This Week in Startups - Zillow CEO Rich Barton on branding, building in provocative industries, and more! | E1791

Episode Date: August 11, 2023

This Week in Startups is brought to you by… Crowdbotics. Great ideas can change the world, and Crowdbotics is the fastest way to turn those ideas into code. Get a free scoping session for your next big app idea at crowdbotics.com/twist OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at openphone.com/twist Fitbod. Tired of doing the same workouts at the gym? Fitbod will build you personalized workouts that help you progress with every set. Get 25% off your subscription or try out the app for FREE when you sign up now at fitbod.me/TWIST. * Today’s show: Rich Barton joins Jason to give a masterclass on his thought process behind creating evocative top-tier brands like Zillow, Expedia, and Glassdoor. (22:02) Rich also discusses the lessons he learned from Bill Gates during his time at Microsoft (49:22), how tech management has evolved (57:04), and more! Rich's blog on branding: https://www.hopperanddropper.com/syllables-scrabble-letters-and-picking-brand-names * Time stamps: (0:00) Zillow CEO Rich Barton joins Jason (1:58) The creation of Zillow’s Zestimate (7:03) “Tension and Importance” and empowering people in the workplace (13:24) Crowdbotics - Get a free scoping session for your next big app idea at crowdbotics.com/twist (14:53) Branding and creating iconic company names (16:53) Navigating major layoffs (22:02) Back to building top-tier brands, “What got us here, won’t get us there” (27:54) OpenPhone - Get 20% off your first six months at https://openphone.com/twist (29:25) Steering the complex dynamics of startup-attorney interactions (33:22) Defying convention to create stellar products and the effects digital currency (37:54) Fitbod - Get 25% off at https://fitbod.me/twist (39:23) Innovating in the real estate industry (49:22) Lessons Rich learned from Bill Gates during his time at Microsoft (57:04) How tech management has evolved (1:01:27) How Covid-19 and remote work changed the landscape (1:07:02) The concept of “iBuying” (1:10:31) Continuous high-interest rates, “zoom towns”, and the “great reshuffling” * Follow Rich: https://twitter.com/Rich_Barton * Read LAUNCH Fund 4 Deal Memo: https://www.launch.co/four Apply for Funding: https://www.launch.co/apply Buy ANGEL: https://www.angelthebook.com Great recent interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland, PrayingForExits, Jenny Lefcourt Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

12 years ago when I started this show, it was, you know, a thousand people listening. Now it's a quarter million. And all ends a million. You know, it's a lot of listeners. And I was getting my blood drawn because I'm on this health kick. And the phlebotomist came to the house. And he's like, halfway through taking 20 points. And he's like, I just want to say. And I was like, fan of the pod. He said, yeah. So you want to take a selfie? He said, I really do. But I did fire. Whatever. I said, let's do it. Don't tell your boss. then I go to dinner the same night and I'm like I gotta eat a chicken farm

I saw somebody had tweeted a chicken farm so I go out I get a chicken farm Find the best one on Yelp The waiter's like I hate to do this And I'm like, fan of the pod Big time I go to Berkeley or whatever And I was like okay

You want to take a selfie? Yeah I said let's do it in the parking lot So you don't get fired So we went to the back in the parking lot I take a picture with him It's very weird It is very weird

Well congratulations you should feel good You've been working out It a long time So well done Yeah you know I think it's like, there's also something about like doing things. And I think it's a really good part of our conversation. Hey, everybody, welcome to this weekend startup.

Rich Barton is here. We're off to the races. This weekend startups is brought to you by CrowdBotics. Great ideas can change the world. And crowdbotics is the fastest way to turn those ideas into code. Get a free scoping session for your next big app idea at crowdbotics.com slash twist. Open phone brings your team's business. calls, texts, and contacts into one delightful app that works anywhere. Get 20% off your first six

months at openphone.com slash twist. And FitBod, tired of doing the same workouts at the gym, FitBod will build you personalized workouts that help you progress with every set. Get 25% off your subscription or try out the app for free when you sign up now at FitBod.me slash twist. So Rich Barton is the, or was the founder of Expedia, Blasdor, and now the CEO of Zillow. I've been trying to get him on the program for a while, but he's like one of those quiet assassin executors. You're not like super into doing media,

although you've had media at the core of a lot of your success in terms of strategies, yeah? Yeah, yeah, we have. You know, I believe that the product should speak for itself and it should be amplified by earned media and word of good old word of mouth. I really believe that's the way the good stuff gets out there. So I'm certainly familiar with media,

but I am relatively bashful. That won't be coming through in the pod, Jacob. Well, I mean, we'll have a good time. You and I have a lot of friends in common, and we're just chopping it up, talking shop. But I would like to just double click on this one immediately because I think you're being super humble.

When I meet with startups and they ask me, hey, I want to do earned media. I want to earn some media. I don't want to just hire a PR firm. I want to have a strategy. And you know what the first thing I tell them to look at? Zillow and this estimate. Because I met your CMO.

Remind me of her name. Amy Batinsky. She's on our board now, but yeah. Amy. And she spoke at a couple of my conferences. I interviewed her on this podcast. I don't know, five, six, seven years ago. You came up with the ultimate earned media for Zillow.

Maybe you could explain. because she's explained it to me, and I have some broad strokes here, but from your perspective as the founder, CEO of Zillow, maybe talk about how you created Zestimate and then the local reports, which then let you literally take over every quarter on a rolling basis, the local news cycle for real estate, which is adult porn, basically. All right. So there's a ton in there.

Amy is just brilliant. There's a ton in there, and I can reach, I could reach back and give a little context about how we got there, and then I'll tell you about it if you really want to get the story. Yeah, I do. But it goes back to another bestie of the pod, Bill Gurley. Oh, Bill Gurley. Bill Gurley led our A-round as a good friend,

and I was a venture partner, a benchmark for 17 years. So I'd done a bunch of stuff with Bill and those folks. And we were early as ill. We didn't even have the product. quite down yet. This is in 2006. And I had just come off selling Expedia to Barry Diller.

I had taken Expedia public when I was 32 years old back in 1999. Even you remember that. Yeah. Yep. That was when, you know, dogfood.com could literally go public. We'll get into the Expedia story. That's a fascinating one. But I had taken Expedia public and I was used to spending

advertising money. And as we were getting ready to launch Zillow, Gurley said, hey, Rich, what if you had a zero dollar ad budget? Then what would you do? And I was like, okay, what would I do? I was like, that's impossible. Of course you can't do that. But like all B-Hags, big hairy, audacious goals, you think at first it's impossible.

Then you go away and think about it for a little while. and you start to shoot the, shoot the stuff with your friends, have a couple beers and think about, well, how might we do that? And so we basically ended up taking this project that turned into Zillow and pivoted towards creation of this estimate, which most of your listeners and viewers out there know what the estimate is. Everybody knows. Everybody knows.

You gave an estimate on the price of a home, and you did that through looking at recent sales in the home, and then whatever data you had on the home that you had licensed, if I understand correctly, licensed a bunch of data. And it infuriated people because everybody believes that their house is worth 10% more than whatever the highest priced house that just sold is. And so then they all went to you and said,

how dare you? I'm going to sue you. I'm upset. My house is worth $67,000 more dollars in this. And then all of a sudden they know Zillow. They've logged it and claimed their home. Yes, yes. I would say it wouldn't be quite so negative on it and say,

Yeah, there was some negativity to it, but it was very provocative. So we used AI, yes. We used AI to create the original's estimate long, long ago. And we figured, oh, we dropped this price on every house in the country. We updated every night. And it would be provocative from a look up your old girlfriend's, you know, well, you know, from high school where she's living now, what that house is worth. We had a lot of that. We had a lot of that's not right, just like you said.

