The narratives take shape, and start to diverge in Q1/2013.
When I began writing this report, I did not think that a mere update on quarterly results would reach over 12,000 words and require so much work. After all, the annual report is the really important one, and the quarterly reports are mere milestones along the path.
But with all of the changes going on in real estate today, it turned out that there were some really significant signs and developments in Q1 of 2013. The three companies – Move, Trulia, and Zillow – have begun to diverge from each other in not just performance, but in their overall strategic narratives. Each has made important strategic decisions and has begun to execute on them, and the first quarter of 2013 provides glimpses into what the future holds.
Move, the veteran, actually showed revitalization across the board. But it is unlikely to get much credit for its strong performance because the two upstarts outperformed Move on virtually every metric. Nonetheless, the narrative for Move has shifted subtly, but importantly. The content to connection to close story is a good one, and Q1 suggests that perhaps, that strategy is working. At the same time, there are some hints that perhaps Move is undergoing a far more fundamental change in who they are and what they do.
In the case of Trulia, of course, it isn’t merely a glimpse. With their $355M acquisition of Market Leader, Trulia has more or less set its strategic path for the next couple of years. It was a bold move, probably a necessary move, and one filled with high risk and high reward. Coming on top of an extremely strong quarter, where Trulia beat out Move handily and either outperformed or kept pace with Zillow on almost all key metrics, the acquisition sets Trulia’s strategy and narrative for the foreseeable future. If I wrote in the last report that I wasn’t sure what Trulia’s strategic vision was, well, consider that corrected. It is now obvious what Trulia’s narrative will be.
Zillow’s Q1 results and the important management discussion that followed can be described with a word: confidence. Having announced in the 2012 earnings call that Zillow plans to start heavy TV advertising to take over the “brand whitespace” that is real estate, Q1 gave us some results and some glimpses into how that is working. This is a company that knows it has the lead, knows it’s winning, and has decided to start building enduring competitive advantages. Trulia won the quarter, but it will take more than one quarter to catch up to the frontrunner, who knows he’s out front, and by quite a lot.
All of these developments will have deep strategic implications for everyone in the real estate industry, from brokers to agents to franchise companies to MLS and Associations to vendors and other technology companies. Some of the implications will be obvious, and others less so. What I have tried to do is to tease out details on the one hand, while taking a step back and looking at all three companies and their narratives to get a sense of the overall shape of things to come.
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