How Zillow's CEO Thinks About Innovation

Zillow's (NASDAQ:ZG) online real estate platform has been a major innovation over the past 10 years, but the company is aiming to do even more. 

In the following video, Motley Fool analyst Brendan Byrnes sits down with Spencer Rascoff, CEO of Zillow, to discuss how he thinks about innovation at his company. Rascoff higlights how Zillow recently crossed 1,000 employees, and the way it stays innovative is by keeping its product teams very small. Rascoff also mentions how he likes to think of his product team as a confederation of about 15 different start-ups.

BRENDAN BYRNES:

How about overall Zillow innovation? You're still a relatively young company — up-and-coming company — but you also have the lead in your industry. How does Zillow innovate and what kind of areas can we see Zillow innovating in, in the future?

SPENCER RASCOFF:

Well, we're about to cross a thousand employees, so we are up from about 500 or 600 a year ago. We're adding head count at a pretty rapid pace. The way we stay innovative is by keeping our product teams very small. Anytime a team gets bigger than ten or so people, we reduce the scope of that product team and we cut the size down. So, we're constantly redividing the sizes of these product teams so they can stay pretty autonomous, be self-contained and therefore can be nimble.

Our product team is like a confederation of about 15 different start-ups. One start-up might focus on our local data. Another might focus on the listing pages. Another focuses just on the iPhone app. And so, each of them have different code branches and they can innovate and ship new features pretty autonomously and that allows us to stay innovative.

BRENDAN BYRNES:

You're going to be testifying in front of the Congressional Internet Caucus Advisory Committee — I wanted to make sure I got that right ...

SPENCER RASCOFF:

That's a mouthful ...

BRENDAN BYRNES:

... about open data. Could you talk about how that impacts Zillow?

SPENCER RASCOFF:

Sure. Well, Zillow's a data company. What we've done is we've turned on the lights in this dark room where consumers didn't used to have access to information about real estate and now we've made it readily available. So, it is deep in our DNA that consumers ought to have access to information that when lights are turned on in dark rooms, then great things happen. Information empowers people to make smarter decisions. So, for us, for example, that means the importance of being able to see what everyone's house is worth. Being able to see what the taxes are in everyone's home. Being able to see what everyone paid for their houses — not on a name basis, but on an address basis.

The reason those things are important is they're the foundation for an equitable property tax system. The reason we have a bias toward the right for the public to have real estate information is because the underpinnings of our tax code are all based on property values. Therefore, in order to know that I'm not being unfairly taxed, I need to know information on what's happening in my real estate market. In my community. Zillow is a big advocate of open data. We buy a lot of data from counties and from other sources and we give it back to consumers, to homeowners, to Americans through the Internet.