And we had a lot of, hey, I'm actually looking for a home right now. and I want to know what the hell that thing's worth. And so it was this interesting intermingling of the kind of titillating in the pragmatic, which is a wonderful sweet spot to be if you're building consumer product. If you can really get emotionally involved with your customer with the product, but also be super pragmatic at the same time, you're really digging in the right spot, in my opinion. So there was some tension there, just to unpack that.

Because when you talk, I mean, I've listened to three or four of your interviews in preparation for this. And I listen to it candidly. I just respect you so much as an entrepreneur. Anytime I see, like you're along with Mark Knopfler and like some other topics on my YouTube, you come up often. So I see like nine-year-old interviews with you and Gurley or Gersner or whatever. It's always great. But you had to double click on that one. There's some tension there.

Yeah. And that tension means attention and importance, correct? I like that. I've never heard it put that way. But exactly. If there's no tension, there's nothing interesting. Just like when you're telling a story, there has to be tension, and that tension has to be released.

And that's what a story is, right? Did you ever study screenplay writing or think of being a direct? I didn't, but I really do love, you know, I love, like you do. I love movies and books. Who's your favorite director? I think the Coen brothers Coen brothers I'm dating myself but like raising Arizona

Oh my God I used to drive I used to drive backing forth to college Across the country of my Nicholas Cage right I mean Nick Cage and Holly Hunter And John Goodman

It was you know It's brilliant Every line is brilliant Uh anyway And so many of the Coen brothers movies are that way Big Lobowski I mean Yeah Like how many times can you watch Big Loboskey

You know That's you know repeatability I think is such an important characteristic. This is why Ridley Scott is, I think, my number one. You know, Scorsese, Ridley Scott. Yeah. You know, they always just clog up my top list.

And I can watch Gladiator or Goodfellas any moment. Minute one, minute 100. I'm watching till the end. It can't get turned off. Can't change the channel. Do you know Ridley Scott? Do you know Ridley Scott did the original Mac ad for Steve Jobs? I didn't know that.

I feel like it would be, but in the 1984. 1984 will not be like 1984. woman with the hammer throwing it through Big Brother on the screen. It was like, that was important to me. I was watching, it was in the Super Bowl. It ran once, that ad. I think you're a little older than me. You were born in 1968, 67?

67, yeah. Okay, so you're three years older than me. So at that time, when it came out in 84, you were 17 years old. I was 14. Yeah. I had a PC junior. What computer were you rocking at that time? I, I, God, I went through the TRS.

What were you on? There it is. I went through the TRS 80, the Commodore 60. the Commodore 64. At the time, I probably had an Apple 2E. And this was the moment, right? The rise of IBM was biggest in the personal computer business.

And this basically was supposed to represent all the mindless drones watching Big Brothers, big head on the screen representing IBM. And this is Apple, Steve Jobs, and the Mac, this woman, this athletic woman who is breaking the spell. Look at that. It's so

subversive when you think about it. You've got all these, I mean, on a gender basis, I didn't even consider the fact just knowing this iconic commercial that it's a woman coming in a, you know, basically running like an Olympian to knowing that she's outnumbered and she's just going to blow up the screen with the man on it and all these drones. It was so iconic and made you so enthused about the power of technology. It was an inspiring call for our generation, I believe. The power to the people is kind of how I've retrofitted my whole company. creation philosophy that technology empowers the regular person to take on the man and bust

the old ways. And like, this is what this ad did for me. And it has that very, you brought up Ridley Scott, it has that very blade runnery, you know, vibey, dark apocalyptic, you know, thing. Well, man against the machine, right? And then the same thing with gladiator, et cetera. So this tension also manifested itself in glass door. Hey, what's it like to work at this place?

Yeah. rate your boss and how much you getting paid. It's another example of there's going to be some people who are inspired and empowered by this data. There's going to be a lot of tension. As some people are going to want stuff fixed. Hey, this was unfair. But you cannot look away. You must engage.

That's right. That's right. That was how and why we launched Glass Door. We had kind of this, you show me yours. I'll show you mine, give to get model for salaries. So you can anonymously share your salary. And if you do then, you can see what everybody else is anonymized salaries are for this job. And wow, what a wonderful power to the people liberating data thing.

You know, it kind of came from a printer accident. I was running Zillow at the time. And I accidentally printed everybody's review and salary and raises out in the common printer rather than my printer. This is back when we actually had printers. Yes. And IT nightmare. Luckily, I caught it, but actually it got me think. well, what if everybody did see it?

Well, it ought to make sense, right? Like, everybody who saw that ought to go, yeah, well, XYZ should be making that much money and deserves that raise because of the work that person has been doing. And it got me and my co-founder at Glass Store is Bob Homan, who had worked with me at Expedia, development manager. It got us brainstorming on how we might build a product around that. Anyway, it was the same provocation marketing. Very interesting data.

The data coming out of glass door, the data coming out of Zillow, we realized with folks like Amy Batinsky, we could actually create a machine that kept pumping that data out through local newspapers and local publications on a daily basis. And we would, we found that especially for real estate information, but also job information, there was kind of an infinite newshole. Like, you know, newspapers and media outlets would publish interesting stuff every day. about real estate and jobs if they could, and many of them do. So we realized that we built an organization, kind of Bloomberg like to pump this data out into the world,

and that is how we earned our media. Amazing. All right, we all know the one thing that separates great startups from the good ones is product velocity. What does it mean? Product velocity, fancy term, right? Here you've got your product and your velocity. Speed, the speed in which your product improves.

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Going back to Zillow and your experience there, the other thing that I think you're a master of is branding. Expedia Zillow Glass Door. All of them just incredibly well done. I'm a branding aficionado myself. I know a hard. it is to name stuff. Take us through the naming of each of those companies and how you got there.

I know, you know, this is something you're very passionate about. And then you had an interview and you talked, you said you had a whole theory about branding. And the person was like, that's great. Let me go to my next question. And I like literally almost threw my phone against the wall because I was like, he just told you. He has a theory of branding. The guys made three of the most iconic web properties or just properties companies.

And you literally let it go down the wrong. river and get lost forever. So let's unpack this here. Okay. Rich Barton's, the theories on branding and creating iconic names go. Okay. The title of the blog post is actually out there. It's something like, you know, syllables and high point scrubble letters. I do. It's out there. And back when you were already blogging a lot, I tried to blog for a little while, you know, and you know how that goes for guys like me. We do a few blog posts and we forget about it. And it just sits there forever on the

So there is a blog post that you guys can pull up and put in the show notes. The website is called hopper and dropper.com. That's a fly fishing term. And there is a post in there on blogging. There we go. Syllables, scribble letters, and picking brand names. Here it is. Those of your video are seeing it right now.

In 2009, I wrote this. Love it. This is after the great financial crisis. So you're probably somewhere just absolutely licking your wounds, wondering if it's the end of the world. It was, that was a big time. I was running Zillow. Yeah, I was running Zola.

We had to lay off 35% of the company after the, you know, it was a, it was a financial crisis, yeah. Yeah, the GFC happened in the real estate industry with mortgages, right? And we were like, caused by the real estate industry. Let's be honest. Right. We were money losing pre-revenue. Oh, my God.

That was a rough time. No, we were private, but it was losing money really rough, 150 people. I think we had to lay off about 60 people. It was rough. That was one of the lower. lower points. Laying off people. Was that your first major layoff?

Or did you have done any of Microsoft and Expedia? I had, you know, I'd had experience with small scale ones, but nothing like this. Your leg shake? Did you puke? Did you get the sweats?

