Zillow's CEO on growth during a housing crisis

Summary

Decoder with Nilay Patel

Episode: Zillow's CEO on Growth During a Housing Crisis

Date: March 2, 2026
Guest: Jeremy Wacksman, CEO of Zillow

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Episode Overview

In this episode, Nilay Patel sits down with Jeremy Wacksman, CEO of Zillow, to explore how the company is navigating the extraordinarily complex landscape of the US housing market amid a crisis of affordability and limited housing supply. They dive deep into Zillow’s evolution from a real estate listings aggregator to a vertically integrated real estate platform, the politics and economics of real estate databases, ongoing lawsuits, and the impact of AI on their business. The conversation examines whether scale and end-to-end integration can solve enduring pain points for buyers, sellers, and agents in a hyper-local, highly regulated industry.

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Key Discussion Points & Insights

1. Zillow’s Evolution: From Database Aggregator to Vertically Integrated Platform

• Origins & Mission

  • Zillow was founded in 2006 to make real estate data accessible to average buyers and sellers, breaking through an opaque and professional-only environment.
    • “Our cofounders...said, wait, I can’t find out what homes are for sale or what houses are worth…Let’s turn on the lights, let’s give people access to information.” – Jeremy Wacksman [05:23]

• The Zestimate & Marketplace Building

  • The company launched with the “Zestimate,” using comps and machine-learning to estimate home values.
  • Early on, Zillow built an ad-driven marketplace. Ads were sold to agents eager to reach Zillow’s audience. [05:23–08:47]
  • The brand became so strong “Zillow was searched more than real estate in Google.” – Jeremy Wacksman [05:23]

• Pivot to Transaction Focus

  • Over time, Zillow shifted to facilitating transactions: “Actually building the software to help the buyer, the renter, the seller transact. Not just find the agent, but coordinate and collaborate...the software for the agent, the services for you to get the loan...” – Jeremy Wacksman [05:23]
  • Success is now measured by transactions participated in, not just ads/reach.

2. The Politics of Real Estate Databases

• MLS: Structure, Access, and “Public Good” Tensions

  • The MLS is not a single database, but 500+ regional ones maintained by groups of Realtors.
    • “Whenever I talk to people about our industry…they are surprised to learn...the listings that are for sale are broadly shared…We all have the same listings.” – Jeremy Wacksman [10:13]

• Cooperation and Friction

  • Zillow and realtor groups sometimes clash over access rules and data control, but also align around broad, pro-consumer access.
    • “[The MLS is] an incredible public good…Buyers and sellers, big brokerages, startups, innovators, can all get access to the same information...” – Jeremy Wacksman [10:13]
  • “On balance, the idea that the databases coordinated and broadly available is 80, 90% good and there’s 10, 20%…friction” – Jeremy Wacksman [13:51]

• Database Politics in the Age of AI

  • Nilay and Jeremy agree that with AI, control of underlying data is more up for grabs than ever—will the front end (Zillow) remain valuable if users can query the MLS directly through smart assistants?

3. Decision-Making & Company Structure

• Organizational Evolution

  • Zillow uses a matrix structure, with product, engineering, design, and business teams collaborating:
    • “For our most mature businesses…great product marketing, engineering and design teams…with dedicated leaders that matrix into the business team.” – Jeremy Wacksman [16:53]
  • Rentals division, for example, started independently, now moving toward integration as it matures.

• Workforce & Priorities

  • About 7,000 employees, split between fixed (product, engineering) and variable (sales, ops).
    • “Product and engineering is probably the largest group. We are first and foremost technology innovators.” [19:54]

• Leadership Philosophy

  • Data-driven but ready for intuition and gut calls when necessary:
    • “I’m a big believer in find the truth, don’t find the right answer…We push for data…That doesn’t mean we wait for data.” – Jeremy Wacksman [20:43]

4. Lawsuits & Controversial Decisions

• The 24-Hour Rule

  • Zillow’s policy: new listings must be on Zillow within 24 hours, or not at all.
    • “That policy is really about protecting transparency.” – Jeremy Wacksman [26:52]
    • “We don’t think you should be able to free ride and only give the Internet the listings that you want and still get access to everyone else’s listings.” – Jeremy Wacksman [26:52]
  • Targeted at practices like Compass’ “windowing”—withholding listings before public release.

• Transparency vs. Closed Ecosystems

  • Under pressure by fee litigation, large brokerages may prefer to create closed, private markets.
    • “You can window. You just can’t window by only showing your home to some people…because the toll on all those customers is going to go up.” [30:18]

5. Housing Crisis, Affordability, and Market Dynamics

• Transaction Volume & Market Freeze

  • Housing transactions are down (from 6M/year to 4M), mainly due to affordability and supply shortage.
    • “It is so hard to buy. That’s a combination of, yes, mortgage rates…(but) home prices are up nearly 100% in many markets from pre-pandemic levels. That’s not sustainable.” – Jeremy Wacksman [35:15]

• Supply Shortfall

  • The US is underbuilt by almost 5 million homes, with the supply crisis dating to the 2008–09 financial crisis.
    • “We stopped building enough houses to keep up with new household formation…and we definitely stopped building affordable homes.” – Jeremy Wacksman [37:15]

• Transaction Share & Strategic Shift

  • Zillow’s market share is still single digits, even though 60–70% of buyers use the platform.
    • “Our transaction share…is single digits…the number of times a buyer and seller…moves from using us as a shopping and dreaming site to hiring one of our agents, using one of our loan officers…is single digit.” – Jeremy Wacksman [38:38]

6. Zillow’s Vertical Integration & Competing in New Segments

• Mortgage Origination

  • Launched their own loan origination, leveraging their customer acquisition cost advantage.
    • “You have to originate the mortgage yourself really, to do that. But yeah, in that case, we are more competing directly.” – Jeremy Wacksman [40:26]
  • Emphasis on integrating the mortgage, agent, and closing experience in-app.

• Serving Agents & Local Expertise

  • Zillow’s software aims to let agents focus on the “atoms, not the bits” (in-person service, negotiation, staging vs. back-end busywork), leveraging workflow tools powered by data/AI [47:34–48:39].

7. AI, Data, and The Future Interface

• Data Quality and Local Nuance

  • Real estate remains stubbornly local, and not all data scales well:
    • “The value of the agent is perfect knowledge of their locality…it's in the atoms, it's not in the bits.” – Nilay Patel [47:34]

• AI in Imaging & Listings

  • Growing concern over “AI slop” (overdone virtual staging, unrealistic photos) in listings.
    • “Now you’re seeing virtual staging that’s getting maybe one tick too aggressive…How are you guarding against that?” – Nilay Patel [59:08]
    • “Having a professional database…is good for this. One of the benefits of an MLS is…licensed professionals who are endorsing…the content is accurate…” – Jeremy Wacksman [60:00]
  • Zillow is pushing AI-generated “more realistic” tours and images, hoping user incentives will favor accuracy over misleading marketing.

• The Chatbot Disaggregation Threat

  • What if the interface shifts away from Zillow’s app to AI chatbots that can query the underlying databases?
    • “That actually…the next great interface might just be a chatbot…that disaggregates you.” – Nilay Patel [53:57]
    • Jeremy argues real estate’s complexity and regulation make it more resistant, but emphasizes their focus is moving from consumers “dreaming” to “transactors.”

