Zillow Raises $30 Million More, Up To $87 Million in Venture Capital

Seems like a prime acquisation target.

they want to be the hub of real estate.

I love the folks at Zillow…but come on. They better be able to monitize their traffic effectively. So far I hear bad things about their conversion rates and their effectiveness on getting that traffic to trickle down to the Realtors and Brokerages they aim to sell products to. Many don’t trust Zillow and refuse to give them their listings or their money. Without winning over the trust of the RE community, they will struggle to capitalize on their potential.

Trulia is dead. You need more capital in online real estate to weather the mortgage ad and property listing downturn. Smart move by Zillow to take the cash now before the traffic starts to level off or worse, decline.

$87m in venture and no one is talking about them.

I’d love to know what percentage of the company the founder is left with after taking $87 million in investment…

It’s a great service. I remember a few months back there was some group trying to ban Zillow from displaying the home value data. Hopefully all those issues are behind them.

Yikes-
I just want to quickly point out that we are not trying to sell “products” to realtors and brokers. We are a media company and sell highly targeted advertising to both large brand advertisers as well as small businesses (including realtors & brokers) looking to reach a very local audience. 6,000 advertisers have already used EZ Ads (our self-serve ad platform) to target visitors browsing Zillow in certain Zip codes.

Vanessa Fox actually touched on our focus of making content and services free on Zillow Blog today - http://www.zillowblog.com/maki.....e/2007/09/

I guess when you cannot show any growth in Traffic Y2Y http://siteanalytics.compete.com/zillow.com/ and your novelty is evaporating (everyone has valuations now) you need to start investing money into Search Marketing to show growth. I bet Zillow will start ramping up their Ad spend in a very near future and that’s what $30M are destined for

Agents that “don’t trust” and/or fear Zillow are generally clueless about what Zillow offers….

Chad - I believe the “some group” you are referring to was the Arizona Board of Appraisal that sent cease & desist letters to Zillow. An ignorant and basically clueless move on their part that was shot down by the AZ state House and Senate in SB 1291. Zillow is not allowed by statue (in AZ at least) to continue offering AVM estimates for home values.

With that much money, they can just buy traffic to show growth. Which wouldn’t surprise me if their media buyers are already not doing that.

Why do they need over 100 developers? What do they all do?

Whoops… “Zillow is not allowed by statue…” should read, “Zillow is NOW allowed by statute….” Dang, one letter can sure make a big difference in meaning.

Hmm…the article was disappointing, but the comments were good..for us anyway. I agree with #3. I’m sure after a lot of bribery and taking a lot if unnecessary money like Zillow has, TC may feature us.

Michael,

Any idea on:

Revenue?
Valuation?

Zillow - it is 2007, not 1997. You exist to make money. What are your revenues at least? 4.4 million unique visitors, 155 employees, etc is nice, but share the REAL metric: CASH GENERATION

Maybe I’m just being naive - or a capitalist pig…

WOW! $87M………. no thanks! How much cash can they be generating.

Michael, you actually made an interesting point about Legg Mason. Just last week Legg Mason led Sermo’s Series C round. (Series B was only in January ‘07)

You should do a story on Sermo, if you have not already done so. Very interesting model

I agree with David,

The old axiom is that you get funding/loans/cash infusion when capital is available and when you DO NOT need it at the moment.

If the folks at Zillow can truly execute their business model then 87 million in VC funds wont devalue their ownership in the long run. They really seem to have a high powered executive team and with Zillow being in Seattle (which I think is a very good location) you wont neccassarily hear about them in the news every day as if they were in the Bay Area.

WOW!! thats nuts!

well to figure out the cash flow….lets look at it this way:
4.4 million page views…lets say on average there are 2 ads shown per view(probably overestimation) since I didn’t see that many ads.

At 1 penny per view that their rate is thats: $88,000 per month.