I had to like, I actually wrote about it, J. Kell. I had to journal on it to dump all the awful feelings I had, get him out onto paper and talk to people about it

because it did rile me up. I have to say, you know, I've had to do it. since then. And like it or not, we do get desensitized to it. I'm very, I really, really believe you have to treat people with humanity on the way in and the way out. And you want to leave the door wide open because a lot of times they come back when you do. And we did have a lot of boomerangs. You know, that's what I call the people to come back. Those are the very best

employees of the boomerangs, by the way. Well, and it also is indicative of great management. I've had a number of them as well. And the conversation is always very encouraging, which is, I frequently have people say, you know, I, I really, we had our battles, but I really enjoyed working with you. There was just something about the energy and the dynamic, the dynamic nature of it, would love to work with you again. I think that's like, people don't know how good they had it, you know, on both sides. You have some employees who you don't appreciate when they're working for you, and they're employees who don't appreciate you, they get some great job offer, and then they just come back 18 months later, and like, you know what?

This is home. This is better, right? That's one of the greatest feelings. Sometimes you got to break up before you know you're in love, right? And then that happens a lot. Why do you think first-time founders? Yeah. Take it so hard that you got to journal, talk to a therapist, whatever, get some counseling over it and just that it just hit you like a ton of bricks.

What was on that paper that you wrote? A, because we're human, you know, and we care and we care about people more than we care about anything else. And we care about socializing and our friends and support and giving more than we care about anything else, most of us. Yep. And so it hurts. And I also think we get this, especially when we're young in our careers, we get a little bit confused about our jobs and our families, our coworkers and our families. Yes. And it feel a lot of young startups that I've been a part of, that you've been a part of, I'm sure they do.

It does feel like a family. Yes. and breaking up with your family is kind of the worst thing you can imagine, right? And so that's what it feels like. As you get later in your career, you come to realize that your work is actually not your family. That's not to say it doesn't have humanity in society. It does. But it is more like a professional sports team than it is a family or it should be.

Okay. And we are here to do a job and play a game and win the game. And we want the very best players in each position because if we have a weak point guard, we're not going to be able to score. Nope. And so I don't want to take that too far. If you take that to an extreme, you get to read Hastings at Netflix. You know, he really, really, that's his theory of HR. And, you know, an interesting theory created a high performance culture.

But anybody who's in our industry knows at the end of the year, you got Netflix people who have to basically, reapply for their job in January. And if you've got kids, if you've got friendship at work, if you've got mortgage payments, that's rattling. And people want safety. And I think he created an unsafe environment, which is appealing to

certain groups of people, but it might be a little too cutthroat. I wonder if he still holds that opinion now that they're successful at scale. I don't know. Well, I've been on that board for 21 years and still am, actually. So I'll give you a little context to

I didn't realize you were on the board, yeah. Yeah, I've been on the board since it was private, Jason. Oh, wow. But incredible company. I'm a shareholder. Learned, learned a ton. And, you know, I love it when people do things in extreme and interesting and novel ways, because then it begins to make you test all of your theories, right?

Right. And anyway, so Reed has done that for me. I'd say more than any other person. But he is now executive chairman. he is no longer CEO and the company is a lot bigger and the company operates in a highly creative enterprise where

the most important thing they're doing is actually creating stories and content with creative people. And so of course cultures evolve. I would say the foundations of Reed's performance oriented culture are there but it is

it is absolutely evolving and evolving well. Yeah. Back to branding. By the way I love I love the sports team analogy, I think, because I was just, again, one of the things that comes up a lot is I, I watched the, what's, what's the movie based on the Michael Lewis book on baseball? A money ball. Money ball. So I just got the money ball where Philip Seymour Hoffman, rest in peace. I mean, what an actor is, he gets into an argument with Brad, uh, Brad Pitt.

He's like, yeah, you're not playing him on first base. He's like, oh, I'm playing him. The roster's mine. He's like, nope, you're not playing him tonight. He's like, I am playing him and that's that. And he's like, you're not playing him because he doesn't work for our team anymore. And he's just like, you're killing me. And it's just such a great scene.

But it's very hard sometimes to make those decisions. Hey, the team started and what got us here is not going to get us there. You know, this player, you know, you see it all the time in product and finance and sales. an organization gets to a certain scale, that person just can't level up. And they don't want to. They're zero to one. They're not one to a thousand in terms of employees, right? Most of those conversations founders dread having that conversation.

But in my experience, it's liberating for the people you're having the conversation with as well. It really, it really is because everybody wants to, you know, achieve their highest and best use. And really wants to contribute in a way that everybody believes they're contributing as well. and getting the right people in the right places and letting them thrive, that's just, that's, that's fantastic. Anyway, so back to the branding. Back to branding. Back to branding. Otherwise, we risk bearing that one again.

It's a fun, it's a fun blog post. Check it out if you're, if you're from the from the from the from the from the show notes. But basically, I believe, um, first of all, fundamentally, I believe making up words. Hmm. If you, if you're building a consumer brand especially, okay, a little bit different for B2B. some of the same principles hold, though. If you're building a consumer brand, making up a new word

is better than taking a pre-existing word. Okay. Zappos is better than Sneakers.com. Got it. Okay. And the reason is? But those of you out there are saying,

are saying, oh, but Sneakers.com is going to get SEO right away. Yeah. So I don't need to work very hard. And Zappos, who the hell knows what Zappos means? I'm going to have to, like, tell people what Zappo means. Okay, that's absolutely right. So making up a word is harder initially and more expensive initially. But when you are successful making up a word, you own the word.

You have defined the word. You have filled that word with the emotions that you want to have it filled with that come from your product. And then that word, if you get lucky enough to get something like Zillow, you've added to the vocabulary of humanity. Yes. Uber, Airbnb. So many great examples. Yeah. So many great examples.

Okay. So I really like the harder route, which is make up a word and then own word. Whereas if you were Sneakers.com, you get really big, you know, it just, there's no connectivity. Sneaker means something to people already. All right. Amazon is an interesting counter example. That existed already and had meaning, but Bezos took that word and completely redefined it. Yes.

That was about to bring that up. Like, calm.com is another example. We're investors in that one, but it's a meditation app. It's an existing word. It's a four-letter word. It's in the dictionary. It's evocative. But meditation is not necessarily a calm.

It's an output of calm. Uber exists as a word, you know, the top thing. Yeah. But again, you know, and I think Airbnb, I remember talking to the founders early on, they were considering just calling it air. And I had this like big branding conversation with them. And I love the concept of air. And I was like, you should maybe do that.

I don't know. You like Airbnb or Air? I like Airbnb way better because it's theirs. I like Airbnb better, okay. Yeah, I don't like it syllables. Let's get to syllables. Okay, syllables. So I like making up words.

Then once you decide you're going to make up a word, here are things that I like. I like high point Scrabble letters. Okay. One of those. X, Q. Z's XQ. Right. They're high point for a reason.

Why are they high point? They don't exist. There aren't that many words with them. They're rare. Bingo. They're rare. Okay. So rare letters are memorable. Interesting.

Rare letters jump off the page. Subconsciously, if you look at a screen of text, the Zs and the cues and the Xs, you see them. You see them in your field of vision and you're processing them. Because they're rare, everything else is that's not rare. So I like high points grow up letters. Clearly, Elon Musk does too. X.com. X, X, X, X, X, X, X, X.

I do like X's. Expedia. Okay, so you like that. High points. High points, probable letters. Okay, second thing I learned, I made a little bit of a mistake with Expedia. Expedia. For syllables.

