Guest: Spencer Rascoff - CFO of Zillow
Host: Robert Scoble - The Scoble Show

Robert Scoble - The ScobleShow
Who are you?

Spencer Rascoff - Zillow
I am Spencer Rascoff.

Robert Scoble - The ScobleShow
And what do you do here?

Spencer Rascoff - Zillow
I am CFO of Zillow.

Robert Scoble - The ScobleShow
Excellent.

Spencer Rascoff - Zillow
This is our home, small town America, come on in.

Robert Scoble - The ScobleShow
Hey, that's a nice view.

Spencer Rascoff - Zillow
It's nicer when it's not raining.

Robert Scoble - The ScobleShow
Well, it's always raining in Seattle.

Spencer Rascoff - Zillow
Oh, no it's not. That's a myth; you know that, you've lived here.

Robert Scoble - The ScobleShow
It's always raining here.

Spencer Rascoff - Zillow
Stop it; spoken like somebody who just moved to Northern California.

Robert Scoble - The ScobleShow
So, you are the -- we are here at Zillow, right?

Spencer Rascoff - Zillow
Yes, Yes. Thank you for coming.

Robert Scoble - The ScobleShow
And you are the CFO?

Spencer Rascoff - Zillow
I am.

Robert Scoble - The ScobleShow
I think you are the first CFO I've had on my show.

Spencer Rascoff - Zillow
Well, thank you for having me.

Robert Scoble - The ScobleShow
I usually interview geeks and stuff like that.

Spencer Rascoff - Zillow
Well, I could be a geek if you want. Thank you very much for having me.

Robert Scoble - The ScobleShow
So, what does a CFO do?

Spencer Rascoff - Zillow
Well, the CFO at Zillow is responsible for budgeting, figuring out how we spend our money and just general financial controls. We have raised a lot of money from several prominent Venture Capital firms and making sure that we manage that money well. Also at Zillow, CFO is pretty involved in strategy and business planning, and I also happen to be the Vice President of Marketing. So, I've got two pretty different jobs and so, in my marketing job...

Robert Scoble - The ScobleShow
So, you don't sleep basically.

Spencer Rascoff - Zillow
I also have a baby and I (Inaudible) little baby.

Robert Scoble - The ScobleShow
I know that one.

Spencer Rascoff - Zillow
So, sleeping is optional.

Robert Scoble - The ScobleShow
Tell me about Zillow, what is Zillow? Just for anybody who doesn't know. I know what it is, because I just bought and sold a house -- sold and bought a house and I used Zillow to do that. But tell me a little bit about what Zillow is?

Spencer Rascoff - Zillow
Zillow is an online real estate company that provides tools and information to give consumers an edge in real estate. Right now what we do is, we have a national database of homes and we provide free and instant valuations on almost every home in America.

Robert Scoble - The ScobleShow
Yeah.

Spencer Rascoff - Zillow
So, you can go to Zillow, zillow.com, type in an address and we'll give you a Zestimate, which is our valuation of what that home is worth, and you can find that out in seconds, you can see it on a satellite map, you can see it with all of the other homes in the area, and you can go in and interact with that valuation; if the home is yours, you can claim it as your own, you can edit the home facts, you can run your own valuation of that home and then choose to save it in your own account or publish it to the web if you'd like.

Robert Scoble - The ScobleShow
Okay, now the -- I just sold a house here in Bothell, Washington near where we are, and bought a house down in Half Moon Bay and the house I sold was, I think $30,000 more than what Zillow said it was. So that's one trick, if you are selling your own house, don't use this stuff as hard and fast rule, you really got to understand the local market, and the local market will change -- according to my real estate guy -- will change from house to house.

Spencer Rascoff - Zillow
Yeah.

Robert Scoble - The ScobleShow
And, so, doing a broad guesstimate on valuation won't actually get you to the actual price.

Spencer Rascoff - Zillow
Absolutely, Zillow is not meant to be the end all be all in terms of home valuations. It's meant to be a starting point. We're providing free tools and information. To consumers we are saying, "Hey, this is our best guess. We've never been in the home, we don't know -- we don't know what the wallpaper looks like or if the dog has torn up the floor. But here is a starting point and here are some tools to help you refine the valuation. Most folks then, if they are selling their home, choose to work with a professional real estate agent who can help them actually price their home. But a lot of people are not ready for that yet in that stage of the process; they just want to get a sense of what their house is worth, maybe play around with different tools and then later engage an agent to help them professionally figure out what to list their home for. And the same is true on the buying side; I mean Zillow is a great way to get a sense of what home values are like in a given neighborhood. You can save certain homes into your favorites if you've got multiple open houses, but most people still just choose to work with an agent on the buy side, to help them figure out exactly what -- to walk them through this very important purchase.

Robert Scoble - The ScobleShow
Yeah, how long is -- Zillow has been in business for how long?

Spencer Rascoff - Zillow
Zillow, well, we got together about a year and half ago to start the company, and we launched in February. So,that's about eight months ago. So, we've been out for eight months.

Robert Scoble - The ScobleShow
You guys have been on a rocket ride then huh?

Spencer Rascoff - Zillow
It's been a whirlwind; we launched in February and we were hoping with no advertising spent, to get about a million unique visitors a month by about now - seven or eight months after launch. And we've been getting, kind of three to three million uniques a month since launch. So, the traffic...

Robert Scoble - The ScobleShow
Three to five times faster growth than you planned for.

Spencer Rascoff - Zillow
Exactly, the traffic...

Robert Scoble - The ScobleShow
So your VC's are happy.

Spencer Rascoff - Zillow
The VC's are happy, we've (voice overlap)

Robert Scoble - The ScobleShow
Your Board meetings must be pretty fun?

Spencer Rascoff - Zillow
You know, they're more fun than a couple of Board meetings I had at my previous company, Hotwire, after September 11th, when being an online travel company was not the place to be. Yeah, these are more pleasant Board meetings. What we've done so far is, we've proven that we can really tap a nerve in terms of providing consumers with this information. I mean the way we think about the business is like a TV network, and we're very much like, you can watch HDTV or Fine Living for real estate information on television, or you can watch Zillow for real estate information online. And what we've done so far is, we've proven that we have at least a couple of hit shows. These are shows that people like to watch, they like to talk about, and tell other people about. And now we're in the process of launching what we hope will be more hit shows.

Robert Scoble - The ScobleShow
Excellent, where did the name Zillow come from?

Spencer Rascoff - Zillow
Zillow means zillions of pillows. It's meant to evoke that yin and yang of the home transaction. So, on the one hand we've got tons and tons of data, more data than anybody could ever really want when thinking about the valuation of home, and on the other hand, we are trying to evoke the squishy aspect of a home pillow - an icon evocative of your home.

Robert Scoble - The ScobleShow
Right. Now I have a lot of entrepreneurs around the world who watch this, people who are either -- have just started like Web 2.0 companies or who are thinking about starting a company or what not. What advice -- since you just went through that process in the last year and a half, what advice will you have to people who are thinking about going into a Venture Capitalist office and asking for money to start a company?

Spencer Rascoff - Zillow
Well, it helps if -- it helps a lot. I mean Zillow has been very lucky for at least two reasons in terms of our fund raising. One is that, the executives of Zillow had great success in other companies before, primarily at Expedia; the founding team of Zillow is really the founding team of Expedia, including our CEO, our President, our CFO who is at Expedia, our head of engineering, our head of program management and kind of CTO's are right off - are down the line. And so, having that prior success story as a calling card really helps a lot. But also, the other thing that helps a lot is, when you have prior relationships with a particular venture capitalist.

