Motley Fool Money - The Next Priceline?

Episode Date: June 19, 2015

TripAdvisor soars on its partnership with Marriott. And Fitbit soars in its Wall Street debut. Our analysts discuss some of the week's top business stories and Zillow Chief Marketing Officer Amy Bohutinsky talks about the future of real estate. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good to see you, as always, gentlemen. Chris. How you do it? We've got a couple of big deals and a really big IPO. Zillow Executive Amy Batinsky is our guest this. week. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the travel industry. Shares of TripAdvisor up 20 percent this week after the online travel company expanded its partnership with Marriott. Starting later this summer, anyone

on TripAdvisor.com will be able to book a room with Marriott hotels without having to leave TripAdvisor's site. And Jason, Wall Street thinks this is a big deal. Do you? As a TripAdvisor shareholder, you too. Congratulations. This is a great deal. I think, you know, we've talked a lot about how much easier it would be for TripAdvisor to become more like Price Line than it would be for Price Line to become more like TripAdvisor. It's the reviews and the content that really set TripAdvisor apart. And so this deal with Marriott, I mean, that's 4200 hotels worldwide, includes brands like Ritz Carlton, Fairfield, and Suites, along with all of the other Marriott names.

And it's really interesting to see kind of how they work this deal. It's a little bit different than you might see something with Price Line. Ultimately, this allows someone on TripAdvisor to book a reservation with a Marriott property. Now, what this does, it keeps the service side of this transaction on Marriott's side of the court. Marriott is going to be able to handle the customer service side of this transaction, learn more about their guests, and take this really from the point of that booking on TripAdvisor. Now, TripAdvisor concedes a little bit on the pricing side of this, but that's okay, really, because really what TripAdvisor is doing is just diversifying their revenue.

stream more and more with deals like this. And so, you know, I think that it is definitely a win-win for both parties involved. And it's really interesting to see if they will be able to land more deals like this with big, reputable names in the space. Because I think that most property managers, most hotel chains would like to be able to keep control of that service aspect, particularly if they have a brand to protect like Marriott does. How do we feel about their reviews on these type of sites? Because I got a I have to admit, they always confuse me. One person, it's the best place ever. The next person, this place is a dump. How many do I have to read? Is it like the Olympics? I have to throw

out the best and the worst? Well, and along those lines, do we now have to add a grain of salt to the Marriott reviews if we're on TripAdvisor? Well, I think that's all very good points. I mean, regardless of what you're doing when you read reviews, I think you have to take them with a grain of salt. Now, I think with trip advisor, it's important to note that there is a vetting process involved with these reviews that are being posted. As someone who has posted on TripAdvisor before, it's not like you just make a review and it automatically goes up. I mean, they're going to take the time to vet it,

to read through it, to understand exactly what you're saying. Is it consistent, generally speaking, are you making stuff up or really do you have an ax to grind? And so with TripAdvisor, because they have garnered so many reviews, it really is pretty easy to separate sort of the wheat from the chap, so to speak, and find the real good places to go. And I'm not just speaking from experience, we're getting ready to go to Hawaii here. And we've had a ball the past couple of months, just looking at these different things to do in places to stay and places to go. And just having read through all of these reviews, there really is a separation there.

Absolutely has, yeah. That's fair. Maddie, Jason mentioned Priceline. If you're Priceline or Expedia, how nervous are you right now? I think you're getting a little nervous because it seems like all roads now are starting to go through TripAdvisor. The OTAs like Priceline, the online travel agents, like Priceline Expedia traditional ones, are a little worried that their cut of these deals of the travel agent deals might be going

lower if someone can book instantly through TripAdvisor through all these hotels. So I think it's, yeah, I'd be a little nervous. What's the nature of the transaction, right? I mean, you're going to Priceline to book this transaction. This is sort of, you know, you're going pre-trip booking the transaction, and then that relationship is done. You're not going back to Price Line to post a review. With TripAdvisor, you're researching the trip.

Now, if they can offer me the opportunity. to book that transaction as well. Wow, I mean, that's killing two birds with one stone. That's pretty attractive. CVS Health, the leading drugstore chain in America, is buying targets, pharmacy and clinic businesses for $1.9 billion. So now, Ron, when you walk into any of the more than 1,600 target locations across the country, those pharmacies are going to be rebranded as CVS Health. This also seems like a win-win. I like this deal. It makes sense. It's clearly not targets bread and butter, but they do

need those pharmacies to generate traffic. I think the fact that they'll now be CVS pharmacies and their minute clinics as well in 80 stores will even be a better driver of traffic into targets. It allows Target to concentrate on their bread and butter business, which they had been struggling with for quite some time. Brian Cornell, the relatively new CEO, I think, has been doing a good job of getting the company back on track, refocusing on its core business. As he says, getting back to its core DNA, getting out of that. disastrous Canadian business. A win-win, I think, for both companies. I think the $1.9 billion is actually reasonable. I don't usually think that when it comes to acquisitions. So, good job

for both companies. Well, and you mentioned Brian Cornell at Target. Larry Merlo, who's been CEO at CVS Health for about four years, he's building up a really nice track record. Getting it done, really, I think in his mind, he wants CVS to be a health care company, not a retail business. And he's been doing a great job. They acquired Omnicare. KR relatively recently, a $12 billion deal. They're a nursing home pharmacy operator. They're making this deal. The stock obviously is doing quite well. It's up 36 percent over the last year. Target's actually up even more, 42 percent over the last year. Both CEOs, I think,

doing a nice job. Fitbit, the maker of wearable fitness trackers went public this week, shares up as much as 60 percent on opening day. The company raised more than $700 million, making it the biggest consumer electronics IPO in history. Maddie, you buying? I don't know. At a $7 billion market value. It's approaching over nine times sales. They did $745 million in revenue last year. They come in multiple colors. They do. They do. And prices from $60 to $250. I mean, it is profitable. I'll give it fit at this. They had $745 million in revenue last year. That's tripled from the year

before, and they generated profits of $131 million. So this is that rare IPO this year that actually is profitable. My problem is with Fitbit, and as I was a Fitbit user at one point, is that it just became, Jason and I were talking before the show, it became kind of a pain. I mean, I'd have my little Fitbit, and for a while, the first month or two, I'm loving it. I'm counting my steps. I'm counting my stairs, and my distance traveled every day, and I'm going on Fitbit's great dashboard and looking at it. Over time, I just kind of got tired of it. And the day I stopped wearing the Fitbit was the day I said, gosh, I feel great. You're free. I'm relieved. I'm relieved. I don't have to keep checking everything.

And the one thing, the big thing, my big concern with Fitbit really is so many, I mean, they claim you know, 20 million active devices out, their active users. But the problem is I feel like most people are going to have a one-and-done relationship with Fitbit. They buy the device. They use it for a few months. There's not a good recurring revenue model here, unless you really engage with Fitbit software, and most people aren't doing that.

So, a little worried about this one. And you haven't even mentioned the competitive landscape, which includes companies like Under Armour, Microsoft, and Apple. Yes. I mean, that's going to be a big problem for them. You know, I didn't even realize before. I mean, I was trying to figure out what is the big deal with the steps. Oh, you took 8,000 steps to you, BFD, okay, whatever.

I didn't realize. Apparently, the American Heart Association has deemed that 10,000 steps or more per day is a way to really keep your health in check. I mean, is there something to that? I don't know. I mean, but, you know, it seems like it's... I think for... If you're already active, if you're an already inactive person, which I consider myself

fairly active, it's not going to be that interesting to you. If you're someone who doesn't do anything and you're like, you know, I just, I need to get up to 10,000 steps, it's a nice, neat little product that gets to you. you moving. But once I think you're used to it. I even have one. That'll tell you something. Yet it's not on his wrist, folks. On a day where you actually exercise, 10,000 steps is nothing. On a day where you're relatively sedentary, it's kind of difficult. You've got to get up from your seat and walk around the building a couple times a day to get there. But let's also admit, I mean, it's kind of fun to be sedentary every once in a

