An Interview With Zillow CEO Spencer Rascoff

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.

Spencer describes how Zillow was created and how it compares with other companies in the real estate space. We learn about the company's approach to acquisitions, its ambitions with regard to the rentals market and other future endeavors, and the biggest misconception investors have about Zillow.

Austin Smith: Hey, Fools. Austin Smith here, joined by Spencer Rascoff, CEO of Zillow.com. Thanks again for sitting down with us today.

Spencer Rascoff: Thank you.

Smith: Let's just jump right into it. Tell us a little bit about Zillow, maybe how it got started and the background, for those who aren't familiar.

Rascoff: Sure. Zillow is the largest real estate website. We have about 50 million people that use Zillow every month, on desktop and on mobile. We started the company about seven years ago with the vision of empowering people with access to information so they could make smarter decisions.

We started with home valuations, telling people the "Zestimate" on their home -- what every house in the country is worth. We then expanded into real estate listings, rental listings, mortgage information, and, more recently, home improvement.

We're about 700 employees. We're based here in Seattle, and we're the largest real estate site, nationwide.

Smith: Obviously you're leading Zillow today, but you've had other tech roles prior to this, notably Expedia.com. What do you see as the central qualities that investors should be looking for in tech leaders today?

Rascoff: I think the most important thing, when an investor looks at investing in a company, and backing that leadership team, that management team, is passion for the product. Does the executive, and does the whole management team -- ideally, does the whole company -- care deeply about their own product and the way their users interact with it, and the way their advertisers benefit from it?

In my case, I live and breathe this product. I'm constantly talking to users through social media or through email or at conferences or trade shows or elsewhere, talking to the agents that use Zillow, talking to the lenders and rental professionals that use Zillow and talking to our consumers, and taking back what I learn about how people use the product, into how we develop software here.

Smith: Why make the leap to Zillow from Expedia? Why the transition?

Rascoff: I started a company called Hotwire in 1999, which I sold to Expedia, and then at Expedia I helped run the hotel business for Expedia and Hotels.com. In 2005-2006 we were at Expedia and we were looking at other verticals that hadn't yet been "Internetted," hadn't been empowered by the Internet, where there was still a lot of customer frustration about lack of information.

To our surprise, the real estate industry still felt very anachronistic in terms of consumer empowerment. There was all this great data and information locked up in secret industry-only databases or in county courthouses.

We said, "Why don't we liberate that information and empower consumers with information?" There's still a critical role for the real estate professional, though. The real estate professional is there to help the consumer interpret all of this information.

In that regard, Zillow has partnered with tens of thousands of agents in most every major brokerage in the country and most MLSes in the country, so that the real estate industry views us as a participant and a helper to their business goals.

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?

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 five 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.

Smith: There was a recent Redfin report that came out, I believe, that targeted you and Trulia for somewhat dated data. It's been a knock against the Zillow part for a while. I'm wondering if you have a reaction to that.

Rascoff: The way I look at it is, when you talk about listings accuracy or listings information, you have to see the whole picture.

Three percent of all the homes in the U.S. are for sale by agent in the MLS at any point in time. Those are commoditized listings. They're readily available on Zillow and pretty much every other major real estate website.

We put a lot of importance on making sure that those listings are accurate and timely and fresh, and we've improved quite a bit over the last year or so. But those are commoditized listings. At Zillow we also have over a million other listings, which are not going to be on any other sites, like the ones that you mention -- foreclosure listings, Make Me Move listings, new construction listings, rental listings, and for-sale-by-owner listings.

Those typically aren't available on sites other than Zillow, and then of course Zillow has information on every home in the country, 110 million homes, with seven years of user-generated content around a third of all those homes that have been edited or improved upon by their owners.

When you look at listings quality, I think sometimes competitors focus much more narrowly on listings information than Zillow's perspective, which is to look at the entire housing stock rather than a small portion of the housing stock.

Smith: Based on your answer, then, I'm sure I can guess your reaction to this question. Would it, at some point, make sense for you guys to get a brokerage license, if nothing else, to get that MLS-direct plugin?

