When giants buy giants: ‘Ghost ship’ sails on amid portal wars 

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 acquisition that fueled Zillow's growth — and an update on the rival that's been compared to a "ghost ship." Read part 1 here.

Ten years after Zillow's acquisition of Trulia, which then-CEO Spencer Rascoff described at the time as "a tremendous opportunity to combine our resources and achieve even more impressive innovation," it seems that most of those resources were ultimately funneled to Zillow.

Does Trulia still bring value to the business or consumers? According to a statement from Zillow COO Jun Choo, "Trulia is an important part of Zillow Group's brand portfolio. Over the past decade, it has continued to serve millions of home shoppers and renters, complementing the Zillow brand by offering consumers more choice and different ways to engage with real estate."

Yet both Trulia founder Pete Flint and Greg Schwartz, Zillow's chief revenue officer at the time, observe that Trulia's presence has diminished. The platform's interface has remained largely unchanged for years, with few noticeable product updates or innovations from a user perspective.

"It does feel like a bit of a ghost ship," Flint said. "It's there, but underinvested and not growing. I look at it pretty frequently, and it's really not changed in a decade."

Smart business move, or missed opportunity?

Schwartz attributes this evolution less to corporate neglect than to natural market dynamics.

"Zillow continued to invest in advertising expense and people and an independent team for Trulia for a long period of time," he said. "But with the same listings and the same business model, what was the fundamental unique contribution to consumers? When the founders transitioned out of Trulia, it seemed to lose a bunch of its inventiveness and energy."

Flint acknowledges the business logic. "Zillow was always the slightly larger brand, so it makes sense to double down."

Still, Flint sees missed potential. "I would love to see Zillow run a dozen experiments on Trulia," he said. "Limited downside, tons of upside. It could be a super valuable playground for some product leaders to try interesting things."

Spawning 'the most competitive phase' for portals

While Trulia may have lost its luster, the acquisition's broader impact on the market remains significant. Perhaps the most striking outcome of the Zillow-Trulia deal is what it didn't do. Government regulators and industry critics feared the $2.5 billion acquisition would stifle competition in the home search portal market. A decade later, the opposite has proved true.

"The naysayers were pretty damn wrong," Schwartz said. The market now includes four major competitors: Zillow, Realtor.com, Redfin (owned by Rocket Mortgage) and Homes.com. "It's the most competitive phase in the portal landscape since they've existed," he said, adding that the deal may have actually "lit the wick" for increased competition by strengthening Zillow's position and forcing rivals to invest more heavily.

Does that mean there's still room for new players? Flint believes the portal space has matured to the point where he wouldn't back a new entrant. "It's a marketing battle requiring massive distribution," he said. "How are you going to compete as a startup against billion-dollar businesses?"

Lessons learned

For both executives, the experience shaped their thinking about acquisitions and company-building. 

Schwartz's biggest takeaway concerns integration strategy. "Either you operate assets you purchase completely independently at arm's length, or you un-shamefully fully integrate it," he says. "Don't spin yourself into circles trying to maintain a culture halfway. We admired the Trulia culture but didn't give it complete independence, so we smothered it in the process."

Flint's lessons focus on startup fundamentals that transcend product quality. "Really focus on distribution; how can you get customers? What's your truly defensible moat? We live in a world right now where something that looks expensive today becomes cheap tomorrow. What's your defensibility in the next few years?"

A rivalry resolved

The Zillow-Trulia acquisition accomplished what it set out to do: It ended a costly rivalry, created efficiencies for agents and strengthened Zillow's competitive position in a market that has only grown more contested. Whether Trulia's evolution since then represents smart resource allocation or a missed opportunity for experimentation depends on one's perspective.

What's undeniable is that the portal wars Zillow and Trulia helped define continue with renewed intensity. And the two executives who once threw punches at each other on stage? They're still friends.

"Pete's on my board of directors," Schwartz said. "We met on those stages at Inman when we were fighting it out. We ended up liking each other."

Miss part one? Find it here.