In our case, our two Lead VCs from our Series A round were Benchmark and Technology Crossover Ventures to firms with which our CEO Rich Barton had, had a lot of experience. He's actually a Venture Partner at Benchmark and Technology Crossover Ventures, was an early investor in Expedia and was on the Board of Expedia. So, we knew TCV, we knew Benchmark very well, and then PAR Capital, the investment firm that led our Series B round, we also knew very well from investments in Expedia, and just from being in the industry. So, if you're lucky enough to have relationships that predate your current venture, it's a lot easier when you go hand-in-hand looking for money. I guess the other advice I'd give is, to try to -- this is more general and not just about raising money, but just, one of things that's really worked so far at Zillow is assembling a great team; and we've been very, very lucky, so far. I've got about 125 employees, and the quality and caliber of people we've been able to attract has been phenomenal. And we've got about 40 or so job openings as well. So, if any developers are out there in particular, we are anxious to go to the site... (Voice Overlap)

Robert Scoble - The ScobleShow
What are you offering? It's raining today; it's not a good recruiting day.

Spencer Rascoff - Zillow
That's true. That's true.

Robert Scoble - The ScobleShow
See, I know my Microsoft. In Microsoft we'd always bring recruits during the summer, whenever it's like, and nice and sunny weather out here, particularly when the spouse is -- really going to decide to move. Oh, it's so nice here.

Spencer Rascoff - Zillow
Means you can be very productive (Voice Overlap). Yeah. Anyway, I moved up here from California and I love it in Seattle as well.

Robert Scoble - The ScobleShow
It's a fun place to live. We're playing in the rain but it's actually a fun place to live, it's a really beautiful area.

Spencer Rascoff - Zillow
Yes it is. Yes it is.

Robert Scoble - The ScobleShow
What are the challenges with building a good team, how do you do that? I am just reading a Harvard Business school book actually called, 'The no asshole rule', which is a provocative title, but he makes a case of that -- building a team is about keeping assholes out, you know, jerks, people who are...

Spencer Rascoff - Zillow
I wholeheartedly agree. We have a slightly more politically correct way of phrasing it, which is the...

Robert Scoble - The ScobleShow
It's a great work.

Spencer Rascoff - Zillow
...'share an office rule', which is basically, would you be willing to share an office with that person? And if you wouldn't then you shouldn't hire them. The other rule we talk about is, kind of the grocery store rule, which is, if you see a person that works in your company at the grocery store, kind of, on the other end of the store, would you go over there to say hi to them, or would you kind of pretend that you didn't see them? And if you are interviewing somebody and you think that you probably would pretend you didn't see them if you saw them on the street or the grocery store, you probably shouldn't hire them. And so, those rules I found -- I think are very helpful. I mean, what's really interesting - and we'll probably talk about this whole Web 2.0 thing, but what we've been blessed with at Zillow is, being able to attract really experienced subject matter experts in these different disciplines in a way that really wasn't possible five or seven years ago. I mean, I mentioned that the company I helped start before Zillow was Hotwire, which I've co-founded in 1999.

You know back then, somebody who'd run email or somebody who'd run online marketing, or somebody who's an expert in web design, and that in that they have like 6 months of experience with LYCOS. I mean, or they had like, you know, sent a couple of emails, like there was just no comparison because the internet was so new. Well, now, the people that we are able to hire in these different positions, they've been doing it for five, ten plus years, and so, just the whole crop of internet employees, internet savvyness, is just so much more well-developed than it was five or seven years ago; and that, combined with the fact that we have an exciting story, we're well-funded and we're in a really interesting category and a fun category of people like real estate -- that's made it pretty easy for us to attract good people.

Robert Scoble - The ScobleShow
Yeah, how do you get your traffic? What was the best thing you did to get traffic? A lot of people say it was buying Google Ads or...

Spencer Rascoff - Zillow
No, No.

Robert Scoble - The ScobleShow
...or getting on TechCrunch.

Spencer Rascoff - Zillow
Well, in our case, what we decided was -- I'll back up for a second. So, we decided long ago that we will be an online media company that would make money through advertising. That was the business plan and it was a very different business plan from what we were used to at Expedia or Amazon or Hotwire or other companies that we came from because those companies are in the transaction; they make money when people buy or transact, they buy or sell. And that made sense for those business models at that time of their creation because there was no advertising economy -- online advertising economy to support an advertising model. Well, things have changed; now, $16 billion is spent in online advertising every year, growing 20%-30% a year. Google and CNET and Web MT and iVillage and Yahoo! and all these companies have proven that if you can get traffic, you can make money in advertising. It works a lot like the economics of TV; if you can get viewers, you can money with commercials - and that was impossible five years ago. So we said, there needs to be a website in the online real estate category that is advertising supported because (a) there's the potential to have a lot of viewers, because nobody is really serving the consumer in the online real estate space and (b) there's no brand that fills that void. I mean, if I said to you, name 3 online travel companies; it would be no problem - you'd say, Expedia, Orbis, Velocity, Priceline, Hotwire, CheapTickets, Trip.com, whatever - piece of cake. Name 3 online trading firms - okay, Schwab, Ameritrade, Daytech. No problem. Photo Sharing, you know, Shutterfly, Butterfly, Shutterfly SnapBits (ph) etcetera.

Robert Scoble - The ScobleShow
Zooomr, Flickr.

Spencer Rascoff - Zillow
Flickr, Yeah. I mean no problem. Well now name three online real estate companies, you're like -- I mean its like, there's REALTOR.com, that has been around for a long time, that a lot of people know, and then there are the brokerage sites. There's Coldwell Banker, RE/MAX, Century 21 etcetera. But there's no brand that owns the space in terms of being large and being the caliber(ph). So, back to your question of how do we attract traffic? What we decided is that if you're going to be an online media company that makes money by selling ads, it's very, very hard to sustainably buy that traffic.

In other words, who are we to think that we would be so smart that we could go to Google and buy AdWords, and bid against 20 other online real estate companies, and then get traffic to Zillow and then sell off that traffic to those same guys that we were bidding against on Google? I mean that arbitrage can work in spots, and it can work for a transactional company, like Expedia for example. But it's very, very difficult to make it work sustainably for a media company. And so - back to your question, we decided to invest in the product. So, what we said was, we said, "Let's take whatever we would ordinarily spend in marketing - online, offline whatever, the $20 - $200 million a year that most online brands spend online and let's spend that on the product. Let's hire more employees -- it's pretty uncommon that a startup would launch with almost 100 employees -- almost all of them are developers. Let's have cooler maps; let's ship more products more quickly. Basically, in the analogy of a TV network, let's spend more money on programming -- on the programming department, on hiring -- on getting content - getting shows than on buying viewers. So, the biggest thing we did was, invest in the product. Other things that we've done is, invest in PR. We have a terrific PR team, including three folks here.

Robert Scoble - The ScobleShow
Don't you just have a blog?

Spencer Rascoff - Zillow
It's -- you know we've got a great PR team and...

Robert Scoble - The ScobleShow
Great PR teams have blogs, right?

Spencer Rascoff - Zillow
And we've great PR teams, and we have spent a lot of time on blogs. I mean, it's so funny, you're right in the middle of this, so you know better than I do. I mean, you've actually wrote the book on it, which is here in my pile somewhere.

