Latest / NOISE vs SIGNAL by Inman / Zillow CEO Jeremy Wacksman on AI, the Housing Market and What's Next for Real Estate

Transcript

Zillow CEO Jeremy Wacksman on AI, the Housing Market and What's Next for Real Estate · NOISE vs SIGNAL by Inman

0:00
Hey everyone, if you have not been to Zillow's
0:02
Unlock conference, you're missing out. I got
0:05
the opportunity to sit down on noise versus signal
0:08
and share a great conversation with Jeremy Wacksman
0:11
the CEO of Zillow Group. We talked about his
0:14
rise through the ranks starting in marketing
0:16
to becoming the CEO of a multi -billion dollar
0:20
corporation. We also talked about the future
0:22
of AI, how it affects Zillow, and yes, private
0:25
listings. You don't want to miss this conversation.
0:28
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0:30
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1:02
Welcome to Noise vs. Signal. I'm your host, Inman
1:06
CEO Tom Bond. Each week we sit down with the
1:09
top producing agents, industry CEOs, prop tech
1:12
founders, and the people shaping the future of
1:16
the business of home. Then we break down the
1:18
week's biggest headlines and decide what's noise
1:21
and what's signal. Let's get into it. Hey, everyone.
1:29
Welcome to a very special edition of Noise vs.
1:32
Signal. I'm here at Zillow's Unlock Conference.
1:35
What an incredible place. And I have a very special
1:37
guest, the CEO of Zillow Group, Mr. Jeremy Waxman.
1:41
Thank you, Jeremy, for being here. Happy to be
1:43
here. Thanks for coming. No, it's a great show.
1:46
It's an exciting show. The vibe here is outstanding.
1:49
Congratulations to you and your team on everything.
1:51
Thanks. A lot of people see you in the news and
1:54
hear about what you're doing. And you've been
1:57
at Zillow quite a... Quite a long time. Let's
1:59
go back, though, because I'm really deeply interested
2:02
in your history. A lot of people who wind up
2:06
as CEOs of multibillion dollar companies don't
2:08
come out of marketing. You're different. Talk
2:10
to me a little bit about that trajectory and
2:12
how you got to this point. Yeah. Yeah. We we
2:16
use a phrase at Zillow, the career jungle gym
2:18
rather than the career ladder. And I think I'm
2:19
a really good example of that. If you had asked
2:22
my 20 year old self what my career ladder is
2:24
supposed to look like, it looks nothing like
2:25
this, including. getting into marketing. I started
2:27
as a computer engineer. I wanted to, you know,
2:31
be an engineer and that's what I studied. And
2:33
in graduating and getting an internship and looking
2:36
at that job for the first time, I quickly realized
2:38
it was not my passion nor was I going to be great
2:40
at it. And so I did my first ever career pivot
2:43
right out of school and got into more software
2:45
product and marketing and started working on
2:48
talking to customers and helping figure out customer
2:50
needs. I did that at a software startup in Austin.
2:53
Xbox, you were with Microsoft? Then went back
2:55
to grad school to focus more on marketing and
2:58
then took a marketing job at Xbox at Microsoft.
3:01
Small little brand. Small little brand. And somehow
3:04
in 2009, while working at this great growing
3:07
entertainment brand, decided to leave that job
3:12
and come work in the real estate industry during
3:14
the global financial crisis, much to my family's
3:17
chagrin. But at the time, again, it was. falling
3:22
in love with the team and the problem space.
3:24
I met our co -founders. I met Rich and Lloyd.
3:27
You know, I saw what they had done before and
3:30
what they were trying to do with Zillow. And
3:31
I just want to be a part of that. And they were
3:33
starting to grow. And so I came to work on product
3:36
and marketing. And I've now been here. It'll
3:38
be 17 years next month. And I've had a bunch
3:42
of different jobs and none of which I would have
3:44
thought I would have had, you know, two or three
3:46
years before I ended up taking them. It's interesting
3:48
because I think I read when you started at Zillow,
3:51
the iPhone had just been introduced in the app
3:53
store. That's right. I mean, and think about
3:54
what the brand has been built. I mean, you had
3:57
no online or digital presence when you came.
