Trulia CEO Pete Flint wants to transform real estate.
And with today’s $355 million bid for Kirkland-based Market Leader, the Internet executive took his boldest step yet in making that dream a reality. In acquiring Market Leader in the cash and stock deal, Flint said they are getting one of the most comprehensive lead generation and customer relationship management products out there, essentially what he dubbed “the operating system” of real estate.
The deal has all sorts of interesting subplots — not least of which is that Market Leader board member Nick Hanauer and Zillow chairman Rich Barton are best friends. (The acquisition could make for some very interesting late-night discussions between them). There’s also already been one “investigation” launched by a New York law firm as to whether the Market Leader board failed “to adequately shop” the company before entering into the transaction.
The intense rivalry between Trulia and Zillow also is at play here, in part because both companies are positioning to be the dominant players in the multi-billion dollar industry. Historically, Zillow has held the edge over Trulia in nearly every respect, from traffic to revenues to market cap.
But with Market Leader and its 285 employees under its belt, Trulia could leapfrog its larger rival as the two companies race to gain mindshare (and dollars) of real estate professionals.
We caught up with Flint after this morning’s conference call to find out more about what the Market Leader deal means for Trulia. And, yes, we did ask about the rivalry with Zillow too, and Flint had some interesting remarks about that in the comments below.
Here are excerpts from the interview:
On why Trulia wanted to buy Market Leader: “I think this is an incredible combination. As you know, we’ve been focusing on transforming the consumer experience for the real estate industry, and Market Leader has really been focused on transforming the agent experience. It is kind of akin to the fact that if you speak to a sales person, they spend half of their life in front of Salesforce.com. If you speak to a recruiter, they spend half of their life in front of LinkedIn. And, for real estate agents using the platform, they spend half of their lives in front of Market Leader. We think the combination of our consumer, agent marketing and lead generation tools, with their, what we call the operating system for the real estate industry, is a really transformative deal for the real estate industry as well as for both of our businesses. We are tremendously excited about it.”
On the Market Leader team and culture: “I’ve know the team there for some time, and it really presented itself as an opportunity where we kind of proactively felt that this was an incredible combination for the industry. We approached Market Leader. And, if you think about it, there is not only a strong strategic fit. But, then, there is also a strong cultural and organizational fit. They are a really strong team. I am really impressed with everyone we’ve met. It is an incredibly bunch of people that have really done amazing things over the last few years, and pivoted the business. We think the people side of this is going to be great, as well as the strategic and financial side…. We both have a shared vision about transforming the real estate industry, and making it better by using technology. And we are also a like-minded team of passionate, ambitious, smart people who are looking to do incredible things.”
On what’s ahead in terms of growth of Market Leader: “We are really excited about the growth opportunities. This is not about cost cutting. Absolutely, not about cost cutting. Quite the opposite, this is about incremental growth opportunities for both companies, and it is all about taking advantage of the enormous opportunity in front of us.”
On the size of the acquisition: “This is the first sizable acquisition. It has been a deliberate focus for us to be less about the smaller zero revenue companies, and more about the sizable businesses with customers, with breadth, with technology and competitive moats around their business. We are a pretty sizable company now that is growing rapidly and we have a very strong management team at Trulia to compliment the very strong management team at Market Leader. And I feel very confident about the ability to turn the strategy into reality, and to execute to take advantage of the opportunity.”
On whether more acquisitions may occur, including one of this size: “For right now, we are going to be heads down and focused on making this work.”
On operating Market Leader as a standalone entity: “We think, given the momentum in their business and given the momentum in our business, we are going to keep the organizations separate so we can focus on the slightly different segments.”
Why focus on tools for real estate professionals: “This gives us an opportunity to create the only end-to-end solution. We have this massive consumer audience and we provide this firehose of leads to real estate professionals. We started with consumer, and transforming their experience, and from the very beginning we recognized that real estate agents are fundamental to the industry. Market Leader has incredible breadth and scale in providing services to the real estate industry. It is quite the opposite of us focusing on the agent more than the consumer, we are focused on both. Our consumer audience is growing tremendously quickly, and complementing this with Market Leader puts us in a unique position in terms of category leadership.”
Tools for real estate professionals is an area where Zillow has been spending some of its resources. How does this acquisition position you against Zillow? “The tool set of Market Leader is unrivaled in the industry. It is night and day compared to anything else out there, and it is a real testament to the Market Leader team … that they have understood the real estate agent workflow…. It is night and day to compare it to anything else out there. It is much more than a CRM service…. This stuff is extremely hard for anyone else to replicate.”
This deal could make you bigger than Zillow in employees, premium subscribers and potentially a number of other metrics. How does the Market Leader deal position you against them? “I think for us, we are not as focused on the direct comparison of ‘us’ vs. ‘them.’ But it certainly puts us in a category leadership position.”
Does having a big presence in Seattle create an advantage for you? “I think the Seattle region is just full of amazing talent. From a strategic point of view, there are other more interesting strategic things. But we are tremendously excited about growing the team within the Seattle Market Leader offices. I love Seattle, so I am looking forward to coming up to visit the team there.”
On the upturn in the housing market: “The housing market has turned, and the real estate industry is being transformed by technology and this combination gives us the opportunity and our customers to capture the upside from the real estate industry recovery. The timing for us and the timing for Market Leader and the timing for customer is perfect in our opinion.”
Zillow is investing heavily in its brand through a nationwide ad campaign. Do you have a plan to counter that? “Our focus, if you listen to our earnings call, is really about building the very best technology for consumers and for the real estate industry out there. We’d rather spend the money on hiring the next engineer, than giving the money to ABC or CNN. That is just a choice of investments that we make, which is slightly different. In the long run, the leading company is the company that has the leading product. That’s our focus.”
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