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Notable Quotes & Memorable Moments

• On Starting Zillow & Emotional Homebuying:
  “The data point I always remember…more than half of buyers cried during the process. We’re like, well, that’s not great.” – Jeremy Wacksman [05:23]

• On MLS Data as a Public Good:
  “There’s no differentiation of what’s for sale. Right. And what that means is it’s an incredible public good.” – Jeremy Wacksman [10:13]

• On The Strategic Threat of Chatbots:
  “If you think the next era of software will be defined by AI…maybe you don’t need an app like Zillow if your AI agent can just go look at the real estate database…” – Nilay Patel [02:00]

• On Industry Pushback:
  “It is not surprising that companies want to find a way to find more margin, maybe at the expense of their end buyer and seller, if they’re finding their margin challenged.” – Jeremy Wacksman [33:37]

• On the AI Content Flood:
  “Every platform that has user content…is overrun with slop, like pure AI slop. And I see this in listings now…over HDR photos…now you’re seeing virtual staging that’s getting maybe one tick too aggressive.” – Nilay Patel [59:08] “Having a professional database…is good for this…you have licensed professionals who are endorsing…that the content is accurate.” – Jeremy Wacksman [60:00]

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Timestamps for Key Segments

• Zillow’s Founding Story & Mission: [05:23–08:47]
• MLS Structure and Database Politics: [09:25–13:51]
• Org Structure and Making Decisions: [16:53–21:24]
• 24-hour Rule/Lawsuit with Compass: [26:16–32:37]
• Housing Crisis and Affordability: [34:47–39:42]
• Mortgage Market & Integration: [40:26–44:06]
• AI, Listings Integrity, and the Chatbot Threat: [53:57–62:54]
• Agency and Platform Power: [66:00–69:16]
• What’s Next for Zillow: [69:16–69:41]

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What’s Next for Zillow? (Closing Segment)

• Continue building a fully integrated, one-stop transaction platform—where every part of the process, from dreaming to signing, can be handled in-app.
• Expand digital tools for agents and broaden proprietary offerings like immersive tours, while balancing openness and innovation.

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Summary prepared for listeners eager to grasp the nuances of Zillow’s strategy and its evolving role in the real estate industry.

Transcript

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[Eli Patel]

support

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for the show comes from Anthropic, the team behind Claude. You know how sometimes a problem just grabs you like you sit down thinking it's a quick thing, then suddenly it's midnight? That's exactly the kind of mind Claude is built for. People who don't just want the answer, they want to chase the thing that's underneath it. Anthropic positions Claude as a thinking partner, not a search engine. It works through the problem with you, and it doesn't try to just wrap things up in an easy answer. Get started with Claude for free at Claude AI Decoder.

[Eli Patel]

Hello and welcome to Decoder. I'm Eli Patel, editor in chief of the Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with Zillow CEO Jeremy Waxman. Zillow is one of those apps that really exemplifies what you might call the smartphone era of software. The company built a great mobile app for looking at real estate listings, and it turned that into not just entertainment for so many of us, but what has become a vertically integrated platform for buying, selling and renting real estate. Now, if you've been listening to Coder lately, you have maybe already guessed why I was so eager to talk with Jeremy. A popular mobile app like Zillow is really the front end to a big series of databases. And the politics of who gets to access databases and how much that access should cost is newly up for grabs. If you think the next era of software will be defined by AI. After all, you don't need an app like Zillow if your AI agent can just go look at the real estate database, which is called the MLS directly. Or maybe you do need an app like Zillow. Maybe you need an app like Zillow more than ever. Which is, of course, the case that Jeremy made in this conversation. That's because the politics of Zillow's own database access are as complicated as it gets. The company is involved in big lawsuits over when and how houses get listed in MLS vs Zillow. And realtor groups as a whole have an uneasy relationship with the platform. Jeremy's argument here is that the future of Zillow looks a lot like an end to end platform for those real estate agents. And we spent a lot of time talking about whether a business as local and as relationship driven as real estate can benefit from platform level scale in the way he's proposing. Yeah, there's a lot of decoder in this one. It's going to surprise you, I think. Okay, Zillow CEO Jeremy Waxman.

[Jeremy Wacksman]

Here we go.

[Eli Patel]

Jeremy Waxman, you're the CEO of the Zillow Group. Welcome to Decoder.

[Jeremy Wacksman]

Thanks for having me. Happy to be here.

[Eli Patel]

I'm excited to be in person. I love doing these episodes in person. Thank you so much for coming to our office here in New York.

[Jeremy Wacksman]

Yeah, I mean, we're here for the week. Zillow's 20th anniversary yesterday. We're celebrating it today. So it worked out really well to be in person. So I'm excited to do it.

[Eli Patel]

Yeah, it's always a. It's always a little looser when I'm in person. So excited to do it. I'm excited for this episode. Zillow is one of those, you know, it's a tech company, there's platform dynamics, there's lots to talk about. My favorite Decoder episodes are the ones where you point out that a database is very complicated and full of political machinations and like big economic, like regulatory disputes. And there is no more complicated database than the databases of houses that are for sale in America.

[Jeremy Wacksman]

I think that's a. That's well said.

[Eli Patel]

And so I'm dying to just dive into that. So I think most people understand Zillow is the app where you judge other people's taste in interior Design, especially in 2026, America it feels like its primary

[Jeremy Wacksman]

purpose, I mean, it's entertainment on Zillow has been a growing phenomenon, really, since I've been there. Absolutely.

[Eli Patel]

You've been there since 2009. I want to say.

[Jeremy Wacksman]

2009. 16 years.

[Eli Patel]

16 years. And you only just became the CEO, I think last year or year before.

[Jeremy Wacksman]

Yeah, about a year and a half ago, August 24th.

[Eli Patel]

So that shift from, hey, it's, we can put all the houses for sale in your era on your phone and you can just see what's happening to, oh, we're going to transact a lot to. At one point, I think Zillow was buying lots of houses to. Now you're the CEO and the whole market has changed. Describe the arc of Zillow briefly for people. What the app was, what the company is now, what you wanted to be a CEO.

[Jeremy Wacksman]

So Zillow started 20 years ago today, as we're recording this, and it was founded on the principle that real estate information wasn't available to the average buyer and seller. So our co founders, Ritz, Barton, Lloyd Frank, they had come off of Expedia, they had built a bunch of marketplaces. They looked at real estate, they were shopping themselves and they said, wait, I can't find out what homes are for sale or what houses are worth or, you know, the data is locked in a professional's database and I have to go pay for access. And so that was the kind of founding inspiration was, let's turn on the lights, let's give people access to information. The other categories on the Internet by then had gone that way. You could start to get access to travel and all the other verticals. But real estate really hadn't come to the Internet circa the mid 2000s. So we launched in February 2006 with the zestimate. That was our launching product. And that was just trying to answer one question, right? Just what are homes worth? Not, not a perfect answer, but an estimate of, okay, take some comps and build a machine learning model to figure out what these houses might be worth to help you be smarter when you start to shop. And Zillow grew out of that into an advertising business, right? And the first probably decade plus, it was just a classic ads marketplace. It was, okay, let's offer great products to buyers and sellers. They come and use it. They, they dream, but they also shop and they buy. And advertisers, professionals are going to want access to that audience. So we'll just sell access to the audience and sold lead, sold advertising, and probably about, I don't know, 10, 11 years in, we had built this great brand, right. We were very proud that Zillow was searched more than real estate in Google. That was sort of the, you know, we have become a category term. People love the brand. The cocktail party story was always, wow, can you change my Zestimate or you know, how do you do that? But we're customer obsessed. And we would ask customers how it was going and they're like, well, I love using Zillow. Like, okay, well then what? Well, I cried when I bought my house. And the data point I always remember was we surveyed the average home buyer. We do this every year now as a housing trends report and sort of percentages and demographics and trends. And one of the things that stuck out back then was more than half of buyers cried during the process. We're like, well, that's not great. We're the preeminent brand in the category. We're helping people with the start, but the rest of it's still broken. So we shifted and pivoted the business to be more transaction focused. Right. And we obviously still have ads and ads as a part of the business model. But what we've been focused on for a while now is actually building the software to help the buyer, the renter, the seller transact. Right. Not just find the agent, but coordinate and collaborate with the agent at. The software for the agent to help you buy and sell the house, the software for the agent to help you list the house, the services for you to get the loan from us, the software for you to coordinate all that together. And we measure our growth and our success now as the amount of transactions that we actually participate in with the buyer and the seller. And so that's been the journey we've been on. We're not done. That's like you said, there's no more complex database than the real estate one. That's what makes building this integrated experience so hard is you have to coordinate so many things which we can talk about. But that's really the history of Zillow. And it's fascinating because we're celebrating a 20 year anniversary and the brand has come so far, but the goal of building a one stop shop for real estate, we're really just getting started.

[Eli Patel]

I want to come to measuring transactions, especially in our current real estate market.

[Jeremy Wacksman]

Sure.

