Lessons Learned from Spencer Rascoff, CEO of Zillow
Last week, we had the pleasure of welcoming into our office one of the most respected CEOs of our time, Spencer Rascoff from Zillow (www.zillow.com). It was enriching to hear from a leader of one of the top real estate technology companies about how Zillow revolutionized the residential real estate market, especially as we endeavor to do the same in our own niche – raising capital online for commercial real estate.
As someone who has been in the trenches of a real estate tech startup for the past few years, took Zillow public, made about a dozen acquisitions, and is now at the helm of successfully running a multibrand online strategy in real estate, Spencer had many stories to share with our team. He shared that Zillow is the combination of two sides of our residential real estate brain; Zillions – the quantifiable hard numbers side– and Pillow – the soft and squishy side that loves a white picket fence around a beautiful Cape Cod. He also shared with us some important lessons that are especially prescient in these uncertain times for both real estate, technology, and startups, which I will attempt to share now.
Lesson #1: Empower Your Customers with Access to Information
By making information more accessible, democratization of real estate happens and consumers are empowered. It’s true for Zillow, and it’s true for what we’re trying to do.
If you’re looking to buy a house do you call an agent to send you listings? No, you search by yourself online - unheard of 10 years ago. That has become the norm since information is more readily available today than ever before and it is changing everything. Just look at what Spencer’s company has done as an example ̶ the Zestimate® tool on Zillow has gone from a 12% margin of error covering half the homes across the country when it first launched, to a 7% margin of error and nearly nationwide coverage today.
At RealtyMogul.com, we use data daily to determine the strength of our investments – the sponsors, assets and markets all are weighted heavily through vast sources of data. All investing decisions are heavily data-driven. When we market a transaction, we share all that data with our investors, so they can make informed investment decisions that make sense to them.
It’s nice to be in good company with Zillow – being able to offer investors open access to real estate data is an incredibly powerful and game-changing paradigm shift for real estate investing.
Lesson #2: Culture is Critical and It Takes Time to Create
Spencer spoke passionately about the strength of Zillow’s corporate culture. He shared how he implemented internal institutions that foster and codify the culture for his employees and listed one of the benefits as creating shared experiences with people, which in turn strengthens the bond for a long lasting relationship.
Zillow waited 2 years until they were a “real company” to introduce these corporate maxims and now use their core values to hire, manage and encourage top performance from their employees. I guess you could say that everyone has drunk the proverbial Kool-Aid, and embraces the company’s firmly developed culture.
We spend a lot of time at RealtyMogul.com discussing, dissecting, and working on our company culture. One thing is blaringly clear each time: culture does not pop-up overnight. Our culture has evolved rapidly over the course of our three-year history. We have grown from 6 to 60 employees during my 2-year tenure, and while it has been both fast and furious, it certainly is not without its stumbling blocks. It’s comforting to hear Zillow’s early stage challenge stories, and like Zillow, we can see a distinct, positive, and pioneering culturing emerging today.
People want to be a part of something impactful, something they can believe in and want to personally be a part of. Creating a new category of real estate and offering access to something that previously was inaccessible is exciting to many people and it certainly drives us as a company. We’ve been able to recruit some of the best talent because of the exciting field we’re in.
Lesson #3: It’s the Hard Times That Shape You
In 2008, at the depths of the recession, Zillow downsized from 200 employees to 120. In short, “it sucked” (his words, but I doubt anyone would disagree). However, he reflects now that it actually turned out to be a blessing in disguise. The company turned out to be better off and more successful for going through a tremendous heartache. It bound the survivors together in a way that only trauma could; it forced the company to dig deep and make changes it otherwise wouldn’t have made; and, it forced a pivot towards monetization faster than the company expected. As a result, the company reached profitability sooner and built a foundation from the ashes that was stronger and more lasting than if it had not gone through the pains of such early stage upheaval. What they say is true: what doesn’t kill you, makes you stronger.
We have not been without hard times at RealtyMogul.com. We have made hard decisions and moved fast, leaving some talented people behind. But I too feel like some of the loss has bonded us together, that we are stronger for it, have built greater trust for one another, and now look forward to continuing the journey together with a team whom I have grown to care about deeply.
Lesson #4: Surround Yourself with People Who Are Better Than You
Spencer spoke openly and honestly about being hired initially as the Chief Marketing Officer at Zillow with no marketing experience so he wasn’t even sure he was up for the role. However, he quickly realized that he had the ability to hire people around him who were experts in what they did, and by elevating them he would successfully elevate himself. With such lack of hubris and unwavering ability to put the company and team first, it is no surprise that he ended up as the company’s Chief Executive Officer. “Cheesy Advice”, admitted Spencer, but hiring the right people who excel certainly helps elevate the manager’s standing in the company.
Having Spencer in the office was a treat; it’s not every day you take a deep look at how far you have come as a company with a humble reminder of how far you still have to go – all over lunch. And if a “Zillion Pillows” can forever change the landscape of real estate, then I have faith and confidence a real estate mogul can too.