Four syllables. Too many. Too many. Two too many. Two too many. Two too many. Two is the right number. Two is the right number.

I think two is the right number. Two is the right number, I think. Google, Yahoo, Facebook. Yep. Airbnb. Too many. Too many, but still a good one because it's unique. Not bad.

Yeah. Amazon. One too many. One too many. Okay, though. Okay. Yeah. So it doesn't have to take all the boxes.

I mean, it's a framework. It's a framework. Are you still using your personal phone number for your startup? It's 2023. It's time to stop. It is a huge mistake that founders make. Why? You're just getting started with your company,

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It's so affordable. And think about it. If you have your sales team using their personal phone numbers, a salesperson leaves and goes to a competitor. You don't have any insight into what phone calls occurred, what people's phone numbers are. That's your company's database. And if you allow the sales team to run them up or the customer support team, it's just unprofessional. Be professional. Use open phone. And we use it for things like event communication. So we get one phone number, but it can go to multiple people, like a round rob and then we have a shared phone number.

Do that for customer support. And open phone is rated number one on G2 for customer satisfaction. I trust G2's ratings. Open phone. It's ready. It's affordable. Starts at just 13 bucks a month. A twist listeners can get 20% off any plan for the first six months at openphone. com slash twist.

And if you have existing numbers with another service, no problem. Easy peasy lemon, squeeze, open phone will port them over at no cost. Head to openphone.com slash twist to start your free trial and get 20% off. And then one other I like, maybe it's in the blog post, but I'd like it if it would make a good dog's name. Oh. Interesting. Dogs names are dogs names because they're memorable of people responding.

Dogs respond to them, which means something in our brains responds to them. Fascinating. Verbs. If you can turn the word into a verb, you know you've made it as a consumer brand when you become a verb. I'm Googling something. When you're going to zillow it. I'm zillowing something.

Yes. And the lawyers will tell you, oh, don't never, never let your brand name be used as a verb because you're going to dilute your brand you know, defenseability, whatever. I'm like, no, don't listen to that. I mean, every conversation I have with lawyers about intellectual property, fair use, trademarks and copyrights is so fear-based.

Yes. It's the worst advice. Collectively, the IP industrial complex gives fear-based advice. Yeah. And it has no practicality. Like they told you probably, do not do this estimate.

You're going to get sued. I mean, what was the glass door? I mean, you ask an attorney to evaluate the Zestimate or Glassdoor ratings. They're going to give you every reason not to do it. Yeah, don't do it at all. Yeah, don't do it. Founding of YouTube. Founding of YouTube, don't do it.

Founding of Uber, don't do it. Don't do it. Okay, so, so look, I believe that you can't be a successful start. It's very hard to be a successful startup or a company without amazing. attorneys. I have high, high, high respect. I do believe that something that lots of organizations, especially startups, a trap they do fall into, is that the attorneys are so well educated, so smart, so articulate, they command the space so well that people kind of get confused about who's working for who. Exactly. This is exactly what happens when I have conversation with David

Sachs on Wallin. He's an attorney. People are like, oh, wow, yeah. No, Trump's not guilty. you're like, are you sure? I'm like, really? I don't have no attorney, but I think they got them. The hard way, the woes of like trying to debate a debate champion. That's what it feels like, yeah. It does.

But it's such a good point. You have to be able to say to an attorney what. What do you say to an attorney when they're overpowering the room saying, hey, here's all the reasons that you're bending the rules and here's all the reasons you're going to get legal letters and sued, how do you, over your career, how did you get more confident in managing attorneys who are trying to do the right thing,

but they don't want to get fired when you get sued, so they always take the most conservative path. I guess the advice I'd give is to find attorneys to work at your company and to work outside your company who really are business people. Okay? They're business peoples and attorneys.

together. They're not just attorneys. And when you, when you, when you, when you find one, and there are a lot of good ones who are business people, you basically partner with the attorney to make a business decision of which the legal advice is one component. Okay. And, and trying to really assess the amount of risk and how much risk are you, the entrepreneur or the business person willing to take from a legal perspective. Some of the great companies have been created in that kind of, okay, it's not without risk, but we're going to plow ahead and do it because you know what? It's the right thing to do.

It's what consumers want. And at the end of the day, I'm psyched about standing in any courtroom and wrapping myself in the consumer flag saying, I did the right thing. I let the sunshine in and gave power to the people. this is I think such an instructive point because watching what Uber and Airbnb did close up an investor in one and just knowing the other pretty well and even DoorDash and Postmates you know a lot of what they provided to the world was not already defined by the rulebook and when you looked at when they did stuff to your point power to the people

if somebody is using an Airbnb, DoorDash or Uber, that is very empowering. If you live in Brooklyn and you couldn't get a cab, if you're living in Arizona and you're a retiree and you have no income and you can rent out your guest house, like this empowered people in a major way. So when they did get resistance, they had an army of advocates who would say,

yeah, we want Airbnb, we want Uber, we want DoorDash, we want Postmates. And so ultimately we'll win, even though the regular, are set up to protect the folks who are doing it the way it's done right now, be at the Taxi Commission in New York City, whatever neighborhood regs versus Airbnb. You know, we had our own, with early Zestimate, we had serious problems with the industry, didn't want us in, and they were trying to use the regulations to get us basically illegalized

and kicked out of the industry. And we had, I remember an amazing thing happened in Arizona where it got to Arizona. Congress was debating this. The real estate lobby had brought all this pressure to bear. And we had all these Arizona Congress people get up and say, you've got to be kidding. I love Zillow. Zillow is fantastic. It's helping me go away.

And it just went away. But anyway, I'm not encouraging everybody to go break all the rules. You've got to pick the rules, pick the rules that you want to break based on what is the right thing for the consumer. So a noble, you know, re contextualizing. I'll use that framing of existing laws. Noble. And I think this is where crypto was so promising at the start, but I found so abhorrent when all the hucksters came in.

They pitched it originally as this is going to empower people. Hey, you're not going to be controlled by fiat currency. You're not going to have to pay all these fees. And then I was like, oh, you're just sweeping all this cash off the table, selling worthless tokens that don't solve any problem in the world. And so this whole moral high ground that they had staked, they never delivered on. They never empowered anybody to understand the price of their home or get a better deal on a home or get a taxi in Brooklyn. Yeah.

Yeah, I think, I mean, if there's a buck to be made, it's going to be made. And then there was a lot of that. There was a lot of that there. I still hold out a lot of optimism around what emerges from the crypto buoys that actually is of value. And I think we'll probably begin to. see that emerge. What do you think is the valuable part of it? What intrigues you about it? I mean, I really do believe that having a digital store of value and a cross-border, you know, meta-currency, that concept is a very powerful and strong one, and it clearly is useful.

And, you know, because of that, I think we're going to continue to see a lot of innovation here. I'm really kind of confused, though. I mean, we're in a little bit of a resurgence of meme stocks and resurgence of trash crypto right now. And I'm just like, in what world and what economy is this being supported? It's confusing to me that we're seeing that and a little bit distressing, but I think I, I guess I write it off simply as people like to play games, you know? I literally finished my thought. In my brain, I'm like, I think there's a group of people who find going to a subreddit,

debating a meme stock and trying to cause a squeeze or just getting in a battle with some big hedge fund. It's entertainment. And then I think also buying crypto is entertainment for people. So it's like sports betting. And you and I are looking at it as investment and securities and structures and alignment. And that makes it perplexing. Just like some people will look at a professional poker player and be like, that's they're they're playing a game for a living i don't understand and it's like no they have a

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So much so that there are lawsuits trying to crack this, like, six, percent, three on each side, you know, there's like these real estate exchanges that own the data. When you came into the industry, there was, I mean, anybody who comes in and tries to innovate in that industry is attack. So maybe take me through the arc of Zillow and how they tried to stop you along the way and then how they, how you converted that to support. Or is it still like a standoff? No. All right. That's a great question.

