Wonder how much your home is really worth? Zillow has the answer. Its website for homeowners and buyers provides a free estimated market value using its proprietary formula ("Zestimate") for more than 70 million homes across America. Users enter an address into a search field, and Zillow computes the Zestimate and overlays it on a satellite map. The company also provides listings and neighborhood information, photos, purchase and sale data, and rental price estimates on more than 100 million US homes, and offers services to find real estate agents and mortgage rates. Zillow was established in 2004 by Expedia founder Rich Barton and former Expedia exec Lloyd Frink. It filed to go public in 2011.
Observers have questioned the timing of Zillow's IPO, as the housing market has yet to recover from the downturn. Thanks to a temporary federal tax credit for homebuyers that was instituted in 2010, residential real estate experienced a slight uptick during the first half of the year; however, demand slowed in the latter part of 2010 and has remained lackluster since then. Zillow raised about $69 million through the offering (higher than the previously estimated $52 million figure), and is using the proceeds for general corporate purposes, as well as to fund possible acquisitions or investments that complement its business.
The company provides listings and neighborhood information, photos, purchase and sale data, and rental price estimates on more than 100 million US homes. It provides Zestimates on more than 70 million US homes. In 2010, Zillow's revenues jumped to $30.5 million from $17.5 million the year before, representing 74% growth. Part of the increase was due to its ability to attract more visitors to the site. Zillow had an average of more than 12 million monthly unique users in the last three months of 2010, an increase of more than 65% from the same period in 2009. Like other startups, it has yet to post a profit while it incurs costs to expand the business. However, its net loss narrowed significantly to $6.8 million from $12.9 million in 2009 as it increased sales.
Another reason for the company's positive earnings in 2010 was its increase in revenues outside of display advertising, which historically had earned Zillow nearly all of its money. Now, however, fees and subscription sales to lenders and agents are becoming a more important source of revenue. The company's Zillow Mortgage Marketplace connects borrowers with verified and rated lenders, while its Premier Agent program provides a directory of real estate agents. Together these products are classified as marketplace revenues, and accounted for more than 40% of sales in 2010 (up from about 20% in 2009 and 1% in 2008).
Zillow has been expanding its offerings through strategic partnerships, acquisitions, and product development. It formed a deal with Yahoo! in 2011 through which it places home listings and ads from local real estate brokers on Yahoo!. Later in 2011 it acquired the assets of Postlet, a real estate agent and rental property manager marketing service. Postlet created a platform that makes it easier for agents, property managers, and landlords to distribute listings on real estate and social media sites across the Web. The previous year the company launched Zillow Mobile, which publishes a real estate app for iPhone, iPad, Android, and BlackBerry products.
In 2010 Barton relinquished the CEO role to Spencer Rascoff, the company's former COO and a co-founder of the online travel service Hotwire.com. Barton had been the company's CEO since it was founded, and remains with Zillow as executive chairman. The CEO appointment was an early signal of the firm's upcoming IPO, as Rascoff is comfortable communicating with outside investors and the public.
The two co-founders together own most of the company; Barton controls about 47% of votes, while Frink controls some 38%. Before its IPO, the company raised about $87 million in funding from venture capital groups such as Benchmark Capital, Technology Crossover Ventures, Legg Mason, and PAR Capital Management.
The name "Zillow" combines the words pillow (where you lay your head at night) and zillions (the number of data points the firm desires to provide).