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7/28/2014

Zillow Dragon Merger?

















Zillow buys Trulia Active Rain. 

Wisdom of the ancients predicts the future?

Mergers are a tricky thing. It’s the same as a divorce but no one uses that nasty word. Executives will be fired, employee benefits slashed, and offices closed. Consolidation of this kind is aimed at increasing earnings. This merger makes Zillow a powerhouse of old Real Estate information. The combination of brands should capture more consumers. Why do I say old? Because the information presented is outdated. Zillow is not in the free real estate information providing business, company EBIDTA is based on advertising.
A brief history:   (history tells us everything)
Zillow is a Seattle based company with 817 employees. (I owned 200 shares- sold in June 2014 as a full disclosure but I hear insiders at both companies dumped shares in the past few days- someone is in trouble...) Today the price is down, but it has soared about eighty percent in the past six months.

Problems with Zillow:
1. They have been spending more on advertisements than earnings in the past sixty days. You've seen Adwords, television, Facebook, print, geez they spent on Warner cable…

2. They have a scummy sales force model that works as follows:
Zillow salesman tells Realtors to convince Lenders to pay for their advertisements (the right side banner shared with two other Realtors on listings that they have no direct contact but is implied they are perhaps the listing agent). Zillow salesman and Realtor tell the Lender to write the first check to the Realtor directly then use a credit card for the area(S) desired. A high net worth area may cost $400 a month, while a lessor one $290. Lender is told they are exclusive, but this is untrue, the same area is sold to twelve to sixteen other lenders. The assumption is Realtor and Lender will rake in leads and recoup the cost tenfold.

Zillow’s challenge now is to cut costs. Free user accounts on Active Rain, Trulia and Zillow will become less visible. Meanwhile they will promise a paid account to rise in rankings. 
Trulia and ActiveRain employees I hope you packed up the photograph of your son’s little league team, the sales trophies you have and the pen given to you by the CEO because your days are numbered. Work smart, volunteer to rescue market capitalization and become invaluable –it may or may not open a job for you in Seattle, but the San Francisco office is imploding as I type.
Consumers – Good news. The new Zillow powerhouse can withstand the lawsuits from National Association of Realtors (or others for copyright infringement) will add services enhancing user search for property. 
They will add better mapping, maybe drone photographs, maybe intuitive advertising directed at the consumer (much like Facebook farms all our traits and secrets). I see them adding referral sources for construction, remodeling, property management, title, and national escrow.
Consumers if you would like to get on the Multiple Listing Service live (rather than Zillow’s year old sold listings that appear open) please contact me.









These opinions are my own and not reflective of stock future price or loss.




Name in- famous merger game:
Google – Motorola
New York Central- Pennsylvania Railroad
Sears- KMART
My un-favorites are the financials.

Trulians in the Den in the Rialto building 
today I wish you well. Perhaps the reason
Mayan culture fell wasn't climate change?
Merger?


Dragon fruit

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