Jay Cal, great question. And let me start out by saying, before I rewind into the history and say, this assumption by smart tech and business types, like the two of us, that it's some cartel that needs to be cracked and we're just the only guys that can do it.

That is a pretty commonly held belief by folks like us. And I would say it was one of the inspiration. for me, honestly, getting into it because it felt very, very, very power to the people turn on the lights. I've been in the industry now 17 or 18 years with Zillow, and I will tell you that our real estate industry here in the U.S. is by far the cleanest, most liquid game in the world. Most real estate markets around the world have almost zero transparency, no clearing, no clearinghouse marketplace where you can actually see all the inventory. Not a lot of places have buyers representation. So I guess I would say I've learned to appreciate it. I've learned to appreciate it and understand, of course, there are lots of pockets of

information to be liberated and lots of efficiencies to be gained and a lot of ways we can make the interactions between buyer-seller and our partners better, tons and tons. And that is the space we live in. But I didn't want to just let you throw out the, it's a cartel. But here's, yeah, tell me, like, how did they try to stop you? How did you make a piece with them? Any industry that's been around for a long time wants to hold on to the marketplace information. You can pick your industry, name your industry, and you find a set of legacy players who have a control of the marketplace information.

And they don't want to release that for obvious reasons. But Gravity Tech Internet smartphone says there's no way you can. can hold on to that information. That information does eventually want to be free. And the opportunity we saw Wazillo was being able to kind of tear down that wall, liberate that information, add a bunch of more information onto it, and create a much brighter lit, better operating marketplace. That is what, that is what drew us to it. I would tell you that because of Expedia, the travel industry really didn't like us. And I have had a lot of experience with the, let's call it the supply side of the marketplaces that I've been building, not wanting me to be there.

Okay? And actively disliking it, disliking what I was doing. But I always felt I'm holding my hands up here. I've got the supply side of the marketplace egg. Here's the marketplace. The supply side on one side and the demand side on the other. So consumers over here on the other side. I've always felt that it's most important to engage the demand side and that nobody on the

supply side is going to show up unless you have, you're doing real magic tricks for the folks on the, on the demand side. And no one's even going to take your calls and care that you exist unless you have the demand side. But if you do, in fact, show up with the demand side and you have engagement with the demand side of the marketplace, eventually the supply side is going to come around to dealing with you. That's kind of been my philosophy. Of course, both sides of the marketplace matter hugely to make a marketplace. You can't have it without both sides. But I've always believed that if a product manager is working on features and is trying to decide, should I do the right thing for the consumer or do the right thing for the supplier? Well, number one is the consumer,

number two is the supplier. That's what I thought. Of course. If you don't have happy consumers who like your mousetrap, you have nothing. And I got to see this up close in person, but some people believe the supply site is the hard part of a marketplace. So what do they, why do people fall for that fallacy that, oh, if I just had the supply, then everything would work out. You know, I think we could probably pick examples where that has been true. Especially for highly concentrated supply side industries, which there are plenty of. Or you don't have too many competitors. There's high time.

There you go. A high degree of control. Yeah. And so, however, if it is highly fragmented supply side, hotels. Hotels is perfect. Then, then, and you have a lot of choice. So it's to a certain extent somewhat commoditized in that it's replaceable or interchangeable or you're able, you're able to steer traffic one way or another. Then you actually begin to focus more on the customer side.

In any marketplace, you have to have both. I don't want to say that. You know, you really have to have both. And by the way, it could be a fantastic. consumer experience to have exclusive supply. You can only find stranger things on Netflix. That is a really good consumer experience, okay? Yes.

So I'm nuanceding a bit what I said. Yeah. But in general, I believe, I believe, at least in the companies that I love and that I've been a part of, that the consumer is your North Star. Yeah. That is what we should be. And by the way, that's the most fun to me anyway. Yeah, I mean, if you can delight a consumer, you're going to have them use the product again.

And using the product again or telling your friend about the product and why you love it are the two most powerful things in consumer land, would you say? Absolutely. Absolutely. Yeah, we were working on word of mouth stuff before there was social media before there was smartphone, you know? Yeah. below, the Zestimit predated the smartphone. Yeah. Okay.

And predated social media. There was no social media at that point. And so word of mouth was like standing on the sidelines of the kids soccer game and talking to each other. It was, we call it over the shoulder. David Sachs came up with that one, two Sachs references one episode. But he was talking about Uber and I had invested in it and then he invested in a later round and we were talking about it. He said, this thing is so viral.

I'm like, how is it viral? The give to get like the $25? She's like, no, when I order an Uber and I take somebody, they ask me if I have a driver and I say, no, I have Uber, and then they say, what's Uber? And then I take out my phone and I show them to them. And I was like, ah, it's like over the shoulder. And he's like, yeah, it's like over the shoulder virality. Yeah.

I'm like, um, we've all had that moment where somebody takes out a phone and does something magical on their phone and you're like, how did you do perform alchemy and magic? Wait, show me that. Show me that. What is that? And it's like, absolutely. Apps or spells, right? Just like, here's something amazing.

Be a wizard. I love that analogy. Be a wizard. Well, I mean, if you can conjure up something that delights a consumer, that is magic, right? And it's just, it's so rare that you know it when you see it, right? You just, yeah. It is. And you got to think, what does it take to make magic?

And you really have to find magicians. And it's something that, you know, I was kind of, I grew up at Microsoft in the, in the, in the, early 90s right out of college. And there weren't many tech people there. I was product manager of MS DOS 5. Really? Not many of your, not many of your listeners.

I mean, I was on MS DOS, but I think I went to Windows runtime 3.0 and then DOS 5.0 still exists. It was like parallel. We did do as parallel for a while. You had to actually put the windows, you had to put windows on top of DOS. Yeah, exactly. And DOS 5, DOS 5 was the first.

time we did a retail upgrade of the OS until then you had to basically wipe everything off your computer and then installed the new operating system and then rebuild all your apps and all your data and everything right and so the idea with DOS 5 was Bill Gates's idea was hey could we like write a little program that lifted up all your apps and data swapped out the OS and then set them back gently down and you're like that's insane and now we have over-the-air updates and and they occur without us even knowing. What was insane about that was software was sold in packages then. We didn't have the internet, right?

So it was the most popular software skew sold of all time by a factor of 10. DOS and Windows. The DOS 5 upgrade. Literally, we did a midnight mad. Egghead did a midnight madness sale. We had people camped out to get the DOS 5 upgrade. And it was like there were like five bullet points on the back. People forget this, but the way you interacted with software was you went to Comp USA or Fries or whatever store.

And there were, like VHS tapes at Blockbuster, package, you could go buy Netscape. You would go buy a browser for $99. You'd go buy a video game. You would go buy the operating system. When the operating systems came out, it was a BFD. It was a big deal in Nerdland. Oh, yeah. So you were going to say about what you learned at Microsoft.

That was an interesting time. The 90s was when they were. firing on all cylinders, and they were about to peek and get their knuckles wrapped by the antitrust department, which would be a great jumping off point for a lot of discussions. What was amazing to me at that? I had studied engineering in college, but I wasn't practicing engineering at Microsoft, but I was dangerous enough that I could hang with those folks, right? And it totally felt like we knew magic. We were wizards and the rest of the world was full of muggles and, you know, let's make some spells and change the world.