4:00
We had no mobile presence. Right. And so, yes.
4:03
So I was hired to help grow, help work on product
4:07
and marketing. And that meant Internet search.
4:09
That meant desktop website search. That's what
4:11
we were. Right. And Steve Jobs held up the iPhone
4:14
right as I came. We knew everything was going
4:17
to change. We started playing with it. And when
4:21
you put yourself in the shoes of what can you
4:23
do with the technology, all of a sudden your
4:25
eyes get open to, well, now real estate can be
4:27
24 -7. Now real estate can be in your pocket.
4:29
Now you can ask what's around. Now you have a
4:31
mobile companion. Now you can scroll in bed and
4:35
do social media with real estate. All these things
4:38
didn't exist then. But it was a huge pivot for
4:41
Zillow because we had no mobile experience. Right.
4:44
We and so what did we do? We just ran in and
4:46
we said, we got to figure this out and let's
4:48
put a bunch of great people on trying to figure
4:50
this out. We're not going to get everything right,
4:51
but we're going to be early. We're going to learn
4:53
and we're going to keep going. And in many ways,
4:54
that pivot and run at something is a culture
4:59
tenant that we keep. you know, at Zillow. And
5:02
it's even more important, I would say, in today's
5:04
revolution with AI, which I'm sure we'll talk
5:06
about. Yeah, well, we'll definitely talk about
5:07
that. Let's go back there. You actually had mentioned
5:09
when you first came on board that you were in
5:11
the middle of a financial crisis, right? Which
5:12
we all lived through. And it feels like in many
5:14
ways, we're kind of back in those weird times,
5:16
you know, some days. You've been through a lot
5:19
of inflection points at Zillow. What have you
5:21
learned from that? What has been the most unique
5:23
or most difficult? Because as difficult as real
5:25
estate is right now, you guys are still growing
5:27
significantly, top line and bottom line revenue.
5:30
I think the thing to learn from every inflection
5:34
point or every change is stay focused on your
5:37
customer. If I think about when I came to Zillow,
5:40
it was a really tough housing market, but Zillow
5:42
was trying to solve customer problems with the
5:45
internet that had never been solved before. And
5:47
so they were growing really well during that
5:49
tough time. If I think about the mobile revolution,
5:51
as we talked about, it's about... wow, there's
5:54
new customer problems to solve. Technology can
5:55
now do things it couldn't do before. Let's go
5:57
figure out how to make that available to customers
5:59
and to agents. I think about the pandemic. And
6:03
the pandemic was this crazy run -up and then
6:04
this crazy interest rate. But there was a lot
6:06
of inflection and change in that. And we learned
6:08
a ton. I mean, virtual touring took off during
6:11
the pandemic out of necessity. We had been building
6:14
a bunch of tech, getting ready for it. And our
6:17
rich media tech and others' rich media tech was
6:19
very nascent. All of a sudden, agents needed
6:21
it. Because they couldn't show homes. And so
6:23
that was a huge learning. And that has accelerated
6:25
a lot of what we've done in all the virtual touring
6:28
and rich media space. So I think every inflection
6:31
point, you can't control when the market comes
6:34
at you, but you can control what you focus on.
6:36
And we try and stay focused on, okay, well, what
6:39
problem is the customer having? How can we help
6:40
solve the problem? It's interesting because you
6:43
mentioned AI and everyone's talking about AI.
6:45
When I first came on board to Inman, one of the
6:47
issues we were struggling with is really the
6:48
meltdown of open web search. You know, people
6:51
were no longer going through Google and, you
6:53
know, finding Inman right away. And it was like,
6:54
how are they getting to us? How do you find this?
6:56
And then how do you attribute the number of clicks
6:59
or connections, right? Same types of things you
7:01
deal with. You recently celebrated a year now
7:04
in ChatGPT. Walk me through that. Are you concerned
7:07
about losing control of the customer? But you
7:10
also have AI within your... Walk me through that
7:12
dynamic. And is that a fine line to balance between
7:15
the two? We don't really see it as a choice.
