Choice Quotes From Zillow CEO Spencer Rascoff

If you think Zillow is primarily a real estate search site, and that home buyers and sellers are Zillow’s customers, you are wrong.

Zillow is a lead generation site. Home buyers and sellers who use Zillow are the “leads.” They are not the customer, they are the product that is being sold to real estate agents.

But don’t take my word for it. Here’s Zillow CEO Spencer Rascoff describing Zillow’s purpose and philosophy in his own words:

This is why Zillow doesn’t really care about all the expired and missing listings or bad “Zestimates.” The only thing that matters is driving more leads to agents.

If you think Zillow is or will be “disruptive” to the real estate industry, you are, once again, wrong.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    The Tim says:

    Yesterday Steve asked:

    Why are you so down on Zillow all the time?

    Maybe these quotes will help explain a little more of my general distaste for Zillow.

  2. 2
    Blurtman says:

    RE: The Tim @ 1 – Zillow is sitting on a ton of cash, the stock is galloping upwards, Rascoff is apparently paid a salary of close to half a million a year, and is a multimillionaire via stock selling. Them be the facts. This be Amerika.

  3. 3
    Erik says:

    RE: The Tim @ 1
    Your goal is to collect precise data and produce precise results. Steve’s goal is to make money and stack chips. I understand steve’s goal better than I do yours because I am more like Steve. It all comes back to what I was talking about before that I learned in grad school. You are a strong formalist and Steve is a utilitarian. I think if you understood the difference between the 2, you would atleast understand both points of view which would relieve a lot of your frustration.

    Look up and understand what a utilitarian is. Then learn and understand what a formalist is. Maybe you would need more guidance to understand what the difference is between the 2, but that will get you started. Figuring this out should be required by everyone as far as I am concerned. It is a little subjective, but it may hit home with you as it did with me.

  4. 4
    Erik says:

    RE: Blurtman @ 2
    I also agree that the CEO of zillow has already won. There is no debate. Tim is a data man and he looks only if the data is correct and represented clearly. If the data is not correct, you lose. Hahaha. Formalist. I run into tons of engineers that think this exact same way. Everything is objective and they just wanna follow the “rules” as closely as possible. It is weird to me, but I think most programmers and software engineers think this way. Programming is rule based logic. Rule based thinkers gravitate to that career path.

  5. 5
    The Tim says:

    RE: Erik @ 3 – Who is Steve?

    I’m not really interested in having a philosophy discussion. I get that Zillow’s goal is to make lots of money. Duh. That’s every company’s goal. In my opinion some companies add real value to the world and others are basically just middlemen. Zillow is more the latter.

    Obviously it’s worked out well for them. Great, good for them. Just because they’re good at making money doesn’t mean they’re worthy of respect.

  6. 6
    Erik says:

    RE: The Tim @ 5
    I meant the CEO of zillow, not Steve. Redfin adds more value than zillow to the world.

    You are smart, sharp, and you take initiative. Learning these soft skills is one way you could widen your knowledge base.
    I don’t consider soft skill philosophical.

  7. 7

    There are a ton of companies whose mission it is to suck money out of agents, and Zillow is one of them, but there are many more. Not a week goes by that I don’t get at least one call from someone offering to put me on the first page of Google (although lately in the email spam area most the stuff seems to be how to become an REO agent, which seems odd.)

    Zillow does work for some agents, but what I’ve often wondered is how those agents wean their clients off of Zillow so that they aren’t wasting their time with incomplete and stale listings.

  8. 8
  9. 9
    SS says:

    Wait, your general distaste for Zillow is because they generate revenue from lead generation?

    How is your employer any different with their lead generation tools? They are simply middle-men and certainly aren’t doing anything different and unique. I don’t see anything wrong with the business model.

  10. 10
    The Tim says:

    By SS @ 9:

    Wait, your general distaste for Zillow is because they generate revenue from lead generation?

    It’s that they do so without providing unique value for consumers and are in fact providing misleading, incomplete, and incorrect information to consumers in a market where complete and correct sources of information are readily available. And they consider those issues to be beneficial since it just generates more leads.

  11. 11

    I am a Zillow fan.

    Except when they train their sales people to tell Realtors to go extort money from their loan originators to pay for 50%-95% of their advertising bill each month, which is in violation of RESPA.

    It would be nice if all the advertising revenue made by Zillow off of advertising dollars paid for by LOs on behalf of Realtors complied with RESPA. It would be nice if they stopped training their hard-core sales people to say to Realtors, “It’s all perfectly legal. It’s all been reviewed by attorneys. Don’t worry.”

    Apparently coffee is for closers only.

    That makes me a formalist, and a utilitarian/consequentialist, and an aristotelean, and a Kantian.

  12. 12

    RE: Jillayne Schlicke @ 11 – Welcome to business in the 21st Century. Legality is a second thought–if that.

  13. 13
    wreckingbull says:

    By Jillayne Schlicke @ 11:

    Apparently coffee is for closers only.

    And it takes brass balls.

  14. 14
    Jonness says:

    By Erik @ 4:

    RE:I think most programmers and software engineers think this way. Programming is rule based logic. Rule based thinkers gravitate to that career path.

    Trust me when I tell you I went to software engineering school with people who could think further outside the box in a day than you’re capable of doing in a lifetime. Formalized rule-based tools can be used to get from A to B, but they are only a subset of what’s required to create and invent the future.

    Those exist in the field who are stuck in the past, those exist who study the present, and those exist who live entirely for the future.

    How on earth did you get through graduate engineering school without being exposed to logic, reasoning, and rule-based thinking?

  15. 15

    RE: The Tim @ 10

    It appears that you respect Redfin and not Zillow, and I do not challenge your reasons for that. But why do you suppose Redfin includes a link to Zillow on every one of its property displays that allows it? If there is no benefit to viewing the property on Zillow, why would Redfin include the link over to it?

  16. 16
    The Tim says:

    By Ardell DellaLoggia @ 15:

    But why do you suppose Redfin includes a link to Zillow on every one of its property displays that allows it?

    Because Zillow marketing has done a good job over the years convincing people that knowing what a home’s “Zestimate” is will somehow usefully guide their home-buying process. Buyers expect it, and since it’s free to do so, Redfin includes it.

    Note: This is my opinion only, I do not speak for Redfin, and in fact I don’t know the reasoning, as it was a feature in place long before I started work there.

  17. 17

    RE: The Tim @ 16 – It wouldn’t surprise me that there’s some sort of a deal between Redfin and Zillow to feed listings to Zillow and also provide for the link.

    Didn’t Windermere cut some sort of deal with Zillow (or someone like Zillow) about 4-5 years ago? Edit: I might be thinking of Windermere/Trulia:

  18. 18

    You Guys All Missed the Bag of Gold

    You should have sold your Seattle house and bought Zillow stock a couple years ago, you’d of turned a $250K stagnant home investment into $1M cash today.

  19. 19
    Scotsman says:

    Eric- think about this: One hundred years ago “snake oil” salesmen peddled their wares to an often (enough) believing public. Some made good money, but they all tended to stay on the move, looking for the next deal. Questionable morals, short term thinking, not really concerned with accuracy or results, just their own interests.

    Another group stayed with reality, documented results, thought long term, had the interests of the group and society in mind while also taking care of their own financial needs, though typically on a lesser scale.

    One advanced the cause- created modern medicine that saves lives and improves the quality of life for all. We have many of their names and accomplishments written down. The other group still exists- selling vitamins, sexual performance enhancers, etc. And outside of a rare persecution for outright fraud no one knows or cares who they are. Sounds like you’ve already decided which team you want to play on. My money- considerably more than yours- is on long term reality based thinking that creates real sustainable value. Let’s see where Zillow is in a couple of years before jumping to conclusions.

  20. 20
    SG says:

    Redfin (where Tim owns stock options) must be planning an IPO pretty soon. And Tim’s getting anxious and doing everything to make their competition look bad. Redfin’s a brokerage and that’s a non-scalable business. And investors will not give it a high multiple of a tech company.

  21. 21
    Erik says:

    RE: Scotsman @ 19
    Hahaha…. “considerably more than mine.” Probably, but I scored $128k on that last remodel, which felt pretty dam good since I was broke before. I am gonna make another $100k on the remodel I am currently working on. I bet you are considerably older than me, therefore you should have considerably more money dummy. When I am 50, if I can’t retire comfortably, I am going to load my 357 magnum and put it in my mouth.

    Assuming this remodel works out, I am going to incorporate and start stamping these things out like a professional.

    Funny you used modern medicine for your analogy. I am personally very against many allopathic practices and use naturopathic as much as possible. I think in very rare situations should someone use things like antibiotics when there is a non destructive homeopathic remedy to cure yourself. It makes no sense! What makes sense is there pharmaceutical companies brain washing the sheep and making money. I could go off on that rant all day, but it is off topic.

    Give me 5 years and we can meet up at a cafe and stack our chips up to see who has more. You have a big head start on me, but I am gonna catch up. I got my masters degree from uw this summer, so I shouldn’t be too poor ever anymore. Check it out..

    My name is Erik Muller. Type it in. I do every once in a while after getting beat down on this website. No thesis, I just took 4 extra classes. Seemed like a good deal since I don’t have time to go to the university while I have a full time job plus remodel.

  22. 22
    Erik says:

    RE: Scotsman @ 19
    I read your comments and they make sense unlike a lot of these computer freaks on here. Therefore, I definitely respect your opinion.