I mean, it was really a magical time. And honestly, I feel that way today. There are a lot more people that are involved in tech now and a lot more engineers and a lot more product people and designers and marketers that are so fantastic. But in general, it's still a pretty small segment of really special creators. of products, okay, of technology products. And if you can, if you can find those people, I'm talking to the folks out there, just find those people

and take any job you can get to hang around with those people. What are those people have in common? If we look at the people who have that alchemy, that ability to cast a spell, what are the attributes you see? Obviously, Gates and Jobs, Elon, you know, Jack, you know, doing square and Twitter.

I mean, there's a lot of interesting people in that. I wouldn't put Zuckerberg in there because he just copied everybody's stuff. I would put Evan Spiegel in there for sure. You got to put Reed Hastings in there. What are those people all have in common, the conjurers? You know, I was just listening to the names as you were throwing them out because I didn't really, I don't really have a pad answer to your question, so I was looking for patterns.

And I guess I would say, I was steeped in that environment on Microsoft, so I absorbed it by osmosis. But I guess listening to that list, I would say, it's the people who love products. And you know the people who love products because as they move through the physical world or the virtual world with you and you watch them, they are continually frustrated by bad products and bad design you know like Crestron home interfaces for managing

your lights and music okay like like Crestron I hate to say this but these big soft controls in the cars now with these giant screens like God the knob worked better okay it was better my light switch works better

than this panel of bull you know and seven clicks to get to something Okay, so you know those people in your life and maybe you're one of those people. Okay, but in fact, I think those are the people that you want to hang around with. Those are the people you want to,

those people are the ones who are going to invent the future breakthrough products, I think. You know, one thing I think with those folks, you know, investing in them for a living now is they're very, what's the word when, I don't say cantankerous, but they're very annoyed when things should work better

and they don't. What's the word? They're not insufferable, but they're not, they're intolerant of product. Yep. And they're frustrated

and they're tenacious and they're tenacious and they're critical and sometimes they're not the most tactful in their sharing of feedback. Gates was the penultimate. I mean,

and he or the ultimate, I mean, He was known for savaging people. Tell me about Gates in that period, because he was at the height of his powers in the 90s. Yeah, when I started at Microsoft. It was 90% of desktops were Microsofts at the time, to give people context.

Yeah, when I started at Microsoft in 91, we had maybe 3,000 people at the company. So not small, but certainly not big, barely, barely medium-sized. And Bill Gates at that time was the company was still in the scale where he knew everything about every product company and was running product reviews continuously through his conference room. And so every product team at the company would cycle through every six months,

every six to 12 months, and present what they were working on, the progress they were making, et cetera. And it was mostly kind of product management, engineering, little program management, you know, not a lot of sales and marketing, but sometimes, sometimes. And, you know, Bill had a reputation, kind of earned reputation for being incredibly difficult.

Steve Jobs had the same kind of reputation as well for just being incredibly critical and difficult and hard on folks. I learned a lot about how great product people think, but I also learned a lot at the time about how I deliberately tried to create cultures that were able to be critical, but also simultaneously respectful. And I would say Bill Gates has learned that in his life. time as well. So why do you think at that period of time the you know let's say no a whole rule didn't really exist and it was actually a bit more of a pirate ship and you could kind of get away with that or

that was the culture which was I don't care if you're going to cry and if I can make you cry when I give you this feedback great because I need to get you the off the ship because it can be no cry babies here and if you don't want to come in and work this weekend 12 hours to fix this shit, you're walking the plank. That was to give people historical culture, the 80s and 90s, tech was pirate ships, fighting in the open ocean, and if you were on that ship and you complained, you walk the plank, period, full stop, correct? It was pretty rough.

You know, it was a culture that you and I probably were well-suited, let's say that. Okay. But why was it like that? And what was it? Give me a story from that time period. It was a bunch of dudes. It was a bunch of young dudes. Yes.

So it's 20-somethings. 20. You know, Bill was 18 when he started Microsoft, okay? People forget. My co-founder at Zillow, Lloyd Frank, started working for Microsoft at the age of 14 years old when there were 22 people because he went to the same high school Bill Gates went to. And his mom and Bill Gates' mom were friends. And they were at some school function.

in Seattle and and you know Bill's mom said to Lloyd's mom my son's really into computers and Lloyd's mom said so's mine like we should get them together anyway it was a bunch of dudes and they were young and they were smart and that particular mix of folks created this pirate culture that that you're talking about of course that culture grew up those people grew up and you know we've recognized that to harness the maximum amount of power we can in this space being way more inclusive about the group of creators that we bring into the space meant that there had to be a different culture. And so we have all, maybe not all, you know, there may be some organizations that still operate

this way, but not mine. Yeah. You know. So, and do you think the culture got too soft during the Google, you know, we're going to do your dry cleaning and here's your infinity pool and, hey, 20% of the time do whatever you want, or if you want to do nothing and just hang out on the roof and rest and vest, that Huli, you can. And then we're now cleaning a bit of that up. So do we pendulum go too far the other way and entitle, create a little bit of entitlement culture? I mean,

I think broadly speaking in, you know, in the industry, I think it's a, it's a, it's a, keen observation. It's not how I've thought about my companies, though, J. Cal, I, I, I do believe that that culture is a symptom of simply not having to be a problem. having really cool, important stuff to work on. Ah. Like, it's... Too much success on the original idea, maybe? Maybe too much success or just, like, you're not now doing cool things that fire you up.

I believe when you're on a mission to build something amazing and you're making progress and you're working with your team, I believe what people really want is to work on cool stuff with great people and win. That's what I think. Winning does change everything. I mean, even if the culture is a little bit off, if you win, people are like, we, you know, yeah, Draymond punched somebody, but we won, right? So if they won this year and Draymond punch somebody, who cares? It's only like, you know, when you don't win and the things were chaotic that you're like, maybe we need to evaluate here. How do, what is the culture you try to breed, knowing what you know about entitlement culture, you know, on one side, and then pirate culture.

maybe being a little too rough and tumble for, you know, today's environment. What culture did you define for your companies? I would do a third, put a third leg on that triangle and basically say, oh, look, have a real kind of mission-driven company that's building something that matters to people that we can talk to our moms and sisters and brothers about and and SOs about and that gets them really fired up. Have it be some, I have a goal that is a big,

hairy, audacious goal that seems super important, you know, to people. And then assemble a really diverse team of adventurers to go summit that particular mountain. You know, that's Mount Rainier in Seattle.

You know, in fact, probably, oh, it's over my shoulder on my background here. See it there. Yeah. Amazing. That's,

this is my actual office, though, it's a virtual version. because I'm on the red. But, you know, Rainier is the destination. We want to stand on top of Rainier. That's what we want to do. Let's go do that.

Yes. And in order to get there and make it through the storm and the hail and the lightning and the river we got across to get to the base of the mountain and whatever, we have to have a really great team that respects each other and respects every component of it, not just the leader, you know, not just the end. engineer, you know, not just the storyteller. Like, we need, we need everybody, we need the whole wheel, and all the spokes tighten to make the wheel roll. And so the kind of culture that I like is a culture of respect and inclusivity, but hardcore adventurers, you know, trying to summit the

mountain. Yeah. And the purpose then makes everything kind of lock into place because people understand, hey, this is the mission. And then, you know, here's our strategies, here's our tactics, whatever, you know, you can get granular on it. But at least if everybody knows the mission of where you're headed, it gets easier. Yeah, it gets easier and you get through the dark times because there are times when you can't see the mountain. And, you know, if you don't really have a clear picture of where the mountain is, what it's going to feel like to be there, then you get lost in the dark, right? You get lost in the storm. So that's what leadership, you know, that's what leadership is. And for the leaders out there, you know, painting a picture

of the wonderful future and the destination and communicating that in a compelling way that gets people fired up. That's what serves you in recruiting. That's what serves you in building great products. That's what serves you well in signing up partners and suppliers. That's what gets you there. You know, this COVID thing was quite an interesting catalyst

and also, you know, headwind for different businesses, Airbnb had Brian Chesky and Joe Jebia on recent this year. And they both said this is like, you know, crucible moment, as Roloff, both who would say from Secoil, a crucible moment for the company. And there's a bit of a crucible moment for you as well at Zillow. This could COVID. Sorry, I got distracted. Yeah, COVID. Yeah.

