Zillow (NASDAQ:ZG) is one of the largest online and mobile marketplaces for real estate and homes. Yet, some investors are concerned that competitor Trulia (NYSE:TRLA) will overtake Zillow's market share. While you should be mindful of the competition, I believe folks are underestimating Zillow's leadership, strategy, and overall strength as a business. 

Zillow grew sales 69.05% in 2013 to $197.54 million and has expanded sales at an average annual pace of 59.57% since 2010. Not too shabby, and I think there is more to come. Here are three reasons why I think Zillow is slated to continue delivering market-beating returns over the long haul: 

1. Excellent leadership
35-year-old Zillow CEO Spencer Rascoff, one of the founding employees of Zillow in 2005, has a 98% employee approval rating on Glassdoor. Zillow as a whole receives a 4.2/5 rating from employees on Glassdoor.

Trulia's 38-year-old co-founder, chairman, and CEO Pete Flint receives an 80% employee approval rating, and Trulia has a 3.6/5 employee rating on Glassdoor. While Trulia's reviews are hardly dismal, a determined Rascoff is leading the charge with a very enthusiastic base of employees at Zillow.

If Peter Drucker is indeed correct that culture eats strategy for breakfast, Fools ought to prefer Zillow over Trulia. 

2. A sensible and proven strategy
In the company's recent fourth quarter conference call, Rascoff outlined Zillow's continuing strategy: "As we turn our focus now to 2014, our strategic priorities remain consistent, and they are: 1) grow our audience and widen our category lead, 2) grow our Premier Agent business, and 3) grow our advancing marketplaces."

Rascoff also shared just how effective Zillow has been at generating traffic (and, in turn, sales):

According to comScore, we are now nearly twice the size of our two closest competitors on combined mobile and Web traffic. And, we're growing faster – on desktop, comScore shows Zillow tripling our category lead in 2013.

The biggest strategic difference between Zillow and its rivals is Zillow's focus on reaching a wider consumer audience, rather than focusing on professionals such as real estate agents, landlords, brokers, and lenders. The reasoning behind this strategy is fairly simple: the larger the consumer audience, the bigger draw for advertisers to utilize Zillow's site. If comScore's data is any indication, Zillow is crushing the competition in terms of audience reach. 

This is really a "what comes first" sort of question: does a wider consumer audience attract more professional advertisers, or does first appealing to professional advertisers lead to a wider consumer audience? Zillow is operating with the understanding that cultivating a larger consumer audience through its mobile and web outlets will attract more professional advertisers.

Other companies, such as Trulia, are operating under the assumption that first appealing to the professionals will, in turn, lead to a more successful outcome in terms of consumer reach and sales. While neither strategy is necessarily right or wrong, Zillow's financial results reinforce what it's doing when compared to Trulia. 

3. Zillow's superior cash flow production
While Zillow's cash flow production decreased slightly to $31.30 million in 2013, the company has expanded operating cash flow production at an average annual pace of 92.91% since 2010. This, along with a stock issuance in 2012 and 2013, has helped the company build a cushion of $295.29 million in cash with no debt. 

The most cash flow Trulia has been able to produce, was $4.15 million in 2012, and that number turned negative in 2013. Trulia has $225.6 million in cash, but also carries a debt load totaling $230.08 million.

Trulia has grown sales at an impressive average pace of 64.16% annually since 2010 to $143.73 million in 2013, but that growth hasn't translated into cash flow production. This has pressured the company to issue extensive amounts of stock and debt over the past two years, with no improvement in cash flow production to show for it.

Foolish bottom line
Zillow will undoubtedly be a volatile stock going forward, with a P/S ratio currently nearing 16. However, the company is guided by Spencer Rascoff, a young and innovative leader, who oversees one of the top company cultures in the country. Zillow's focus on building a service that attracts a wider consumer audience has proven to be an effective strategy, and the company has done a great job translating ever-expanding customer visits into consistent sales growth and cash flow production.

As Rascoff explained in the fourth quarter conference call:

55% of new sales bookings in the fourth quarter went to existing agents buying more impressions across mobile and Web, which is higher than recent trends and signifies strong underlying demand.

In other words, Zillow's strategy is working. This isn't to say that Trulia or other players cannot succeed as well, but Trulia hasn't been able to prove it can actually make money or generate cash with its strategy. Zillow has a proven strategy that is already leading to solid financial performance, which gives me confidence that the company can continue to outpace the market. 

More compelling ideas from The Motley Fool
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

David Kretzmann owns shares of Zillow. You can follow David on his Foolish discussion board, Pencils Palace, on CAPS, or on Twitter @David_Kretzmann. Learn more about David's Pencils IRA Project at Fool.com. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.