Robert Scoble - The ScobleShow
You actually have it?

Spencer Rascoff - Zillow
All right, I forget -- your book.
So, you wrote the book on Blogs. I mean, when we started interviewing about a year ago, PR firms, we spoke to probably five in Seattle, and probably five in San Francisco and we ran a whole lot of pre-processes. And almost as like, a throw away question at the end of these two hour sessions, we were like, 'So, tell us about blogs; what do you think about blogs?' And nine out of the ten PR firms a year ago totally failed that question. They either didn't know what a blog was, or they turned to the youngest guy or gal in the room, and like, "You're on MySpace, you tell them what blogs are?" And we are like, okay, you guys have -- you don't get it all. And admittedly, we didn't really get it that much yet either. But we knew there was something going on here; this whole citizen journalism, the concept, you know, Web 2.0, publishing to the web, this was going to be something important, and so we should probably pay attention. Fortunately, we ended up with a PR firm who actually understood it, and we educated ourselves. And I started a blog and the company started a blog, and we started reading blogs, and we started investing the time that it takes to really understand what they're all about. And yes, it's certainly helped us gain visibility, but it's also helped us just probably understand the mindset of bloggers more. I mean, they're extremely influential - in some cases more influential than individual print journalists. And if you're trying to develop a new brand, it just makes no sense not to try to understand that constituency.

Robert Scoble - The ScobleShow
Yeah, that helps you on the Google ranking, which brings in more and more people?

Spencer Rascoff - Zillow
It does; yes, it does. I mean, the other thing -- which reminds me of some other things that we've done in terms of attracting traffic. We invested pretty heavily in understanding SEO and optimizing our site for free search results. But we're pretty careful and we made some really conscious decisions where we decided not to do some gimmicks that we knew would improve our SEO results because they were bad for the consumer. I mean, you see some sites with footers that are mile long listing every city in the universe, to try to improve their natural search results for a certain city -- city searches, you see lots of, sort of gimmicks and...

Robert Scoble - The ScobleShow
And also the gimmicks generally get caught by Google eventually...

Spencer Rascoff - Zillow
Absolutely.

Robert Scoble - The ScobleShow
...and all of a sudden you disappear from the search.

Spencer Rascoff - Zillow
They are bad from a UI standpoint and bad for consumers, but also they sometimes backfire. And they can backfire unexpectedly, and suddenly, and without warning so...

Robert Scoble - The ScobleShow
Google just this week turned off a major (Inaudible) kind of company.
Well, they turned off BMW a few months ago for a while.

Spencer Rascoff - Zillow
Yeah, and I think KinderCare I think sued them, right? Down there's a pending law -- or was it...

Robert Scoble - The ScobleShow
Yeah, and lost, right?

Spencer Rascoff - Zillow
I don't know, I'm not sure if it's...

Robert Scoble - The ScobleShow
There was one law suit that somebody lost but...

Spencer Rascoff - Zillow
I mean, but from our standpoint, the more important thing is just the usability. We decided that if you build a good product, the rest will take care of itself; and that's the philosophy that we've always believed in. The other thing we've invested pretty heavily in is, email marketing. And so, we had a great guy who ran email marketing at Expedia and at Hotwire and had spent a lot of time at eBay., and we've got a couple 100,000 email subscribers because, if you're checking the value of your home, you want to be updated on the value of your home, or if you're a buyer, you're actively in the market. If you are an agent, you want to receive frequent updates in trying to make our email marketing campaign kind of an extension of the site -- it's a pretty big priority for us.

Robert Scoble - The ScobleShow
Yeah, how does somebody convince you to fund something? Because as a CFO I bet -- at least with my CFO, if I need a new machine or a new camera, I have to go and convince the CFO, "Hey, we should invest in this $4000 camera, you know?" So, what kind of technique works with you?

Spencer Rascoff - Zillow
You know, I really believe this medium model focused on programming thing; and so, you frequently hear people say around here, "Hey, this is our marketing budget, this new data center that's going to reduce latency on the East Coast" - I mean, that is our marketing budget because that's going to give people a better site experience and therefore they're going to tell more people and that will improve our audience going forward. And I believe that, and we've decided strategically to invest in the site experience and in the product. So, whether it's being the first real estate site to integrate with Microsoft Virtual Earth for example, to have this amazing 45 degree photography of homes in almost half the country, from where you can rotate 360 degree around the home, we raced to get that done, which required a lot of resources - financial and technical, to be the first real estate site to get that out the door, about a month after we launched our web site, 8 months ago. That was an example where we decided that, that was just a show we had to have on our network. That was the product we needed to have. And so, we invested pretty heavily in it.

The other decisions have been programming related, so, make sure that we've got great content and great user experience, and then the rest will take care of itself. And customer research is another really good example. We've invested really significantly in understanding our consumers. We've done extensive focus groups around the country, we've have done brand awareness studies, we usability test everything before we ship it. I mean, for a startup eight months old, to be spending the amount of money and time that we spent on understanding our consumers is really uncommon. But I'd much rather spend hundreds of thousands of dollars on that, than not do that, ship a crappy product and spend a couple hundred thousand dollars buying keywords and you buy traffic to the site. And they have a bad experience; they go away, they never tell anybody, they never come back -- and that's hollow money, that's wasted than rather invested in the product.

Robert Scoble - The ScobleShow
Awesome! What else do we need to know about Zillow? What is the most surprising thing you've seen happen since you started the company, that you wouldn't have expected when you started the company?

Spencer Rascoff - Zillow
Well, we didn't expect it to have this much interest, this much excitement this early. We thought we are building something big, but turns out that, it's even bigger than we expected. So, that's a pleasant surprise. I think another big surprise for me has been this API; so, we have an API that in late October here is shipping in an open API forum, where anybody can come in and put Zestimates and Zindexes, which are average Zestimates on their site. As long as they have branding for us, and they have links back to us, they can do whatever they want with it. And so, we have had this out in sort of a closed alpha stage for a couple months now, and you've got big sites like Yahoo! Real Estate for example using it where, we're now the home valuation -- we power Yahoo! Real Estate's, home valuation product. And so, if you got to Yahoo! Real Estate -- or actually, if you just go to Yahoo.com and you type in 'Home Valuations', or you type in any of a couple hundred keywords at Yahoo.com, you'll get a co-branded Zillow Yahoo! Real Estate valuation product with branding for Zillow, and then traffic back to us.

So, you've got big guys like Yahoo! Real Estate using us. Brokerage sites like ZipRealty, Redfin, Prudential (Northern California), Real Living, these are all very large brokerage sites with lots of traffic that has Zestimates on their site, either in a 'Home Valuation' section, where you can find out what your house is worth, or side by side with their listings where it says, this home is for sale at this price and the Zestimate for this house is that price. And then we've seen a lot of developers doing lots of interesting stuff; so there's a guy for example, with a website called auctioncloud.com, where he's built a Mashup between eBay real estate listings and Zillow Zestimates. So, you see what homes are for sale on eBay and then you see the Zestimates right next to it.

Robert Scoble - The ScobleShow
Now you are blowing me away because that most CFO's, I don't expect to know about Mashups and APIs and things like that.