And that moment in time and then everybody going remote. This had massive impact on your running of the business. Some of the business lines you were in like flipping homes or being an eyeball. I think is a term you use for it in your industry. And then, you know, brokers not being able to show houses. I mean, talk about the chaos of the last three or four years and this work from home trend, which impacts your business because everybody wants to buy a bigger home, but also impacts your ability to run a company.

So walk me through like the last couple of years and coming out of this COVID shock to the system. Because I don't think we ever experienced anything like it. A great financial crisis felt like a cakewalk compared to this in some ways. I think it's been the most important and interesting and complicated and fraught and quite actually wonderful in a way, you know, it's weird, weirdly experience in our, in my lifetime, you know, in my business lifetime, my personal lifetime, everything. It will be the thing that defines our generation, I think.

This is, we're going to be. Yeah, I thought it would be 9-11. Yeah, no, it's like, because I think it's COVID because 9-11 was, you know, contained in, some places, but so. Yeah. So, so all the trends, all the trends that you. all the trends that you talked about, you know, dead bang on. I mean, I think it's trite to say at the time, but, you know, it's a trite to say now.

But really, COVID, what it did was accelerate by N years, five years or more, a lot of the kind of preexisting trends. And name your industry, name your political movement, name your whatever. And COVID had a way of just breaking through a lot of the legacy crap that was holding back progress on these trends. Yeah. Okay. And in that way, it's like one of the most innovative times we've seen, right? You know, we all used, we had Zoom at the company. We had Slack at the company, but they weren't very well used, right?

And then all of a sudden, bang, they became the two most important things happening at the company. Everybody's got a podcast studio now in their house or office, right? They got a professional mic and a great camera and lighting. We already, we already. We already were tending towards more hybrid work and much more nomadic, nomadic work. And boom, this like blasted that one out of the out of the telemedicine. Yeah, we already were moving towards telemedicine. We were already moving towards digital document, digital routing of mortgage documents.

But we hadn't gotten there, but boom, now we got to because we can't be. Okay. So, so, you know, all of these preexisting things just got blasted, blasted forward. It was a huge, initially in the real estate market. It was a huge wind at the back for transactions because everybody wanted to move. And so we saw a huge amount of demand pickup to move. And so Zillow is a business experience, this incredible, you know, it wasn't quite like Zoom and Peloton, but it was kind of, you know, in that same vein

because so many people wanted to move. And then, of course, you do, you know, we get. the rebound from that and we're seeing that. Interestingly, if you looked at the plot of Zillow unique users on Google Trends or something over that time, you wouldn't actually see too much, which is sort of interesting. But it did change the behavior of moving itself. It kind of front-loaded some transactions and now we're dealing with the echo. Another aspect of it was, you know this well, but capital was free. I mean, you know, interest rates were basically zero and, you know, capital startups and big companies alike. We're swimming in capital.

And so we had, yeah. Unlike anything we've seen, you know, we thought we saw it in 99, we thought we saw the most euphoria you could possibly see. And that was nothing compared to what we saw in the zero interest rate period, right? People would just offer you, they would come to a company like yours and say, hey, here's money. How can you put it to use? Where we have money to put in your bank account and you can pay us back at 2%, And or even personally, they're just, oh, you have a bunch of stock here. Here's some line of credit that is unbelievably low.

And people are like, yeah, I should just buy the stock market with this. I mean, people got themselves in trouble with leverage, but it was crazy. So a bunch of new businesses emerged where capital availability was the defining competitive characteristic, right? So, you know, the ability to raise an infinite amount of money at a very cheap price hatched, new business ideas as a result. And so we saw a lot of that in the market. And one of those ideas was kind of trying to flip homes at scale and provide a more efficient marketplace, this I buying concept pioneered by Open Door, who's a partner of ours now.

And at Zillow, this was one of the things we're like, all right, well, we can raise the capital too. This might be super important. Consumers seem to really like it. If we can get it to big scale, we should give it a shot. Explain what a concept of eye buying is. What was the thing that attracted you to it? What was the thing that made it appealing to people?

Just less hassle and moving. Like, you know, it's very hard to coordinate the buy and the sell when you're moving from one house to the other. If you're a first-time buyer, this is no problem, okay, other than affordability. But if you're selling a house and buying a new house, the problem of managing all the logistics between those two things and not being able to carry two mortgages, it makes it difficult. And so if there is a market maker that sits in the middle that could temporarily own the house, fix it up and then sell it, and you could get your money and then get onto your next house, well, that makes a, that, that has some consumer appeal to it. The problem we encountered, however, was that prices turned, in COVID, especially prices turned out to be way more volatile than we ever anticipated they could be, which made the calculation for market making and holding inventory. to become much more dangerous and risky. And so, you know, we tried it for a while, decided,

yeah, we're software people. We're not big capital, big balance sheet people. We're going to stop doing that. And we're going to partner with the innovator in the space open door to do it. And that's working out. Is that what you did? You did a deal to give them your inventory to kind of work it out, as it were? No, we didn't do the inventory deal with them.

We simply did a partnership with them on a go-forward basis. We had no. No problem. We made this call in November of 2021. So before the interest rate thing happened, I just got nervous. And so before interest rates went up and made everything look horrible in the whole world, we were in houses. It was super easy to sell a house.

We were able to unload all over inventory before the site. I took a lot of crap for this at the time, you know, from my people too. and it involved a lot of layoffs, and it was rough. But we as a leadership team looked pretty smart, pretty shortly after that, because we had gotten out of the business. So anyway, this is a lesson in learning. Yeah, owning thousands of homes requires you to be able to have unpredictable swings. Being a publicly traded company, that's not great for running a public company.

If you're some private equity firm or some giant hedge fund, it's a lot easier to own 1,000 homes, 2,000. thousand homes if you're only you know if you're looking at it with a longer window and you're not doing public quarterly earnings calls correct correct and especially if you're a software person who's used to you know 93% gross margins which is how I grew up you know and and and dealing with four percent gross margins um you just you just have to be really good uh uh way way better than I am J Cal so so like People say this.

I don't know if it was Warren Buffett or something. He was talking about how hard it is to compete in like two, three star hotels, you know, the holiday ends, whatever. And it's like there are specific Indian families cartels basically who are so good at operating these things that nobody can operate them better than this group

and these families that own those hotels and you shouldn't even try operating. Right. Like, why would you bother? Like it's just too hard. Right. when we look at what's happening in the market high interest rates, maybe staying high for longer than people think. What impact is that having on the markets, especially after all of these COVID towns bumped?

And then we'll get into, or people are going to come back to offices? Because we were looking at maybe moving to Austin. That was pretty public about it. We're considering it. Yeah. And the houses like tripled in price. And I'm like, wait, how is, how are you getting $25, how are you asking $2,500 a square foot when that's the price in Atherton? And that doesn't make any sense.

