wikipedia or Yahoo Health–all sorts of great information about what your ailment might be. But you still typically go to a doctor to get a professional perspective on things. I think it’s not dissimilar within real estate. Zillow is an incredible tool for consumers. And what it does is it levels the playing field,” Rascoff says.
“It, as we say, turns on the lights, which means that you have the same information as a practitioner. So a real estate agent should have the same data as you, just like a doctor would have the same data as you, ideally. But the professional helps you interpret it. So it’s still very, very difficult and confusing and complex and expensive to consummate a real estate transaction without a professional adviser. And the goal of Zillow is to give you access to the same information as the practitioner, but then you’re probably still going to use a professional.”
And to further that claim of professional support, just last week, Zillow launched a suite of tools for real estate agents to manage their leads that come through the site. But he admits Zillow’s relationship with the real estate industry is complex.
“There are some other agents that fear technology and fear progress and haven’t embraced us, and would prefer to go back to the days when the consumer was disempowered and didn’t have access to the same information. It’s like this in every industry,” Rascoff says, noting that former real estate dissenters like Edina Realty now show their properties on Zillow. “Eventually, the long arc of progress is powerful, and eventually everybody ends up turning on the lights. But there are some holdouts.”
An earlier version of this story reported that 20 million Zillow users had edited their home information on the platform. It has been corrected to say nearly 60 million.