The End Of War Between Zillow and Trulia

by Victor Lund on August 13, 2014

Dollar Signs with handshaleThere is a major war going on in the taxi industry today. Uber and Lyft are duking it out. Both companies have deep cash pockets and they are deploying it in marketing and undercutting each other. It is pretty hard to know which service is better as they work hard to drive market share.

As Zillow marches toward the stock swap to join forces with Trulia, perhaps a new wisdom of that transaction will reveal itself. They just avoided a very expensive war where the two of them may have killed each other off to reign supreme. It is pretty clear that the company that spends the most to attract the consumer is the company that gets the most traffic. Sure, the site itself is important in terms of usability or in terms of features like AVM, mortgage information, agent ratings, rentals and the like. But the real reason why these companies have the traffic they have is that they take every dollar they bring in from agents and brokers and buy more traffic.

Many industry analysts have long term concerns about the voice of real estate not being a broker or an agent or part of the REALTOR family. Those are reasonable concerns that any incumbent would have in the face of new competition. But look at the facts. These companies are marketing the entire real estate industry on the back of investor dollars more than ad revenue from agents and brokers. Even if you want them to go away – be sure to thank them for the advertising first. They built the mulit-billions in value in their business.

As an aside – Uber and Lyft have grown their value to $18.2 billion. I guess the taxi booking business is big business.

Remember, market-share lead does not assure success. These companies are hopeful that it will, but in the interim, some brokers and agents are riding on the returns from their investment in reaching the consumer. They are putting more dollars to work than the dollars that you pay J

We expected this value to continue for many years as Trulia and Zillow independently competed against each other by deploying dollars from their IPO. With the merger, these companies are not likely to be injured by competition between the two of them. They are on the same team. It will be time for Realtor.com and Homes.com to step up. Competition is healthy.

Today, Uber pays taxi drivers $250 for referring a customer, $500 for referring a Lyft drive, and $1000 for signing up a Lyft “mentor,” and experienced Lyft contractor who helps train new drivers. I would love to see one of these companies pay a Realtor to refer another realtor to buy portal services. Everyone wins.

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