Thursday, February 09, 2006
Edge Competencies - Zillow
Zillow launches. It's been the subject of quite a bit of speculation, even by insiders, since the hype focused around a radical innovation for real estate via the www that no one could quite figure out.
Now, the cat's out of the bag - Zillow's big innovation:
"Zillow's algorithm crunches the home sales, tax assesor and other data it has and returns what it calls a Zestimate. We tried it on our home and it didn't seem far off. The site also shows the values of surrounding homes, which are displayed on an aerial map. Zillow can also show "comps,'' or the sale prices of homes that are comparable to the one your interested in."
Is this important? Yes. Why? Edge competencies - they're what you do to make the edge productive.
One of the edge competencies I talk about, but 2.0 players across spaces are glossing over these days (unwisely) is liquidity. Zillow, pretty clearly, is building a competence in making real estate much more liquid than it's been in a loooong time.
Will it work? Not sure. But the deep economics of the model are perfect - so I think it's a great bet for Benchmark and TCV to have made.
I'll tell you why it will work, it's the same thing you're talking about, just put into different words:
If you own, or plan to own a house (90+% of the population?) this site is valuable to you.
That's it. Do something of great value for a huge segment of the population, and either you, or the value you've created, will live on.
The challenge, if they really want to make a mark, will be for them to make all aspects of the home buying experience liquid. Because otherwise, it will be the value they've created (picture everyone else creating a similar algorithm, so all real estate sites can give you an estimate) that outlasts the company.
This is a great first step, but they must rapidly entrench themselves.
BTW the estimate for my home was fairly accurate (within 10%), but it screwed by my neighbor's home, because there are a lot of intangibles in real estate. Another obstacle.
Also, it was missing the most recent sale (mine) for the house, which was 3 years ago.
I take your point about the algorithm - that is a key constraint.
But I think you hit on a much deeper insight:
"...if they really want to make a mark, will be for them to make all aspects of the home buying experience liquid."
Begs some very interesting questions.
Thanks for the comments.
Having personal interactions with Zillow people, I was expecting much more. Just because they had money they were able to do it at a larger scale, otherwise people like redfin give the similar information, but only for one county in NWMLS.
I've posted slight elaborate comment on my blog at http://omshom.blogspot.com/2006/02/finally-zillow-launches.html
i am not sure i would call Zillow.com nor http://www.HomePricemaps.com DATA PORN, i mean aren�t we helping the consumer make better informed decisions, thus not relying upon the realtor as much, or at least giving the consumer the ability to know when his realtor is screwing him over?
since when is that porn?