[Eli Patel]

Where it seems like transactions are just going to stay low for a while. That initial piece of Zillow, we're going to just show you what houses are available, how much they transacted for. That is just a public database. Right. This is just a thing that happens in your area and you can have access to that database. And I would say broadly, the early Internet and pretty particularly early mobile, the innovation was often just exposing the database to people packaging it up, making it pretty saying, here's some information that's available to you that certainly now on your phone, you know, I'm at a restaurant in some town I'm visiting, I can just see what the houses are worth,

[Jeremy Wacksman]

or you're walking the beach and you can say, wow, I want to move here. Yeah, what's that house worth? Right.

[Eli Patel]

So that's a big public database that created a lot of value for Zillow. Created a lot of value for Zillow's users over time. As you want to take control of more of that transaction journey. Right. You need control over many, many more amounts of data through the process. Right next to that is the real estate industry in the United States, which is. There's the national association of Realtors. And I want to. They've been in some regulatory issues that I want to talk to you about. But they maintain the multiple listing service. That's right where it's tempting to think of that as one database, but it's actually like hundreds of databases, over 500 maintained by little groups of regional Realtors doing their thing.

[Jeremy Wacksman]

That's right.

[Eli Patel]

What's your relationship with that? Because that feels like the most contentious back and forth of this all.

[Jeremy Wacksman]

It's a great question. I think from the outside, you would assume it's contentious because we're the innovator. We came in, we're the technologists. But the reality is we love the mlss. They are the marketplace. And your comment on. We have this real estate database that is the mlss and it's available to everyone. Whenever I talk to people about our industry and they don't work in our industry, they are surprised to learn is the listings that are for sale are broadly shared by every person in the real estate market to everyone else. So the listings that are on Zillow, the listings that are on realtor.com, that are on our competitor websites, we all have the same listings. There's no differentiation of what's for sale. Right. And what that means is it's an incredible public good. Buyers and sellers, big brokerages, startups, innovators, can all get access to the same information because the real estate industry has agreed to cooperate and share it. And we're the only country in the world that works this way. Every other country, they are private databases. They are Somewhat controlled. That creates less competition, that creates less transparency and it actually creates a worse consumer experience. So we have grown up and the Internet coming to real estate actually allowed the MLS's to build this so that it's commoditized. Right. And Zillow then has to differentiate on top of that. Right. We have to fiercely compete for audience and win that audience with better products. On top of commodity, many marketplaces. Yeah, you build content other people don't have and you have this lock in benefit. We don't have that. We have to build better touring experiences. We have to build better AI powered virtual touring. We have to build better financing. We have to attract buyers and sellers to want to use our services because one click away is the same listings on another website.

[Eli Patel]

Do you think if I went and asked the national association of Realtors or any of these small realtor groups that maintain these databases if they think their product is a public good, that they would think it's a public good?

[Jeremy Wacksman]

I think many MLS would say transaction

[Eli Patel]

data is definitely public good. Right. That's just literally public.

[Jeremy Wacksman]

Well, that's the transaction data is actual county public records.

[Eli Patel]

But the MLS is a bunch of Realtors who all decided to share their listings together in very specific ways. Right. They have their own agreements. There's stuff in those databases that I can't see as a member of the public.

[Jeremy Wacksman]

That's right.

[Eli Patel]

When you described it as a public good. I'm pushing on this for a reason. They maintain control of it and there is friction in that relationship.

[Jeremy Wacksman]

Yeah, that's right.

[Eli Patel]

How do you think they see their relationship to you?

[Jeremy Wacksman]

I think many see it as complimentary. I think the challenge with 500 plus is there's 500 plus groups, so there's not. We can't have one conversation. There are many MLs that are very consumer focused and most of their rules, as you put it, are pretty consumer friendly because they want to support broad membership. Their interests are how can we have more members, how can we have more folks come and use our service? So there are some that are more industry focused and we would actually take issue with some of their rules. And we do. And we're allowed when we think they have anti consumer rules. But I guess to answer your question, on balance the idea of not having a shared cooperative database and we go sign up and get all the listings, which by the way we did before all this, like we did not get our listings from the MLS until six or seven years ago. We still had most all the listings on Zillow because People want to put their listings on Zillow. It was just way less efficient to get it that way. You're talking about tens and thousands of feeds and relationships and changes and all the things. So on balance, the idea that the databases coordinated and broadly available is 80, 90% good and there's 10, 20%, you know, friction and rules that we don't love, that we work hard to lobby and advocate and change for.

[Eli Patel]

One of the themes on the code that comes up over and over again is obviously aggregation theory, where on the Internet particularly people that have the consumer demand get to set a lot of the terms. Google, I think is maybe the ultimate aggregator. Right. There's just incredible demand for whatever is on Google and then Google gets to set a lot of terms for suppliers. There's many, many other examples of this. Credit to Ben Thompson, who came up with aggregation theory. Zillow is one of those aggregators. And so even in the case where there was another database of information, you're saying the real estate agents knew that the audience was on Zillow, so they should put their listings on Zillow as well. At what point did you realize that you had the ability to go say to the MLS providers, hey, this is way more efficient? Because at some point they didn't think that was efficient. When did you realize it would be more efficient? Or when did they realize it'd be more efficient to connect directly?

[Jeremy Wacksman]

Yeah, I mean, I don't have the history perfect, but the Internet broadly, I think helped them evolve that way. There's a standard that they created that I'm sure if we go back to when Zillow was founded, it wasn't available where brokerages, the real estate industry, the MLS could make available a feed for any Internet site or any Internet brokerage based site to display. That came about as the Internet was coming, as sites like Zillow were coming. So they reacted to that, I think in a, again in a pro competitive and pro consumer way. It probably happened over the last 10, 15 years. I mean, the other part of the Zillow history is we didn't start that way. Right. Because back then there wasn't this sort of Internet powered set of MLS rules. They were, they were before the Internet. They hadn't thought about this. So we had to go sign up and get all these things on our own. And we did that and we built these great brands and consumer experiences and then I think the industry kind of caught up.

[Eli Patel]

The reason I'm asking all these questions is one, I think, I think the politics of Databases are fascinating and in particular, who gets to connect what, who creates the data and populates the database and who gets to display the data in the database in the age of AI is actually like more up for grabs maybe than ever before.

[Jeremy Wacksman]

Yeah, right.

[Eli Patel]

Like the idea that you have an interface.

[Jeremy Wacksman]

Yeah.

[Eli Patel]

As opposed to there's a chatbot that's directly reading your database. We're going to come to that. But I see all these politics as up for grabs. The other reason is I wanted to set up the decoder questions here. You had a business that was, hey, there are a bunch of public or semi public databases that we can access to. And our job, as you've described it, is to build the best product on top of those databases and to say, here's the listings, here's the best tour, here's the best photo viewer. And that is, you know, I don't mean this to sound reductive, but that is like, we're going to make a great mobile app.

[Jeremy Wacksman]

Right.

[Eli Patel]

We're going to have the fastest photo viewer and worry about caching images where they are and all that stuff you're going to do. We're going to have the best 3D tours. The things you're describing now are we're going to do real estate transactions.

[Jeremy Wacksman]

Right.

[Eli Patel]

It's not just pure software design on top of databases. It's we're going to actually go and address the business logic that someone is having when they're looking at a listing that seems like you would have to change the company pretty dramatically. So tell me how the company was structured before you became CEO. And then this is the Dakota question, how is Zillow structured now?

[Jeremy Wacksman]

All right, I'll answer both those questions. The company structure pre and post my taking over CEO didn't change too dramatically. Mostly because the CEO transition was pretty planned. Right. So I was COO before and we really planned for succession and so we started organizing the company back then. So the question probably is better answered is how did we set up the company at that stage? And that's largely how it's structured. Now. We are, I'm sure you get this a lot. We're kind of a classic matrix. We have functional teams and functional expertise that then sits alongside business groups for our most mature businesses. So great product marketing, engineering and design teams that are fully integrated with dedicated leaders that matrix into the business team. And most of our mature businesses are run in one group, so that's most of Zillow.

[Eli Patel]

What are your mature businesses?