Spencer Rascoff - Zillow
This is the Web in 2006 -- I mean - and this is what Zillow is all about. I mean, trying to -- we're embracing this Web 2.0 thing. It's not just a fad; it's not just a buzz word. For us -- for me, when I think about corporate strategy for the company, it's extremely scary because what we're doing, if you think about it is, we're giving the keys to the kingdom to anybody. There are sites out there that are arguably competitors of ours that we're giving this functionality to which -- we just spent a year and millions of dollars on hundred -- on more than 100 employees building this functionality, and we're saying, "Here, have it for free." And, a lot of them are advertising based too, where they're trying to get traffic -- they are combining with other functionality and selling ads against it.

Robert Scoble - The ScobleShow
Yeah.

Spencer Rascoff - Zillow
And it's like, well, wait a minute, isn't that competitive of what Zillow is doing? And so, this is a strange new world for us.

Robert Scoble - The ScobleShow
It's a world of sharing, isn't it?

Spencer Rascoff - Zillow
Yeah, it's a world where YouTube helps make MySpace and MySpace helps make YouTube, and yet they are competitors in a lot of ways and yet, you know, Google buys one, but the advertising network runs on other, and then, I mean it's like -- this is what the web is all about now. And so, this API thing is just really interesting for us and -- we've seen a lot of ideas that are on our product's pipeline that we hope to ship over the coming months and years, are going to get built by other -- like, essentially competitors, by other startups, using our functionality. That's a little scary, and really exciting and interesting. But it takes a lot of confidence in the building of a brand, and confidence in that strategy to give away this functionality, and that's what we're doing.

Robert Scoble - The ScobleShow
Any advice for real estate professionals out there, since you're understanding their world from a different angle than they probably understand it.

Spencer Rascoff - Zillow
Sure.

Robert Scoble - The ScobleShow
Would you have any advice, like start a Blog and start putting some of these Mashups on the Blog and start -- or how would you market yourself, how would you get involved in this role?

Spencer Rascoff - Zillow
Well, about 12% of our visitors' say they are real estate professionals; and so, interestingly, we have a couple of hundred thousand real estate professionals, and there only are a couple of million real estate professionals out there. So, we are attracting a large portion of people that are actually real estate professionals any given month. The advice that I would give to real estate professionals is to be where your consumers are; and it's kind of obvious, but your consumers are on the Web; your consumers are on Zillow and on sites like Zillow, and you are starting to see this migration of the time and attention and advertising spend moving off-line, primarily out of print and on to the internet. But it's really interesting how much slower that migration is occurring when compared with the migration of time that consumers spent on the internet. So for example, in terms of online advertising spend, about -- see if I can get these numbers right -- about 40% -- according to Forrester, about 40% of consumers' time consuming media, is spent consuming it on the internet; and yet, only about 5% of advertising money is spent on the internet. And that compares with print for example, where about 40% of advertising dollars is spent in newsprint, and only about 10 or 15% of people's time is spent consuming media on newsprint. And so, there's a big disconnect; so, my advice to Realtors and other Real Estate professionals would be, make sure that you're spending your time in terms of where you actually get information from, and make sure you're spending your money in terms of how you market yourself where your consumers are, and increasingly -- in fact, it already is the case, that's on the internet.

Robert Scoble - The ScobleShow
Yeah. That's where we found our new house.

Spencer Rascoff - Zillow
I mean that's where our consumers are; especially in certain cities like, on the West Coast or the East Coast or other major cities, where internet penetration is particularly high, you know, that's where you need to be.

Robert Scoble - The ScobleShow
I think it is going up even -- and we just took a trip to -- I am sorry, Montana and there was Wi-Fi signs on several restaurants there.

Spencer Rascoff - Zillow
Wow!

Robert Scoble - The ScobleShow
You know, I think it's -- even in places that you wouldn't expect technology to be used, I think that's going to change over the next couple of years.
Have you found any difference in the usage patterns of the Internet users, for instance -- have you discovered anything about your RSS feeds?

Spencer Rascoff - Zillow
Yeah, I mean in terms of -- well, we don't have RSS feeds to the site yet; we have RSS feeds for our blog; zillowblog.com gets in a lot of traffic, in fact it's one of the most widely read real estate blogs on the internet; and that's been a great way for us to communicate with the real estate blogosphere and just with our customers - and we have a lot of RSS subscribers to our blog. Usage patterns, in terms of how people are using the site; yeah, it is incredibly Long Tail in terms of which houses people are checking. I mean, Bill Gates' house gets a lot of searches and the Playboy Mansion gets a lot of searches, and other kind of notorious houses get a lot of traffic, but it drops off unbelievably quickly in terms of what houses people search. People tend to -- about half of our visitors are actively in the market, buying or selling a home - and about half of them are not. And so, among those people that are actively in the market -- and by the way, I think that's kind of a misconception to some extent. I think, people who probably haven't spent very much time on zillow.com, probably think that it's more heavily skewed towards a voyeuristic use, where people are sort of Zillowing their boss, or seeing what some ex-girlfriend's house is worth...

Robert Scoble - The ScobleShow
Yeah! I got to try that.

Spencer Rascoff - Zillow
But half of our visitors are actually using us as a decision support tool in the transaction. Those people, as you can imagine, are checking 10, 20, 30 houses at a time, because if they are selling, they want to know exactly what homes are worth? And if they are buying, they want to be able to see all the homes that they are looking at and save them into their favorites. The other interesting functionality that we shipped a couple of months ago is this thing called ZeeMobile, where you can send an email to us at zee@labs.zillo.com.

Robert Scoble - The ScobleShow
That's very easy. You are already a member (Voice Overlap).

Spencer Rascoff - Zillow
Exactly. It's not (Voice Overlap) easy but you can save it into your blog there...

Robert Scoble - The ScobleShow
Some innovation on URL's there.

Spencer Rascoff - Zillow
...you can save it into your Blackberry as I have. So, if you save it as ZeeMobile, which is what I've done, and then if you email an address to us.

Robert Scoble - The ScobleShow
What comes back?

Spencer Rascoff - Zillow
A Zestimate - bed, bath, square footage and transaction history. So you can imagine for example, if you're a buyer going to multiple open houses on a Sunday and you want to know what those houses are worth, or if you're walking the dog around the neighborhood, or pushing your baby stroller around the neighborhood as I frequently do -- I'm walking around my neighborhood with my Blackberry, kind of saying, "That's a really nice house, I wonder what they paid for it?" Or "That's a nice house and I wonder what its worth?" And so here we've a...

Robert Scoble - The ScobleShow
When we were looking for houses, they would have the 'For Sale' sign up front, and usually there's some brochures there that you can...

Robert Scoble - The ScobleShow
Who are you?

Spencer Rascoff - Zillow
I am Spencer Rascoff.

Robert Scoble - The ScobleShow
And what do you do here?

Spencer Rascoff - Zillow
I am CFO of Zillow.

Robert Scoble - The ScobleShow
Excellent.

Spencer Rascoff - Zillow
This is our home, small town America, come on in.

Robert Scoble - The ScobleShow
Hey, that's a nice view.

Spencer Rascoff - Zillow
It's nicer when it's not raining.

Robert Scoble - The ScobleShow
Well, it's always raining in Seattle.

Spencer Rascoff - Zillow
Oh, no it's not. That's a myth; you know that, you've lived here.

Robert Scoble - The ScobleShow
It's always raining here.

Spencer Rascoff - Zillow
Stop it; spoken like somebody who just moved to Northern California.