Rascoff: We are not a brokerage. We sell ads, not houses. We don't intend to compete with brokerages. Brokerages do a great job, doing a completely different thing than what we do.

We've always said to agents, brokers, and MLSes, "If you want your listings on Zillow, fantastic, but we're not going to use the rules that you set up to our advantage by being a paper brokerage, being a fake brokerage, and getting listings that way." That seems very competitive to the broker business model to me, and that's not a path that we've pursued.

Smith: Looking at the competitive landscape, Trulia just landed the acquisition of Market Leader. I'm wondering if you have any thoughts, if this is anything that concerns you guys?

Rascoff: I'm very, very pleased with our portfolio of assets. We've made six pretty small acquisitions over the last two years. All of them have been small development teams, each of which had a small piece of functionality easily bite-sized, integratable into the mother ship of Zillow.

Especially in the agent tool space, I feel like we have the right set of assets to address that need. When you're integrating, you're not innovating, and it's very difficult for companies to swallow large acquisitions.

Smith: With regard to the recent acquisitions you've made, of course I'm sure they're all wonderful and they're all lending great things to the Zillow portfolio. Is there one that you really just see a tremendous amount of potential, and that you're most excited about?

Rascoff: I think the one that has borne the most fruit so far would be the Diverse Solutions acquisition, which was about a year and a half ago. This is a company that, originally when we bought it, connected to about 150 MLSes and sold, wholesale, that MLS connectivity to other companies that created websites for agents and brokerages.

Fast-forward to today, they connect to over 300 MLSes, so they've dramatically increased their footprint, and we've changed their business model. They now -- we now -- produce websites for real estate agents and we give them away for free.

We have a very disruptive business model here, where we're basically competing against the sales channel of Diverse Solutions by giving away free websites to real estate agents. That has been a very successful acquisition for us.

Smith: Probably going to make your skin crawl on this one, but we couldn't help but read the Citron Report, just to understand both sides of the bull/bear thesis here. They had a point about Point2's new policy, which would seem to severely limit your ability to sell leads to non-listing agents, if I understand it correctly. Do you have any thoughts on that policy and if it does restrict you?

Rascoff: This is kind of industry minutiae, I guess, for most of your viewers. Just to level up and explain the issue really briefly, the question really is when a listing appears on Zillow, does a buyer lead on that particular listing get sold to a Premier Agent, or does that buyer lead go to the listing agent?

Smith: Right.

Rascoff: Most of the time, the buyer wants to work with the buyer's agent. They don't want to work with the listing agent, because the listing agent has been hired by the seller to sell it for the highest possible price, and the buyer wants to be represented by a buyer's agent who wants to get the house for as low as possible a price.

Many states actually have laws forbidding the same agent from working both sides of the transaction because of the obvious conflict, and a lot of brokerages actually forbid their agents from working both sides of the transaction.

This concept of dual agency is very, very well understood within the U.S. real estate system, and it's how we make money, of course. We have buyer's agents that we connect home shoppers with.

What that article was talking about was whether, when an MLS syndicates listings, whether it's opt-in or opt-out, basically, whether the MLS has to choose to participate or it's automatically participating and then they can choose to opt out.

I don't expect that will have any impact on our business.

Smith: I'm wondering if you could discuss a little bit about the opportunity with rentals. It definitely seems like there's a lot of potential there. Obviously, more frequent transactions being done, but probably going to be a slightly more hands-on model in part of the transaction?

Rascoff: Well, the rentals opportunity is massive. The reason for that is, there really is no rentals marketplace. The closest thing to it in the U.S. is Craigslist, and Craigslist only has a fraction of the rental listings in the U.S.

Our strategy in rentals is to grow rental audience on the Zillow brand on desktop and mobile, and on the HotPads brand on desktop and mobile. We bought HotPads about a year ago. It was one of the largest rentals-only sites, or predominantly rentals websites. We're keeping it as a separate brand focused on rentals.