7:17
Like we see it as an and. We're always going
7:20
to run at new platforms because we want to be
7:22
where customers are. So if customers are going
7:24
to start using horizontal AI platforms, now if
7:27
they're going to start using personal agents,
7:28
we want to show up there. They're going to ask...
7:31
things differently. They're going to find things
7:32
differently. They're going to start their search
7:34
differently. So we want to be there. And so that's
7:36
why you see us run. That's why we ran a mobile.
7:38
That's why we run a platforms that don't always
7:40
pan out. We ran out the vision pro. We still
7:42
think AR VR is going to be interesting, but obviously
7:45
it's slower, but that's why we also run out the
7:48
AI platforms and we learn from that, right? So
7:51
being the first app in chat GPT, getting our
7:54
rentals business into Gemini, like we learn from
7:57
that and we. take those learnings back to how
8:00
do we make Zillow AI -ified. And for us, it's,
8:04
they're complimentary, right? Because so much
8:07
of our traffic comes direct to us, because our
8:08
brand is so strong, we're going to have most
8:11
buyers and sellers want to come to us directly
8:13
because they're going to be buying and selling
8:16
for five months and they're going to need all
8:17
the data and all the insights and they're going
8:19
to need the agents and the agent software that
8:21
agents are using. Brands still wins no matter
8:24
what. But as the top of funnel shifts, you want
8:27
to be in all the places, to be there when the
8:30
conversation starts so that you can win them
8:32
over however their technology needs change. Very
8:34
smart. When people are in chat using Zillow but
8:39
on your own AI, what types of things are they
8:41
asking? Yeah, so Zillow AI mode is what we're
8:43
still in beta, although now very broadly available
8:47
to our users because we are learning. And we
8:49
are learning that this is very additive and very
8:52
complementary to the way internet and mobile
8:55
worked. They aren't. just setting filters or,
8:59
you know, consuming the content from an IDX page
9:01
the same way they were before. They're asking
9:04
new questions. They're spending more time doing
9:06
comparisons. We look through, you know, the history
9:11
of how people ask questions and it's just fascinating.
9:13
They're asking stuff that they never would have
9:14
asked Zillow before. And then they weren't asking
9:16
Google before. You know, one example I thought
9:18
was fascinating was there was a buyer who spent
9:21
something like 200 sessions on Zillow using AI
9:24
mode. was looking at a couple of different properties,
9:27
kept asking all kinds of deep comparison questions,
9:29
asked a lot of financial questions. Like, can
9:31
I really afford this? You know, and you know,
9:33
okay, are you pre -approved? Are you not? Let's
9:35
set your budget. At one point, this is all AI,
9:38
all talking to AI mode. At one point asked about
9:40
buying or renting. And so it helped with that
9:42
question. Right. And then eventually raised their
9:45
hand, hired an agent and closed on a home. And
9:48
I haven't talked to that agent about that customer,
9:50
but I have to imagine that buyer was one of the
9:53
more qualified leads. agent got. Yeah. Because
9:56
they had done so much research. Or there could
9:58
have been a nightmare too, knowing how. Yeah.
10:01
But, but I think in today's affordability challenge,
10:03
a more educated buyer, like that's gotta be,
10:05
that is one of the number one problems right
10:07
now is getting the financial picture, getting
10:09
the reality of the financial picture is the biggest
10:11
challenge. Yeah. Yeah, absolutely. Talk, when
10:13
you think about AI in general, how are you guys
10:15
using it internally as a company? Are you like,
10:18
are there any particular tool, like what are
10:19
the one tool or thing that you like? You got
10:22
to grab this. Yeah. The thing is, we're so early.