Robert Scoble - The ScobleShow
So, you are the -- we are here at Zillow, right?

Spencer Rascoff - Zillow
Yes, Yes. Thank you for coming.

Robert Scoble - The ScobleShow
And you are the CFO?

Spencer Rascoff - Zillow
I am.

Robert Scoble - The ScobleShow
I think you are the first CFO I've had on my show.

Spencer Rascoff - Zillow
Well, thank you for having me.

Robert Scoble - The ScobleShow
I usually interview geeks and stuff like that.

Spencer Rascoff - Zillow
Well, I could be a geek if you want. Thank you very much for having me.

Robert Scoble - The ScobleShow
So, what does a CFO do?

Spencer Rascoff - Zillow
Well, the CFO at Zillow is responsible for budgeting, figuring out how we spend our money and just general financial controls. We have raised a lot of money from several prominent Venture Capital firms and making sure that we manage that money well. Also at Zillow, CFO is pretty involved in strategy and business planning, and I also happen to be the Vice President of Marketing. So, I've got two pretty different jobs and so, in my marketing job...

Robert Scoble - The ScobleShow
So, you don't sleep basically.

Spencer Rascoff - Zillow
I also have a baby and I (Inaudible) little baby.

Robert Scoble - The ScobleShow
I know that one.

Spencer Rascoff - Zillow
So, sleeping is optional.

Robert Scoble - The ScobleShow
Tell me about Zillow, what is Zillow? Just for anybody who doesn't know. I know what it is, because I just bought and sold a house -- sold and bought a house and I used Zillow to do that. But tell me a little bit about what Zillow is?

Spencer Rascoff - Zillow
Zillow is an online real estate company that provides tools and information to give consumers an edge in real estate. Right now what we do is, we have a national database of homes and we provide free and instant valuations on almost every home in America.

Robert Scoble - The ScobleShow
Yeah.

Spencer Rascoff - Zillow
So, you can go to Zillow, zillow.com, type in an address and we'll give you a Zestimate, which is our valuation of what that home is worth, and you can find that out in seconds, you can see it on a satellite map, you can see it with all of the other homes in the area, and you can go in and interact with that valuation; if the home is yours, you can claim it as your own, you can edit the home facts, you can run your own valuation of that home and then choose to save it in your own account or publish it to the web if you'd like.

Robert Scoble - The ScobleShow
Okay, now the -- I just sold a house here in Bothell, Washington near where we are, and bought a house down in Half Moon Bay and the house I sold was, I think $30,000 more than what Zillow said it was. So that's one trick, if you are selling your own house, don't use this stuff as hard and fast rule, you really got to understand the local market, and the local market will change -- according to my real estate guy -- will change from house to house.

Spencer Rascoff - Zillow
Yeah.

Robert Scoble - The ScobleShow
And, so, doing a broad guesstimate on valuation won't actually get you to the actual price.

Spencer Rascoff - Zillow
Absolutely, Zillow is not meant to be the end all be all in terms of home valuations. It's meant to be a starting point. We're providing free tools and information. To consumers we are saying, "Hey, this is our best guess. We've never been in the home, we don't know -- we don't know what the wallpaper looks like or if the dog has torn up the floor. But here is a starting point and here are some tools to help you refine the valuation. Most folks then, if they are selling their home, choose to work with a professional real estate agent who can help them actually price their home. But a lot of people are not ready for that yet in that stage of the process; they just want to get a sense of what their house is worth, maybe play around with different tools and then later engage an agent to help them professionally figure out what to list their home for. And the same is true on the buying side; I mean Zillow is a great way to get a sense of what home values are like in a given neighborhood. You can save certain homes into your favorites if you've got multiple open houses, but most people still just choose to work with an agent on the buy side, to help them figure out exactly what -- to walk them through this very important purchase.

Robert Scoble - The ScobleShow
Yeah, how long is -- Zillow has been in business for how long?

Spencer Rascoff - Zillow
Zillow, well, we got together about a year and half ago to start the company, and we launched in February. So,that's about eight months ago. So, we've been out for eight months.

Robert Scoble - The ScobleShow
You guys have been on a rocket ride then huh?

Spencer Rascoff - Zillow
It's been a whirlwind; we launched in February and we were hoping with no advertising spent, to get about a million unique visitors a month by about now - seven or eight months after launch. And we've been getting, kind of three to three million uniques a month since launch. So, the traffic...

Robert Scoble - The ScobleShow
Three to five times faster growth than you planned for.

Spencer Rascoff - Zillow
Exactly, the traffic...

Robert Scoble - The ScobleShow
So your VC's are happy.

Spencer Rascoff - Zillow
The VC's are happy, we've (voice overlap)

Robert Scoble - The ScobleShow
Your Board meetings must be pretty fun?

Spencer Rascoff - Zillow
You know, they're more fun than a couple of Board meetings I had at my previous company, Hotwire, after September 11th, when being an online travel company was not the place to be. Yeah, these are more pleasant Board meetings. What we've done so far is, we've proven that we can really tap a nerve in terms of providing consumers with this information. I mean the way we think about the business is like a TV network, and we're very much like, you can watch HDTV or Fine Living for real estate information on television, or you can watch Zillow for real estate information online. And what we've done so far is, we've proven that we have at least a couple of hit shows. These are shows that people like to watch, they like to talk about, and tell other people about. And now we're in the process of launching what we hope will be more hit shows.

Robert Scoble - The ScobleShow
Excellent, where did the name Zillow come from?

Spencer Rascoff - Zillow
Zillow means zillions of pillows. It's meant to evoke that yin and yang of the home transaction. So, on the one hand we've got tons and tons of data, more data than anybody could ever really want when thinking about the valuation of home, and on the other hand, we are trying to evoke the squishy aspect of a home pillow - an icon evocative of your home.

Robert Scoble - The ScobleShow
Right. Now I have a lot of entrepreneurs around the world who watch this, people who are either -- have just started like Web 2.0 companies or who are thinking about starting a company or what not. What advice -- since you just went through that process in the last year and a half, what advice will you have to people who are thinking about going into a Venture Capitalist office and asking for money to start a company?

Spencer Rascoff - Zillow
Well, it helps if -- it helps a lot. I mean Zillow has been very lucky for at least two reasons in terms of our fund raising. One is that, the executives of Zillow had great success in other companies before, primarily at Expedia; the founding team of Zillow is really the founding team of Expedia, including our CEO, our President, our CFO who is at Expedia, our head of engineering, our head of program management and kind of CTO's are right off - are down the line. And so, having that prior success story as a calling card really helps a lot. But also, the other thing that helps a lot is, when you have prior relationships with a particular venture capitalist. In our case, our two Lead VCs from our Series A round were Benchmark and Technology Crossover Ventures to firms with which our CEO Rich Barton had, had a lot of experience. He's actually a Venture Partner at Benchmark and Technology Crossover Ventures, was an early investor in Expedia and was on the Board of Expedia.

So, we knew TCV, we knew Benchmark very well, and then PAR Capital, the investment firm that led our Series B round, we also knew very well from investments in Expedia, and just from being in the industry. So, if you're lucky enough to have relationships that predate your current venture, it's a lot easier when you go hand-in-hand looking for money. I guess the other advice I'd give is, to try to -- this is more general and not just about raising money, but just, one of things that's really worked so far at Zillow is assembling a great team; and we've been very, very lucky, so far. I've got about 125 employees, and the quality and caliber of people we've been able to attract has been phenomenal. And we've got about 40 or so job openings as well. So, if any developers are out there in particular, we are anxious to go to the site... (Voice Overlap)

Robert Scoble - The ScobleShow
What are you offering? It's raining today; it's not a good recruiting day.

