{"id":16252,"date":"2012-12-07T12:07:35","date_gmt":"2012-12-07T19:07:35","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=16252"},"modified":"2012-12-07T14:02:10","modified_gmt":"2012-12-07T21:02:10","slug":"are-zillow-and-trulia-thrashing-savagely-in-a-blood-red-ocean-heres-a-clue-both-of-them-are-jumping-the-shark","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16252\/are-zillow-and-trulia-thrashing-savagely-in-a-blood-red-ocean-heres-a-clue-both-of-them-are-jumping-the-shark\/","title":{"rendered":"Are Zillow and Trulia thrashing savagely in a blood-red ocean? Here’s a clue: Both of them are jumping the shark."},"content":{"rendered":"

\"Do<\/a>Is the business model of all the Realty.bots daft?<\/a><\/p>\n

It is Citron’s primary thesis that Zillow is a Web 1.0 business presenting itself as a Web 2.0 investment. The entire premise of Web 2.0 is that smart managing and publication of information interactively to users can scale tremendously, while costs remain fixed. But unlike Netflix, LinkedIn, and even Facebook, Zillow isn’t voyaging forth into an ever-expanding horizon of unlimited sized markets opening up on the internet. It generates virtually all of its revenue from U.S. real estate agents. And it does so the old- fashioned way\u2014by cold-calling them on the telephone. It’s been operating since 2006 more or less as it does today, and was consistently unprofitable, until the last two quarters.<\/p>\n

[….] It is a “heavyweight” sales company masquerading as a “web 2.0” leveraged technology play. The only way it has to grow revenues right now is with the increasing intensity of the sales effort. It\u2019s not light and leverageable like LinkedIn, or OpenTable (Sales and mktg 21.4% of revenues) Zillow is more similar to Groupon than a Web 2.0 company such as LinkedIn or Open Table.<\/p>\n

[….]<\/p>\n

Expressed another way, it is apparent to Citron that Zillow is buying revenues with an intense telesales effort. Put in its simplest terms, they spent an additional $3.8 million on sales expense last quarter, and only generated $4.8 million in new revenues!<\/p>\n

By comparison, Open Table spends 21% of revenues on sales, and even LinkedIn spends 33%. This comparison shows how much Zillow is dependent on old school phone room sales\u2014not Web 2.0 online leverage.<\/p>\n

While management might spin a fun story about their company growing revenues at a rapid pace, the proof is in the numbers. The cost of sales demonstrates that customers do not buy Zillow ads; they are sold Zillow ads, which should be disturbing because they address a target niche market unlike OPEN or LNKD\u2014and cost of sales should be lower.<\/p>\n

[….]<\/p>\n

Citron notes that MOVE.com, formerly Homestore.com, referenced above, could not make money during the real estate boom of the mid 2000’s. At the time, they were the only online destination for brokers to buy Read more<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Is the business model of all the Realty.bots daft? It is Citron’s primary thesis that Zillow is a Web 1.0 business presenting itself as a Web 2.0 investment. The entire premise of Web 2.0 is that smart managing and publication of information interactively to users can scale tremendously, while costs remain fixed. But unlike Netflix, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[524,6,5,19],"tags":[],"class_list":{"0":"post-16252","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-fun-with-vendorsluts","7":"category-marketing","8":"category-real-estate","9":"category-technology","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2664,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2664\/zillowcom-announces-its-sponsorship-of-bloodhoundblog-unchained\/","url_meta":{"origin":16252,"position":0},"title":"Zillow.com announces its sponsorship of BloodhoundBlog Unchained","author":"Greg Swann","date":"February 26, 2008","format":false,"excerpt":"BloodhoundBlog has grown up with Zillow.com. We're consistently second or third on a Google search for Zillow.com, and Debunking Zillow.com is one percent or more of our traffic every day. On the other hand, we've also been big boosters of the tools Zillow has built to help sellers, buyers and\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3344,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3344\/as-good-as-a-link-how-would-you-like-to-co-brand-with-zillow\/","url_meta":{"origin":16252,"position":1},"title":"As good as a link: How would you like to “co-brand” with Zillow?","author":"Greg Swann","date":"July 9, 2008","format":false,"excerpt":"Do you want to see something huge in the guise of something that might seem quite small at first? Click here. This is new software from Zillow.com. It's supposed to go live at 9 pm PST, but it's already working for me. What's different? Look up in the upper left\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1951,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1951\/zillowcom-snares-another-30-million-in-venture-capital\/","url_meta":{"origin":16252,"position":2},"title":"Zillow.com snares another $30 million in venture capital","author":"Greg Swann","date":"September 19, 2007","format":false,"excerpt":"VentureBeat:Zillow, the controversial website that gives value estimates of people\u2019s homes and other real estate info, has raised a significant $30 million of funding, despite the mortgage industry credit crunch. The Seattle company has now raised a hefty $87 million in total funding during its short lifetime, making it one\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":18119,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18119\/overnight-news-if-zillow-can-lose-30000-per-investment-in-the-hottest-sellers-market-ever-how-much-can-it-squander-once-the-market-turns\/","url_meta":{"origin":16252,"position":3},"title":"Overnight News: If Zillow can lose $30,000 per \u201cinvestment\u201d in the hottest seller\u2019s market ever, how much can it squander once the market\u00a0turns?","author":"Greg Swann","date":"May 7, 2021","format":false,"excerpt":"Zillow's first-quarter results are out, and the message is plainly obvious: Milk the idiots, but don't be the idiot. They won't learn. The only successful \"disruption\" in proptech, so far at least, belongs to Zillow: They replaced supermarket real estate magazines with the Zestimate\u2122. The difference is, the sleazoids who\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":754,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/754\/zillowcom-versus-realtorcom-nothing-grows-in-the-shade-of-great-tree\/","url_meta":{"origin":16252,"position":4},"title":"Zillow.com versus Realtor.com: Nothing grows in the shade of great tree . . .","author":"Greg Swann","date":"December 9, 2006","format":false,"excerpt":"I think part of the problem, in understanding the radical nature of what Zillow.com did this week, is that we are conflating unlike things. As an example, when I speak of a National MLS, I am not talking about local MLS systems. For one thing, the sine qua non purpose\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1269,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1269\/why-doesnt-zillowcom-act-like-truliacom-because-life-is-short-but-art-is-long\/","url_meta":{"origin":16252,"position":5},"title":"Why doesn’t Zillow.com act like Trulia.com? Because life is short but art is long . . .","author":"Greg Swann","date":"April 5, 2007","format":false,"excerpt":"Cathy had lunch today with a friend and ex-colleague. Cathy was talking about Zillow.com as a Web 2.0 phenomenon, and her friend was having trouble wrapping her mind around the idea of Web 2.0. I sent her mail when I heard about this, summarizing and quoting from the seminal Tim\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/16252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=16252"}],"version-history":[{"count":6,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/16252\/revisions"}],"predecessor-version":[{"id":16259,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/16252\/revisions\/16259"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=16252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=16252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=16252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}