10:25
There's no one tool. So we are making tools,
10:28
plural, available to everyone. And we are really
10:30
trying to encourage everyone to use them. And
10:33
we have kind of AI champions in every function
10:36
trying to really help develop. So because it
10:38
is we're trying to figure out how to use the
10:40
best tool for the best job. And there's no one
10:42
size fits all. Right. So the tools we're using
10:44
to code differently and ship code differently
10:46
and the tools we're using to design and build
10:49
product. uh roadmaps um and prototypes differently
10:52
are different from the tools our legal department's
10:54
using right and they're different from the you
10:56
know our recruiting team to automate more of
10:57
the funnel like there's different tools for different
10:59
jobs what we're trying to do is say start to
11:03
use them start to learn how to use them and as
11:06
the tools evolve how do we evolve with them and
11:08
how do we evolve how we work and we're doing
11:09
that for our employees we're also trying to do
11:12
that for agents in building those tools right
11:14
we're then turning around trying to okay how
11:16
do we make follow -up boss How do we build more
11:19
AI features to make agents' jobs easier while
11:22
we're also trying to figure out how to use the
11:23
tools? So it's kind of this dual race that we're
11:25
under. Did you guys favor any one particular
11:28
AI internally? No, we don't. And that's the thing.
11:32
The great thing about this explosion of technology
11:34
is stuff is changing every week. If we'd sat
11:36
down a month ago, we wouldn't have even been
11:37
talking about personal agents. And now Muse and
11:40
Dot are out there. And they're not just out there.
11:42
They've exploded in their usage, right? So it
11:44
moves really fast. You know, we were using...
11:47
open AI for a while for engineering. Now we're
11:49
using cloud code. Like we can switch. And we
11:51
also let people pick their tools. So we do have
11:54
some standards out there, but we let people pick.
11:57
And then the great thing for the software we
12:00
ship is you want to use all the tools. You don't
12:03
want to bet on one horse. And we are using the
12:06
best model for the best job. And we are able
12:07
to switch models. And I think as the technology
12:10
matures, you're going to see that. Like agents
12:12
are going to have software in their hands. that
12:14
does all that work for them. It's just going
12:16
to be, okay, this is AI enabled, this is agentic,
12:18
and the software has, you know, you don't have
12:20
to think as hard. Right now, you kind of still
12:21
need a little bit of an AI PhD to get the most
12:24
out of it. Yeah, you do. And it's still not as
12:27
seamless as everyone thinks it is. It's not,
12:29
but it's coming quickly, I think. Yeah, scarily
12:32
quick. Yeah. One of the things that I know that's
12:35
been in the news a lot is the whole thing about
12:37
listing transparency. And I know you guys have
12:39
been very, very, very strongly supportive of
12:41
listing transparency and things like Preview
12:44
now lives in both Zillow and Realtor .com. Talk
12:47
to me about all that drama and all that craziness.
12:50
I know what I'm hearing from readers of Inman
12:52
is that we're so tired of this story. Please
12:54
tell us something else. But I'd love to get your
12:55
perspective on why transparency is such a critical
12:58
issue for you. Yeah, I think for us, we were
13:00
founded. In 2006, to turn on the lights, the
13:04
very first product we launched, provocative in
13:06
the industry, the Zestimate, a free automated
13:08
valuation model, it empowered sellers and buyers.
13:11
And what did that do? A more empowered seller
13:13
and buyer was a more educated client and a better
13:16
lead for an agent. And fast forward 20 years,
13:19
we're still operating off that same principle.
13:21
If you turn on the lights, if you make more information
13:23
available, consumers are going to do more on
13:26
their own. And that's going to be a good thing
13:28
for great professionals. It's going to suck waste
13:29
out of the system, right? And for both the consumer
13:32
and the agent. And in trying times, if businesses
13:36
are trying to take things back off the internet
13:38
and turn the lights off, that's going to disadvantage
13:40
buyers and sellers. It's also going to disadvantage
13:42
agents. They won't be able to do their jobs as
13:44
effectively. Everyone's going to waste a bunch
13:45
of time. And so we just don't expect the market
13:48
to work that way. And that's why to us, it's
13:50
so obvious to stand on the side of let's give
13:53
everyone access to information. A healthy public
13:57
marketplace is the best functioning market. Where
13:59
does this all land? You think it's going to be
14:00
a state by state battle and legislatively figure
14:03
itself out? Or I don't see anyone taking the
14:05
leadership. I mean, I think I think you're starting
14:08
to see a lot of interest. I mean, you've seen
14:10
a handful of states start to pass legislation.