We bought two software companies, Postlets and RentJuice, which provide software tools to the property management industry, to the rental industry. So we have a two-pronged approach here, from a strategy standpoint. One is, grow audience of rental tenants in order to be attractive to landlords, and two, provide software tools to the rental industry -- something that Craigslist, for example, is not likely to go down that road.

It's still very early days as we're creating this rental marketplace, but the market opportunity is very, very large, probably in the $10 billion range, at scale.

We haven't focused overly on monetization yet. We're still in the marketplace creation phase, where we're trying to grow liquidity on both sides of the marketplace -- tenants looking for rentals and property managers listing rentals. Late 2013 and into 2014, we'll start focusing more on monetization.

Smith: Maybe this is the secret sauce, but monetization on that platform; what does it look like? Is there a fee for brokering a transaction? Are you selling ad space? What's the --?

Rascoff: It'll be a hybrid approach of selling software tools, a SaaS software model, with selling sort order -- placements, basically paid inclusion -- for property managers, as well as cost per lease or cost per lead.

The answer to your question is kind of, "All of the above." It'll depend on the market segment. It'll depend on what's most palatable to the partner on the other side of the equation.

Smith: Obviously there's a lot of things going on, so a lot of different revenue streams, a lot of potential revenue streams in the future. What's one thing, given all that, that you think investors commonly miss with you guys?

Rascoff: I think investors sometimes get our total addressable market wrong. There's a long history of publicly traded real estate companies that have crashed and burned. That sometimes sits in the back of investors' minds.

The reason why most of those other companies have crashed and burned is they haven't focused on the consumer. They've focused on the professional.

Our north star is the consumer. We worship her, the home shopper. If we do right by her, then we'll do right by professionals, and then we'll do right by employees, then we'll do right by stockholders. What investors, I think, get wrong is misinterpreting the past in this category and misevaluating the size of our addressable market.

In the four categories that we're in -- real estate, rentals, mortgages, and home improvement -- professionals spend $35 billion each year in the U.S. advertising their services to those types of consumers, looking for those four services.

Smith: That's collective, all four.

Rascoff: Collectively, $35 billion. We're a tiny, tiny, tiny, less than 1% fraction of that $35 billion addressable market.

Smith: I think we posed the question earlier, but I'd love to hear your take on it as well. Zillow Digs -- a great product -- I use it myself, it's a lot of fun. It seems like there's an obvious monetization track here as lead-gen for contractors.

Rascoff: That may be how we choose to monetize. Candidly, we haven't discussed it much yet. The focus for Zillow Digs is growing audience. Right now, this product is six weeks, eight weeks old. We need to get to a place where 10 million, 20 million people are using it every month to plan remodeling projects.

Then there are a lot of ways to monetize at that point, whether it's local lead generation or display advertising or integrated e-commerce where you're buying some of the things that you see there; we'll figure all that out down the road. Right now, the product development team at Digs is focused on growing audience.

Smith: A lot of young products in your pipeline. Five years out, you've got some slightly more mature revenue streams. What does Zillow look like?

Rascoff: Wow. Well, five years from now we're -- "almost exclusively" might be a little bit of an overstatement -- but a predominantly mobile company. We already are, 55 to 60% of our usage is mobile. Five years from now, who knows what that number will be, but it'll be very, very significant. Usage of Zillow on smartphones and tablets will be massive.

I think we'll have a much bigger brand. Today we're about 50 million uniques in the U.S., but only about 12% of Americans recognize the brand name Zillow. We're spending tens of millions of dollars on advertising in 2013 to try to change that. By five years from now, I think the Zillow brand name will be as widely recognized as Netflix or Expedia or other vertical-leading brands.

Of course, at that point, we become more of a must-buy for local advertisers in real estate, mortgages, rentals, and home improvement, because if they want to grow their business they need to advertise on Zillow, which will be the leading brand in our category.

Smith: I know we talked about maybe companies that you guys might ... what other young, successful tech companies -- maybe Netflix -- do you guys identify with, associate with?

