Spencer Raskoff: Zillow wins by focusing on consumers

The portal’s co-founder and former CEO also said that Zillow’s influence includes the creation of tens of thousands of new “super agents.”

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Spencer Raskoff, co-founder and former CEO of Zillow, said that when the now giant portal first launched, Realtor.com had much more traffic.

The rival company appeared to be “an impenetrable competitor,” he said Thursday.

But Raskoff said things have changed over the years — Zillow now has far more traffic than any other portal, including Realtor.com, and its lead is growing — thanks to one realization.

“The reason Zillow was able to get past Realtor.com was because it prioritized the consumer,” Raskoff said.

Raskoff made the comments during a webinar with Ryan Fraser, CEO of investment firm Arrived. In the middle of the conversation, Frazier asked Raskoff, who has become a well-known investor since leaving Zillow, where he prefers to invest his money. Raskoff replied that he was looking for industries where “a lot of money is spinning” but in which many users are unhappy. And he said that real estate fits the bill, a fact that contributed to the creation of Zillow.

“Everyone is unhappy, but there is a lot of money in this category,” Raskoff said.

Spencer Raskoff at Thursday’s webinar hosted by Arrived CEO Ryan Fraser | Had arrived

He later went on to describe Zillow’s origins. The company was launched in 2005 when there were no consumer tools on the Internet, Raskoff said. At the time, real estate’s online presence was focused on commercial use. Broker websites were for other brokers, for example, and consumers could not find information such as number of days on the market or price history.

“There was nothing that empowered the consumer,” Raskoff said.

Realtor.com already existed during this period, and Raskoff said the site had “10 to 20 million” users. It seemed like a lot. But Raskoff said Realtor.com was geared towards real estate professionals, and Zillow eventually outperformed the site by targeting the consumer.

“This simple finding allowed Zillow to outperform Realtor.com,” he added.

Zillow averaged 212 million monthly unique visitors between January and March, Inman reported earlier this week. In comparison, Realtor.com – now the second largest real estate portal – averaged about 72 million monthly users in the first quarter of this year.

Raskoff ultimately compared the situation to the competition between TikTok and Instagram, stating that the former eclipsed the latter due to the realization that “it’s more fun to see content that (the algorithm) thinks you want to see than your friends’ content.”

In other words, it was a relatively simple insight that allowed the new company to beat the old one.

Spencer Raskoff at Thursday’s webinar hosted by Arrived CEO Ryan Fraser | Had arrived

Another successful move by Zillow, as Raskoff recalled on Thursday, was moving to mobile devices. Raskoff said that on the same day that Apple founder Steve Jobs introduced the app store, Zillow dropped “.com” from its name to make it more mobile-friendly. And Raskoff announced internally that he would be walking away from company meetings where speakers demoed desktop versions of Zillow sites before mobile versions.

“I only needed to do it once or twice before the company realized we were going to be a mobile company,” Raskoff recalls, crediting in part the success of Zillow with the company’s mobile focus.

Among other things, Raskoff also talked about the influence of Zillow. He noted that in the early days of the Internet, many consumer-facing real estate tools did not exist because “the industry didn’t want consumers to know how long a home was there.”

Zillow changed that, but Raskoff said he sometimes faces criticism from business students who say Zillow had a chance to revolutionize the industry, but ended up stalling and “getting out.”

Raskoff said such criticisms are not unfounded, but he argued that the amount of information Zillow has made available to consumers represents a major change in how real estate functions.

“There’s a lot to be said for consumer empowerment and information,” Raskoff said.

And he also claimed that Zillow changed the calculation for agents.

“What Zillow has done is create tens of thousands of super agents that have a much larger market share than before,” Raskoff said. “And they do that by buying leads from Zillow.”

Email Jim Dalrymple II