year. Every once in a while. Speaking of sedentary, shares of the gap up this week, not because the apparel retailer is crushing it. The company announced it is closing 25% of stores in North America. That's 175 locations, Jason. And they're also cutting some jobs at their headquarters. What happened to this company? That was such a great segue. It was almost as good as investor relations headline of this press release that read Gap Inc. announces strategic initiatives to increase productivity and profitability of namesake brand. And nowhere in that headline would you ever think for a million years that something actually was wrong. Yet they're closing down a lot of

No indication that there are fewer Gap stores year over year for the past decade. I was going to say, they've been closing stores every year. They have been. I've listened to this call. It was really interesting. Management's kind of back on its heels here. It seems that they've lost touch with their core Gap customer over time. And the entire process from inception to production, to supply chain, to selling was just full of inconsistencies. And so they're talking about these stores that they're closing. They weren't representative of the brand. The traffic patterns have shifted. Certainly, They are seeing some changes there with e-commerce. They do about 15% of overall sales online.

I mean, I will say to Gap's credit, it is nice to see that they have more than just the Gap brand underneath that umbrella. Old Navy, I think, is what really is buttering these guys' bread right now. But yeah, I mean, Gap, you know, hey, listen, fashion comes and goes. Retail apparel is such a tough, tough market. Gap is just, they're not immune to this. And so I think, you know, this is going to be something that we're going to see more and more. of as time goes on, and they really need to figure out a way to get back in touch with their core gap consumer. Coming up, just in time for Father's Day, we'll share some advice we got from our dads.

Stay right here. This is Motley Full Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So, no buyer sell stocks based solely on what you're here. Welcome back to Motley Full Money, Chris Hill here in studio with Jason Moser, Matt Argusinger, and Ron Gross. Three years ago, Starbucks paid $100 million dollars for lots. La Boulange, a small chain of bakeries based in San Francisco. The goal was to improve Starbucks

food offerings across America with food from La Boulage. And Ron, I'm assuming its mission accomplished. I was about to say. Because this week, they announced they're shutting down all 23 of the La Boulange locations, calling them a distraction. How big it is? It's the same business. It's not really the same business. Listen, as you said in the lead-up, the point was to beef up the food offerings and the store. stores, different offerings, better offerings. There are 12,000 different stores, La Boulanger

is in now for Starbucks. They did that. As you said, Mission Accomplice. 23 bakeries doesn't move the needle for Starbucks. Any time they spend talking about it, plus the two manufacturing facilities that they use to create the products for the bakeries. It's just not worth it. There's nothing to it here. The real estate is worth something, again, for a company the size of Starbucks. Okay. We shouldn't spend even too much. time talking about that. But this is the Bay Area, and that is valuable real estate. So, that'll be something to watch to see what happens there. But otherwise, yes, it's a distraction, and the company mission accomplished. The stock for Starbucks hit a new all-time high this week.

Does it look cheap to you, or is it pretty fairly valued? 20 times EBITDA right now. Typically not a cheap number. But, I mean, it was probably there just a year ago, and the stock's up 40 percent since then. So the company's a couple of company continues to just make great headways, keeps expanding internationally, here domestically, the numbers look good. It's probably a relatively low-risk stock that you can keep as a core holding and do just fine. All right. It's Father's Day this weekend. Jason, I'll just start with you. One piece of advice that you got from your father that you'd like to share. It can be about money. It

could be about anything. Oh, wow. Yeah. I mean, I guess so my dad is the one that got me investing. So thanks, Dad. Happy Father's Day. I love you. He taught me from a very, very, very, very, you. young age, and he was a fool and didn't even really know it, I guess, because he's a long-term style investor. And he said, listen, son, you will never buy at the bottom and you will never sell at the top. Get used to it and move on. And everything will be fine. And I tell you, that is just some good medicine to swallow right there, because there's