Rascoff: From a strategy standpoint, I identify a lot with OpenTable, because they have a great mobile presence and a desktop presence, which attracts an audience of consumers, and then they provide software tools to the restaurants, so they marry lead generation with SaaS B2B software tools, so, strategically, I look at OpenTable quite a bit.

I look at WebMD a lot from an industry standpoint, in the sense that WebMD is no more a threat to doctors than Zillow is a threat to real estate agents. Consumers go to WebMD to learn information about their ailments, but then they go to a doctor to help them interpret it.

Consumers go to Zillow to learn about real estate, but then they go to a professional real estate agent or mortgage lender to help them interpret the information.

Smith: Looking at the Zillow portfolio of assets, what is Zillow's most important asset?

Rascoff: The most important asset is the living database of all homes. The information that we have on 110 million homes, which, through seven years of user-generated content, over 30 million of those homes have been updated or edited -- have had an owner or their representative change information.

Much as Wikipedia is a living database of all the world's knowledge, Zillow is a living database of the entire housing stock of the U.S., and that is very difficult -- arguably impossible -- to replicate. That's our most important asset.

Smith: If I can stress-test that a little bit ...

Rascoff: Sure.

Smith: A lot of people may have said the same thing about Netflix's asset of all of their user play history and things. But then you've got a company like [Amazon.com] -- they have deep enough pockets, they've got their IMDB platform -- that they could disrupt it. Is there an equivalent in this space?

Rascoff: Yeah. Netflix saying that their point of differentiation is their algorithms -- their recommendation algorithms -- or Pandora saying their point of differentiation is their recommendations, I don't think is the right comp.

For us, I would think of it more like YouTube's treasure trove of user-generated content -- basically, their library -- which makes the YouTube catalog distinctive from the Amazon catalog or the Netflix catalog or the NBC.com catalog. That, to me, I think is more comparable to what we have.

We have this database of all homes, but it's constantly being improved upon. It's not the user's knowledge. It's not the user -- "Oh, I like this home, I don't like that home." It's that the property record on 123 Main St., which the county thinks has two bedrooms and two baths and the owner has come in and told Zillow it has four bedrooms and four baths. That's what I'm talking about. That's what's distinctive.

Smith: That is something that there is probably no replication for in this space.

Rascoff: We certainly have a very multi-year lead here.

Smith: If you were to sort of fight off the bears here, what is the biggest misconception about Zillow?

Rascoff: From an investor standpoint, I think the biggest misconception is the size of the market. It's that sometimes investors say, "Well, how many agents really are there out there that would buy advertising from you?"

The fact is that agents sell $1.2 trillion in real estate each year, they collect $50 to $60 billion in commissions, and they turn around and spend $6 ro $10 billion in advertising. In our largest and most mature of our four businesses, real estate advertising, we have around 2, maybe 3% wallet share of what agents spend on advertising.

Say that another way. We're the largest real estate website, by far, and the largest on mobile by far -- twice as big as No. 2 and four times as big as No. 3 -- and yet agents spend 97% of their ad budgets elsewhere; on print, on refrigerator magnets, on other websites. Elsewhere.

Smith: Those magnets are a huge threat to you guys, let me tell you.

Rascoff: I'm sure they drive tons of business to agents.

Smith: Almost as much as the calendars.

Rascoff: Yeah, and other tchotchkes and Post-it notes. Yeah. Eventually -- we've seen this in every category -- eventually ad budgets follow eyeballs.

I firmly believe that eventually all of that real estate advertising, the $6 to $10 billion, will move online and it will be disproportionately spent on whoever has the largest audience. That's why we already have audience leadership, but we're still focused on extending that lead.

Smith: Obviously, you're a very creative company. Culture is a very important part of what you guys do. How do you foster that? How do you keep that engine going and encourage people to make the little bets that could pay off the big bets later?

