Zillow Inc (NASDAQ:Z) has recently acquired its major rival Trulia Inc (NYSE:TRLA) for an astounding $3.5 billion. Zillow Inc (NASDAQ:Z)’s CEO and co-founder, Spencer Rascoff, discussed with Bloomberg’s Trish Regan about this move and provided some insights about the company’s business strategy going forward.
In the current market scene, both Zillow Inc (NASDAQ:Z) and Trulia Inc (NYSE:TRLA) do not seem to be profitable. When questioned about this, Rascoff said that it was because they chose not to be.
In his own words, “[...] We choose how profitable we want be right now, and right now we are not choosing to be very profitable. We are choosing to invest in advertising, we are spending about $75 million this year to grow the Zillow brand and grow our audience and we are investing in product development and we think those are the right things for long term shareholder value creation, but in the near term it curbs profitability.”
Though they are now part of Zillow Inc (NASDAQ:Z), Trulia Inc (NYSE:TRLA) and StreetEasy retain their unique brand identities.
“Certain consumers gravitate to certain brands for different reasons. They like the color palette of one or another, they like a particular feature in one or another and there are a lot of media companies that adopt multiple brands [...],” he said.
Zillow Inc (NASDAQ:Z) has been on an acquisition spree in the recent years, its most recent conquests being StreetEasy for $50 million in 2013 and Trulia Inc (NYSE:TRLA) for $3.5 billion in 2014.
“Trulia would be our ninth acquisition. I’m sure that won’t be our last. [...] We have made three consumer facing acquisitions, StreetEasy, Hotpads and, soon upon closing, Trulia. So we keep looking at acquisitions and we’ll see,” Rascoff added.