so many people I know, they'll buy shares of a company. The next day it's in the red. They're like, oh my God, I can't believe I'm losing money. You just, you got to look past it, you know, you just keep on going on and it's worked out all right. Mattie? Yeah. Father's Day, Dad. I think humility is the most important thing anyone can teach anyone, including a son. And I would say the one thing my dad told me really early on, and it was really hurt when he told me at the time, was he said, you know, son, he said, you're going to

meet people in life that are better at you at everything. So it's not just better at you and something that you know, no, no, you're going to meet people that are smarter and better at you than everything. And you just, that's great. You should embrace that and just hang out with those people. And I always thought that was really great advice. Ron? I think the best This lesson he taught me was one that he taught by example. My dad is 85 years old and he still works two days a week. Strong work ethic, work hard, save your money, but always put family first. For my dad on the financial side, it was definitely teaching me the difference between being

thrifty and being cheap. Being thrifty is a good thing. Saving money is obviously a very good thing. Being cheap is just one of the tackiest things. imagine, well, in my father's mind. So it was a great lesson to learn at an early age. Let's bring in our man from the other side of the glass. Steve Broido, before we get to the radar stocks, one lesson from your dad you'd like to share this Father's Day weekend? Well, my dad and I talk about stocks all the time. We were talking this morning, in fact, and this advice he picked up from a broker, which is the first bad news is not the last bad news. Oh.

Wow. Deep. That feels like... The Broido men are deep. It was heavy. That feels like, I don't know, something you should like buy on a t-shirt or something like that. Let's get to the stocks on our radar. Ron Gross, you're up first. All right, I got K-12, ticker symbol is LRN, Learn. It's the largest operator of online public

schools in the U.S., originally backed by folks like Michael Milken and Larry Ellison. Tremendous growth in the early days have really stumbled now. We've got allegations of aggressive recruitment practices, weak test results, student turnover. Stock has come way, way, way down. Whitney Tilson doing a short attack on it did not help. It is now a deep value potential stock. If they get their act together, there could be significant upside here. Balance sheets are real strong and they're still profitable, even with the problems. The problems, though, I really need to dig in to see where this goes from here. But this could be really interesting.

I think the corollary from Steve's dad would be the first allegation is not the last allegations. That could potentially be true. Steve, question about K-12? If you were hiring for a position and someone had gone to an online university, would you look at them differently than someone who had gone to a bricks and mortar one? That is really fair. Well, the honest answer is, yes, I would. But perhaps we shouldn't, because more and more, even regular, normally accredited schools are going to be offering more and more online. I think that's certainly the way this educational industry is going, but certainly accreditation is very key.

Jason? Sure. This just happens to be great timing with our guests this week. But I'm going with Zillow, a ticker Z. This is the Premier Web property for real estate. These are the guys It hit it first. They hit it hard. They have a wonderful mobile presence. A solid management team in place. They've been working together a long time already. Tremendous market opportunity. They continue to improve the information on their site, on their listings. They made the transition from the relationship ending with List Hub seamlessly. And any time management refers to the business as being in a transition year, which is what they've said here because they're integrating

that Trulia. See, I pronounced it correctly, Chris. Trulia acquisition. You know, the short-timers bail. They do, but the long-term picture with this company still looks great. I and shares myself. We own it million-dollar portfolio. Love this business. Love its future. Steve? My question is, have you ever looked up the Zestimate on your home? I have. As a matter of fact, I've looked at the Zestimate on not one, not two, but all three houses which bear my name, Steve. Hi-roller, Jason Moser. Donald Trump. Maddie, what are you looking at this week?

