Imagine a horse race. Two horses, a perfectly toned and young thoroughbred against a 7-year-old nag. No surprises who is winning the race.
Then, two things happen: 1. The winning horse surprisingly steers off the track to further bulk up for the race; 2. A new tested and savvy owner and trainer take over the nag, tweak and buff up the old mare, and begin to catch up with the thoroughbred.
The Zillow and Trulia executive team have been all but sidelined the last nine months, as the Federal Trade Commission reviewed thousands of emails, contracts and records of the two companies to figure out if the merged entity is good for consumers. A nod on Friday that the merger was OK, for now, puts the thoroughbred back in the race.
While Zillow was doodling with regulators, News Corp., a force to be reckoned with, bought Move for all cash, closed very quickly and began plotting a plan to catch up with Zillow. The nag is being rehabbed quickly.
The race is now truly on, no more distractions. So, what can we expect?
Zillow and Trulia executives have been sidelined by Beltway regulators and by trying to figure out how to merge the two companies. Besides Zillow CEO Spencer Rascoff’s new book, not much beyond the merger and the FTC were on the minds of the executives there.
Now, they can focus on their formidable new competition. Look for new products, more multiple listing service data announcements and burgeoning new partnerships.
In Trulia, Zillow bought a rock-star company. Assuming not too many egos get in the way, Zillow just tapped an amazing talent pool. And people are a big part of the formula for winning, in any business. If the two cultures can be properly integrated and their people can be properly focused, then results should be evident in the next few months.
Lots of people got really rich off the Zillow and Trulia deal, so keeping the key executives engaged will be challenging. Rich young people often do what they want, not what they are told.
The FTC review gave Rupert Murdoch and his equally smart team time to quickly make some strategic moves including new distribution from other News Corp. assets, and to bulk up the Move management team and connect the dots globally to his other media properties.
Expect more M&A, as there will be a free-for-all acquiring companies, small and large, as Zillow and Move try to outsmart each other.
Falling into Zillow’s lap is the big broker/small broker rift with MLS data. Zillow seems to be picking off more MLS feeds as MLS boards must be very careful to serve its entire membership. Big brokers who have their own private data feeds with the portals, who try to bully MLS boards into not releasing the data, could get in regulatory hot water themselves.
With Zillow’s new “pipe,” the company supplies an easy-to-use technology solution to MLSs who must serve all members big and small. MLSs are in the cat seat, for now. Zillow dreams of getting out from under the dirty data charge, once it has MLS data. But the story is not over on that race either.
Industry control of data has never been more important as these two giant portals get more and more consumer mind share. Therefore, the Upstream project, which promises big franchises and brokers more control over their data, will get more momentum.
This could ultimately lead to no ads on listings, which would hurt both Zillow and Move, as some version of this ad unit represents their most lucrative revenue source. As a result, expect innovation in their business models.
The big broker portal will die a slow death, because catching up with Zillow and Move will require at least $100 million — and even that may be folly. If the industry is expected to win in this world, it will be from moves they make on the back end with data, tools and software.
The everyday agent will have more and more choices as these two innovative companies compete for their dollars. For a while, prices will be under no pressure and may come down if Zillow or Move resolves to compete on price. Long term, who knows.
Consumers will experience crazy levels of innovation from both Zillow and Move but also from small startups that now have access to a horde of new funding sources because of the Z&M phenomenon.
Get out your binoculars, this could be a photo finish.
Email brad@inman.com.
