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Co-founder Barton returns to the position of CEO to lead the transformation of the Seattle-based company, which employs 1,900 people at the downtown headquarters.
Zillow Group, the Seattle-based housing search website that has seen a drop in prices as it pursues an ambitious home buying and mortgage development plan, is bringing its first general manager back to head. transformation.
The CEO, Spencer Rascoff, hands over the responsibility to Executive Chairman Rich Barton, who co-founded the company in 2005.
Zillow, whose shares are down 46% since June, has announced this news, as well as a quarterly earnings report, which shows short-term results below analysts' expectations.
Changing the direction of the company "so that my voice was well heard during the period of extreme evangelism seemed to be the right thing," said Barton, founder of the Expedia Group travel site, in an interview. "I hope our investors think it's the right thing to do. I know a lot of our investors. They know me from the beginning. They have also invested with Expedia and other companies. They are accustomed to me pointing to the moon and say, "I want to walk on that thing."
Zillow has become one of the largest employers in Seattle under the supervision of Rascoff. The company now has approximately 4,000 employees across the country, including 1,900 at the downtown headquarters at the Russell Investments Center on 2nd Avenue, compared with 200 when Rascoff took office in 2010.
A spokesman for Zillow said Thursday's news should not have any impact on jobs in Seattle.
Rascoff and his family really moved away from Seattle years ago. He sold his Madison Park home in 2016, 40% less than the company's Zestimate algorithm, and moved into a $ 20 million mansion in Los Angeles. He sometimes flew by helicopter; In 2016, the company has disbursed nearly a quarter of a million dollars for its air travel.
The separation agreement between Rascoff and the company includes a lump sum payment of $ 405,000, which represents six months of his salary. All of its outstanding stock options will also vest within 18 months, which is an accelerated schedule. As a member of the board of directors, he will receive an additional $ 400 million in stock options. The agreement also includes a mutual agreement of non-disparagement between him and Zillow.
Zillow's plan would transform the way Americans buy and sell their homes because it changed the way they buy them, with a click of a mouse on a satellite map. In April, the company announced its intention to launch a Big Data strategy on returned homes, using its price estimation software to buy properties and then performing minor repairs before reselling a few months later. .
This business, based on the idea that selling a house is a headache that consumers will pay to ease their spending, has put Zillow in competition with half a dozen other companies, sometimes called iBuyers, whose Opendoor, which raised $ 1 billion in venture capital.
On average, a customer asks Zillow for an offer on his house every five minutes, said Barton, noting that consumer demand for a simplified home-based sales process was greater.
"It's like advertising free beer at a university party," he said.
The company only launched its domestic-related activities in seven markets outside the Pacific Northwest and indicated that it did not have a timetable for launching its activities in the United States. Seattle area. In King County, the return home has generally declined in recent years as houses are already expensive and most homes are already renovated. It is therefore difficult to make a transaction profitable in the short term.
Zillow was created in 2005 by Barton, Rascoff and Lloyd Frink, who wanted to do for the real estate market what their previous company, Expedia, based in Bellevue, used for air transport, that is to say that it is more transparent for consumers. Rascoff took office as CEO in 2010 and led the company to a series of acquisitions, including Trulia's StreetEasy property portal and New York City, making the company a dominant player in research on the home online.
Barton said the decision to take control of day-to-day operations has evolved over conversations with Rascoff and Frink, who would transition from vice president to executive president, while Rascoff would remain on the board.
Each month, in the third quarter of 2018, 186 million unique users visited the company's websites and mobile apps, about triple the number of Realtor.com, which had approximately 60 million users worldwide. during the same period.
Historically, Zillow's main business has been selling advertising to real estate agents who want to deal with this traffic. Over the past year, Zillow has launched a new strategy to reap more profits from this massive audience.
The navigation was not easy. In August, the company said it was taking longer than expected to sell the acquired homes. Three months later, it was reported that some advertisers were withdrawing their business because they did not like the changes to the platform. Shares of the company, which peaked at $ 65.21 in June, fell to $ 27 in November. Following a conference call with analysts, the stock advanced $ 2.80, or about 8%, to $ 37.84.
"Investors are really undecided about the strategy," said Andrew Eisenson, an analyst at Bloomberg Intelligence. "When are these investments made for investors? And will they work? I think they will – in the long run, business is really good here – but there will be a slowdown in the short term. "
Zillow reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 201 million for 2018, below the consensus estimate of $ 205 million. Zillow expects a loss of EBITDA of up to $ 14 million in the first quarter of 2019, according to a statement, while analysts expected a profit of $ 41 million.
"The prospects were lenient" for Zillow's main advertising activity, said Thomas White, an analyst at D.A. Davidson & Co., in an email. "Spencer resign is certainly a surprise, but Rich is well respected by investors."
The company plans to return to normal in its advertising business during the first half of 2019 as real estate agents become familiar with new marketing products. The advertising sector could almost double its revenues and reach $ 2 billion over the next three to five years, Zillow said in its statement.
During the same period, executives see the company buy 5,000 homes per month as part of its instant offer business, generating an annual business turnover of about $ 20 billion and generating more than 3,000 loans a month after the acquisition of a mortgage company last year.
In the shorter term, the company expects to generate nearly three times more revenue by buying and selling homes in the first quarter than in the last three months of last year.
"This involves a huge investment that needs to be made," said Barton. "My challenge will be to arouse the enthusiasm of investors for this trip with us on the abyss."
Mike Rosenberg, Seattle Times reporter, contributed to this report.
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