I've been looking a lot at Reitz, Real Estate Investment Trust lately, because as interest rates have kind of ticked up, you've seen a lot of stocks in that space come down. One of those is Alexandria Real Estate Equities, Ticker A-R-E. It is the biggest real estate owner of life sciences, medical labs, and biotechnology facilities. And I'd say it's a great way, if you're interested in the biotech industry, it's a safer way, in my view, to play. It's just to own the company that owns most of the real estate behind those places. And it's got a 3.4% yield on it, too. Steve? Are folks looking at appreciation in these equations of REITS? For this particular

industry, I would say it's more about sustainable advantage. This company owns some of the really premier biotech and facilities like that. So, yeah, there's going to be some growth. They'll kind of grow along with the biotech industry. But, you know, so top line, you got Mike at 10%, but then you throw in the 3.4% yield on it. So it's probably a nice return from here. Steve, you've got a REIT, online real estate, online learning. Any of those interest you? I'm going with a REIT. Sounds interesting to me. I like real estate. There we go. All right, drop us an email. Radio at Fool.com is our email address.

Drop us a note. Let us know the best advice you ever got from your dad. Ron Gross, Jason Moser, Matt Argusinger. Guys, thanks for being here. Thank you, Chris. Shares of Zillow have nearly tripled the market's return since the online real estate company went public nearly four years ago. Up next, a conversation with Zillow's chief marketing officer, Amy Batinsky. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Zillow is the number one player in the online real estate market, a position that's gotten even stronger after it acquired number two player, Trulia.

At our event in Seattle last week, Motley Fool CEO Tom Gardner had the opportunity to talk with Zillow's chief marketing officer, Amy Batinsky. And he began the conversation by asking about Zillow's business model. So we started Zillow nine and a half years ago because at that time, it's hard to believe. But if you think back a decade ago and you were trying to figure out what's for sale in a neighborhood or how have prices dropped, were there foreclosures here,

what's for rent, what's a home worth, here we were, you know, 2005, more than a decade, 15 years into the internet and you could not find that information online. Every single area, different marketplaces had been empowered with information via the internet and real estate really hadn't.

It was still kind of in the dark ages. So when we started Zillow and launched it in 2006, it was about empowering consumers with information to help them become smarter about what is the biggest, often most expensive, and most emotional purchase of their lifetime, where to live, their homes. And at the time when we started Zillow, we didn't have much beyond that. We didn't have a business model. We didn't know how we were going to monetize this.

But we said, if we build something that doesn't exist, that's going to help consumers with something that's so important and so kind of near to their hearts and find and synthesize and create the best information we can, it's going to turn into something. So that was the genesis for Zillow. We evolved much, you know, over the years. Today we're largely mobile. I would guess that most of you who said, you know, Zillow use, have used Zillow on a mobile device or a tablet.

Today, and today we derive the bulk of our revenue through something called, which is called our marketplace revenue, our premier agent program, which is real estate agents who pay us for exposure when someone's searching in a certain area. So if you're looking at homes for sale, you'll see on the listing of the home, on the right-hand side, it'll say, need a buyer's agent, here's three or four. And they pay us to be a premier agent. They're rated and reviewed by thousands and thousands of consumers, and that's not something that can be impacted whether they pay us or not.

But to them, the value is interested buyers who contact them. that's where most of our revenue comes from. Of course, some people, I'm sure you're asking every conversation or interview that you have, what's the future of the realtor? Why isn't this all just going to be automated and people will just have more and more discounted pricing when they're buying their home because they can do it themselves and have all the data right there online? Why won't that happen? Or is that possible? It's interesting that there's a statistic, the National Association of Realtors tracks is the percentage of home sales transactions that are made with a realtor involved.

When we started Zillow 10 years ago, I believe it was at like 70 something per, no, maybe close to 80%. Today it's over 90%. Over 90% of all home sales transactions include a realtor. Even as more information has come online and it's empowered consumers to learn more about homes and home prices and the process. And a big part of this is, or what it is, is, buying a home for most people is something that only happens a handful of times in their life.

