Armchair Quarterbacking Real Estate 2.0

I started writing this post as a comment in response to Joel's post over at FOREM which was inspired by Dustin's post at 4Realz.net. By the time you finish reading it you may think you hear the sound of two lips puckered in the pursuit of serious "kissing up" to Zillow. You would be wrong. Those that know me would back up the fact that's something I have no use for, results yes...ass kissing...no. Those same people know I usually don't get involved in speculation either, especially in this blog. Most of the time it's too squishy to have the kind of value that I think readers are looking for. The more I thought about it, the more I realized a more in depth look might be in order. I know there are Brokers and MLS' considering relationships with Zillow. I'm not saying that Joel is right or wrong to bring up the issue. That said, I'm not sure I see the same connections between a nebulous comment in an interview to the 2005 patent filings of Zillow. I'm not a journalist, so perhaps there is something I am missing in trying to connect those kind of dots.

Let's start at what's the heart of the matter - the business model. If so many are convinced that the "end game" of being a "media play" has no future, where does that leave other teams on the roster? Move, Trulia, IAC (or whatever the individual properties become), NCI, Classified Ventures, FrontDoor etc.

Maybe it's a perceptive mistake on Zillow's part to pin the moniker of "media company" on their business model. I think it immediately puts people into a mindset of limited revenue channels when in reality there are many different scenarios under which Zillow could generate revenue without stepping in it when it comes to the transaction.

There were plenty of people making the same early assumptions regarding YouTube, MySpace and Facebook. In some cases the game hasn't reached half-time yet. But even with things still in play, you can step back and look at the almost endless stream of new and creative ways that these companies have partnered with the creative architects of the marketing and advertising world to generate revenue that goes way beyond banners and keywords. Creating API's, new application platforms and more are things that didn't happen during season 1.0. I'm not saying that the investments and valuations of all of them make sense and to be sure, there will be some big investments made in Web 2.0 plays that turn out to be nothing more than a popcorn fart. I honestly think Zillow is playing on different turf. With the right creativity and the ability to remain nimble, I have a gut feeling they will become profitable a lot faster than most pundits do.

Attempting to navigate the land mines that lie in the path of transaction revenue (via an auction model or anything else) would be insanely expensive and excruciatingly time consuming, especially to VC's that will not tolerate that path if winds and turns through a bureaucratic maze of glad handing. If someone could have figured out how to forge that magic bullet I think we would have seen something close to it already and to be sure, E-Bay doesn't count. That said, I reserve the right to a disclaimer myself so, as Dennis Miller used to say when he closed out every show, "That's just my opinion, I could be wrong"

Hindsight is a distinct advantage for Zillow. Dustin alluded to it in his post and I think that it's pretty clear they made a strategic decision early on that moved them away from repeating the mistakes made during "season 1.0. I freely admit that I'm like a lot of other people that felt completely different about Zillow in the early days. Sure you can bring up the patent filing from 2005. But to be fair, shouldn't you also bring up the more recent patent activity with Home Direct that clearly defines Zillow's offerings being based on advertising? If you tried to define Microsoft or Apple based upon their patent filings you would end up with business plans that looked like they were written by Mary Shelley.

I'm not privy to any inside information on Zillow's undefined offerings or strategies. My conjecture is based on my mind's eye concepts of the possibilities and what I know about their current products. If you're a broker or agent that hasn't taken the time to at least understand all there is to Zillow, you're not really in a position to call in any plays.

In the end it's about the the people. Look at this way, if you're going to arm chair quarterback Real Estate 2.0, you need to pick the players for your team. If had the likes of Rich Barton, Lloyd Frink, Spencer Rascoff, Sara Bonert, David Gibbons and Drew Meyers on mine, I would feel pretty good about the chance of the "End Game" being in the playoffs. Personally I don't think the 2005 playbook is being used. But once again, I could be wrong. If so, I will be the first to point it out.