Rascoff: We reward -- culturally -- we reward risk-taking. It's an idea meritocracy, supported by data. We come into all meetings armed with data, and the best idea wins. It's a pretty flat organization. I don't overrule people; people overrule me, and vice versa. It's very much a -- whoever has the data and can articulate it and present it best ends up winning that argument.

Then we A/B test everything. Somebody will say, "Oh, I think this will do better than that." OK, well, let's run them both side by side for a couple days and see what our users think. Then we let our users decide. That certainly creates the culture.

Overall, our culture is our biggest asset. It is incredibly valuable that we have a passionate, energetic employee base that cares deeply about the consumer and, especially, as compared with companies that have come before us in the space who haven't been consumer-focused, I think are employee-based. The consumer-first mind-set is a point of differentiation.

Smith: One of the things that's made analyzing Zillow difficult for investors has been the multiple revenue streams that are affected by different forces, but also maybe the lack of release of information that would be more commonly associated with the industry. ARPU, a metric you guys have only recently started to present; churn, still a big question mark. Any intention of opening up the gates a little bit?

Rascoff: We've been public now for six or seven quarters, I think, and pretty much every quarter we've given a little bit more disclosure, a little bit more information. What we disclose today, for example, as compared with a year or two ago, helps investors and research analysts model the business with a lot more granularity, in particular breaking out our mortgage revenue from our Premier Agent revenue, for example.

We have kept some things quiet, especially that we think are competitive data points that we'd rather others not know, and I think we'll continue to do that. I certainly think there's enough information about Zillow for investors to make a well-informed decision about whether they want to be shareholders.

Smith: Real estate, obviously a huge industry, there's going to be many facets of it that impact Zillow. What sort of 30,000-foot-level forces are going to positively or negatively impact Zillow in the real estate space? Interest rates, homeownership, things like that, if we're to understand those positive or negative impacts on you guys?

Rascoff: A couple big macro trends that impact us -- one is, of course, the overall housing climate. We've had 17 months in a row now of home value appreciation, which is great. It means home shoppers are getting off the fence and they're buying houses. When they buy houses, agents collect commissions. When agents collect commissions, they become more bullish about their business; they turn around and buy more advertising from us.

That is a virtuous cycle which we're the beneficiaries of right now. Another big macro trend is the migration of consumer usage -- consumption of real estate information -- from desktop to mobile, where we have a huge advantage, competitively speaking.

On the Web, there are a lot of great local real estate websites that we compete with. On mobile, it's a much better competitive environment for us. Because it's so complicated to write mobile software across all these different mobile platforms, really there are only a very small number of technology companies like Zillow that can truly compete on mobile.

We love that audience shift. That's a macro trend that we definitely benefit from.

Smith: Any tips for improving my Zestimate?

Rascoff: You can claim your home and edit your home facts. Typically, when we have Zestimates that are too low, it's because the county has information, and therefore Zillow has information, that's outdated.

For example, on my home, on an investment property that I own, it had 3,000 square feet in county records, and I updated it to 4,000 square feet, and it improved the Zestimate.

Smith: Got it. So you don't think the county has my rock wall or trampoline fully incorporated in there?

Rascoff: They may not know about that, and if you want your Zestimate to be fully accurate, then you've got to put that in.

Smith: With your huge string of acquisitions, how are you balancing the look for more acquisitions, as opposed to incorporate and really extract all the value from the acquisitions you've made?

Rascoff: We've always had a very high M&A bar. We looked at, at least, 100, if not more, possible acquisitions in 2012. The deal flow continues to be very solid into 2013, but we're very selective, and we certainly have a lot of work to do in the four businesses that we're in -- real estate, rentals, mortgages, and home improvement.

Then on both sides of each of those businesses -- there's the consumer side and the professional tool side -- so there's really eight businesses that we're in, and we've got a lot of work to do there. Our high bar got a little higher each time we bought a company over the last two years. At this point, we're incredibly selective.

Smith: Over at Fool.com, UVs -- unique visitors -- is one of the key metrics we look at. That's one of the ways that we've started to look at how to maybe evaluate Zillow. But it's also a really, really tough metric to pinpoint, especially with so many different devices. How do you guys really provide an accurate number there so that your 50 million's not really 30?

