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The online real estate startup is the featured company on the cover of Fortune Magazine's February 19 issue. The article explains how Zillow has changed the real estate market by making automated home valuations available to all.
The story is a sexy combination of residential real estate and Web 2.0. Fortune and its sister publication, Business 2.0, have shown a keen interest in such topics. So, the choice of featuring Zillow makes sense from the perspective of selling magazines.
Zillow's elegant service is the clear leader when it comes to Real Estate 2.0. Seeing Zillow in such a prominent media spot made me wonder how much of an effect Zillow is really having on the real estate market. It has traction and is being used in the market as the Alexa chart shows below. But, its valuation service isn't unique and its Make Me Move feature is fun but not game-changing.
To change the game, Zillow must do one of two things. It could choose to facilitate the buying and selling of homes via a partnership or acquisition of a discount real estate brokerage like Redfin or Movoto. While that would completely change its business model from relying on real estate brokerage advertising dollars, the mortgage broker ad dollars in addition to the lucrative transaction fees would more than make up for the loss.
Alternatively, Zillow must list more homes for sale on its site. This is the path it's moving in as CEO Rich Barton maintained in the story his position that the company will not facilitate the buying and selling of houses. The company began moving in the direction of home listings on December 6 when it allowed users to list their homes for sale. New homes are being added at a rate of about 523 per day. However, until it reaches critical mass, it will be an also-ran when it comes to starting a home search. If it can gain access to more listings via a partnership or organic growth, it will grow into a lead generation cash register. That's what Benchmark Capital and Technology Crossover Ventures, the venture capital firms that have invested $57 million into the company, are counting on.
It's notable that the article begins with the author checking the valuation of his house before he considers selling it and buying another one. Zillow is useful to him on the valuation side of things. However, when it comes to buying and selling, he must go elsewhere. Despite the fact that the author states he might begin his search for a new home on Zillow, he'd be missing 99% of the market if he did. Same goes if he just listed his home for sale on Zillow. He'd be missing 99% of the buyers. Trulia, Redfin or Movoto are the online places for that activity. So, why don't they deserve a mention in the story?
Technorati tags: zillow, real+estate, movoto, trulia, redfin, benchmark+capital, vc, venture+capital
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Thanks for the comment, Mike. As one blogger I linked to in that post wrote, what Zillow is really doing differently is marketing. Its attracting so much attention that it's building the only big brand in this segment. No one else is even close right now.
Josh - They've done amazing. As a marketer I'm jealous - they've played into the voyeuristic culture we've been part of AND all know and love.
Interesting Post - I thought the same thing when I saw it come across my desk about telling the whole story. I've worked with a company called Buyside realty that is in 6 states - similar but in more locations than the two you mentioned on the seller/buyer side. But, I've seen them all and it will be interesting to watch how they all get play.