How does Zillow’s CEO manage? By learning
Spencer Rascoff is the rare chief executive who relishes not having all the answers.
Briefly a journalist and then an investment banker, the CEO of the real estate information site Zillow (Z) has fashioned himself into the epitome of the self-improvement boss. He has cultivated a network to help his management team learn about everything from TV advertising to analyzing data to public relations. He’s even had the presence of mind to turn to true experts on social media—summer interns—to find out what he needs to know in that realm.
Rascoff has plenty to show for his learning-on-the-job experimentation. Zillow’s got a hot stock, up seven-fold from its 2011 IPO. It is also in the process of gobbling up rival Trulia (TRLA) for more than $3 billion.
What’s fascinating about 38-year-old Rascoff’s approach is how much he recognizes he and his company still have to learn. Starting with a network of personal relationships with other CEOs, many of whom have appeared at a Zillow-hosted speaker series in Seattle, Rascoff has built out a formal and informal system of sharing ideas and best practices among his peers. The companies include LinkedIn (Rascoff confesses to having a “man crush” on CEO Jeff Weiner), Expedia (which Zillow chairman Rich Barton founded), Yelp, Twitter, TrueCar, Shutterstock, and two companies where Rascoff is on the board, Zulily and TripAdvisor. Rascoff says he and his people are constantly in touch with their counterparts at these companies.
The foundation of the network speaks to a common concern of technology companies outside Silicon Valley. “I did this because we’re in Seattle,” Rascoff told me over lunch in San Francisco last week. “I’ve had to sort of manually create this thing that happens more naturally for companies in the Valley.” For example, Zillow trades ideas on business intelligence and customer personalization with Zulily, which sells children’s clothing to moms. The two companies aren’t competitive, and Rascoff find that the lessons of personalizing messages about children’s apparel translates well for homes. (Zillow provides pricing information about homes across the U.S. and makes most of its revenue, more than $300 million this year, selling ads to real estate agents hawking their services.) It has compared notes with LinkedIn (LKND) and TripAdvisor (TRIP) on matters relating to investor relations. Zillow is planning an entire day of executive-to-executive meetings with TrueCar, a site that provides pricing information to consumers gleaned from collecting auto leasing data. “They know a lot about direct response from TV advertising,” Rascoff says. “We’re just starting to learn about this.”
The knowledge transfer goes both ways. Rascoff knows Niraj Shah, CEO of the online retailer Wayfair, which recently filed documents with regulators for an IPO. He called him up to offer assistance in the arduous going-public process.
Amid all this learning and giving and sharing and ruminating, Rascoff also is running a business. Zillow has been battling Trulia for nine years. I asked him how it came to be that Zillow, whose shareholders will end up with two thirds of the combined company, became the gobbler rather than the gobbled. “We are broader, they are narrower,” he said, explaining that Trulia focuses on homes that are for sale while Zillow provides data on all homes, for sale and otherwise. So why buy Trulia at all? “The reason I want to own Trulia is that as a media company I want to own multiple brands,” he said. “We sell advertising, not homes,” he added, meaning that the more “shelf space” the better for Zillow to attract the attention of home buyers and, importantly, potential home buyers.
At the end of our conversation I asked Rascoff about his rabid embrace of Twitter. He is a frequent and open sharer on the social-media network, as well as a generous re-tweeter. His response speaks volumes about the CEO’s capacity for learning. It started, he said, when Benchmark investor Bill Gurley called Zillow Chairman Rich Barton to ask his opinion of Twitter. (Gurley later invested in Twitter; Barton has a longtime association with Benchmark.) Barton in turn asked Rascoff who in turn asked a particular summer intern who knew a lot about Twitter to teach him what she knew. “I spent two hours with her. Today she has a team of five people working for her.” And Twitter (TWTR) is critical to Zillow’s social-media strategy for both internal and external communications. “Nothing happens at the company without a social media strategy,” says Rascoff, citing companywide social events and quarterly earnings calls as two examples.
So what’s next for Rascoff to learn? “I recently asked her to explain Instagram,” he says.