The untethering of work and location — the “Great Reshuffling” — contributes to another great quarter for Zillow Group

At Zillow, we believe there is strong, durable support for the housing market. Among the reasons is that, historically, work and location have been inextricably bound together. But the pandemic changed that, joltingly and dramatically unbundling them for many. This created new flexibility by enabling people to optimize both separately and simultaneously. Moving to the big city is no longer a requirement for many job seekers, and that shift will inevitably disperse talent and economic opportunities. This un-tethering of location from work feels deeply important to me for the future of work and life. And, by implication, for housing. We’ve been calling it the “Great Reshuffling.”

This is why we, at Zillow, leaned in hard and early on the “Cloud HQ” idea as the future of work. You can read about this in a New York Times article by Sarah Kessler, featuring Zillow Vice President Meghan Reibstein, one of our many folks who “cut the cord” from our old Seattle HQ, and moved to Asheville, North Carolina to be near, and to support, her family. Year-to-date we have had 153,000 candidates apply for a job at Zillow (many of them women and BIPOC candidates who are not from coastal cities), which we believe has been fueled, in part, by the possibilities of our permanent location-flexible policy. It is one of the factors we see driving the housing market for some time — the other important factors being Millennials entering their prime home-buying years, and low interest rates.

We have always had audacious goals at Zillow, guided by our strong urge to empower people to use technology to more easily navigate the expensive, confusing — and? emotionally and financially fraught — process of buying and selling a home.??

Our initial dream was to build the most trusted and vibrant home-related marketplace, and to solve a big problem in real estate — the lack of transparency in home shopping.? Our dream to “turn on the lights” started with both the Zestimate, our killer algorithm that puts a price on every rooftop in America, and Zillow.com — one marketplace where everyone can search and find homes, with data easily at their fingertips. This was not possible prior to Zillow. This transparency and convenience became the accelerant for establishing Zillow’s brand in real estate, and making it the most popular place to dream and shop, with an average of 229 million monthly unique users coming to our mobile apps and websites in the second quarter of 2021 (including our great adopted sister brands, Trulia and StreetEasy).

The Zillow brand became synonymous with real estate empowerment, but the fundamental transaction continued to be painfully stuck in the 1950s, resisting the gravity of digitization. So our dream and ambition moved from the top of the consumer funnel down to the bottom — to the transaction itself. We, of course, recognized that our huge brand and traffic, as well as our DNA as software engineers (many of us “grew up” at Microsoft in the 1990s), would advantage us relative to this large and daunting challenge.?

So our expanded dream is to re-engineer, streamline, and digitize the moving process. We believe customers want speed, simplicity, integration, and value. These are fairly safe consumer desires in which to invest, in my opinion. To deliver on this dream, our strategy has been to build an integrated set of real estate products and services (both owned and operated with professional partners) that can be mixed and matched to make it radically easier for all of the dreamers and shoppers on Zillow to transact and move to their next chapters.

We are executing nicely on this ambitious growth strategy. Today we are seeing more and more signals from our customers that validate our integration thesis and growth strategy. Home shoppers and buyers who once just thought of Zillow as a place to “search and find” are starting to understand and take advantage of the reality that we now offer so much more. As one example, we are building a program called Zillow360 that enables our customers to sell their current home to Zillow Offers, buy their next home with a Premier Agent and finance it with Zillow Home Loans. The customer then uses Zillow Closing Services to finalize the transaction and ultimately receives a discount for using the bundled package. While we still have a long way to go to scale Zillow360, we are seeing strong interest and higher close rates when offering a mix-and-match menu of services to customers versus single, standalone services. Looking forward, we see our ability to execute on programs like Zillow360 as competitively differentiated. Due to the volume of visitors to our apps and sites on a daily basis, we are able to spread our low customer acquisition costs across these additional adjacent services, which allows us to pass along savings to customers while generating returns for shareholders. ? ?

Embedded in our ability to drive growth are some confident assumptions about our business and opportunity. First, consumers will demand an e-commerce experience for their real estate transactions. Second, our scale and strength of brand gives us a customer acquisition cost advantage. Third, our suite of connected offerings fit together well to serve our customers and partners. And fourth, our location-flexible workforce will allow us to attract and retain a deeper and more representative talent pool from across the country to best serve our customers

A recent customer example validated all four of these assumptions. Ina and Tony, of Atlanta (pictured below), recently wrapped up a seamless move to their new home with the help of Zillow360. Feeling overwhelmed by the prospect of balancing closing dates with their daughter’s school schedule and other commitments, Ina and Tony decided to accept an offer to sell their home to Zillow. Recognizing the ease that Zillow brought to this experience, they were intrigued when our teams told them they could buy, finance and close their new home with Zillow, too. The opportunity to align the buying and selling process so it could work on their timeline was too good to pass up. So, we connected them to one of our awesome agent partners, who helped find them their dream home. By this point, financing with Zillow was “a no brainer” for the couple. To put icing on the cake, I found out last week that Tony was so impressed with Zillow during his move that he subsequently applied for, got offered, and then accepted a role with our Zillow Offers team as an estimator. Wow!?

As a significant Zillow shareholder, I evaluate our opportunities in three ways: First, is our Total Addressable Market (TAM) large and untapped? Second, are we in a strong position to capture that opportunity? And, third, can we execute? It is clear in my two and a half years back in the CEO seat that the answers to those three questions are all a resounding “Yes.” I’m really proud of the progress the team has made, but we have miles to go before we sleep. In our new home, and on a soft pillow. Above a kitchen with marble countertops and a doggy door to the back yard. ;-)

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This blog is adapted from my remarks to Zillow shareholders on August 5, 2021. For more, visit Zillow Investor Relations.?

And for more details regarding Zillow Group’s results for Q2 2021, check out our Shareholder Letter. Forward-Looking Statements: This blog post contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including, without limitation, statements regarding the future performance and operation of our business and the current and future health and stability of the residential housing market and economy and our expectations regarding future shifts in behavior by consumers and employees. Differences in Zillow Group’s actual results from those described in these forward-looking statements may result from actions taken by Zillow Group as well as from risks and uncertainties beyond Zillow Group’s control. For more information about potential factors that could affect Zillow Group's business and financial results, please review the "Risk Factors" described in Zillow Group's Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission, or SEC, and in Zillow Group's other filings with the SEC.