And so, and there's no, you don't record the prices in Texas. So you can't even do an analysis of what's happening. And I was like, I'll just wait for this all to calm down. Now it turns out some places are collapsing, right? So maybe you can just tell us like, what's happening post all this movement? And then is the market frozen with these six, seven percent mortgages? Or is it possible that society can deal at the six or seven percent mortgage rate? Yeah, it's logical that some of those, you know,

Zoom towns, I guess they were called at the time. Yeah. You know, Salt Lake City, Bozeman, Austin, you know, the Hamptons, wherever, you know, they are definitely experiencing a pullback. Truth be told, though, none of those places is very big and couldn't absorb that many people anyway. And so they were in, they made for interesting headlines, but that is really not the big story. The bigger story in people movement, I called it the great reshuffling at the time, in people movement catalyzed by COVID is not necessarily people moving completely out of the city to a brand new city in a mountainous state or what have you.

It's actually people moving into the donuts around cities. So the thick the thick ring of places around cities is what has really been enjoying. It has the capacity to absorb a lot of movers. and it's like stimulated a real boom in these donuts around cities to the detriment of the downtowns, which is, you know, which is what's been, we're trying to recover from right now. And that's interesting and that makes a lot of sense. People who are working two or three days a week going into the office that can commute at the times they choose, that they want to move to a place that has a yard, maybe a little bit different school where they can walk the dog, whatever.

And that's really been the predominant trend. So now what we're looking for on a lot of people, are watching very carefully, especially if you're in the commercial real estate business that has investments in office towers in downtowns, you're trying to figure out what that's going to happen with all that space. Anyway, so that's kind of the big story. What do you think happens? Do you think people go back to offices? What are you doing at your company? Or are those going to have to get converted? It doesn't look good for them, JCal. It does not look good, right? It does not look good.

I think it's way worse than it even looks in the data that you see because, you know, the utilization rates, the kind of what's being rented out right now in these offices, Pick Your City is kind of in the 85% range right now, which is galactically low numbers. But if you actually look at usage, it's way below that. And then you start thinking, all right, what are employers going to do? you're not going to rent space for like the Wednesday when everybody's in. You're not going to like rent for peak loading. You're going to actually figure out how to optimize how much space you use so that you've, when on the peak days, you're not going to be able to take everybody,

but you're also not going to be empty on Friday and Monday. Anyway, it's a really, really tough problem for downtown commercial. The hybrid issue is very real because yeah, yeah, you're looking at it. I'm assuming you're going hybrid. Is that your philosophy going forward?

Or do you believe in, or do you believe like you need to get people back to an office to really do your best work? And what do you candidly believe? I'll come to that in a sec, but I think the answer, I think the answer, my intuition, the answer about what's going to, what a new city is going to look like is we have to rethink cities to the point where we are intermingling life, shopping, entertainment, and work. the places that have intermingled those beautifully are thriving the ones who have hived off high-rise downtowns and that's where your office work happens and then over here is where the living happens and then over here is where the shopping happens that is an unsustainable model people what people want is an intermingled live work shop eat play that's what they want anyway so I think that's how it's going to going to play at

With Zillow, I saw the writing on the wall really early July of June, July of 2020. So first year of the pandemic, I was like, oh my God, we're working really well together in the cloud. This definitely and obviously feels like the future to me. Let's burn the ships and let's liberate people. And then if you were living in New York City, but your lease was coming up, I said, go ahead and move back to Ohio, be near your parents. no problem we'll never ask you we'll never make it a job requirement

that you move back to New York City and so we basically went to what I call Cloud HQ early on not without its problems but oh my God I'm so thankful that we didn't have to do this hokey pokey negotiation between management and employees that's going on at so many companies right now

Amazon Facebook Yeah everybody is Everybody Well I mean there is some amount of abuse that is occurring. There is a lack of mentorship for young people. And, you know, there's some amount of collisions.

I've heard you talk about this before in interviews that occurs by being in person. So what have you lost that you lament by having the Cloud HQ? What have you lost and that you're struggling to recreate? I mean, I think the early career mentorship thing is a real issue. and our solution may be that we just do less of that you know, we have more experienced people. It could be. We'll see.

You know, the collision in the hallways thing is real, but we're getting all kinds of more collisions in Slack and Zoom as well. If you're using those tools correctly or teams, you know, if you're using those tools correctly, there's a new kind of meeting format where I've got Slack up and Chrissy's telling me. you know, your time is getting tight. You know, we're multi- multitasking and making decisions in meetings, right?

Which has never happened before. Like, we had to have the meeting after the meeting to make the decision because you couldn't say what you're really thinking in the meeting. But now we can do it in Slack and just say, this is the answer and everybody moves on. So there's some more efficiency that's occurring because of this. Way more, way more.

We still get together, though. So CloudHQ for me means, yeah, you can decide, you can choose in these three time zones, where you live. No problem whatsoever. But you are going to be, for a lot of job types of least, you are going to be required to get together at least once a quarter with your team. Once a quarter for a week.

And you got a, yeah, so if you got a family, if you got kids, whatever, you got to make that work. That's part of the deal. That's part of the deal. And people have a blast. And it's like the human thing. And you get to know people and you make the human bonds. And then when you go back into your Cloud HQ seat, you have more personal relationships and

you're more effective. So that's where. You need to what a third? You need 25% of the office space that you had? I think that'll be right. Yeah. Yeah. We're at 35% now.

We'll probably get down to 15 or 20% of pre-pandemic space. See, this is the fascinating part that it is worse because I know that the statistics you're talking about are correct. The vacancy rate in San Francisco, I think, is like 30%, which is absurd, right? Like 30% is 30%. You said 15% is crazy. San Francisco is 30%. but I know that other 70% is being used 15%. That's right.

Let's say give it 30%. Oh my God. Unsustainable. I mean, it's empty down there. It's truly, truly scary. All right, listen, I know you got to go. You gave me a full 75 minutes. I appreciate it.

I was really concerned with this because I told you at one point, like I invited you so many times. And I was just like, you were like, did I say something mean to you? I literally, I insulted a lot of people and I didn't know. I'm not good like that. It's like, what does that happen now?

Three times? I was like, I told Brian Chesky at some point. I was like, Brian, I've invited you out like seven times. I really am going to stop inviting you because I feel like I offended you at some point and I really don't want to make it uncomfortable. And I said the same thing to you. And you're like, check out, I love you. I didn't do it.

I'm like, so let's do a pod. It's not the end of the world. You're just like, I'm not my thing. Honestly, it was, I don't like to get overexposed. But, but it was really, Gersoner, I'm really tight with Gersner. I'm really tight with your bestie Gersoner. Oh, thank you, Brad. Watching all you guys have so much fun on the all-in, as well as how you're doing with this pod.

Yeah. It's like, all right, you know, obviously. I appreciate your caving. Well, here's the thing. There's, you and I have been so blessed, right, to be part of a generation that grew up with the PC, build companies, to invest in companies, be on the board of companies. It's just such an amazing privilege. And these conversations, I have 16, 17, 18-year-olds, that 14-year-old who went to work on Microsoft,

they listen to this week. startups, they take notes, they write me these long emails. I saw this interview. It changed my life. They come up to me. I've had people hug me and cry and say, I watch this episode with Travis and you guys talk for three hours or I saw this Chris Sock episode and it changed their lives. And that's what gets me stoked every thing about a mission. If I can share these conversations with quarter million, half million people and it just inspires 10 of them to create something in the world, man, what a legacy and is how great it is. And you were so awesome. Let's put it on the books for a year from now. I really appreciate

you taking the time. I got a thousand more questions. There it is, folks. We'll save it for next time. Thanks, Jake. Thanks, everybody. All-Star Summer. Rich Barton. All right, see you. Share it now.