In this clip from "Real Talk" on Motley Fool Live, recorded on Feb. 11, Motley Fool contributors Matt Frankel and Jason Hall discuss Zillow's (ZG 3.00%) super app plans that could potentially drive revenue and speculate whether it's too ambitious or a clear winner.
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Matt Frankel: Let's talk about the super app because that's really where Rich Barton is heading with this. They want to build their so-called housing super app. Just a few of the things that it says it's going to do on their presentation. Search, which is what Zillow does right now. Mortgage-free approval. An immersive shopping experience, which I have to imagine is something like Matterport (MTTR 3.33%) where you can actually go into homes virtually. Things like buying a house directly through the app, which is why I think they're going to end up partnering with some of the iBuyers because that's how that will happen.
Jason Hall: That's a huge hole in their offering if they're ignoring that completely.
Frankel: It is. There's a lot of money to be made there. Home tours, financing, selling your home through Zillow, so you can put your home for sale directly through Zillow and maybe link-up with buyers. And payment facilitation, you can put your down payment through Zillow. They will facilitate that payment through their super app. I think the super app idea sounds a little ambitious. This would be that win if they were looking for a way to get $5 billion of revenue. The super app could get it there. Tell me where I'm wrong on this, Jason. Zillow's had 15 years, give or take, as the leader in this space.
Frankel: Why isn't the super app existing already?
Hall: I think because of iBuying. Was it three years ago? About four years ago now when they made that decision, that was a tremendous capital investment. That was a tremendous resource investment. It was also building a Zillow that competed against some of its most important customers in some important ways, and would be competing against other platforms where you could have a super app where it wasn't guaranteed that every home that might be available or interesting to a certain buyer is going to show up on that platform. So, I think that was the biggest thing. Again, the iBuying thing, I think it's still really important to Zillow's business. If Zillow does not partner with iBuyers to have a presence on their website, to feed them leads, then there is a reason for people not to come to Zillow. With their prior business model, there had to be a reason because you're going to go head-to-head with Opendoor (OPEN 12.61%) on properties. It's far less likely that Opendoor's properties are necessarily going to get priority on your site, you know what I mean? So I think by breaking down those barriers where you're not necessarily competing against your customers, now you can do it. Maybe it's underappreciated how big of a resource focus it had to be to build iBuying, so that's what I think. Now you can build a business where there's no real reason for somebody to have to go to a Redfin (RDFN 2.54%) or a realtor.com when they can come to Zillow for literally every part of the real estate transaction.