Rascoff: Well, there's definitely some duplication in the unique user count; if you use Zillow on iPad and desktop and iPhone, you're going to show up three times in that unique user number, even though you're really only one person. Unique machines is what you're really measuring when you talk about UVs.

Internally, though, frankly, the more important metric that we look at is visits, which in that example you would count three times, and if you visited twice on each device you'd be counted six times in the month. We focus much more on visits, which doesn't have this device proliferation problem.

We don't release those metrics, but I really like what I see.

Smith: Fair. Maybe not releasing a hard number, but every company does have their own better way to evaluate themselves than Wall Street or investors realize. What better metrics are there for Zillow? Is it revenue to page visits, which of course we can't get, but we can guess?

Rascoff: Let me answer the question another way. If I could only see one or two metrics a day, instead of the hundred metrics that I look at a day, the most important ones would probably be mobile visits and desktop visits, or total visits, because, to me, that's a really good leading indicator of a lot of good things.

Premier Agent revenue and mortgage revenue, total revenue, EBITDA, and eventually stock price down the road, etc., all flow from visit growth, audience growth.

Other key metrics for me are probably Premier Agent bookings, so how much revenue did we sell to new Premier Agents or existing Premier Agents that prior day? I look very closely at that metric. That revenue, of course, gets served over a subscription period.

Then I look a lot at usage of our software tools on the B2B side of the business. What percent of our agents are using our CRM? What percent of our property managers are using our tool to syndicate their listings?

What percent of our lenders in Zillow Mortgage Marketplace use the Mortech suite of software tools -- a company that we acquired -- which is a leading provider of lender software, B2B software for the lending industry?

I look at usage rates across our different software tools.

Smith: You've set a pretty aggressive north star EBITDA margin. Correct me if I'm wrong, but I believe it's north of 30%, right, is your range?

Rascoff: Longer-term, yeah.

Smith: Right. Obviously an aggressive number. What sort of things should we be looking for on the path to that, that would indicate that you're either on or off track?

Rascoff: Well, we're in an interesting place right now. When we reported earnings a couple of weeks ago, we raised revenue guidance from $168 to around $180 million at the midpoint, and we lowered our EBITDA from around the mid- to low 30s for the full year to around $20 million, on a dollar basis, for the full year.

We did it because that extra $10 to $15 million, we decided to use for advertising. We basically doubled our ad spend for 2013, because advertising was working for us. We had two quarters of ad testing under our belt, we loved what we saw, and we decided to step on the gas in terms of advertising.

That will sacrifice near-term margins in 2013, and we're very, very comfortable with that. We think it sets us up for a future -- unclear whether that future is 2014, 2015, 2016 -- but a future where we're so large that we become even more critical to the industry, even more critical to advertisers, and that's where margin expansion comes from.

The way we're running the business today is, how do we maximize long-term margin potential, long-term shareholder value creation, rather than near-term margin?

Smith: OK. As a guy who's obviously compensated on Zillow's long-term share performance in a meaningful way, how do you balance the day-to-day nature of watching your stock ratios? You've obviously had a great short-term run, but how do you think about that?

Rascoff: Well, for starters we have a prohibition, internally, on employees checking the stock price. I know it happens, but it can't happen in public. If I ever walk into a meeting and people are talking about, "What's the stock doing today?" that's verboten.

I set that example, and everybody follows that, because, culturally, it doesn't matter. It really does not matter what the stock is at yesterday, today, the next day. What matters is, where's it going to be in three years? Where's it going to be in 10 years? Where's it going to be in 20 years?

You can really tie yourself into a pretzel, overly focusing on the near term. The value of stock kind of goes like this, and the value of the company kind of goes like this. There are going to be times when the stock is above that, and there'll be times when it's below it. The important thing is trying to block out all that noise, which is very hard with the media amplifying that noise, and just focus on the long term.