14:13
You've seen government inquiry into it. You've
14:15
seen regulator and consumer protection. The industry
14:19
has been shouting about this thing that, by the
14:20
way, still isn't a very big thing. It's still
14:23
a fraction, a very, very tiny fraction of those
14:25
things because it's not actually good for sellers
14:27
or buyers. But I think if that continues, that
14:31
practice continues, I think you'll see more inquiry
14:33
and more scrutiny. And I think ideally that helps
14:36
shape policy around all this. But I think it's
14:40
just your readers and. This industry has been
14:43
talking about for a while, but it's still not
14:44
something. If you go outside of the real estate
14:46
industry and you talk about this issue, people
14:48
look at you sideways. They're like, what are
14:49
you talking about? Well, the thing I keep hearing
14:51
is it's basically essentially a made -up challenge
14:54
that we don't really need right now. That's what
14:56
I hear quite a bit. And to maybe go back to your
14:59
first question, if you focus on the customer,
15:02
which is what we try and do, and you actually
15:04
sit down with a buyer -seller or agents sit down
15:06
with a buyer -seller, how do you get your job
15:07
done? This is not what anyone's asking for. No
15:10
one, yeah. Last thing I want to talk about is
15:12
Zillow is now going to be an information partner
15:16
with our new Inman 2 .0. Thank you so much. We're
15:19
very excited about that. When we set out to redo
15:22
Inman and our portals and our platform and make
15:24
it the Bloomberg of residential real estate,
15:26
we couldn't have asked for a better data partner
15:29
than you guys. So what data do you think is absolutely
15:32
still out there missing that we need to figure
15:34
out or get into the hands of agents today? Yeah,
15:37
well, we're really pleased to be partnering with
15:39
you all. So I would say that for first. And then
15:42
secondly, when I think about where data goes
15:45
in the future, I think about two things. One,
15:48
so much of what this industry uses is still backward
15:51
looking. Comps, what's sold, you know, everything
15:54
is what just happened as a way to drive intelligence
15:57
and insights into current market activity. But
15:59
what buyers and sellers and agents are trying
16:01
to figure out is they're trying to predict the
16:02
future. And it's hard to predict the future,
16:04
but you can at least get. current real -time
16:06
signals, real -time demand. And that's one of
16:08
the things we can offer, right? We see 70 % of
16:12
all buyers. We see all real -time buyer activity.
16:14
We see all showing activity. And so if we can
16:16
help create more current data, that can help
16:20
be a really differentiated source of value for
16:23
the industry, for agents. And if you think about
16:25
AI coming to the party, and AI isn't just a tool,
16:29
it also generates data and it generates content.
16:31
And to use your own podcast name, it generates
16:34
more noise. And so the ability to pull the signal
16:38
out of all that noise and provide insights, actionable
16:41
insights. So it's not just here's a huge amount
16:44
of data figured out yourself. I think that's
16:46
really the opportunity that we still aren't seeing
16:48
a ton of this century. What tool are you looking
16:50
at right now at Zillow that you're most excited
16:52
about? Like, is there one thing you're like,
16:53
wow, this is I bet because the laboratory of
16:56
ideas has to be pretty strong. I mean, I can't
16:58
you're asking me to pick a favorite child. I
17:01
mean, I'll. Plug a couple since you asked. I
17:04
think on the consumer side and on the agent side,
17:06
on the consumer side, what we're seeing Gen and
17:09
AI let us do around rich media is fascinating.
17:12
I mean, you've seen, if you haven't played with
17:15
it, Sky Tour, which is one of the things on our
17:17
rich media product now where you can just take
17:18
drone photography and generate a video game around
17:21
the house. That's going to come to video creation.
17:24
That's going to come to being able to just instantly
17:27
create a floor plan with no special work. That
17:30
makes the agent's job easier, the photographer's
17:32
job easier, but that makes the sellers like light
17:35
up because now I can really showcase my home.
17:37
So that class of technology is exploding and
17:41
we are seeing huge benefits if we can get that
17:44
in the hands of more customers, but more agents.