It's expensive, it's emotional, it's the biggest purchase they make, it only happens every seven years or so on average, and it's not like an airline ticket where you just buy it, if it doesn't work out, it's not a huge loss. Like this is really big. So most people feel like they want to have a professional. What has changed, though, is what that relationship looks like over time because it used to be you called a real estate agent and you said what's for sale what can I afford today you pull out Zillow you when you're in the car walking or driving through a neighborhood at night on your laptop many months before you're ready to even pick up a phone and call an agent and you figure out what can I afford can I pre-qualify for a mortgage what's out there

what's selling what do I like you may visit some open houses on your own and then there's at some point where you say okay I'm ready to do this then you pick up the phone and you call the agent, that relationship sort of time period has shortened, but people are still using agents for the transaction. I want to talk about your career and kind of the founding of Zillow. So what do we call Zillow people? Zillowians. Zillowites. Zillowites. Okay, Zillowites. And now we have Zillowites and we have Trulians. And we have Trulians. Okay, right, exactly. So the Zillowites gathered at a couple different companies and then came to Zillow. Can you just talk a little bit about the founding and obviously how many people were there in your founding group when the

company started. So I'll tell, if you don't mind, I'll tell a little bit of my own story, that 10 years ago, so Spencer Raskoff, our CEO, I had known him, he was the co-founder of Hotwire, the discount travel site, and I worked there in San Francisco. We were acquired by Expedia in 2003 and became one of the brands in Expedia Inc. And this was about, this was 2005. Spencer had since left Expedia, and he went and teamed up with Rich Barton, who had been the founder of Expedia, and then in 2005 was the founder of Zillow. He teamed up with him, and Spencer called me in San Francisco.

And, you know, at the time, I loved San Francisco. I had a new boyfriend. I kind of had this great life in San Francisco, and Spencer said, Amy, you got to come talk to us. We're going to do something in real estate. It's really exciting. I said, okay, you know, I'll talk to you, but there's no. way I'm leaving San Francisco. I've got a great life here. I've got this new boyfriend, like no way. But I'll come up and talk to you guys. I came and talked to them and between Rich Barton and Spencer, they convinced me in an hour. And that relationship ended. Actually, so I've got to-

You don't have to go there. No, I've got a good footnote to this. They convinced me in an hour to drop everything and move to Seattle because the passion behind the two of them and the idea of what they planned to do was so powerful that I said, okay, I'm going to leave everything behind. Now the footnote to that is that that boyfriend has done my husband. He followed me up here and we have two kids, so it all works out in the end. But the point is, something about Spencer, if any of you have ever met him, I know you've spent a lot of time with Spencer, is he's an amazing leader. He has an amazing vision, and he executes in a way that I've never seen or met with any leader before.

and Rich, the founder of Zillow, is similar. And kind of the passion behind what they've always believed in and what we've always believed in, and the consumer orientation has really been the driving factor behind our success. Everything we do at Zillow is with a consumer in mind, because we believe if we're doing right by the consumer, then we're ultimately going to be able to make connections to the right professionals to help them, and that will ultimately impact revenue. But if we're sitting there making a decision, should we do this, or should we do this, we're going to err on the side of the consumer.

And sometimes at the expense of revenue, because we believe it'll take us the right way. One example, actually, that you may have heard about a bit on our last earnings call is with Trulia. We have intentionally taken down the number of display ads on Trulia because we know consumers don't like them. When you're going to look for a home for sale, you don't want big flashy things popping up. popping up. They want fewer of them. We believe that creating the right and most seamless and most enjoyable consumer experience will ultimately help us to win. But sometimes there are short-term revenue tradeoffs we choose to do that. I want to circle around toward the end of

the conversation, talk about the culture at Zillow. And it's one of the reasons that I made the decision to invest in Zillow is because it's such a dynamic workplace and you have such great retention rates and you're among your employees. But I want to talk more about marketing, now so chief marketing officer you all did not advertise at all in the first seven years you've been there even at Zill over ten years of course so what was the shift when did you decide to start advertising why and then we'll talk a little bit about some of the things that you've learned yep so in the early years of Zillow we number one we had taken venture capital money and and we said we want to

put this to best use we had all been through the first internet boom with hot wire and Expedia and it's thing seen a lot of companies spend a lot of money on advertising in the early years and not make it. So we said we're going to put all our money into building the best possible product because the absolute best product marketing you can do is to build a great product that people love and they want to tell other people about. So the first seven years of Zillow marketing was building great products and then using what we call earned or organic marketing channels to spread the word of those products. PR, social media, content marketing, government relations. So making sure our Zillow data is used.

