The Motley Fool sat down yesterday with Zillow Inc (NASDAQ:Z) CEO Spencer Rascoff for a quick interview after the company announced its acquisition of NYC-focused real estate website StreetEasy.
We discuss Zillow’s rationale behind the $50 million all-cash acquisition, Zillow’s growth, and whether the company might have other acquisitions planned.
Brendan Byrnes: Hi Fools, I’m Brendan Byrnes, and I’m joined today by Spencer Rascoff, who is the CEO of Zillow. Thanks so much for taking the time.
Spencer Rascoff: Thank you, Brendan.
Brendan: So, I wanted to ask you about the StreetEasy acquisition; maybe for someone who’s not familiar with it, what StreetEasy does and how it fits into Zillow Inc (NASDAQ:Z).
Spencer: StreetEasy rules New York. They are by far the dominant player in the online real estate scene in New York. They have over a million unique users a month, mostly people shopping for apartments or to rent apartments, and they’ve accomplished something that is incredibly impressive from my perspective, which is they have a local network effect; they have basically all the home shoppers, but they also have incredibly high levels of engagement among real estate professionals, and that local network effect, in a market as important as New York, is very hard to replicate.
Brendan: Do you think it’s more important to have the local network effect versus their unique visitors, which I think: 1.2 million per month.
Spencer: Well, you know, the reason they have the audience is because of the incredible product.
Brendan: Sure.
Spencer: They have an extraordinary focus on the New York area, so they’ve taken the time to build out an amazing product in New York. New York is a very unique place from a real estate stand point and in a lot of other ways, and StreetEasy has cracked the code in New York frankly.
Brendan: So, you also bought Buyfolio, which also a New York focused company. Could you talk about the New York market, specifically what makes it so important, and whether StreetEasy is something you guys plan on focusing in other cities on or just New York?
Spencer: New York is incredibly unique, first of all, because it’s the largest real estate market in the country, and, by the way, you can’t be the largest real estate company- largest online real estate company on the Web and not be number one in New York. So, that’s why it was so important to Zillow Inc (NASDAQ:Z) to acquire StreetEasy and become number one in New York. Buyfolio is a great service, which helps real estate agents and home shoppers communicate and kind of collaborate in their real estate search. So, we bought Buyfolio because it’s a B-to-B SAS company, and we made their software free to our Zillow premier agents; StreetEasy is a consumer facing website and has a large consumer audience. So, the two are very complementary to each other.
Brendan: Will StreetEasy be cash flow positive on day one?