[Jeremy Wacksman]

So most of our for sale business is how we think about it, we think about for sale and rentals. So most of the buyers and sellers that are using the Zillow brand that you see and most of the agents that are talking to them and most of the loans and home loans that you're getting in our residential real estate is kind of the most mature part of. And I don't say mature in terms of market share and growth, but in terms of how long we've been at this. We also have startups, acquired businesses, smaller businesses that we intentionally run more independently for some period of time until we need to think about how to better integrate them. Rentals is a great example. We have a rentals marketplace that's now, you know, north of 20% of our company, but that was largely a startup inside of Zillow for a long time and it operated and still operates relatively independently with a GM of rentals and had a lot of its functional teams fully owned. And as it's matured and now, you know, it's going to be our next billion dollar business, that's one of our goals is we are starting to intentionally think about, okay, well how do we fold some of that back into the functional expertise capabilities? Street Easy here in New York, which I know you all know well, that was something we acquired and maintained its independence and have continued to maintain its independence because there's not a lot of value and there's actually a lot of more value in keeping it independent and thinking about New York because it's such a unique market. So we don't have a one size fits all. But broadly speaking, we have kind of a functional business matrix that we look at. Does it make sense for the next thing we're doing?

[Eli Patel]

As you've evolved, right, there's been periods of growth in Zillow. There's been periods of layoffs. One of the, I think the most boldest attempts that will make home buying easier was Zillow would just own all the homes that did not go well. How big is Zillow now?

[Jeremy Wacksman]

We are approximately. Don't get my count exactly right, approximately 7,000 people.

[Eli Patel]

How is that distributed?

[Jeremy Wacksman]

We think about it as like, I guess maybe chop it into like fixed and variable headcount would be one way to think about it. And you know, fixed is largely product engineering, marketing design and shared services. And then variable is sales, operations, support and things that grow with revenue. So loan officers, rental sales, you know, loosely speaking, it's about half and half.

[Eli Patel]

And are you mostly invested in product stuff or are you all accounting executives? How does that Work.

[Jeremy Wacksman]

I mean, product and engineering is probably the largest group. You know, we are first and foremost technology innovators. And that's kind of where we got our start. And that's still as we talked about earlier. Yes, the business model's evolved, but building the best products and services, even if that's becoming software for the real estate agent or if that's becoming software for loan officers, that's still how we get to our end goal of more transactions. So that's still the largest investment we have. But as the businesses are growing, right, staffing more loan officers, staffing more account managers to work with agents, that is variable growth. That comes as we see more share come. So those are growing as well. And those are, those are probably on a percentage basis growing more. Even if on a dollar basis, that's still a smaller part of the company.

[Eli Patel]

Yeah. The other question I ask, everybody comes on decoder is about decisions. How do you make decisions as CEO? What's your framework?

[Jeremy Wacksman]

I guess I'm a big believer in find the truth, don't find the right answer. There is a famous quote that I'll get wrong that was like, you know, humans are naturally biased to want to be right and sometimes they want to make the argument versus actually like seek the truth in the data. So our version of kind of customer obsessed is we're looking for the answer from the buyer or the seller or from the agent using the software. And ideally the data helps us make sure we don't have biases or we rechallenge assumptions. So like we push for data where we can get it and data to make decisions. That doesn't mean we wait for data. Like sometimes you have to make a gut decision, but often we want to be as data informed as we can.

[Eli Patel]

We have to pause here for a quick break. We'll be right back.

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[Eli Patel]

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[Eli Patel]

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[Eli Patel]

Welcome back. I'm talking with Zillow CEO Jeremy Waxman about making big decisions, including some controversial decisions that have landed the company in court. So let me ask you about a big recent decision. I realize it's somewhat controversial. We're talking about databases and one of the rules that Zillow has is if a property goes for sale, it has to be on Zillow within 24 hours or it's not going to be on Zillow at all. Explain that decision. There's a lot of controversy. There's a lawsuit next to this decision. Explain that decision. You're like, this is the policy and it's going to lead to some controversy. How did you decide? Okay, we're going to hold to it.

[Jeremy Wacksman]

That policy is really about protecting transparency. So back to your earlier question. We all benefit Zillow and our competitors from these. MLs have most all available listings for free. For free for us, but for free for the agents who work and for free for the buyers and sellers who use any site. There are companies in the space that want to take those listings off the Internet and hide them for themselves and not put them as part of the database. And we don't think that's a good thing. And if you look at the other real estate markets in the world, that's how they work. Private databases where you have to pay for access leads to consumers having to pay more. So we think that's a bad idea. And so for us it was easy to say, okay, well what we can do as a audience in the industry is we can say, well, we don't think you should be able to free ride and only give the Internet the listings that you want and still get access to everyone else's listings. So we just, we won't let you do that on, on Zillow, right? If you want to do that, then that's fine, you can go operate that way. But we don't want to have that listing. And it was more of a educational tool so that people understood there was a trade off if they did that. And ideally incense, what we already see, which is the majority of sellers and sellers agents, if given a choice, want their listing on the Internet and want their listing on as many Internet sites as possible. And that's what they choose.

[Eli Patel]

So the company you're talking about is Compass, which is reasonably high end real estate firm. They have a bunch of software of their own. They will happily tell you that they're a tech company. You're obviously in a lawsuit with them. In every other business I can think of there is some windowing, right, where you have your first customer. Netflix and TV is a great example of this, right? The movie comes out in theaters. Ted Sarandos has to promise Congress he's going to maintain a 45 day theatrical window. If he's going to buy Warner Brothers, then it goes to, I don't know, it goes, goes to HBO and then to Netflix and then to the Delta seatback. And every one of those is a different payment. And you can see windowing happens across different businesses. Why do you think windowing is inappropriate in the real estate market?

[Jeremy Wacksman]

Well, I think you should think about real estate more as E commerce than as premium content. Right? And when you're selling a good, you want to advertise to as much demand as possible kind of as quickly as possible. I mean, the number one thing, the reason people cry is because it's so hard to buy and sell and it takes weeks and sometimes months to do it. And you have people traipsing through your house and you basically have to hire someone to be kind of a part time job on your behalf to help coordinate all this stuff. So the idea that you wouldn't try and maximize price, when we ask sellers, most people say no, no, no, I want to sell my house for as most, the most I can in as short a time as possible. So that, that doesn't really fit with trying to window or hold things out or take longer. And so for us we're like, well, the goal would be to help sellers do that, to help sellers understand that if you want to maximize price, the way to do that is to broadly market your home as quickly as possible. If you don't. And there are rare cases where people don't. You can do that, right? You can. You can sell your home privately. You can opt your home out of the Internet because you have privacy concerns. All those mechanisms exist today, and we support all those things. We're not saying you can't do that.

[Eli Patel]

You can.

[Jeremy Wacksman]

You can window. You just can't window by only showing your home to some people and then forcing those people to go work with certain companies over other companies, because the toll on all those customers is going to go up.

[Eli Patel]

Wait, let me. How can you window if you can't ever get on Zillow unless you list within 24 hours? I think this is a thing that I don't quite understand.

[Jeremy Wacksman]

Got it. The only thing we take issue with is selective marketing. So, you know, there are plenty of ways for you to be private or sell your home in a. In a private fashion. Today, you can never put your home in the mls and you can sell it off market, and that happens in privacy situations or luxury situations. You can put your home in the MLS and sort of opt out of the Internet because you actually don't want people traipsing around, driving around your street. You can hide the address if you have privacy concerns. Like, you can take all these steps today. And then, of course, you can put your home on the MLS and it comes to all the sites. You can also list your home as coming soon in the MLS and say, well, I'm actually not ready to sell. You have to do a whole bunch of work, but I'm going to be selling my home when the spring selling season comes, so I should start to tell people about it. So that's a version of windowing. The common theme across all those is a company is not choosing which customers can get access to the stuff and making it broadly available for some, but not for others, which can lead to all kinds of bad behavior. And you're not telling the seller that by doing so you're going to get even more money. Right. If you're going to forego some demand that you'll somehow increase price, that's. That's the only thing we say, well, hey, if you want to do that, like, we don't want those listings.

[Eli Patel]

The reason I'm pushing here is I think I understand a broad dynamic in this industry, which was there was a pretty big settlement in a lawsuit about realtor fees and broker fees, and now those fees are up for negotiation. And so you can see the big agencies are actually trying to close their little markets right they have a lot of listings that they can just sell in between themselves. They can sort of pre negotiate those fees. You can disagree with that reaction, but it's sort of a rational economic reaction to, okay, we're not going to negotiate broker fees the way we were. We're just going to create a little closed ecosystem. That's right up against you saying, actually the ecosystem has to be maximally transparent because you don't. You're not actually doing the listings. Right. Like, you're not the seller's agent and in many cases you're not the buyer's agent in many cases. I know that there's some amount of referral there. So they're trying to protect their cost of equity, actually sort of managing the inventory. How do you reconcile that?