used by government agency is widely reported on by the media. But about three years ago, we were in a position where we had taken the company public. We were in a good financial position and we kind of looked ahead and, you know, it was interesting. We were the leader in the category. We had about 30 million people using Zillow every month, yet ahead of us we saw what we called brand white space, meaning there were still more people in the United States who had never heard of Zillow than had, even though we were the category leader, the largest brand in the category, and we said, that's ours for the taking. Like, there's so much opportunity to grow this.

Now's the right time to put our foot on the gas and actually spend this money. So we made a decision at the expensive near-term profitability to invest for the next many years relatively heavily in brand advertising, and that we fully believe that if we did this right, and if we're If we did it in a way that really connected with consumers, that we could build a household name that not just we know, but our children and our grandchildren now. So we started investing in advertising and a big portion of that in brand advertising, this is our third year. And it's something that's worked.

It's worked tremendously well. Two years ago, two and a half, when we first started our first national campaign, Zillow brand took about 25% of visits across the real estate category. Today it's over 50. Our monthly unique users were about 45 million Uniques. Last year we hit our peak at 90 million Uniques for Zillow. So it really made a tremendous difference. But I also believe that's the way that we approached advertising. It wasn't just what's called direct response, which a lot of companies do which is I would call it focused on the near term it's how many visits can we drive at this moment for us it is about growing traffic but more

importantly about building a brand that resonates with people and that resonates people in an emotional way and that says to people we understand that buying a home it's not just about the numbers it's a big scary decision because we know that there's so much writing in that decision where your children children go to school, what your commute time will be, your spouse's happiness, who you hang out with, what soccer teams your friends are. I mean, really, we hear from consumers all the time. There's so much involved in this, and so we wanted to make sure our advertising said to people, hey, we understand, we get that, and we understand that your home is so much more than that.

Coming up, more of Tom Gardner's conversation with Amy Batinsky. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Let's return to Motley Fool CEO Tom Gardner's interview with Zillow's chief marketing officer, Amy Batinsky. So just projecting forward maybe five years, somewhere in the five to 10 year range. What does Zillow look like then? What is the level up from the experience that people are having now on the consumer side? You know, it's interesting.

It's hard to say what the daily device will even be, right? Will it be here? Will it be here? I can tell you that the Zillow brand will be. be the prominent brand on whatever that device is. I mean, we, back in 2009 when we launched our first mobile app, right when the first iPhone came out, it was very, very quickly that we realized, oh, my gosh, this is the future of the way people are going to be searching. And we built and carved out an entire mobile team. We're one of the first, you know, internet companies to actually do that,

and we made a cultural shift internally to mobile. And we said, this is going mobile, we're going to be a mobile company. And sure enough, within the next two years, we shifted, we, the top, toppled over where more of our visits were coming on mobile. Today, 70% of people on a Saturday use Zillow from a mobile device because it's the weekend and people are walking and driving around neighborhoods. So Zillow will be multi-platform. Zillow, the brand will be a household name. Worldwide? International? Probably not. Probably U.S. based. I mean, there's just so much there. What If we're on stage in five years, we won't just be talking about our successful real estate marketplace.

We'll be talking about our rental marketplace, which actually is quite large. We just don't monetize it heavily today, but we'll be talking about the success of that. We'll be talking about our mortgage marketplace. We may even be talking about something for homeowners in home design or home improvement. We've got a small stake in the ground there. But down the line, how someone will talk about Zillow is anything related to homes. So the vision and sort of the marketing vision for me is that when someone's 21, say, and looking for their first rental home, today they download the Zillow rental app and they find that.

