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Zillow lost money because they weren't willing to lose money
71–80 of 386 posts
Re: Zillow lost money because they weren't willing to lose money
#72Earlier quoted context omitted.
Which regulations would you relax? Surely there is some unnecessary red tape, but it's not as if building regulations have been developed for fun, it's largely in response to safety issues and so on.
Cosmetic stuff, square footage requirements, height requirements, parking requirements. Basic structural engineering, fire safety, etc. requirements of course would stay but if local code is more stringent than national you might take a look at it (e.g. things like a local code requiring copper pipes when PVC is acceptable and much cheaper).
(Straight) PVC is not acceptable for hot water supply lines.
Re: Zillow lost money because they weren't willing to lose money
#73> 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…
The answer is to reduce regulation. The process of building new structures is filled with so much regulatory friction that it is impossible for the average person to even consider building their own home.
The Florida buildig collapse showed whqt happrns when regulation is "reduced".
Re: Zillow lost money because they weren't willing to lose money
#74I really liked this quote, which is also true of machine learning organizations at large tech companies: The most valuable data is not social data, ... but your own data because every dataset that you’re looking at internally describes your own process, including your bugs, ... building models from your own data is the only way to build a really successful system. This is one thing that a lot of outsiders do not unde…
Yeah, I'm gonna say that romanticizing mass surveillance is a bit much. Cambridge Analytica, the five eyes countries, Clearview - all these are using Facebook and Google's data to great effect.
Facebook and Google's data are not their own. That data is comprised of private lives, stripped bare pixel by pixel, bit by bit, and it's offensive to frame it as if they're doing something alchemical and special with it. Google's search dominance came from something special, creating the right algorithm and seizing the first mover advantage, but the relentless and ruthless invasion of privacy is a rent seeking race to the bottom.
All of the ills of the internet and political turmoil in the west from algorithmic amplification are the brainchilren of Facebook and Google. It turns out that "tailoring search results" and "targeted advertisement" are excuses for something that can cost far more than a society might want to pay.
Re: Zillow lost money because they weren't willing to lose money
#75> 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…
All I see is the price of real estate being driven up
Who is doing the selling? "Wall St Fat cat Co" or the average Joe who saw his house value go up by a LOT?
Re: Zillow lost money because they weren't willing to lose money
#76Earlier quoted context omitted.
>If they used competitive offers, they’d never have the winning bid. Why do you assume that, seems like a cash buyout would be a great deal for many sellers if it was at the appropriate price. Issue is I think that Zillow's information was less granular than what the buyers/sellers had. Let's say Zillow priced two houses near each other at 1million each. However one was close to a busy road so would only sell for $90…
They are out 200k. They bought for 100 too much and will have to sell for a 100 less than planned.
Not sure I follow. They buy for 1m so they're out 1m. Market value is irrelevant when bought. They sell for 900k, optimally, so they then get back 900k. In total they're out 100k (900k minus 1m). Not counting fees, market movement and assuming they sell optimally.
Re: Zillow lost money because they weren't willing to lose money
#77Earlier quoted context omitted.
People forget that tech is able to automate workflows. You don’t often yield success when you attempt to automate and invent the workflows in parallel.
I would say the opposite is true. Dying companies are stuck in their own routines because they're trying to automate their poorly designed processes that require humans at multiple steps. Smart companies are designing newer, better processes that are enabled by tech. Starting from scratch can be a huge advantage.
Personally, I would treat the GP's mindset of "inventing workflows" differently than your mindset of redesigning at "poorly designed processes".
Yes, a poorly designed process sucks but it works at some level. That means the rough flow of it is figured out. Yes, there are exceptions and complications and all kinds of odd things but it's fundamentally different. It's not "from scratch" as you're taking an existing working-but-broken process where you know the input, know the output, and rethinking everything in between.
In an "inventing" scenario, you have what you think should be the input, a notion of what the output should be, and you're trying to build towards that notion.. without the validation that you're thinking of it correctly.
The first is a harder social problem (aka getting people to change) while the second is a harder technical problem.
Re: Zillow lost money because they weren't willing to lose money
#78> 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…
The answer is to reduce regulation. The process of building new structures is filled with so much regulatory friction that it is impossible for the average person to even consider building their own home.
Because there's a societal need to ensure that the housing stock is safe and effective. We invest (or should) a lot of our taxes into local amenities to ensure that housing is provided the best environment. Transport, schooling, roads, etc.
That housing should also be up to a similar standard in terms of its externalities like pollution and energy efficiency etc.
We have regulations for air travel, for car emissions and efficiency, why should housing be any different?
Re: Zillow lost money because they weren't willing to lose money
#79> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…
> a market-maker for homes at a large scale…a house-flipping company
These are different things.
Archetypal market making involves simultaneously buying and selling an asset. Flipping involves buying, improving and later selling. One might be able to deal with the heterogeneity of houses by operating at scale. (Zillow attempted this.) One might also deal with the delay between buying and selling by hedging. (Zillow never seems to have thought about this.) But the improvement function makes what Zillow attempted fundamentally separate from market making.
They weren’t paid to provide liquidity. If anything, they paid a premium for scale and immediacy. They were a real estate operation masquerading as a tech outfit. WeWork in different stripes.
Re: Zillow lost money because they weren't willing to lose money
#80> 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…
Yes, you are wrong to hate flippers. You are wrong to hate anyone who is working hard to make an honest living. Yes, flipping is hard work. All successful work probably displaces someone else in some way. If you're good at your job, you're "denying" that job to someone less skilled. If you work in software, you're automating things that would require more labor if done manually. Fortunately, humans can pivot. Either…
It doesn’t even matter if it’s hard work. Flippers take advantage of a market inefficiency, and just like everyone who does that, they make the market less inefficient. That’s a good thing even when it’s easy.