When it comes to shopping for homes, is there such a thing as too much information?
Not according to Rich Barton, '89, who cofounded Zillow, an online real estate database company, with fellow data lover Lloyd Frink, '87.
"People's capacity for spending time thinking about and dreaming about homes is not infinite, but effectively it is," Barton says.
Truly, there are few topics more engaging to more people than the housing market. Real estate is a central subject for every major news outlet and, now, entire TV channels are dedicated to the purchase, sale and repair of homes. An essay in the Atlantic a few years ago even claimed that, for many women, an obsession with real estate is supplanting their fixation with love and marriage. And part and parcel of the obsession is the when, where and how of the hunt.
While buyers and seller may quibble about its accuracy, the Zestimate has become the starting point in many transactions.
Zillow owes its existence to a moment when Barton and Frink were both in the market for houses and needed information. The pair had worked together at Microsoft and Expedia, leaving the latter after Barry Diller's IAC/InterActiveCorp purchased it. They were sharing an office and dreaming about their next big business idea.
"We realized the business idea was right in front of us," Barton recalls.
Launched in 2006, Zillow in the beginning was "a place where you checked out your friend's house," according to one real estate agent. Today, the Seattle-based company is a major force in the housing market, one that has changed the role of agents and brokers.
Zillow now has data on virtually every home in the United States—more than 110 million properties—culled from public records and submitted by Zillow users. For each home, Zillow displays an exhaustive amount of information that includes standard real estate flyer data such as square footage, lot size and property features. Users also can look up the sales history, annual records of assessed value and property taxes paid, nearby schools and an assessment of the local market.
The company employs a small army of economists and analysts and crunches all of that information to come up with its signature datum: the Zestimate—Zillow estimate—of the home's current market value. While buyers and sellers may quibble about the accuracy of the Zestimate, some agents say it has become the starting point for discussions in many real estate transactions.
Zillow increased its reach earlier this year with the acquisition of major competitor Trulia, and the Zillow Group also includes StreetEasy, which focuses on the New York City real estate market; HotPads, which covers the rental property market; and half a dozen companies that provide services, data, technology, and connectivity for real estate agents and property managers. Zillow says the four consumer brands drew 140 million unique users who looked at more than half a billion homes during March of this year. Group revenue for the first quarter of 2015 came in at $162.5 million, up 35 percent from the previous year.
In the past few years Zillow's web traffic has dwarfed that of its competitors, according to analytics companies comScore Inc. and Experian Marketing Services. The site's main competitors include Move Inc., which counts Realtor.com and Move.com among its properties, and smaller services such as Homes.com and Redfin, which is also a brokerage.
While house hunters' desire for information may be great, Zillow's founders say they don't want to inundate people with data and make them sort through it.
"Great technologists and great designers figure out how to take huge amounts of data and boil it down to an awesome experience," says Barton, referring in this case to the Zillow experience on a mobile device. "That's where the real smarts come in."
Frink, a Seattle native, landed his first summer job at Microsoft when he was just 14. He had already been coding games at that point (and it helped that his mom and Bill Gates's mom were friends). Barton, who grew up in Connecticut, also professes to have had an early interest in computers and technology. The two met through a mutual friend while in college, though they weren't close. They claim their professional careers have essentially been the opposites of what their college degrees might suggest.
"Lloyd was an econ major at Stanford and is really the more technology-oriented guy," Barton says. "I was an engineer at Stanford and am more of the business and marketing guy."
After Stanford, Barton went to Boston and worked in consulting, while Frink returned to Seattle and Microsoft. Frink recruited Barton's best college friend, Nina (Roberts) Marton, '89, and Barton recalls getting a call from Marton during her first week on the job.
"She said, 'Richie, you've got to get out here to Microsoft. This is where things are happening; this is the center of the universe,'" he recalls. About a year later, he moved to Seattle for a gig as a product manager in Microsoft's operating systems group.
In 1994, Barton was put in charge of the company's Expedia project. It was originally envisioned as a series of travel guides on CD-ROM, in essence an Encarta (multimedia encyclopedia) for travel. Barton didn't think it would work and told his bosses so.
"I think this is a dumb project," Barton recalls saying to Gates and then-vice president Steve Ballmer, "but building an electronic travel agent would be really interesting."
The executives went for his idea. Frink was one of the first team members to join Barton at Expedia, which marked the beginning of the collaboration and close friendship. Eventually Expedia became the world's largest seller of travel.
Both Barton and Frink confess to a love of number crunching.
As they were envisioning Zillow, "We had this eureka," Barton says. "Why do you have to be a guy who knows how to use the web and a spreadsheet geek to be able to figure out what the value of a home is?"
According to Barton, Zillow's biggest leap came with the advent of the smartphone. About two-thirds of visits to Zillow now come from mobile devices; the desktop computer isn't as useful when you're out house-hunting and find an empty brochure box on the for-sale sign.
"All of a sudden you're a real estate god when you open Zillow up" on the smartphone, Barton says, laughing. "We'll get a lot smarter and more personal with our software, so that the products know you and know what you're looking for."
Many agents have embraced Zillow. Michael Dreyfus, the owner and managing broker of Dreyfus Sotheby's International Realty and writer of a real estate column for the Palo Alto Weekly, says Zillow has changed the role of the real estate agent.
"We've moved away from being door openers to being someone who helps to sort out all the information that is coming in, and Zillow is feeding that pump," Dreyfus says. "They've almost game-ified buying. It's a sport. People can see all this stuff, engage, and it's ramped up the timelines on everything because you can get information out so quickly to so many people."
Chris Speicher, a real estate agent and co-founder of the Speicher Group in Maryland, says his firm expects to close $125 million in home sales from 2013 to the end of 2015 from Zillow, which he says generates about 90 percent of his buyer-side business. Speicher is a little concerned that most of his eggs are in that one basket and is working to diversify.
"I haven't found anything that comes close to generating the leads that Zillow gets me right now, though," he says.
Speicher, who is also a member of Zillow's Agent Advisory Board, says some agents are concerned that Zillow might make them obsolete.
"What [those agents] don't realize—and I think this is them looking at it from a defensive standpoint—is that Zillow's entire revenue model is based on agent advertising and connecting homebuyers and home sellers with agents to close more deals," Speicher says. "It's a different business model, and one that I think people are still scared about a little."
The housing bubble burst early in Zillow's tenure, but some agents say the company has proved adept at tracking data despite uncertainty and rapid fluctuations in home prices.
"They did a good job keeping up with the changing markets and providing specific information relevant to those markets," Dreyfus says, noting that Zillow is getting better with time. "Their valuation algorithm improved every year, leading to more and more accurate market valuation in their Zestimates."
Barton and Frink are close friends outside the office. Their families enjoy activities together, and Barton and Frink have attended the Burning Man arts and music festival for the past several years. They ski together, and Frink is working on luring Barton onto the golf links for a good walk spoiled. They share tickets to the Seattle Seahawks and Seattle Sounders games.
As for the future, Frink says the next innovation simply will be improving what they already do.
"You'll get access to more information, and it will be more personalized and more understandable than it is right now," Frink says. "We can help bring the world of real estate to you in a much richer, more entertaining and more quantitative way. That's our big dream."
Greg Scheiderer is a Seattle-based freelance writer.
