Zillow lost money because they weren't willing to lose money
stevenbuccini.com
Zillow lost money because they weren't willing to lose money
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Re: Zillow lost money because they weren't willing to lose money
#2The essence of the article is that they underestimated how flawed their algorithms are and how hard it is to build a good lasting algorithm in a dynamic world.
Many seasoned wall street algorithms have suffered many times over 5 decades, and when they fail we call them black swan events.
Re: Zillow lost money because they weren't willing to lose money
#3The essence of the article is that they underestimated how flawed their algorithms are and how hard it is to build a good lasting algorithm in a dynamic world. Many seasoned wall street algorithms have suffered many times over 5 decades, and when they fail we call them black swan events.
That’s not what I read in that article at all. What I read was that their data and methodology was flawed, and they weren’t willing to pay the price to fix it.
Re: Zillow lost money because they weren't willing to lose money
#4I think the article makes an interesting point about this being the first of many, but I disagree with the initial tone of the article. It seemed to paint Zillow as being afraid of loss. On the contrary, I viewed Zillow as demonstrating good common sense and an ability to make hard decisions. To me it shows that they aren't committing the sunken cost fallacy, and are willing to cut an entire 25% of the company and take massive losses so they can redirect themselves towards better objectives.
Re: Zillow lost money because they weren't willing to lose money
#5That it was a bad idea?
Re: Zillow lost money because they weren't willing to lose money
#6Re: Zillow lost money because they weren't willing to lose money
#7I think a key point that is missed is the feedback cycle time. Real time bidding advertising has I believe a number of the listed concerns however the feedback time is maybe hours at most and might be milliseconds. So the risk is in general a lot smaller and worst case you just lose some of the money you spent that day/week. With long term assets you could lose months worth of investments before your feedback loop fully kicks in.
Re: Zillow lost money because they weren't willing to lose money
#8In the original Foundation books by Asimov, the conceit of "Psychohistory" was similar to the concept of machine learning for pricing: The future can be predicted _if people aren't aware of the prediction to change their behavior in relation to it_
This is similar to 'adverse selection' in real life & in Zillow's model. The article makes a nod to this, but seems to imply that if you train your model on that adverse selection, you can come out ahead after paying to learn about it.
To me that kind of misses the point. Adverse Selection isn't a static feature of the landscape you can identify and avoid, it is people understanding what you understand, adapting, and responding. Train your model with adversaries trying to beat it, then you'll maybe counter the specific first round strategies they use, and they'll learn new ones and beat your new model with their 2nd round strategies. It's a continuous game. Your requirement to gather a corpus of training data will keep you in the 2nd turn of a game where the wins are biased to whoever has the 1st move.
Re: Zillow lost money because they weren't willing to lose money
#9> At a high level, the story of Zillow Offers is a story of our industry at its best.
Not in my book. All I see is the price of real estate being driven up by corporate greed and the individual home-buyer being shut out of the market.
Is it wrong of me to hate "flippers" (be they corporate or private)? Pure capitalists will tell me that every property sold went to the highest bidder — in the case of a flipper winning they were willing (able) to risk the capital to hopefully turn a profit on the flip.
I suspect if you dig deeper you might find sales going to flippers because they had 100% cash offers, because they are better at "the game". I see no reason to punish prospective first-time home owners in this sort of market.
But I don't know what the answer is either.
Re: Zillow lost money because they weren't willing to lose money
#10In the original Foundation books by Asimov, the conceit of "Psychohistory" was similar to the concept of machine learning for pricing: The future can be predicted _if people aren't aware of the prediction to change their behavior in relation to it_ This is similar to 'adverse selection' in real life & in Zillow's model. The article makes a nod to this, but seems to imply that if you train your model on that adverse s…
I'm reminded always of the Hunt brothers that tried (and failed) to corner the silver market in the 70's/80's: