Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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Deja vu

Asking2 I've been watching with amusement the blogosphere's reaction to Zillow's recent announcement of their new "Make Me Move" feature.  According to their press release:

"...any homeowner can now post a Make Me Move price...A homeowner can easily post a Make Me Move price without exposing any personal information. Zillow then enables interested buyers to contact the owner through an email "anonymizer."


Several bloggers who I respect have given positive feedback on the concept, calling it "a big play that could completely disrupt the real estate industry" or "They are finally bringing disruption possibilities to an ancient industry".  And the fact that Benchmark and other VC's thought enough of the concept to invest $57 million is quite an endorsement.

While "Make Me Move" may well be disruptive, what I do know is that I've seen this disruption before. 

Back at the DEMO Conference in 2000 (where I launched Half.com), I remember seeing Bill Gross launch a similar website called MakeAnOffer.com.  As the Washington Post wrote at the time:

"Idealab founder Bill Gross floated a big one with his latest Web business: MakeAnOffer.com, a real estate site centered on homes that aren't for sale. Go ahead, Gross said, make an offer "and we will communicate your offer to the homeowner anonymously.""


What's amazing to me is that the concept is getting rave reviews now, despite the fact that back in 2000 Bill's idea didn't get a good response.  In fact, as ComputerWorld reported back then, "Makeanoffer.com drew laughs, and not in a good way."  From what I can recall, Makeanoffer.com never got traction and appears to have been quickly shut down.

So why the positive response now for an idea that previously failed?  One can either interpret this as (a) an idea that was ahead of it's time, or (b) justification for Om Malik's concept of "Old Bad Ideas 2.0"

Which one is it?  I don't know.  I do know that this would not be the first time that Bill Gross has come up with an innovation ahead of it's time -- after all, he invented the pay-per-click advertising model that was ultimately made popular by Google (which was the subject of a wonderful chapter of John Batelle's book, "The Search").

Either way, it makes me want to explore any other "laughable" Bill Gross ideas that didn't get traction in Web 1.0

Comments

Damon

The difference is timing. In 2000, real estate was very unfashionable. People laughed at the prospect of 10% returns. Today, they make bad reality TV shows about real estate brokers. It's all timing. If it works this time, it's only because real estate buyers are irrational. When the down cycle hits full stride, this concept will quietly disappear.

I trust tha Benchmark's bet is more that this company will be able to displace brokers entirely, not on this gimmick.

Mazen

The difference may be in each company's ability to gain traction.

Having a makeanoffer.com site by itself would require too much work for people to voluntarily register their homes and for others to learn about the site and find a critical mass of homes in order for them to get value and come back.

Zillow on the other hand has a pre-existing service providing real estate prices overlaid on a map that has already grabbed people's attention and mindshare. People's homes are already on there, they almost just need to be "claimed." This seems to act as a focal point around which other services such as makeanoffer.com might work, where they it might be too difficult to make them work independently.

Basically, it's not the idea, it's the execution.

Reminds me of this great post by David Beisel:
http://www.genuinevc.com/archives/2006/10/information_dis.htm

David G from Zillow.com

Hi, it's David G from Zillow. Fascinating post, thank you.

Our business model is not dependent on the uptake of Make Me Move but it will be fascinating to watch. Today so far, about 2400 houses have been posted for sale on Zillow and almost 900 have Make Me Move prices.

I was unaware of Makeanoffer.com and don't know why they didn't make it but from your discussion of the company, I think that Mazen (above) articulated the difference quite well. Zestimates and the audience they've attracted were a crucial first step for Zillow -- and our database of homes and the relationship we have with the owners who have claimed them is unique.

It's early days still, but we're very excited about Zillow's prospects.

Gerald Joseph

Great post-
One of the differences between Bill Gross' Makeanoffer.com and Zillow's latest initiative is market positioning and funding.

Zillow launches the Make Me Move initiative after a great deal of financing 50+ million and significant press attention.

The major questions are: Is this feature really necessary?
Was the feature launched in response to User requests?
If it fails to draw significant attention will Zillow discontinue it and keep their service palette simple and digestible?

The central problem with Zillow is that they are, most likely, focusing on the wrong market.

Zillow should turn its attention to the growing global market of real estate investors and real estate investment advisory institutions.

Zillow should launch a service that provides new metrics, real-time market data calculators, smart real estate news aggregators, and other services to help real estate investors make better decisions.

Nabeel Hyatt

Everyone is aluding to it - so I'll just put it out there.

The difference is credibility.

Zillow has built some credibility around innovation in the real estate market, so you could see it happen. If that was their first press release we'd be scoffing... but they have the "eyeball driver" and interest.

Richie Hecker

One thing is you can never discount Bill Gross. Several of his companies were great and fizzled. Wasn't iexchange an idealabs company? i'd love to see it come back...

i don't see why it wouldn't work, the problem is whats the point of the site? why would people come to the site, too many variables to make it work unless it was part of a yahoo...

daryn

Another key difference (if I remember the details correctly) is that makeanoffer.com let you, the potential buyer, make an offer on any house. With zillow's offering, the homeowner has said "Yeah, i don't plan on selling/moving anytime soon, but I suppose I would for $x".

sumon

Notice Benchmark have invested in the identical concept here in Europe by putting $12.5m into igglo.fi to expand into Europe.

Grace Nationville

The concept of ‘old wine in new bottles’ surface in a variety of online discussion.
For example, watch Prof. Ralph Holloway (Columbia University)that touches upon this point from his perspective.
Happy holidays.

http://nationville.com/?p=113

Eaken

This might be a great tool in a market downturn. Seems more of a help me out of foreclosure tool than anything else.

I've seen some of the homes listed using makemeoffer. The prices makemelaugh.

lv bag

I've seen some of the homes listed using makemeoffer. The prices makemelaugh.

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