Zillow’s Success Based on “Big Data”

ZillowZillow formally announced this morning that it was buying Trulia in an all-stock transaction worth $3.5 billion. I have followed both of these companies — less so after their IPOs — since their pre-launch days. (Makes me feel old.)

I recall my initial pre-launch meeting with Zillow’s then CEO Rich Barton. There were numerous real estate sites at the time. The key differentiator for Zillow was its massive aggregation of housing sales and pricing data. It took all that data, long before the tired phrase “big data” was in vogue, and turned it into a valuation algorithm.

That was the site’s major proposition at the time of launch.

Zillow as able to provide a “Zestimate” of the value of a large percentage of homes in the US. This seemed like magic to people and sparked massive media coverage and curiosity across the US. There was all kinds of “real estate voyeurism” triggered as a result.

In addition to checking out the value of your house you couldn’t help investigating how much your neighbor’s house was worth. There was a mix of high and low at play: a dazzling display of the internet’s capabilities to aggregate and present information, combined with an appeal to somewhat baser human qualities (greed, envy). But it worked. This single idea — how much is my house worth; how much is my neighbor’s house worth — drove initial interest and massive traffic.

From that early foothold, Zillow was able to add features, more content and so on. Zillow’s Barton saw the site ultimately as a “media property.” The model diversified over time into services. However Zillow grew and grew until it became the dominant US real estate destination. Competitor Trulia did almost as well.

Though less splashy than Zillow, Trulia was more of a utilitarian search engine for real estate listings with all kinds of related content. It executed extremely well against that idea and built the number two real estate property in the US. Now the two will be part of the same company, though Trulia will retain its brand and current leadership after the deal closes.

While Zillow’s leadership did a great job improving and evolving the site as real-estate market conditions changed, it was that initial big data “hook” of home valuations that propelled the site. Trulia offered a better user experience than most other sites and continued to build on that.

Both took two slightly different paths to their IPOs and now, with this merger, they’ll be part of a single real-estate holding company. But it was “big data” before big data became fashionable that is largely responsible for Zillow’s success.

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2 Responses to “Zillow’s Success Based on “Big Data””

  1. Tom Fischer says at

    No professional takes those Zestimates seriously and that’s where it ends.

  2. Greg Sterling says at

    Perhaps but that was the early key to their consumer success.

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