    Tell me this.. 1) How did you get rich? 2) Did you inherit money to get a head start or did you start out poor? 3) How long did it take you?

    There is a big difference from getting inheritance and starting from the bottom. If you cashed in some inheritance, we will not relate. I think it is easy to increase the money slowly, but when you start at 0, you can’t invest in things that give 7% return and hope to get rich. If you were given the keys of wealth, you have no room to talk about how it’s done in my opinion.

    What I figured out is that most people with money inherited it. Those people did nothing intelligent. Anyone can invest in safe mutual funds and increase the inheritance. If that is what you did and you are teaching me a lesson, you need to remember that you did nothing remarkable. You just maintained your inheritance and played it safe because you are able to. When people have nothing, there is nothing to lose, and they should take more chances. I did and scored $128k. I am taking the knowledge to the next one.

  23. 23
    Scotsman says:

    Eric- not big on personal details spread all over the web. Suffice it to say I’m not interested in meeting the vast majority of those who are interested in gathering such info as their intent is to harm. In short, nothing was inherited here except intelligence and values. Fifteen years or so ago I was bankrupt from medical expenses. Now I’m comfortably into 7 figures. I did it by valuing precision, comprehensiveness, long term strategies, and real value with no ego and a love of reality. In short, I worked off the values Tim espouses and avoided emotional or poorly thought out strategies like Zillow. Is an investment really high risk if you’ve done all your homework and checked it twice? What is Zillow’s reputation worth in the long run, and what happens when it’s shown to be unreliable?

  24. 24
    Erik says:

    RE: Scotsman @ 23
    Well good job then. I would love to figure out how to rake in more cash. I assume you did it in real estate since we are on a real estate website. I know Ray made a boat load from the real estate crash too.

    The thing about people harming you seems like paranoia to me. Loosen up man, it’s just a real estate discussion board.

  25. 25

    By SG @ 20:

    Redfin (where Tim owns stock options) must be planning an IPO pretty soon. And Tim’s getting anxious and doing everything to make their competition look bad. Redfin’s a brokerage and that’s a non-scalable business. And investors will not give it a high multiple of a tech company.

    I’m not sure either company deserves the multiple of a tech company, because neither fits the bill. Any company can have a website–most companies do. Just having a website does not make you a tech company.

    But like anything else, making a ton of money involves earning a little money from huge amounts of people. Think revenue of pro sports from TV viewers, or revenue of Google from ads. Neither Zillow or Redfin fit that bill because the former makes a fair amount of money from a tiny group of people (real estate agents) and the latter makes a larger some of money from a slightly larger (but ever-changing) group of people–home sellers. Neither is a way to make a fortune–by tech company standards.

    That said, I’ve always been shocked what has been paid for some of the larger brokerage companies, like Realogy and Prudential. Their value is based entirely on inertia–that agents will not leave them. Not something I’d be interested in putting money on. Redfin, on the other hand, is a bit different in that unlike traditional brokerages, where the agent is the draw, with Redfin it is more the draw. I’m going to make some totally un-researched assumptions and assume that Redfin is the entity that does the ongoing client contact after a sale, seeking out future business, and not the agent. Assuming that and a few other things, I could see Redfin might be worth more to an investor than a traditional brokerage. But I agree, that doesn’t get you to tech company valuations.

  26. 26
    The Tim says:

    RE: SG @ 20 – I have no idea when Redfin is going to IPO. My comments about Zillow have nothing to do with Redfin, and they’re not really even competitors anyway. Redfin helps consumers buy and sell homes, and charges a fee for that service. Zillow sells ads and leads to real estate agents. Totally different businesses.

    That said, Zillow’s business model relies on hundreds (maybe thousands by now) of salespeople all cold-calling real estate agents all day long. I’d love to hear your explanation of how a cold-call sales operation is scalable but a brokerage isn’t.

    As it turns out, Redfin has already proven that the brokerage is scalable. When I started working for them in 2010 they had somewhere around 200 agents. They now have well over 1,000 and are showing no signs of slowing their expansion.

    Again though, this post has nothing to do with Redfin or my desire as a shareholder (I own actual shares, not options) to see them succeed. Redfin will succeed regardless of what happens with Zillow.

  27. 27
    boater says:

    RE: The Tim @ 26 – I think what he means by scalable is that like a consulting company revenue is largely directly correlated with number if employees. Unlike many tech companies where revenue is more closely correlated with say page views or ads served. The high multiple tech companies can grow revenue by 10x without costs increasing by 10x as well.

  28. 28
    Oahu Realty says:

    Zillow hounds me off and on. Recently I was getting close to pulling the trigger and then had the bright idea of calling a few agents whom I know that are featured on Zillow. They unanimously told me that the Zillow leads were mostly duds.

    No thanks.

    Yes Zillow is in business to make money for itself.

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