The Founding Story For Zillow

1 Dec 2023 · 3 min

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2:54

In this interview, a Zillow co‑founder recounts how the company was conceived after leaving Expedia. The team spent three months brainstorming startup ideas, eventually zeroing in on a personal need: buying a first home. They built a prototype by mash‑up‑ing King County public data, Google Maps, and MLS listings, creating spreadsheets for property comps that felt empowering. Simultaneously, they explored a separate venture—an early Dropbox‑style cloud file‑storage service—recognizing the growing problem of moving photos and files between hard drives in a pre‑cloud era. They abandoned that idea, predicting that internet giants would eventually dominate storage with near‑free services (which proved true with AWS, Azure, and Google Cloud). Their mis‑predictions about which companies would dominate (e.g., underestimating Amazon, Google, and Microsoft) are noted, but the decision to focus on a real‑estate marketplace proved successful. The narrative highlights personal motivation, rapid prototyping, strategic pivoting, and early insight into cloud‑computing market dynamics.

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You know, what was the founding story of Zillow? And, you know, maybe what were some of the kind of first steps that you actually took to what started as a marketplace?
When it was time to leave Expedia after a year, year and a half, I, my co-founders were early Expedia folks and we sat in a room for about 3 months and tried to come up with a startup idea. I don't know if that's how most startups are hatched. That's how Zillow was hatched. And like what is common about most good startup ideas is it's born out of some personal need, some personal challenge. And so at the time we were doing 2 things personally, all 3 of us, and then a 4th and 5th that joined us shortly after, also from Expedia. We were firstly buying homes and I had just gotten married. I was buying my first house and we were building mashups of King County, which is the county that Seattle is in, King County data from the King County website, Google Maps data. And then a friend of ours had given us access to MLS data. And so we were kind of like, sort of hacking together something that would sort of eventually look a little bit more like Zillow. And we were like, well, this is really illuminating, being able to see all this great data and being able to build spreadsheets with comps and do analysis ourselves. Like, that's empowering. And then we were also doing this other thing, which is we were editing files and family photos on hard drives. So take yourself back here to 2005. There was no cloud, there were no smartphones. But there were these physical hard drives that we all had back then. And we had all been working for 15 years or so and had, we had digital cameras and you would take digital photos and they would go onto your hard drive. And so we were like editing and cleaning all these photos and moving them from one machine at home to a machine at work, whatever. And this other business plan, like what was behind, you know, door B was basically Dropbox. And Dropbox didn't exist. Box didn't exist. AWS didn't exist. Azure didn't exist. But the observation was that moving files from one machine to another was sort of a really big problem that consumers have. And there was going to be more and more data. Businesses were going to have this problem and maybe there was something there. We decided not to do that idea because we thought eventually the internet giants would provide storage for free or near free to get companies and people into their ecosystem. And we were right. I mean, this is AWS, this is Azure, this is Google Cloud. And that it would really be a race to the bottom on pricing because the giants would offer it all for, at a subsidized rate. We were right about that. We were of course wrong about the companies. We thought it would be like eBay and PayPal and Yahoo. Like we didn't, nobody could foresee Amazon. They were selling books and DVDs at the time. And Google was a search engine and, you know, nobody thought Microsoft would ever enter this space again. The space didn't even exist. So that's why we didn't choose the cloud idea and we chose the real estate idea. And, you know, it was a good one.