Three entrepreneurial lessons I learned from Rich Barton, the co-founder of Expedia and Zillow
I'm a huge fan of podcasts as a way to continue to educate myself about entrepreneurship. There's so much to learn from Rich Barton who built two of the biggest consumer internet brands of the past 20 years in the travel and real estate industries. Here's three things I learned in his recent podcast with Guy Raz on How I Built This:
- Most entrepreneurial opportunities are built out of frustration. Rich didn't like having to go through a corporate travel agent while working at Microsoft and wanted to have visibility on flights and hotels since no one would care more about finding the best flights and hotels then he would. That led him to start Expedia. When he and one of his co-founders were looking to buy homes, they commiserated about the lack of information which made their search process particularly arduous. That led them to start Zillow. Where'd the name come from? They felt like the home buying process had both financial and emotional elements to it so they combined zillion (financial) with pillow (emotion) to create Zillow. Saved them $5 million dollars which is what the holders of the homes.com website wanted for their URL.
- The success of Expedia and Zillow demonstrate how empowering consumers with better data can create tremendous business opportunities. While these Barton-led businesses threatened the incumbents (travel agents and real estate agents), those incumbents that survived realized that they couldn't fight this trend. Instead, in order to survive in this new era of data transparency, they needed to adjust their own business models. The pandemic has dramatically changed how people think about buying houses as more of the activity is moving online which clearly accelerated the growth of Zillow (and their stock price).
- The key to the early success of Zillow came from their Zestimate of individual homes. They developed an algorithm using big data to provide a market value for over 60 million homes at launch. When a team member proposed the idea of the Zestimate with a stock chart on a whiteboard showing the hypothetical fluctuations of a home's value, they knew they had a winner. Why? It was 2006 and home prices were zooming and everyone wondered what their home was worth. In addition, most were also curious about the home values in their neighborhood (admit it, you have spent some time scouting your neighborhood on Zillow:). How successful was the launch? It crashed their servers almost immediately after an article about Zillow appeared on the Wall Street Journal website. Once they had the audience attracted by the Zestimate, they devised a strategy to monetize it.