[Jeremy Wacksman]

Right.

[Eli Patel]

If that industry was destabilized by a legal settlement and they're trying to find a new equilibrium and you're saying, actually we're not going to let you make changes, how do you reconcile that?

[Jeremy Wacksman]

I mean, we reconcile it by like what's best for the seller. I mean, that's again, that, that is honestly, if, if we ask 90% of sellers, do you want to do something different? And they said that we'd go work on that. But you ask sellers, do you want to broadly market your home? Do you want to sell faster and for more money by public marketing? And they say yes. And by the way, agents do too. And I think that's part of the other nuance in this industry that folks don't quite get is a lot of these industry machinations are between the brokers and the MLS and the associations and NAR and all the legal work. The industry is actually run by over a million independently licensed real estate professionals who are independent contractors. And so they inherit a lot of benefits from the companies they affiliate with, but they make their own decisions and they are fiduciaries in many cases and they are supposed to disclose the benefits and risks of how you go sell your good to your buyer and seller. So that's what we're trying to help support. It is not surprising that companies want to find a way to find more margin, maybe at the expense of their end buyer and seller, if they're finding their margin challenged.

[Eli Patel]

Yeah. I'm reminded of a quote we get often from the various Amazon adjacent executives who come on the show that other people's margin is their opportunity. Is that how you see it as you think about expanding the business?

[Jeremy Wacksman]

I mean, no, only in as much as agents. Margin is not really high. The end agent we think about it as there's a lot of people in the middle of this real estate. And you go back to the real estate database, there's a lot of folks in organized real estate. Zillow is very, very focused on the buyer and seller. But we're also very, very focused on the, the individual agent at the end of the, of the chain, because those are the folks actually producing. And that is what's led us into building a bunch of software for them and building a bunch of data and workflows for them. Even though they work at tens and thousands of these brokerages and across tens of thousands of these markets, we don't really think about the companies they affiliate with as much as we think about their end agents. And those folks are all basically small business entrepreneurs. They are running their own business. They aren't getting a lot of business support from the inherited entities. And so we're trying to help them run their business better. That's how we help them help buyers and sellers sell more homes and then more transactions is better for us.

[Eli Patel]

Yeah. One thing that's interesting to me, and I'm sure you've thought about this, you've mentioned the seller a lot, like maximizing the value to the seller, which, you know, I think very, again, reductively means the prices are high. But the prices in the home market are staggeringly high right now. Just across the board.

[Jeremy Wacksman]

That's right.

[Eli Patel]

And I'm guessing that a bunch of people listening to this episode are going to say, well, I'm a buyer, I would love to buy a home. The prices are high. Who is maximum? Who's pushing the prices down? Who's maximizing my value as a buyer? Do you think about that side of the equation?

[Jeremy Wacksman]

Absolutely. Yeah. We got into seller because we talked about listings and databases. But, you know, most all marketplaces start from demand. And Zillow is mostly focused on the demand side and helping buyers. And we are absolutely in an affordability crisis in this real estate market. That's why, as you mentioned earlier, we are seeing such depressed volume of transactions is because it is so hard to buy. That's a combination of. Yes, mortgage rates. Everyone loves to talk about mortgage rates. And pre pandemic, they were really low and now they've run up. Although ironically, historically they're still not nearly as high as they have been in historical times. The challenge, though, is home prices. As you said, home prices are up nearly 100% in many markets from pre pandemic levels. And that's not sustainable. And incomes aren't Rising that fast. So trying to ease that supply demand imbalance in the real estate market is really the only way to get back to more normalized housing market. The way I always like to describe that is in any given year over the last three, four decades, about 6 million homes would trade on average five and a half to 6 million homes. That's you know, 10, 12 million people are going through this part time job process of moving. The last couple years it's been 4 million homes. So we're off 2 million off. Kind of a normalized market and it's not really budging. And affordability is the reason.

[Eli Patel]

When you say affordability, I know you started by saying mortgage rates. Everyone's talking about them. You know, I have any number of friends who have pandemic level 2% mortgages. They have no incentive nope to sell their house. They're just not going to do it until maybe never. I don't think they're ever going to get another 2% mortgage.

[Jeremy Wacksman]

No. But they may get more comfortable with a 5% mortgage. You ask them three years ago what rate would you have to see and they say three. Now three or four years go by and there's reasons people want to move that they've been putting off. And now they might say four or at some point they'll say five. So the pent up demand and rates easing will eventually converge and you'll start to see folks get unstuck from their mortgage more often.

[Eli Patel]

Do you see the like the amount of building that you would need to see to, to address this directly from the supply side?

[Jeremy Wacksman]

No, I'm glad you asked that question because that is we get asked about rates so often on the demand side. But the affordability crisis is an availability problem and that's the problem the US Zillow estimates is nearly 5 million homes underbuilt. We just coming out of the global financial Crisis back in 2008, 2009, which many folks listening I would think would remember, we stopped building enough houses to keep up with new household formation and we definitely stopped building affordable homes. And so we have this accumulated deficit of supply that was a problem that has been a problem that is now exacerbated by the mortgage rate lock you talked about. So you need more new construction to help balance the market, but you also need existing home sales to come on and folks to say well I will trade out of my 2, 3% mortgage because I need to or cause rates have come down or because enough time has gone by. So you need both those things. But it is a supply problem. And there are places in the country that are starting to make progress, but it's, you know, it's very marginal progress and we have a long way to go.

[Eli Patel]

Yeah, you were mentioning that the key metric for the company is transactions, the number of transactions that you facilitated. How do you measure that accurately or. Well, in a market that says frozen as the one you're describing, because it seems like it's just a percentage of

[Jeremy Wacksman]

a number that is flat, having a small percentage of a number that is flat allows Zillow to grow and gain share even when the market is depressed. That's, that's a kind of a short version of how we think about it internally. Despite being a brand that is so well known and, you know, 60, 70% of all homebuyers are on Zillow in any given month or quarter. Our transaction share, as best we can measure it, and there's ways we have more so than, than others, is single digits. Right. The, the number of times a buyer and seller moves from using us as a shopping and dreaming site to hiring one of our agents, using one of our loan officers, using the software to help sell and list their home, and then we participate with the agent. That's single digit. And so you're right. While the housing market has contracted from the pandemic, Zillow's share has grown. And that's why our revenue and our business is able to grow in a flat housing market.

[Eli Patel]

So you're just taking more dollars out

[Jeremy Wacksman]

of a sort of fixed pie and more transaction volume. We're taking more share of transactions because we're able to grow. You know, you grow from 5, 6, 7 on a percentage. You know, 7% of 4 is still going to be a lot more than 3% of 6.

[Eli Patel]

You mentioned all the other software building, right. The software for the agents, the software to, to get the loans. Those are places where there is other companies with existing big margins, particularly loans. Right. I always think about, how can I tell when there's like excess margin in a market and it's when I experience Glengarry Glen Ross on the other side of the phone, like I whisper to the Internet that I might want a mortgage and like 500 companies show up at my doorstep. That means there's enough money to do all that marketing to support all that sort of lead generation, lead conversion. That does seem like the opportunity for you. Right. You have the interface, you have the demand. That's right. We're just going to show you the rates. You're going to pick a Mortgage. Have all of those companies been willing to participate in that system because that would reduce their margin?

[Jeremy Wacksman]

Well, that's a place where we actually probably are more competing directly because now we actually originate mortgages. So that's also part of that transaction journey we talked about in the first chapter of Zillow. We were just an ads marketplace for mortgage, too. And a lot of people came to Zillow and said, I need financing. And we said, great, there's a bunch of mortgage providers that will advertise to you and go work with one of them. And then all the advertising inefficiencies that you talked about happen. We now are actually in the loan origination business and we more and more are originating mortgages ourself. And you are right. We have a customer acquisition cost advantage there because we already have the shoppers on Zillow. There's also a customer benefit there. Again, back to like, ask the buyers what they want. What they don't want is not just to be marketed aggressively to. They also don't want to have to hire a bunch of different companies to do pieces of the transaction and have no idea where they all are and have 37 Gmail threads and text messages about all the pieces. They want to be able to open an app and go, okay, here's my conversations with my agent, here's my offer, here's my financing, here's my closing. I just kind of want to see it all there. That's what we're trying to build. You have to originate the mortgage yourself, really, to do that. But yeah, in that case, we are more competing directly. We are an incredibly small mortgage originator. I mean, mortgage is a massive category. We are basis points a share. But the growth for Zillow is going to come from offering that more often. Because when a buyer comes to Zillow, they're asking two questions. They're saying, well, can I afford it? And is there anything I want to buy? In asking those two questions, they kind of realize, oh, I need a professional. And so one of those two things leads them to hire an agent. And we're trying to offer answers to those questions kind of all in one place. That gives us this tremendous customer acquisition cost advantage to offer mortgages as one of the things they could choose.

