When giants buy giants: How acquiring top rival changed Zillow 

Editor's note: A decade ago, Zillow made a blockbuster deal to purchase its biggest competitor at the time, Trulia, for $2.5 billion. This two-part series offers a look inside the deal that fueled Zillow's growth — and an update on the rival that's been compared to a "ghost ship." Read part two here.

In 2014, Zillow and Trulia were locked in an exhausting and costly marketing war. They were the two leading search portals, and both were burning resources to compete against each other — instead of taking on the more established industry players. 

"I needed to get Pete off my back," said Greg Schwartz, Zillow's chief revenue officer at the time, about Trulia founder Pete Flint.

While he's only half-joking about the rivalry between the two companies, he realized the solution was to stop fighting and join forces.

Today, Schwartz is CEO of Tomo Mortgage, an AI-powered home loan provider, while Flint is focused on venture investing as a managing partner at NFX. But both remain close observers of the real estate portal landscape they helped shape.

Time for a truce

The two companies were founded just one year apart in the mid-2000s, each with a distinct vision for consumer-centric home search. Nearly a decade later, however, "it stopped being a product battle; it became a marketing battle," Flint said. 

Consumer feedback at the time reflected this reality. "You'd ask consumers how they thought about Trulia versus Zillow, and they'd say, 'Well, I kind of like the interface for Trulia better,' or 'I kind of like the interface for Zillow better.' People had brand preferences, color preferences, design preferences, but beyond that it was Coke and Pepsi," Flint recalled.

For Schwartz, the rivalry had become counterproductive. "We were throttling Trulia instead of focusing on the bigger opportunities," he said. "There was a big bad real estate industry who had so much more power, so much more revenue, so many more customers. And we were throwing punches at each other instead of focusing on that."

Willing to 'break some eggs'

When Spencer Rascoff, Zillow's CEO at the time, approached Flint about combining forces, the Trulia founder initially hesitated. Everything at Trulia was going well. But the strategic logic became compelling from both a business and product perspective. 

On the agent side, advertisers could tap into both audiences through a single relationship, expanding their reach while simplifying operations. On the product side, Flint saw the potential to accelerate Trulia's roadmap. "We could do what we wanted to do in three years in 18 months," he says.

Flint said Rascoff spent a lot of time studying merger models and best practices before settling on an approach: integrate fast and completely.

"There's sort of two ways to do it," Flint explains. "One is to have businesses run side by side and incrementally build best in class. The other is to know what the end destination is and get there as quickly as possible, even if you break some eggs."

With the company's leaders in agreement, Zillow announced its acquisition of Trulia in July 2014. The $2.5 billion deal closed the next year.

From 'rivals to teammates'

Schwartz decamped to Denver, Trulia's largest sales office, for six months to lead the sales team integration. His job was "to marry these two high-performance cultures into something that was a little better, a little bit more beautiful and a little peaceful together." By his assessment, they succeeded.

The transition proved smoother than expected, partly because the rivalry had always been more professional than personal. "We were born in the same era, venture backed, high growth, similar business models," Flint said. 

"We both cared about building a valuable business but also cared about team and culture. It's almost like a sports team analogy: You love the game of soccer but happen to be on different teams. The next season you get traded and you're on the same team. You go from being rivals to teammates."

What it meant for agents

For real estate agents using the platforms, the acquisition delivered tangible benefits. About a third of Trulia's customers weren't searching on Zillow, so agents instantly expanded their reach. And they now needed to manage just one relationship instead of two, accessing a larger audience through a single ad product.

"There was initial agent angst, which there always is around change," Schwartz recalled. Some feared the consolidation would lead to price increases and reduced competition. 

"But that didn't happen. There's a ton of competition in the market, a ton of options for agents to advertise. It just simplified things from an agent perspective," Schwartz said.

Still separate brands on the surface

For consumers, the impact of the acquisition was more subtle. The companies maintained separate user experiences, preserving the brand preferences that had driven consumer choice all along. Some users preferred Trulia's interface; others liked Zillow's. The strategy was to keep their distinctions alive on the front end while integrating operations behind the scenes.

The strategy worked. Many of Trulia's sales leaders went on to important roles at Zillow, including current COO Jun Choo. The business grew. And contrary to government and industry fears about limiting competition, the market became more crowded than ever.

Read part two here, which looks at how and why Trulia's star faded as Zillow's shone brighter, and how the acquisition may have "lit the wick" for increased competition in the home search space, sparking the portal wars to come.