Spencer Rascoff - Zillow
That's true. That's true.

Robert Scoble - The ScobleShow
See, I know my Microsoft. In Microsoft we'd always bring recruits during the summer, whenever it's like, and nice and sunny weather out here, particularly when the spouse is -- really going to decide to move. Oh, it's so nice here.

Spencer Rascoff - Zillow
Means you can be very productive (Voice Overlap). Yeah. Anyway, I moved up here from California and I love it in Seattle as well.

Robert Scoble - The ScobleShow
It's a fun place to live. We're playing in the rain but it's actually a fun place to live, it's a really beautiful area.

Spencer Rascoff - Zillow
Yes it is. Yes it is.

Robert Scoble - The ScobleShow
What are the challenges with building a good team, how do you do that? I am just reading a Harvard Business school book actually called, 'The no asshole rule', which is a provocative title, but he makes a case of that -- building a team is about keeping assholes out, you know, jerks, people who are...

Spencer Rascoff - Zillow
I wholeheartedly agree. We have a slightly more politically correct way of phrasing it, which is the...

Robert Scoble - The ScobleShow
It's a great work.

Spencer Rascoff - Zillow
...'share an office rule', which is basically, would you be willing to share an office with that person? And if you wouldn't then you shouldn't hire them. The other rule we talk about is, kind of the grocery store rule, which is, if you see a person that works in your company at the grocery store, kind of, on the other end of the store, would you go over there to say hi to them, or would you kind of pretend that you didn't see them? And if you are interviewing somebody and you think that you probably would pretend you didn't see them if you saw them on the street or the grocery store, you probably shouldn't hire them. And so, those rules I found -- I think are very helpful. I mean, what's really interesting - and we'll probably talk about this whole Web 2.0 thing, but what we've been blessed with at Zillow is, being able to attract really experienced subject matter experts in these different disciplines in a way that really wasn't possible five or seven years ago. I mean, I mentioned that the company I helped start before Zillow was Hotwire, which I've co-founded in 1999. You know back then, somebody who'd run email or somebody who'd run online marketing, or somebody who's an expert in web design, and that in that they have like 6 months of experience with LYCOS. I mean, or they had like, you know, sent a couple of emails, like there was just no comparison because the internet was so new. Well, now, the people that we are able to hire in these different positions, they've been doing it for five, ten plus years, and so, just the whole crop of internet employees, internet savvyness, is just so much more well-developed than it was five or seven years ago; and that, combined with the fact that we have an exciting story, we're well-funded and we're in a really interesting category and a fun category of people like real estate -- that's made it pretty easy for us to attract good people.

Robert Scoble - The ScobleShow
Yeah, how do you get your traffic? What was the best thing you did to get traffic? A lot of people say it was buying Google Ads or...

Spencer Rascoff - Zillow
No, No.

Robert Scoble - The ScobleShow
...or getting on TechCrunch.

Spencer Rascoff - Zillow
Well, in our case, what we decided was -- I'll back up for a second. So, we decided long ago that we will be an online media company that would make money through advertising. That was the business plan and it was a very different business plan from what we were used to at Expedia or Amazon or Hotwire or other companies that we came from because those companies are in the transaction; they make money when people buy or transact, they buy or sell. And that made sense for those business models at that time of their creation because there was no advertising economy -- online advertising economy to support an advertising model. Well, things have changed; now, $16 billion is spent in online advertising every year, growing 20%-30% a year. Google and CNET and Web MT and iVillage and Yahoo! and all these companies have proven that if you can get traffic, you can make money in advertising. It works a lot like the economics of TV; if you can get viewers, you can money with commercials - and that was impossible five years ago. So we said, there needs to be a website in the online real estate category that is advertising supported because (a) there's the potential to have a lot of viewers, because nobody is really serving the consumer in the online real estate space and (b) there's no brand that fills that void. I mean, if I said to you, name 3 online travel companies; it would be no problem - you'd say, Expedia, Orbis, Velocity, Priceline, Hotwire, CheapTickets, Trip.com, whatever - piece of cake. Name 3 online trading firms - okay, Schwab, Ameritrade, Daytech. No problem. Photo Sharing, you know, Shutterfly, Butterfly, Shutterfly SnapBits (ph) etcetera.

Robert Scoble - The ScobleShow
Zooomr, Flickr.

Spencer Rascoff - Zillow
Flickr, Yeah. I mean no problem. Well now name three online real estate companies, you're like -- I mean its like, there's REALTOR.com, that has been around for a long time, that a lot of people know, and then there are the brokerage sites. There's Coldwell Banker, RE/MAX, Century 21 etcetera. But there's no brand that owns the space in terms of being large and being the caliber(ph). So, back to your question of how do we attract traffic? What we decided is that if you're going to be an online media company that makes money by selling ads, it's very, very hard to sustainably buy that traffic. In other words, who are we to think that we would be so smart that we could go to Google and buy AdWords, and bid against 20 other online real estate companies, and then get traffic to Zillow and then sell off that traffic to those same guys that we were bidding against on Google? I mean that arbitrage can work in spots, and it can work for a transactional company, like Expedia for example. But it's very, very difficult to make it work sustainably for a media company. And so - back to your question, we decided to invest in the product.

So, what we said was, we said, "Let's take whatever we would ordinarily spend in marketing - online, offline whatever, the $20 - $200 million a year that most online brands spend online and let's spend that on the product. Let's hire more employees -- it's pretty uncommon that a startup would launch with almost 100 employees -- almost all of them are developers. Let's have cooler maps; let's ship more products more quickly. Basically, in the analogy of a TV network, let's spend more money on programming -- on the programming department, on hiring -- on getting content - getting shows than on buying viewers. So, the biggest thing we did was, invest in the product. Other things that we've done is, invest in PR. We have a terrific PR team, including three folks here.

Robert Scoble - The ScobleShow
Don't you just have a blog?

Spencer Rascoff - Zillow
It's -- you know we've got a great PR team and...

Robert Scoble - The ScobleShow
Great PR teams have blogs, right?

Spencer Rascoff - Zillow
And we've great PR teams, and we have spent a lot of time on blogs. I mean, it's so funny, you're right in the middle of this, so you know better than I do. I mean, you've actually wrote the book on it, which is here in my pile somewhere.

Robert Scoble - The ScobleShow
You actually have it?

Spencer Rascoff - Zillow
All right, I forget -- your book.
So, you wrote the book on Blogs. I mean, when we started interviewing about a year ago, PR firms, we spoke to probably five in Seattle, and probably five in San Francisco and we ran a whole lot of pre-processes. And almost as like, a throw away question at the end of these two hour sessions, we were like, 'So, tell us about blogs; what do you think about blogs?' And nine out of the ten PR firms a year ago totally failed that question. They either didn't know what a blog was, or they turned to the youngest guy or gal in the room, and like, "You're on MySpace, you tell them what blogs are?" And we are like, okay, you guys have -- you don't get it all. And admittedly, we didn't really get it that much yet either.