[Eli Patel]

I'm just thinking about when we bought our house, right? The. Our agent, our buyer's agent. This is before the settlement. So the seller was going to pay my buyer's agent's fee. So I just. This very nice woman showed up and she just helps us Buy a house. And I paid her no money because the seller paid the fee for her to do everything. And she was very local to where we live. And she knew all the local mortgage brokers, she knew all the local attorneys. And I was like, this is great. I'm just going to call Pam. She's going to do it. And she just did it. Can Zillow offer that kind of experience when there's no guarantee that it will get a fee the way that the buyer's agents used to get a fee, or are you just going to collect fees at every step?

[Jeremy Wacksman]

Well, there's kind of two questions there. Yes. The more important, I think part of that is can we offer a mortgage service that your buyer's agent would want? We think the answer to that question is yes, because one, it'll be more economical. It'll be integrated into the software. If you hired Pam through Zillow, ideally she's using Follow Up Boss. That's our customer relationship management software that many of the top agents use. So if you were to message her inside of Zillow, she's messaging back from our software. Your loan officer shows up in there. Your pre approval letter shows up in there. So we win her business because we are efficient, we are priced competitively. But the most important thing, the reason that she recommended that person, if she's doing her job right, is she just knew that lender was going to close.

[Eli Patel]

Yep.

[Jeremy Wacksman]

Like buyer agents close a handful of transactions a year. If you ask them what they want, yes, they want to help their customers save money for sure, but they want to make sure the deal doesn't get wrecked. And so what we are doing is building a capability set that we're taking to more and more agents to show them, yes, Zillow, even though we are a national brand, we have local expertise and we have loan officers everywhere that can help. And that's the number one question we have to solve, is that we got the deal done for them, even when the hiccup happened at the 11th hour or even when someone called on Saturday night. Like that's what their value prop test is. And then of course, the buyer's value prop test is trust the agent, trust the loan officer. But also they want to be efficient.

[Eli Patel]

One thing I'm really curious about in this dynamic is sort of the value of data. And I promise this, we'll get to AI in a roundabout way. I'm just previewing that we're going to arrive.

[Jeremy Wacksman]

We've gone a long time before we've gotten to AI.

[Eli Patel]

I do my best to bring up AI, sort of like late middle, because people's actual businesses are interesting to me. And the idea that we're all just going to yell about AI in some mythical way is it comes up. I promise it comes up. But I like to understand the actual business first. And the reason I'm saying I'm going to get to AI with this next question is because real estate is such a local data poor business. You're just in whatever market you're in and those are the houses and every transaction is different in a way that maybe is not even remotely comparable to the next door transaction that's going to take place. Or maybe it is, but that's why everybody's mad about this estimate, right? Like there's just something about this market, this business where the presence of additional data might not actually be helpful. Especially if you have to collect that data on the national scale and then tell some local broker or some local agent or some local buyer, some local seller, hey, we know everything. Like we can definitely close because the data says this national broker that we've partnered with, this national mortgage company we've partnered with is going to close. How do you reconcile that? Because this feels like in order to make the AI tools work, you definitely need to feed them lots of data. But the presence of the data might not actually matter at the local level.

[Jeremy Wacksman]

I think it depends on the type of data. So let's take two examples you kind of brought up there. So in the mortgage process, the mortgage is, for lack of a better term, a government mandated commodity. I mean, at the end of the day, a conforming loan is eventually sold to a bunch of GSEs. And so it has to fit a bunch of standards, has to be underwritten exactly the same way. So all the data collection for a mortgage is every company's collecting the same stuff. And so you're, in that case maybe AI or whatever for more data collection is less interesting on a national or a local scale. But I think your question was also more about, okay, well you're buying a house in Seattle and there's only so many houses in my price range in the neighborhoods I want to look at in Seattle. And so what's the value of going after more data? Well, in that case it's actually more data to help the buyer get a better sense. Because what's unique about real estate is you are making a set of trade offs. It's not like you go to Amazon or you're even shopping for a hotel and you actually have to pick from more supply than you could. You have to make a set of trade offs when you're buying to say, well, the perfect house is probably never

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going to come up.

[Jeremy Wacksman]

It's like what's available in the time frame I have and the price I have then. And if you did it 10 times in a row in 10 alternate universes, it would play out differently. And so when you're making a set of trade offs, more data about how to make that trade off is immensely valuable. So take a product that Zillow offers called Zillow Showcase, which allows AI tools to generate more of a virtual tour and generate more data to learn about whether that house is good for you before you'd have to go get in a car and waste your Saturday going to the wrong houses. That kind of data is immensely valuable because people are in search of basically almost like regret minimization when they're buying in the category. So I think it depends on the type of data maybe in the transaction, whether it's sort of worth going after and investing in incremental data.

[Eli Patel]

Yeah, I'm just thinking about when you, when you say we're going to build a bunch of software for the agents or we're going to originate a bunch of mortgages, you know, the value of the agent is perfect knowledge of their locality in many ways or like being able to stage your house like it's in, it's in the atoms, it's not

[Jeremy Wacksman]

in the bits, it is in the atoms. Agreed.

[Eli Patel]

And those atoms are pretty local. And I'm just wondering, as you say, okay, well we can definitely say the data shows we'll make you more efficient on X dimension if that's actually convincing.

[Jeremy Wacksman]

Well, for the agent, the example you just gave, letting them focus on the atoms and not the bits is incredibly valuable. I mean that's the other thing. If you know, you talk to Pam, she probably wanted to spend time trying to figure out what house you should buy, trying to figure out how to help you. Like the best agents are, yes, they're staging the home, but more often they're negotiators, they're consultants, sometimes they're therapists. They're doing the professional service, client service work, but they're stuck doing all the busy work like the customer relationship management software we offer. You go watch. And agents are spending so much of their time follow ups, responding to the text that came in, checking the item off the to do list. This is stuff that software and workflow can and should do for them. So if we can generate more data to help take away the busy work the back office work so they can kind of do their front office client work that's intensely valuable to them as small business owners.

[Eli Patel]

We have to take another short break. We'll be back in just a moment.

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[Jeremy Wacksman]

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[Jeremy Wacksman]

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[Eli Patel]

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[Jeremy Wacksman]

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[Eli Patel]

Hey, you weren't listening to me.

[Jeremy Wacksman]

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[Eli Patel]

That's cool.

[Jeremy Wacksman]

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[Eli Patel]

Welcome back. I'm talking with Zillow CEO Jeremy Waxman about how very highly regulated the housing market is and how that affects his business. One of the interesting dynamics again of Zillow, it's been around for 20 years. There's been a lot of acquisitions, there's been a lot of growth. You're talking now about pretty much vertical integration in the stack.

[Jeremy Wacksman]

Right.

[Eli Patel]

We went from we have a demand, we can showcase this public database to now we work more directly with the hundreds of databases that have whatever dynamics they have to, okay, we're, now we're, it's the banks. Like, we're, we're all the way up to, we're going to make this transaction and that's our key metric. As you integrate vertically. Are you running into regulatory concerns? I know the previous, you know, the Biden FTC would have a lot of concerns about a lot of things. The Trump ftc, the Trump doj, they have different concerns and they express them differently. And like very differently in some cases, but with just as much emphasis. Right. I mean, this FTC and this DOJ are, they're not shy about their opinions. So how has that changed and are you running into those concerns?