And every year when either they look for a new rental or renegotiate their rent, Zillow is a part of that. So really they're engaging with us over the course of the year. At some point they start thinking, should I rent or should I buy, they shift over to Zillow real estate, search for mortgages, get pre-qualified, buy a home. 25% of people within the first year of buying a home do some sort of a remodeling projects. They use Zillow digs for that. Refinanced by their next home.

The point being that we do and we will increasingly have a reason and a way to communicate with people their entire lives as long as they live somewhere. Let's talk a little bit about the culture. What has kept you there for 10 years? What's kept me at Zillow for 10 years has been the big ideas. We're going after in the leadership. Spencer is a tremendous leader. I've now worked with him for 15 years.

In fact, our entire executive team that was with Zillow in the beginning 10 years ago is still here. That's very, very rare. Four years post-IPO for a company to have its top executive team completely intact. And the reason for that is because we still believe that we're just getting started, that there's so much more ahead of us to come. And you can see that in the way we make decisions. We make decisions for the long term. And culturally, you'll see that a lot around Zillow too.

Something else that I think is highly unusual for a public company. You walk into Zillow, spend a month with us, come to any company meeting. You'll never once hear somebody bring up stock price. You'll never hear Spencer bring it up at a company meeting or end of the year company meeting. And the reason why is because near term, it's not important to us. I mean, we're a growth stock. We're going to go like this. What we are building for and what we want our employees to build for

and become passionate about is the opportunity long term down the road. And if they're focused on the short term, they're not going to make the right decisions. They're going to make tradeoffs. So it's something that's actually quite taboo at Zillow to talk about stock price because we want employees who shouldn't care what happens to the stock tomorrow because they're going to be with us for the next five years. And they're with us because they really deep.

believe in what we're building and growing for the long term. Here come my few zingers before we open it to the floor. What's one thing that you and Spencer disagree on? His treadmill desk, which he walks on, which by the way is like six feet from my desk, because I believe that if you walk slowly at a two-mile pace through meetings, it's not, I mean, you'll burn some calories, it's not real exercise. I think he should go, I would more go for a run.

Yeah, I mean, I will say one thing about Zillow, culturally, that's important. Everyone has a say, and you will just as much, we could be arguing back, everyone has an opinion. I mean, I've seen people at all levels strongly disagree with Spencer on something, and he respects that. I mean, you have to back up what you're saying, but he respects that, and it's sometimes, you know, the senior manager who's, who's 27 may make the point that turns something in a whole direction and may drive what we do. And that's something culturally that's very important that everyone has a say. There's not sort of this hierarchy of how decisions are made and that's really important.

My last question before you go to the question is what's a core leadership principle of yours? You've mentioned Spencer's leader. How do you lead? Well, there's, I guess a couple things. We have a set of core values at Zillow that we really do kind of live and breathe and there's a couple that are my favorites. One is move fast, think big.

And it speaks a little bit to the taking big swings. One is Z as a team sport, meaning leadership is not about telling people what to do. It's about hiring the absolute best people you can and then saying, how can I empower and coach and help them to do their best work? So even today, I'm chief marketing officer, but I have a large team, and I have a lot of great people who actually do the marketing today. Right. Like, I'm not that beautiful TV commercial. I'd love to say that I came up with the idea and created it, but I didn't. I have an amazing team that did.

But it's how do I empower them? How do I keep them engaged every day? How do I give them the resources and the connections and the coaching they need to go do amazing work like that? And that's something that Spencer has taught me. One of his mantras actually is hire better than you. And that's the true mark of a leader. Don't be afraid to hire someone who is smarter, faster, more knowledgeable, or better than you. If you're intimidated by that, then you're not a great leader.

A great leader is to hire the best people you can and then say, what can I do to make them do their best work. That's going to do it for this week's edition of Motley Full of Money. Our engineer is Steve Broido. Producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.