But we knew there was something going on here; this whole citizen journalism, the concept, you know, Web 2.0, publishing to the web, this was going to be something important, and so we should probably pay attention. Fortunately, we ended up with a PR firm who actually understood it, and we educated ourselves. And I started a blog and the company started a blog, and we started reading blogs, and we started investing the time that it takes to really understand what they're all about. And yes, it's certainly helped us gain visibility, but it's also helped us just probably understand the mindset of bloggers more. I mean, they're extremely influential - in some cases more influential than individual print journalists. And if you're trying to develop a new brand, it just makes no sense not to try to understand that constituency.

Robert Scoble - The ScobleShow
Yeah, that helps you on the Google ranking, which brings in more and more people?

Spencer Rascoff - Zillow
It does; yes, it does. I mean, the other thing -- which reminds me of some other things that we've done in terms of attracting traffic. We invested pretty heavily in understanding SEO and optimizing our site for free search results. But we're pretty careful and we made some really conscious decisions where we decided not to do some gimmicks that we knew would improve our SEO results because they were bad for the consumer. I mean, you see some sites with footers that are mile long listing every city in the universe, to try to improve their natural search results for a certain city -- city searches, you see lots of, sort of gimmicks and...

Robert Scoble - The ScobleShow
And also the gimmicks generally get caught by Google eventually...

Spencer Rascoff - Zillow
Absolutely.

Robert Scoble - The ScobleShow
...and all of a sudden you disappear from the search.

Spencer Rascoff - Zillow
They are bad from a UI standpoint and bad for consumers, but also they sometimes backfire. And they can backfire unexpectedly, and suddenly, and without warning so...

Robert Scoble - The ScobleShow
Google just this week turned off a major (Inaudible) kind of company.
Well, they turned off BMW a few months ago for a while.

Spencer Rascoff - Zillow
Yeah, and I think KinderCare I think sued them, right? Down there's a pending law -- or was it...

Robert Scoble - The ScobleShow
Yeah, and lost, right?

Spencer Rascoff - Zillow
I don't know, I'm not sure if it's...

Robert Scoble - The ScobleShow
There was one law suit that somebody lost but...

Spencer Rascoff - Zillow
I mean, but from our standpoint, the more important thing is just the usability. We decided that if you build a good product, the rest will take care of itself; and that's the philosophy that we've always believed in. The other thing we've invested pretty heavily in is, email marketing. And so, we had a great guy who ran email marketing at Expedia and at Hotwire and had spent a lot of time at eBay., and we've got a couple 100,000 email subscribers because, if you're checking the value of your home, you want to be updated on the value of your home, or if you're a buyer, you're actively in the market. If you are an agent, you want to receive frequent updates in trying to make our email marketing campaign kind of an extension of the site -- it's a pretty big priority for us.

Robert Scoble - The ScobleShow
Yeah, how does somebody convince you to fund something? Because as a CFO I bet -- at least with my CFO, if I need a new machine or a new camera, I have to go and convince the CFO, "Hey, we should invest in this $4000 camera, you know?" So, what kind of technique works with you?

Spencer Rascoff - Zillow
You know, I really believe this medium model focused on programming thing; and so, you frequently hear people say around here, "Hey, this is our marketing budget, this new data center that's going to reduce latency on the East Coast" - I mean, that is our marketing budget because that's going to give people a better site experience and therefore they're going to tell more people and that will improve our audience going forward. And I believe that, and we've decided strategically to invest in the site experience and in the product. So, whether it's being the first real estate site to integrate with Microsoft Virtual Earth for example, to have this amazing 45 degree photography of homes in almost half the country, from where you can rotate 360 degree around the home, we raced to get that done, which required a lot of resources - financial and technical, to be the first real estate site to get that out the door, about a month after we launched our web site, 8 months ago. That was an example where we decided that, that was just a show we had to have on our network. That was the product we needed to have. And so, we invested pretty heavily in it.

The other decisions have been programming related; so, make sure that we've got great content and great user experience, and then the rest will take care of itself. And customer research is another really good example. We've invested really significantly in understanding our consumers. We've done extensive focus groups around the country, we've have done brand awareness studies, we usability test everything before we ship it. I mean, for a startup eight months old, to be spending the amount of money and time that we spent on understanding our consumers is really uncommon. But I'd much rather spend hundreds of thousands of dollars on that, than not do that, ship a crappy product and spend a couple hundred thousand dollars buying keywords and you buy traffic to the site. And they have a bad experience; they go away, they never tell anybody, they never come back -- and that's hollow money, that's wasted than rather invested in the product.

Robert Scoble - The ScobleShow
Awesome! What else do we need to know about Zillow? What is the most surprising thing you've seen happen since you started the company, that you wouldn't have expected when you started the company?

Spencer Rascoff - Zillow
Well, we didn't expect it to have this much interest, this much excitement this early. We thought we are building something big, but turns out that, it's even bigger than we expected. So, that's a pleasant surprise. I think another big surprise for me has been this API; so, we have an API that in late October here is shipping in an open API forum, where anybody can come in and put Zestimates and Zindexes, which are average Zestimates on their site. As long as they have branding for us, and they have links back to us, they can do whatever they want with it. And so, we have had this out in sort of a closed alpha stage for a couple months now, and you've got big sites like Yahoo! Real Estate for example using it where, we're now the home valuation -- we power Yahoo! Real Estate's, home valuation product. And so, if you got to Yahoo! Real Estate -- or actually, if you just go to Yahoo.com and you type in 'Home Valuations', or you type in any of a couple hundred keywords at Yahoo.com, you'll get a co-branded Zillow Yahoo! Real Estate valuation product with branding for Zillow, and then traffic back to us. So, you've got big guys like Yahoo! Real Estate using us. Brokerage sites like ZipRealty, Redfin, Prudential (Northern California), Real Living, these are all very large brokerage sites with lots of traffic that has Zestimates on their site, either in a 'Home Valuation' section, where you can find out what your house is worth, or side by side with their listings where it says, this home is for sale at this price and the Zestimate for this house is that price. And then we've seen a lot of developers doing lots of interesting stuff; so there's a guy for example, with a website called auctioncloud.com, where he's built a Mashup between eBay real estate listings and Zillow Zestimates. So, you see what homes are for sale on eBay and then you see the Zestimates right next to it.

Robert Scoble - The ScobleShow
Now you are blowing me away because that most CFO's, I don't expect to know about Mashups and APIs and things like that.

Spencer Rascoff - Zillow
This is the Web in 2006 -- I mean - and this is what Zillow is all about. I mean, trying to -- we're embracing this Web 2.0 thing. It's not just a fad; it's not just a buzz word. For us -- for me, when I think about corporate strategy for the company, it's extremely scary because what we're doing, if you think about it is, we're giving the keys to the kingdom to anybody. There are sites out there that are arguably competitors of ours that we're giving this functionality to which -- we just spent a year and millions of dollars on hundred -- on more than 100 employees building this functionality, and we're saying, "Here, have it for free." And, a lot of them are advertising based too, where they're trying to get traffic -- they are combining with other functionality and selling ads against it.

Robert Scoble - The ScobleShow
Yeah.

Spencer Rascoff - Zillow
And it's like, well, wait a minute, isn't that competitive of what Zillow is doing? And so, this is a strange new world for us.

Robert Scoble - The ScobleShow
It's a world of sharing, isn't it?

