Zillow's CEO on LinkedIn and How to Avoid "Tech Company Cancer"

The Fool is exploring Seattle. Today, CEO Spencer Rascoff introduces us to Zillow, telling us how the online home and real estate marketplace works, what he considers its greatest strengths, and what investors should know about it.

What other tech companies does a tech company look up to? Spencer explains his admiration for LinkedIn and how he plans to follow the social networker's lead to longevity. He also has a tip for investors looking to evaluate tech managers they're unable to meet face-to-face.

See more in the following video. A transcript follows.

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Austin Smith: You guys, obviously a younger tech company in the spectrum of tech companies. Are there tech companies out there that you really feel just get it? They're operationally excellent, very relevant, sticking around, keeping the creative juices going, that you guys admire?

Spencer Rascoff: I deeply admire LinkedIn. This is a 10-year-old company that, as a user and an investor in LinkedIn, and as a friend to some of the management team there, I feel like LinkedIn is executing at as high a level as they've ever been executing, in terms of the pace of product development, the pace of innovation, the internal culture.

It just is a company that seems to be firing on all cylinders, and it's 10 years old. We're seven or eight years old. This is a dangerous time at a tech company. Years 5 to 15 are where most tech companies lose their way. It's where the original management team tends to churn out, especially a couple of years post-IPO, and it's where companies settle into mediocrity and start accepting mediocrity.

That can be very cancerous to an organization. Credit to LinkedIn for that not having happened to them. I try to follow their lead.

Smith: How do you avoid that "tech company cancer"?

Rascoff: I think the biggest thing is I try to lead by example, by staying passionate and full of energy, and trying to convey that sense of energy and enthusiasm for the product to the whole management team and to the whole company. You try big things, and you fail fast. We try to do that at Zillow.

Yesterday, for example, I decided with the team to kill a feature that we were really excited about. A pretty small feature; we were really excited about this feature six months ago, when we shipped it, but it's not getting the usage that we wanted yet. The data proves it. OK, let's pull the plug. Let's get rid of that feature and move on.

That's a hard thing for companies to do, to self-edit, and it's very important to keep the pace of innovation alive.

Smith: Now, as you know, we provide advice for investors out there. Everybody's loving the tech sphere right now, a lot of really interesting companies, but retail investors may not have access to management teams in the same way we do right now, with you. How should retail investors evaluate tech managers that they may never get to meet?

Rascoff: One of the best tools out there for this type of thing is actually reviews about the company on Glassdoor. You go to Glassdoor; you can read reviews that employees of Zillow have written about what it's like to work at Zillow. You can see my approval rating from my own employees, that rate how good a job I'm doing, and how good a job the management team is doing, and what it's like to work there.

As an investor myself, I never buy stock in a company without reading reviews on Glassdoor of that company. It's a great insight into what it's really like at the company.


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  • Report this Comment On July 15, 2013, at 4:26 AM, Wopalongcassidy wrote:

    I like to monitor the value of my home on zillow. Bought it for 287k. Within two years it fell to 256k. Then it meteorically rose to 328k in 500 dollar a day increments. Yet on the bar graph it shows 318k as the max value. Then from 6/11/13 to 6/12/13 it plummeted 10k overnight. What ?? Their values are based on algorithms. There values, as you can see are highly inaccurate. Yet it amazes me as to how many in the RE world refer to them.

  • Report this Comment On July 15, 2013, at 9:26 AM, bearsnsox wrote:

    why didnt you ask him about "innovation" what has his company come out with, digs?? which is horrible, the Zestimate is a joke, no one goes by it, zillow is filled with old listings with incorrect info and pictures, talk about things to avoid, tell him to invest some money in redoing that entire site

  • Report this Comment On July 15, 2013, at 3:08 PM, ngc5904 wrote:

    I think it's because they're the only game in town, that does everything that they do. I think they have a great business model, in a great space, but their valuations are inaccurate. If someone else were to come in with accurate home valuations, I think Zillow would suffer.

  • Report this Comment On July 17, 2013, at 11:11 AM, bearsnsox wrote:

    can you please let us know why the CEO has sold 2.2 million worth of shares in the past 2 months? including 318k two days ago???? thought he sees a lot of potential

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