17:47
And on the agent side, we are just starting to
17:50
scratch the surface on creating software that
17:52
helps agents become super agents. And, you know,
17:54
we're just shipping the first versions of. Okay,
17:58
smart messages and follow -up boss. Very small
18:00
thing. Can I suggest a message for your follow
18:03
-up? Can I give you a to -do list of suggested
18:05
activities? Can I pre -fill those things, right?
18:07
Just starting to nudge the workflow along. You're
18:09
already seeing this huge unlock, not just in
18:11
productivity, but in actually like customer service.
18:14
All this, I'm making, I sound smarter to my client.
18:16
I remember everything about my client. The leaps
18:19
that'll come on top of that, of actually being
18:21
agentic and being proactive and doing a lot of
18:23
that work for you. It's the first time I think
18:25
we've ever really seen more volume and higher
18:28
quality. Yeah. Right. Normally, oh, more volume,
18:31
you're going to sacrifice quality. But for an
18:33
agent's job who has to spend so much time in
18:35
the back office and so much staff in the back
18:37
office just to try and... Which is the worst
18:39
place they should be. That's right. Taking all
18:41
that away and then not just taking the work away,
18:43
but actually proactively generating the insights
18:45
and making the professionals more intelligent
18:47
when they show up. It's going to be a higher
18:49
service level. And that's, I think, something
18:51
that's going to be new for the first time. So,
18:53
I mean, I'm excited about a lot of things, but
18:54
I'll leave you with just those two. Yeah, no,
18:56
those are all incredible. Where do you see, overall,
18:59
where do you see the industry the next, call
19:01
it 24 months? Where do you think we're going
19:04
to wind up? You have great economists. I know
19:06
you're not an economist. I'll put that out there
19:08
right away. But I do want to give you, where
19:10
do we go from here? Well, I think the housing
19:13
market is not getting better anytime soon. You
19:16
know, we came into this year. thinking five to
19:18
10 % value growth, right? Units times price.
19:22
And we're probably ending the year going backwards.
19:26
So I can't tell you exactly how 27 and 28 will
19:29
shape up, but we've been trading at nearly historic
19:32
lows in turnover rate. And with mortgage rates
19:36
up and still supply unsolved, I don't think that's
19:39
getting any better. So I think it's going to
19:41
be a challenging market. I think the rain clouds
19:44
are out there for a while longer. So we got to
19:45
make sure our rain gear is not getting. I don't
19:47
know about 24 months, but I definitely think
19:49
heading into next year. The good news is there
19:53
are still 8 million people on a season -adjusted
19:57
basis buying and selling homes right now. So
19:58
yes, it's not 10, 12 million. And those people
20:01
need help. And frankly, it's so hard for them.
20:03
They're getting more financially ready. I mean,
20:06
what we see on Zillow, one of the most fascinating
20:08
things is when I started, you couldn't get anyone
20:10
to ask a mortgage question. Like everyone just
20:13
wanted to browse and dream and shop and window
20:15
shop. And now half of the buyers only want to
20:20
talk financing before they want to go fall in
20:21
love. And that is the output of years and years
20:25
of this market being so affordability challenge.
20:26
The good news is if you're an agent wanting to
20:29
meet new customers, well, half of them are going
20:30
to have a little bit more reality to the financial
20:33
picture versus the agent having to spoil the
20:35
party and be like, well, you're shopping where
20:37
you can't afford. So that is maybe the silver
20:39
lining of a challenging market is the people
20:41
that do get through are more ready to go and
20:43
they're a lot more educated. I promise, last
20:46
question. How many other Purdue Boilermakers
20:50
are running $2 .5 billion companies as CEO? You
20:53
know, I don't know off the top of my head, but
20:54
we've got some great alumni out there, so I'm
20:56
sure I'm not alone. I saw you're a proud Boilermaker.
20:58
I am. And Kellogg as well, right? Yeah, Northwestern.
21:01
I was a Midwesterner. I grew up in Ohio, so we
21:03
represent the Big Ten well. I love it. Jeremy
21:05
Wacksman, CEO of Zillow Group, thank you so much
21:07
for your time. Yeah, thanks for having me. Appreciate
21:08
it. thanks for listening to noise versus signal
21:11
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