The Real Deal New York

StreetEasy’s rough road

In the wake of a CEO shakeup, a look at where the Zillow-owned portal began and the tumult it’s faced
By Erin Hudson | March 01, 2019 12:00PM

Richard Barton (Zillow.mediaroom)

From the moment StreetEasy debuted in New York City 14 years ago, it was clear that the listings portal was a game changer.

But after an information tug-of-war with the brokerage world, it became something of a de facto multiple listings service for an industry that was too territorial to create a proprietary one for itself.  Now, what StreetEasy once offered for free, its public parent company, Zillow Group, has been monetizing at an increasing rate.

Its most recent program, dubbed Agent Spotlight, debuted last month and charges brokers to avoid one of the company’s other moneymaking programs: Premier Agent. The latter program, which launched in New York in 2017, sparked serious controversy because it allows agents to advertise next to other brokers’ listings.

The fact that the company is doing everything in its power to make money should come as little surprise. It is, after all, a Wall Street juggernaut that needs to show growth to shareholders.

In 2018, Zillow earned more than $1 billion in revenue for the second year running, but it also saw its market cap fall by $2 billion in less than 24 hours after reporting that earnings for Premier Agent were lower than expected. With its stock dropping more than 25 percent in value year over year, Zillow announced late last month that long-time CEO Spencer Rascoff would step aside and that co-founder and former CEO Rich Barton would take over again.

Barton will focus on growing the company’s home-buying business, Zillow Offers. The day after that announcement, Zillow’s stock value shot up 22.5 percent.

While many brokers have publicly denounced the company for making money off brokers’ backs — some characterizing it as “extortion” — Zillow has defended its tactics as giving brokers more choices. And deciding whether to work with (or fight) StreetEasy has divided the industry.

But one thing is clear: Both the company and New York’s brokerages are under financial pressure. Here’s a look at how StreetEasy came to be and some of the tumult it’s been through over the years.

2006

The year StreetEasy founder Michael Smith took the site live. The former company CEO shook up the industry right out of the gate by scraping residential listings from the internet and making them available to consumers and agents for free. At first, NYC’s residential firms resisted, but eventually they began feeding StreetEasy directly.

20%

The overnight drop in Zillow’s market cap — which fell to $6.3 billion from $8.2 billion — after its 2018 third-quarter earnings call. The sell-off was attributed to lower-than expected Premier Agent revenue. In the wake of the drop, two of Zillow’s biggest shareholders — company co-founder Richard Barton (now CEO) and venture capitalist Jay Hoag — bought a combined $44 million worth of shares. Late last month, the company’s market cap was up to $8.43 billion.

$50M

The price Zillow paid to buy StreetEasy in 2013. Before that purchase, Zillow had a strong national brand but was a bit player in New York. Zillow’s then-CEO Spencer Rascoff acknowledged as much, telling TRD that “Zillow had left something to be desired, and StreetEasy clearly remedied that.”

1.2M

The number of unique visitors StreetEasy had a month when it was purchased by Zillow, which had 64 million. The two companies, however, had different business models, with StreetEasy generating revenue from subscribers and ads and Zillow from charging agents to place their information next to listings.

$1.3B

The amount of revenue Zillow earned in 2018, largely thanks to Premier Agent. That cash cow brought in about $898 million — an 18 percent increase over the $762 million the program generated in 2017. In late 2018, Susan Daimler, who was heading StreetEasy, was promoted to run Premier Agent nationally. Her husband, Matt Daimler, took over as general manager of StreetEasy.

15,118

The number of StreetEasy rental listings at TRD’s last count, in January — shortly after it upped its daily rental fee to $4.50 from $3. The site had 31,000 in July 2017 on the day before it began charging for rentals. Zillow claims to have 110 million sales and rental listings nationwide.

2014

The year Rupert Murdoch’s News Corp. bought Move Inc., parent company to Zillow rival Realtor.com, and eight other online real estate platforms. Those sites have become major revenue sources for the company. Zillow, for its part, bought Trulia for $2.5 billion in 2015 and, in addition to StreetEasy, owns six other sites, including HotPads and Naked Apartments.

$333

The monthly cost per sales listing StreetEasy is now charging agents for Agent Spotlight. Paying the fee gives an agent the exclusive right to have their name and photo alongside their listings and avoid having
another agent buy those rights through Premier Agent.