Spencer Rascoff - Zillow
Yeah, it's a world where YouTube helps make MySpace and MySpace helps make YouTube, and yet they are competitors in a lot of ways and yet, you know, Google buys one, but the advertising network runs on other, and then, I mean it's like -- this is what the web is all about now. And so, this API thing is just really interesting for us and -- we've seen a lot of ideas that are on our product's pipeline that we hope to ship over the coming months and years, are going to get built by other -- like, essentially competitors, by other startups, using our functionality. That's a little scary, and really exciting and interesting. But it takes a lot of confidence in the building of a brand, and confidence in that strategy to give away this functionality, and that's what we're doing.

Robert Scoble - The ScobleShow
Any advice for real estate professionals out there, since you're understanding their world from a different angle than they probably understand it.

Spencer Rascoff - Zillow
Sure.

Robert Scoble - The ScobleShow
Would you have any advice, like start a Blog and start putting some of these Mashups on the Blog and start -- or how would you market yourself, how would you get involved in this role?

Spencer Rascoff - Zillow
Well, about 12% of our visitors' say they are real estate professionals; and so, interestingly, we have a couple of hundred thousand real estate professionals, and there only are a couple of million real estate professionals out there. So, we are attracting a large portion of people that are actually real estate professionals any given month. The advice that I would give to real estate professionals is to be where your consumers are; and it's kind of obvious, but your consumers are on the Web; your consumers are on Zillow and on sites like Zillow, and you are starting to see this migration of the time and attention and advertising spend moving off-line, primarily out of print and on to the internet. But it's really interesting how much slower that migration is occurring when compared with the migration of time that consumers spent on the internet. So for example, in terms of online advertising spend, about -- see if I can get these numbers right -- about 40% -- according to Forrester, about 40% of consumers' time consuming media, is spent consuming it on the internet; and yet, only about 5% of advertising money is spent on the internet. And that compares with print for example, where about 40% of advertising dollars is spent in newsprint, and only about 10 or 15% of people's time is spent consuming media on newsprint. And so, there's a big disconnect; so, my advice to Realtors and other Real Estate professionals would be, make sure that you're spending your time in terms of where you actually get information from, and make sure you're spending your money in terms of how you market yourself where your consumers are, and increasingly -- in fact, it already is the case, that's on the internet.

Robert Scoble - The ScobleShow
Yeah. That's where we found our new house.

Spencer Rascoff - Zillow
I mean that's where our consumers are; especially in certain cities like, on the West Coast or the East Coast or other major cities, where internet penetration is particularly high, you know, that's where you need to be.

Robert Scoble - The ScobleShow
I think it is going up even -- and we just took a trip to -- I am sorry, Montana and there was Wi-Fi signs on several restaurants there.

Spencer Rascoff - Zillow
Wow!

Robert Scoble - The ScobleShow
You know, I think it's -- even in places that you wouldn't expect technology to be used, I think that's going to change over the next couple of years.
Have you found any difference in the usage patterns of the Internet users, for instance -- have you discovered anything about your RSS feeds?

Spencer Rascoff - Zillow
Yeah, I mean in terms of -- well, we don't have RSS feeds to the site yet; we have RSS feeds for our blog; zillowblog.com gets in a lot of traffic, in fact it's one of the most widely read real estate blogs on the internet; and that's been a great way for us to communicate with the real estate blogosphere and just with our customers - and we have a lot of RSS subscribers to our blog. Usage patterns, in terms of how people are using the site; yeah, it is incredibly Long Tail in terms of which houses people are checking. I mean, Bill Gates' house gets a lot of searches and the Playboy Mansion gets a lot of searches, and other kind of notorious houses get a lot of traffic, but it drops off unbelievably quickly in terms of what houses people search. People tend to -- about half of our visitors are actively in the market, buying or selling a home - and about half of them are not. And so, among those people that are actively in the market -- and by the way, I think that's kind of a misconception to some extent. I think, people who probably haven't spent very much time on zillow.com, probably think that it's more heavily skewed towards a voyeuristic use, where people are sort of Zillowing their boss, or seeing what some ex-girlfriend's house is worth...

Robert Scoble - The ScobleShow
Yeah! I got to try that.

Spencer Rascoff - Zillow
But half of our visitors are actually using us as a decision support tool in the transaction. Those people, as you can imagine, are checking 10, 20, 30 houses at a time, because if they are selling, they want to know exactly what homes are worth? And if they are buying, they want to be able to see all the homes that they are looking at and save them into their favorites. The other interesting functionality that we shipped a couple of months ago is this thing called ZeeMobile, where you can send an email to us at zee@labs.zillo.com.

Robert Scoble - The ScobleShow
That's very easy. You are already a member (Voice Overlap).

Spencer Rascoff - Zillow
Exactly. It's not (Voice Overlap) easy but you can save it into your blog there...

Robert Scoble - The ScobleShow
Some innovation on URL's there.

Spencer Rascoff - Zillow
...you can save it into your Blackberry as I have. So, if you save it as ZeeMobile, which is what I've done, and then if you email an address to us.

Robert Scoble - The ScobleShow
What comes back?

Spencer Rascoff - Zillow
A Zestimate - bed, bath, square footage and transaction history. So you can imagine for example, if you're a buyer going to multiple open houses on a Sunday and you want to know what those houses are worth, or if you're walking the dog around the neighborhood, or pushing your baby stroller around the neighborhood as I frequently do -- I'm walking around my neighborhood with my Blackberry, kind of saying, "That's a really nice house, I wonder what they paid for it?" Or "That's a nice house and I wonder what its worth?" And so here we've a...

Robert Scoble - The ScobleShow
When we were looking for houses, they would have the 'For Sale' sign up front, and usually there's some brochures there that you can...

Spencer Rascoff - Zillow
Yeah.

Robert Scoble - The ScobleShow
But out of -- I would guess, out of four out of every 10 houses, the brochures are already gone. So, I was like, well, how much should this thing sell for?

Spencer Rascoff - Zillow
So, this is your virtual (Inaudible) so there is your brochure with your Blackberry or other email enabled device. So, zee@labs.zillo.com and you can get a Zestimate, just send an address, zip or address, city, state and we'll email you back the Zestimate and what people paid for the house.

Robert Scoble - The ScobleShow
So, thanks.

Spencer Rascoff - Zillow
Thanks very much for having me.

Robert Scoble - The ScobleShow
Anything else I need to know about Zillow I could -- I ran out of stupid questions.

Spencer Rascoff - Zillow
Check it out. Use it -- zillow.com and check it out and tell your friends.

Robert Scoble - The ScobleShow
Thank you.

Spencer Rascoff - Zillow
Yeah.

Robert Scoble - The ScobleShow
But out of -- I would guess, out of four out of every 10 houses, the brochures are already gone. So, I was like, well, how much should this thing sell for?

Spencer Rascoff - Zillow
So, this is your virtual (Inaudible) so there is your brochure with your Blackberry or other email enabled device. So, zee@labs.zillo.com and you can get a Zestimate, just send an address, zip or address, city, state and we'll email you back the Zestimate and what people paid for the house.

Robert Scoble - The ScobleShow
So, thanks.

Spencer Rascoff - Zillow
Thanks very much for having me.

Robert Scoble - The ScobleShow
Anything else I need to know about Zillow I could -- I ran out of stupid questions.

Spencer Rascoff - Zillow
Check it out. Use it -- zillow.com and check it out and tell your friends.

Robert Scoble - The ScobleShow
Thank you.

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