[Jeremy Wacksman]

I think we have a benefit in that we're so small in that market. Right. The market which is, well, one, we would argue a local share of transactions. But even if you want to think about a national market, a national share of transactions, and we are so small and then the components of the transactions. Mortgage is one of the most regulated markets out there. And we are, you know, basis points of share relative to the large mortgage providers. And so we can grow nicely and still be very, very small. So we need to be aware. But we try and build all of our products backwards from the customer outcome and from consumer choice. It's kind of in our DNA and it's in our business. Again, as we talked about earlier, more volume is better for Zillow. Therefore, that's why we focus on transparency. So that tends to align us well with avoiding any regulatory scrutiny. I'm sure there will be a point and we definitely have various individual legal challenges we can talk about. But from like, how do we think about regulations? As we build, we think about, okay, let's build something that's pro transparent, pro consumer. And there's going to be places where we want to innovate and innovation is going to be stuff that hasn't been thought about from regulatory frameworks. But if we can show our work and explain why we want to do what we want to do, we think that'll end up being a good conversation regardless of administration.

[Eli Patel]

Have you guys been having those conversations with this administration?

[Jeremy Wacksman]

We, yeah, we have. We have conversations with both types of administrations over the 20 years we've been here. Because housing, as you said, is such a kind of fascinating database. The other challenge is you asked about doj ftc. It is more of a local issue. A lot of times these things play out at the state regulator level or state associations and even local markets. And when we get back to macro lobbying for supply, that's a county level challenge.

[Eli Patel]

Yeah. It's funny, I'm talking about this and I'm ping ponging between the experience of using Zillow and then have you talked to Donald Trump about mortgage rates? He has very strong opinions about mortgage rates. I don't know if you've heard he would like them too much lower and that's his solution. There's building supply. All of your ability to do all these things comes from being that aggregator. Right. Having that demand and that is under threat in different ways. As I look at the different aggregators, we've done a lot of episodes about companies like DoorDash. We literally call it the doordash problem here on the show. That actually the next great interface might just be a chatbot. Right. In the. In the mobile revolution where we created new interfaces for databases on our phone and built a new economy. Well, there might be another one like Jony. I've is doing something at OpenAI. It is unclear what, but it is almost certainly going to be voice activated in some way. Right. You can see where all this is headed that disaggregates you like quite literally. It takes your interface out of the mix and maybe presents it in someone else's app or doesn't present it at all in some other way. Have you thought about this problem? It seems like the most unlikely one to be disaggregated first. I think food delivery is much closer. Getting Ubers is much closer. But it's coming for you as well. Have you thought about it?

[Jeremy Wacksman]

We have. And you kind of started to answer the question. It'd be easier for me to cop out and say, well, our category is different, but we do think our category is different. And then we'll get back to the business model that we think we're building. That's pretty durable for any potential aggregation change. I would say over time. Real estate is probably the most, as you started the conversation, complex, regulated, localized, licensed category out there. So it's very hard to think about, okay, well, is there a better way to shop for shoes or is there a better way to find the restaurant I'm going to order delivery from in the next 20 minutes? I mean, every category has its challenges and how aggregation might change, but I think real estate is different for the structural reasons, also for the consumer reasons. So you're not doing something every day. You are buying a house. The average home buyer right now is once every 14 years.

[Eli Patel]

Well, sure, but if you think about Zillow's entertainment, I'm walking down the beach. And now instead of opening Zillow to see how much that has costs, I just ask Gemini or Siri or whatever and I get an answer and I get some transaction listing from the public database. That means I'm not opening your app. And then maybe I'm less likely over time to open your app when it's time to do the other thing. That cycle is already quite good for you.

[Jeremy Wacksman]

Or they become a new source of demand. And sure, maybe they want to ask the horizontal LLM a question that they're asking us right now. And then when they get into the category of actually transacting, which again is the business that we're trying to build, they're going to want to use our software, workflows, data and people to transact. And so it's just a different source of top of funnel. This is the age old question. When Google came around and when mobile and apps came around, it's like, oh, you know, the top of funnel versus the transaction flow. That is why I think we get really excited about the software, the workflows, the data and the licensed professionals that are in the category is we think building that vertical integration, as you put it, is really the most durable components of any evolution. Even if the way people get to our front door might change over time. And then on the flip side, we also are going to look to innovate on those capabilities because there is the horizontal ask a horizontal do it. There's also the ask a vertical to do it which we think in this category also gets really interesting.

[Eli Patel]

Yeah, well, I'm curious about vertical searching. Who really knows where that, where that's going? I think that's wide open because the models just keep getting better.

[Jeremy Wacksman]

That's right.

[Eli Patel]

And so you see those, those opportunities open up and close down really fast. It sounds like you're saying when you say it's more durable that serving the enterprise customer, the business customer, to actually make the money is where the growth is. And maybe it's not in the consumer experience. And I wonder about that because it echoes things I've heard from some, from so many people. Right. The consumer experience of using the Internet is maybe consolidating. Maybe it'll all just be chatbots, it'll be AI powered browsers. Who knows what's going to happen. But at the end of the day, the real estate agents still need to buy and sell the properties and you can sell them software forever.

[Jeremy Wacksman]

Well, I would have said it a little differently, which is the maybe we care more about the transactors than the dreamers over time. But that's already where our business is. I mean, we make money with the transactors. The dreamers and the shoppers and the browsers are efficient, tomorrow's transactors. And we love filling that. And the brand stretching across both is a huge CAC advantage and a huge lifetime value customer. So that part we can talk about, but I don't think it's. We would pivot to be B2B focused over B2C focused. I think it's more. You would probably think about the transactors as the customer segment, as the more durable part of the customer segment.

[Eli Patel]

Yeah, it's that customer acquisition costs I'm actually really interested in.

[Jeremy Wacksman]

Right.

[Eli Patel]

If that's starts to go up.

[Jeremy Wacksman]

Yeah, yeah, yeah.

[Eli Patel]

Because less people, they have less dreamers. Just looking at houses.

[Jeremy Wacksman]

80% of Zillow's traffic comes to us free and direct now. And so yes, if that percentage went down, that's a different customer acquisition equation. And we need to be good at where the traffic's going to come from when they get into the category of transactions.

[Eli Patel]

All right, let me ask you the question I think everybody thought I was going to ask When I talked about AI, it's the first question my wife asked me. It's the first one that comes up. Every platform that has user content on it. And I would count Zillow is a platform with user content. It's a little different, but it's still user content. It's not. Yours is overrun with slop, like pure AI slop. And I see this in listings now. Actually you initially saw it with over HDR photos. So then the photos you were looking at had no relationship to reality. And now you're seeing virtual staging that's getting maybe one tick too aggressive. Like it's not actually so easy to just rip out the floor. But here we are, we're going to rip out the floor. And now you're fully virtual tours, like generated 3D tours that maybe show you reality and maybe don't. How are you guarding against that? Because this is I think the other big threat to your demand.

[Jeremy Wacksman]

Having a professional database that has some rules around it is good for this. I mean, one of the benefits of an MLS is we are one member, there are many members and we all want to solve that problem. And so you can have compliance and rules and violations and fines and you have licensed professionals who are endorsing and stamping that the content is accurate. So when it gets through, that's maybe a licensed professional who didn't do the right job. And so you have a way to police or manage that. So that's one way, as you talked about earlier, we're not going to just rely on the mechanisms of 500 plus, we hope, and we're going to lobby for that. But we'll also look at the data ourselves. And our rentals marketplace is a good example of that, where you don't have the MLS structure and it is long tail user enter directly into Zillow's tools. And so we have to build good compliance tools. I think the nice thing is the benefit in doing it in the real estate market is probably lower because ultimately you're trying to sell the home or rent the place. And if you do it, it might drive top of funnel volume. But the incentive will quickly get squashed because you won't actually rent or sell houses.

[Eli Patel]

Well, I think reality shows that that's, that dynamic has not played out right. I mean you see it everywhere. Every listing I see now has at least over HDR photos.

[Jeremy Wacksman]

Yes, if not every. But you definitely have the content challenges. But the reality is if you can, at the end of the day, someone's going to go tour the home before they buy it. People aren't buying. Well, actually that's not true. Some people do buy houses site unseen, but then they're usually entrusting a professional to go see the house while they're doing it. So someone's putting eyes on the house. So you do have this. You know, you're not again, you're not buying shoes off Amazon. And they're like, well wait, that's not what I thought I bought.

[Eli Patel]

It feels to me like the, the counter incentive to don't lie about the photography has not actually resulted in the photography being more accurate.

