Evolution of Zillow, Trulia, and online advertising, to the Zillow haters!!!
There are hundreds of unprofitable companies, some go out of business and some continue evolving until they become great. Z is profitable and not going anywhere, and they have world class talen with a proven track record.t!!! PE isn't everything for growth companies. Margin is good for companies like Apple, MSFT, Semi's, etc.... But for companies that are going to grow Rev's 40% to 50% YoY, this isn't as important. Bottom line, people will continue going on these websites more and more. TRLA and Z aren't confined to realtors.... Thinks Angies list on steroids [or at least partnership] for their Digs and other programs, think auto/homeowners insurance brokers, think mortgage, think cars, thinks remodel, think landscaping, electricians, plumbing, etc.... It's not the leads getting sold to Realtors that I care about, it's the bigger picture of putting consumers and companies together. A blend between Yelp, Angiest list, Zillow, Kelly Blue Book, NADA, Autotrader, etc... Your Citron arguments have merit to only one aspect, that Zestimate needs to be more accurate. But as long as they get people to click on their websites, improve their Zestimates[or clarify more clearly what the tool is] they aren't going to have problems evolving their business. I am 100% certain that companies like Google and Amazon have thought about, or are currently thinking about buying TRLA or Z out!!!! Once a correlation/pattern can be developed between those homeowners and their shopping habits, it won't take long for synergies to develop. FB, Google, Amazon, Ebay, etc... have a lot of data on people already, now it’s all coming together for the future. You are thinking short term my friends!!!
Zillow will never be successful long term whilst it alienates 10 million homeowners with garbage zestimates and refuses all reasonable requests to correct or delete the erroneous valuation. Tell me one successful company that behaves in such an unreasonable and dictatorial manner with consumers?
What has Zillow got to gain by behaving this way? Nothing, other than motivate critics like me to highlight its many short comings. What it demonstrates is an egotistical management style that feels it has to trample over any homeowner who complains about nonsense zestimates to demonstrate how powerful they are. It makes no sense for Zillow to refuse to correct erroneous zestimates as they even publish an 8.4% median error rate which equates to 10 millions incorrect zestimates. All they are doing is creating a groundswell of opinion that it is time that AVM companies like Zillow cannot be trusted to act fairly and legislators will be forced to introduce some form of regulation that will substantially increase overhead costs and destroy profitability.
1. Most people that look at Zillow and check their Zestimate understand that it is but one of several AVM's, and that none of them are going to be completely accurate.
2. Half of the incorrect Zestimate, about 5 million of the errors according to you, are too high. Most people aren't going to bother to try to correct them, may not even realize they are too high (or believe the unrealistic number attributing it as "living right" and luck), and will only become upset if they pay for an appraisal based on false hope from the Zestimate.
3. The other 100 million (or 105 million counting the high errors) homeowners, plus those that understand the limitations of AVM's, are potential users of Zillow.
Zillow has done an excellent job of connecting with consumers, and connecting enough of the consumers to services through both ads and referrals (even to agents that hate it as much as you do, they know they have to go where consumers are going), to make an excellent start of a profitable web service. I agree that this company has a lot of long term potential. Just how do you think they are getting into partnerships with the likes of more mature internet services such as Yahoo and Google without a proven track record?
I actually feel sorry for you, I know you have been eagerly anticipating all kinds of bad new from this earnings call (posting your fantasies here), despite all of the contradictory evidence, for several months. This week must have been like waking up Christmas morning and finding only a lump of coal in your stocking.