Rich Barton is back in the CEO seat at Zillow Group, taking over at the online real estate giant he helped launch 14 years ago.
The Seattle-based company made an unexpected executive shuffle Thursday as longtime CEO and co-founder Spencer Rascoff will step down after nine years. Barton, who co-founded Zillow in 2005 with Rascoff and Lloyd Frink, will return as CEO, a title he held during the company’s first five years.
Rascoff will remain on the board of directors while Frink will replace Barton as executive chairman.
The changes come as Zillow plans to invest heavily in a new home buying and selling business that it projects can produce $20 billion in annual revenue, exponentially higher than the $1.3 billion Zillow as a whole brought in last year. The company’s stock has dipped nearly 50 percent in the past seven months as Zillow shifts focus.
It’s unusual for a tech company founder to make a return in such fashion, but it’s been done — Steve Jobs returning to Apple 20 years after it launched, for example.
In an interview with GeekWire, Barton and Rascoff said they expect a seamless transition given how they’ve shared leadership duties of the company over the past 14 years.
“Spencer, Lloyd, and I, from the very beginning, have had complementary strengths and complementary jobs,” Barton said. “We’ve rotated that triangle of leadership multiple times over the years when we deem it appropriate for someone to go in the game and be the quarterback who had the right skills for that time.
“That’s what we’re doing right now,” Barton said. “Instead of me in Spencer’s ear while he takes snaps on the field, now he’ll be in my ear.”
Barton, who also co-founded other tech giants such as Expedia and Glassdoor, said he was drawn back to the CEO role because of his affinity for “big swings.”
“I really, really like to lead teams through moonshot-type missions,” Barton said.
That’s what Barton sees with Zillow’s home buying and selling business, which it launched in April 2018 and has since grown to more cities. Barton called it a “major expansion” of Zillow that will transform the company. He’s bullish about Zillow’s future — Barton purchased more than $19 million of Zillow stock in November — despite a tumultuous past year for the company on Wall Street. Zillow’s stock dropped again after Thursday’s announcement but later increased 6 percent during the company’s earnings call.
“This is kind of like Zillow 2.0,” he said. “We are really on the threshold of being a brand new startup. We have a guy in the triangle who loves to do this — that’s me — and so we decided together that this was the right leadership structure.”
Barton said the shift from Zillow’s traditional media business to buying and selling homes has been an “unsettling transition” for some investors, and justifiably so, given Zillow’s success over the years. But he sees an even bigger opportunity with the new initiatives.
“We’re taking [the media business] and using profits from that to fund what some people believe is a speculative business that is unproven, that requires capital investment, that has low gross margin — but has radically larger scale potential,” explained Barton, who was a venture partner at Benchmark and is a board director at Netflix. “That is why I’m excited. My eyes are wide as I look up in the sky and see the moon and I want to go. To me, this is one of the more exciting opportunities I’ve seen in my business career and it’s why I’m recommitting in all kinds of ways, including the announcement today.”
Barton, who previously led Expedia through an IPO, added that “this is why we founded Zillow, to actually change the way people bought and sold houses, and the way they found a new place.”
Rascoff held positions at Zillow as CMO, CFO, and COO before becoming chief executive. During his 9-year tenure as CEO, Rascoff led Zillow through an IPO as the company grew from 200 to more than 4,000 employees. Annual revenue increased from $30 million to $1.3 billion while Zillow acquired 15 companies such as Trulia, Mortgage Lenders of America, StreetEasy, Hotpads, and Naked Apartments.
Rascoff, who met Barton after Expedia acquired his startup Hotwire in 2003, told GeekWire he’s unsure of what’s next for him, aside from continuing to support Zillow as a board member and major shareholder.
“I know what I’m not going to do next week, I’m not going to get on an airplane,” he said. “I’ve been running hard for 15 years at Zillow. I’m going to sleep in and then wake up and start to figure out what’s next. I haven’t given it much thought yet. We’ll see.”
In a note to employees, Rascoff called his departure “bittersweet.”
“We are at a transformative time at ZG — the world is finally ready for the seamless real estate transaction, and no company is better positioned to deliver,” Rascoff wrote in the letter. “Rich, Lloyd and I worked closely together since founding Zillow in 2005, and it feels like the right time to turn the triangle of partnership on its side.”
— Spencer Rascoff (@spencerrascoff) February 21, 2019
Rascoff will receive a lump sum of $405,000 as part of his resignation, which is six months of his current base salary, and accelerated vesting of his outstanding stock options. Barton will receive a base salary of $540,000 in his new role.
Other recent executive shuffles at Zillow include:
- Longtime CFO Kathleen Philips retired in May and was replaced by Amazon veteran Allen Parker.
- Early Zillow employee Amy Bohutinsky will leave in 2019 after 13 years with the company, most recently as COO.
- Former Starbucks senior vice president Aimee Johnson joined in November as chief marketing officer.
- In June, former chief marketing officer Jeremy Wacksman became the company’s first president; former chief business officer Greg Schwartz was named president of media and marketplaces; and Arik Prawer, formerly chief business development officer, was appointed as president of the Homes division.