Now someone mentioned 155 employees….lets say the average is $50K a year(developers offset by call center people), so thats about 4K a month per person. Which means they spend

bah pressed space

anyways 4K per month is 620K per month in wages. Add to that all other little stuff like servers etc, and they probably burn through 2 mil a month…but probably the number is 2.5 mil, which would explain them taking in 30 mil, which at that rate would equal 1 year of operations

Call me the contrarian here but I’m not one that believes Zillow will be a big success. I know some folks who have left there and their view was *not* positive. I think this is a gamble - high risk, high reward. They know they will either flame out or be wildly successful. A few of their primary business ideas have failed so I’m of the belief that the company will fail. I’m not saying anything about their people or their mission. I just think the business is wrapped in a gimmic (auto house values) that isn’t good enough to sustain a large business.

@ Stone
I don’t know about the long-term prospects of Zillow, but I know that they have changed (or are changing) the game in Real Estate. I am a real estate developer, a part owner of a realty company, and have a web business that serves the construction industry.

Whether they make it or not (like others, I wonder why they need $87M), they are opening up the historically insular real estate sales industry. Craiglist and Zillow are definitely changing this industry.

Also, you can’t discount the team. These are the folks that created Expedia.

At best, they will be an impressive force in real estate. At worst, they will be the Tivo of real estate: the company that changed the way people think about something, but has never been able to capitalize on that innovation.

I wrote a little more about it a while back.

http://www.guildquality.com/bl.....-the-game/

My main point: “As Zillow’s popularity (and functionality) increases, they are putting more and more pressure on real estate brokers to deliver exceptional service and insight.”

I have no doubt that they can and will do some good things. But this is a different problem they have. They have raised so much money now that they have to hit a giant home run in order to be successful. As for their team - know of them well - they built Expedia inside MSN.com. This means they had nearly limitless tech resources, cash and most importantly — freee traffic from the MSN portal. It would’ve been very hard to fail under those circumstances.

From what I’ve heard it is as fun to work there in IT / development as it was at Expedia

#22 Geoff

Very well said. Without question I think the real estate structure (sales) structure has finally begun to change. The missing piece I don’t see is a “third party network” that can help close these deals. Any ideas?

i’ve used Zillow a few times and it’s no good at all. this information, after asking my RE broker, is completely unreliable.

The infamous Bill Miller of Legg Mason led the current round. I didn’t realize that he dabbled in traditional venture capital.

Agree with #26. Their data is really not very good. I’ve tried to use it a few times, always with bad results. I’ve given up and simply will not use it anymore.

Hi, it’s David from Zillow,

#19 Andrew - 4.4M unique users - not page views.

Zillow has raised $87 million to date and have only 1.9M uniques per month to show for it? At this level of valuation, the only exit seems to be an IPO, or someone willing to pay $1B+. But to get there Zillow is going to have to increase their user base 5-10 times what it is now. How is another $30M going to get them there when the first $57M didn’t?

There’s nothing wrong with Zillow’s product or strategy - I think they are executing pretty well. The problem is the actual size of the market. I just don’t think there’s that many people that need to check their home’s valuation or talk real estate every single month. The problem that most real estate sites face is that the average user is interested in real estate information only during the buying or selling process, which is generally a very limited period of time. So what happens is that real estate sites keep having to find new users, rather than being able to rely on return visits. Another $30M in capital is not going to change that reality.

@Thom - you’re absolutely right.
@Andrew & David: 4.4M uniques, assuming Comscore’s 19 page views per user = at 1c per impression thats 836K / month. Not bad given that $10 CPM is pretty low for the real estate industry, they’ll be able to get twice that. The alarming issue seems to be lack of growth in traffic, not its monetization.

Purely based on traffic though, Techcrunch must be worth 300M+ as its more than double the traffic

@30 Thom-

I agree, there just ISN’T that many people who search or need to talk about real estate every month. On the flip side, we decided to create a “social network” ( I use that term very loose) for agents, buyers, and businesses to create profiles, search and connect. It’s something Trulia, Zillow and others are not doing, a first in the market.

Since TC probably never do a feature article on us, I’ll use these comments to keep updates.

$87 million in 18 months is quite impressive.

The key to their success in raising VC has been having the “right look”.
http://smartstartup.typepad.co.....-rais.html

the right “look” certainly makes a difference…