[Jeremy Wacksman]

Yeah, but the flip side of that is we're trying to use the AI tools to generate A more realistic version, which I think is part of the challenge of getting things like showcase going, is people who want to market the home maybe don't want to show. So we take a good example. Like we take drone photography, so a photographer, and they'll shoot it in the best possible light and then we'll generate a full flyover. You can like joystick around the house and see it from all angles. And we fill that in with LLM tech that showcases things that maybe they didn't want to show and that gives you a more realistic sense of the home. And so trying to navigate that balance of, well, maybe I didn't want to market it that way, but, oh, if I showcase it this way, I'll actually drive more demand. That's one way we're really trying to drive the right incentive is we can show that when you generate a more realistic version of things, it actually provides more demand and more pull through from buyers if you give them more realistic content, not just staged content. And we're getting to 3, 4, 5% of listings are now doing that. And we just started that a couple years ago. So that's a good example of tools we're bringing to bear and using AI to actually create a more realistic version to maybe counter that incentive.

[Eli Patel]

Would you ever do the opposite and penalize the fake imagery? Like a lot of platforms are having to consider this, right?

[Jeremy Wacksman]

Yeah, yeah. I mean, I think MLS is going to have to rule with it. I mean, we're not in the business of trying to figure out how to create the rules and the fines for licensed agents. We're not the associations of analysis. They are grappling with this concept right now. And we for sure will have a point of view on it.

[Eli Patel]

What's your point of view?

[Jeremy Wacksman]

I mean, we want to create the most fair and transparent and accurate version of a listing as best we can. We. We talk. We started the conversation talking too much to the seller. We started with the buyer and a lot of our innovations are around. Look, more transparency is good. Yes. You want to try and like hide the bad stuff. They're gonna find it when they come see the house anyway. So you're just. Now you're just wasting the seller's time with people, look, walking through the house who aren't gonna buy the house. So virtual touring is actually a good example of trying to giving buyers more empowerment actually helps the seller, even if it sort of is an indirect thing for the seller.

[Eli Patel]

Yeah, all those assets are really complicated. I feel like I could do another full hour for sure. On just what technology we're using to create virtual tours, let me ask you on that, right? Like every sort of view of a database with its own custom extensions. And this is just again, very reductive, very abstract. There's always the opportunity to sort of extend the standard, to build the proprietary version to capture audience. By saying you can only get this here, it sounds like Showcase is one of those examples. How broadly do you think about that dynamic? Right. There's the public database and then there's. We're going to add to it. We're going to add our own proprietary information to this and say to every buyer, if you want the cool drone flyover, you're only going to get that in Zillow. How does that dynamic work? Because even I don't know, you had a dispute with like Matterport, right. Like there's these other providers that would love to be in your views and then there's the opportunity for you to capture that value yourself. How do you think about the balance?

[Jeremy Wacksman]

I think our broad philosophy is any innovation today is going to become commoditized in table stakes. So we want to lead with innovation and create the right incentives for the marketplace to use the innovation. Because back to you said, the biggest challenge we're trying to get Showcase more used is it's really hard to do. People have to change their workflow. Not a lot of photographers are changing on it. There is this. I don't necessarily want to show all the things that Showcase would show in the house.

[Eli Patel]

It's like.

[Jeremy Wacksman]

But you should. It'll sell the house faster, but it'll show this room. I don't want to show or. So there is that incentive. So innovate and create the right incentives for people to use it. But it's going to get quickly commoditized and that's part of why we're even open with all the rich media stuff. So yes, we have our own tech, we support everyone else's tech. We support a bunch of 3D interactive floor plans on Zillow because if we can just get more folks using the tech and the tools, more transactions will move offline to online. That's still the biggest shift we're working on is our business is transaction volume based. We benefit from getting more transactions flowing online and digitized. So we're going to bend towards open and we're going to bend towards platform support because we still need to get all this tech, whether it's Zillow's or not, to be across more of the content.

[Eli Patel]

Let me Ask you one sort of last big picture question, then I want to ask you what's next Broadly for Zillow. Whenever I talk to people who use platforms, big platforms, there is this sense that they've lost agency. Right. And I think this is very true of the consumers on consumer platforms. It is extraordinarily true of creators on the consumer platforms. You ask a TikToker if they feel a tremendous amount of agency about TikTok. They do not feel that way. I think more and more consumers do not know what the algorithms are showing them. Real estate is a different business, a different market. You've said many times Zillow is small, but to many participants in this ecosystem, you're the platform and your rules are what makes things happen. And as you build more software for the agents, the way your platform is designed will shape more of how they do things. Certainly for buyers, the idea that their housing stock options are limited to what they see in Zillow feels like a constraint. How do you give everybody in this ecosystem more of a sense of agency? Because you're the big platform and they don't get to yell at you the way that I get to yell at you.

[Jeremy Wacksman]

I mean, I go back to the, the really unique thing about this category is. And we'll talk about transactors, buyers and sellers, not people who are just kind of using it as entertainment. You are selecting from a too limited set from what you want and having to make a set of trade offs. So in that marketplace where supply is so constrained, the buyer actually has a tremendous amount of agency. It's, it's more about actually making sure you hire the right professional and making sure you end up making the right decision, which you won't really, there's no a B test for that. You won't really know until you do it. And then you look back. That's actually where the agency comes from. Maybe if we're ever in a market again where there is, it is an extreme abundance market and it is, you know, buyer choice is not so constrained. It would feel differently. But right now if I'm, if I'm a buyer, the agency I have is, I mean, eventually I'm going to see all the homes that I possibly could buy before I make my decision.

[Eli Patel]

Yeah. What about on the seller side and the agent side specifically? Because I know they feel constrained.

[Jeremy Wacksman]

Yes. And I think the big challenge they are trying to solve is how can I run my business more efficiently? I mean the agents that are still growing in this market, they are the better agents because they have been able to thrive in probably one of the lowest levels of volume that we've seen in a long time. And so helping give them more agency is, yes, you could say we're the platform, but making them more efficient, whether it's our tools or other tools. And I'll give you an example of how we're trying to do that. So for a long time we just thought about, hey, you're getting a bunch of customers from Zillow. Right? Zillow has buyers and sellers and you collect them and then, okay, we benefit if you convert them and they think about Zillow's customers and they think about their other customers and they're just like two separate worlds. And they're like, well, I really like a lot of the data I get about Zillow's customers. Like, can you help me with those insights about the database of all my other customers? And so we're now launching a software tool that doesn't just give them the thing they're used to, which is if they want to use data on Zillow buyers and sellers, they can. And if they don't have Zillow buyers and sellers, we can't help them. We're actually helping them connect the intelligence and insights from Zillow to the rest of their data, even if they're not Zillow customers. And so you could say that's Zillow providing more software and tools, but it's also us opening it up and giving them more agency to run the rest of their business the way they want.

[Eli Patel]

Yeah. Zillow is 20 years old. You're about to leave here and go ring the bell on the stock exchange. What's next for the company building out

[Jeremy Wacksman]

the rest of this integrated transaction? Right. We want to get to a place where you can open the app. The experience you had that you talked about, the next time you do it, you're messaging with your agent inside the app. You're getting pre approved in the app, you're closing the app, you're signing in the app and you feel that it's more digital and it actually does work the way the rest of the apps on your phone work. It does feel more like a one stop shop. Yeah.

[Eli Patel]

Jeremy, this has been great. You're gonna have to come back. I have many, many more questions about database for you.

[Jeremy Wacksman]

Yeah, we'd love to. Thanks.

[Eli Patel]

I'd like to thank Jeremy Waxman for taking the time to join Decoder today and thank you for listening. I hope you enjoyed it. Let us know what you thought about this episode or really anything else at all. Drop us a line. You can email us atdecoder the verge.com we really do read all the emails. Or you can hit me up directly on the threads or Blue sky. We're also on YouTube. You can watch full episodes at Decoder Pod. We also have an Instagram and a TikTok. They're both at DecoderPod as well. They're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcast. Decoder is a production of the Verge and part of the Vox Podcast Network. The show is produced by Kate Cox and Nick Stat. This episode was edited by Xander Adams. Our editorial director is Kevin McShane. The Decoder Music is by Breakmaster Cylinder. We'll see you next time.