Former Zillow CEO, Spencer Rascoff: Leading Billion-Dollar Startups Through Crises

[00:00:00] [00:01:00] Ilana Golan: So today I have a really great episode for you because this person, I've been following him for a long time, Spencer Vaskoff, co founder and we're CEO of Zillow until 2019, which during your time grew to what over 4, 500 employees, 3 billion in revenue, 10 billion in market capitalization. Massive and I think every single person knows Zillow, which is incredible. My daughter uses Zillow for fun. You also co founded Hotwire, which was sold to Expedia for 685 million in 2003. You've been on boards of TripAdvisor and Palantir and co founded many ventures recently we'll talk [00:02:00] about. But you come from a family of entrepreneurs, So take us back in time to Spencer, like the kid. How did you grow up and how did that shape you? Spencer Rascoff: I was always interested in entrepreneurship and business. I was the kid that would Bake cookies and sell them on my street that would get tracing paper and trace artwork because I wasn't a good artist, but I could trace things and sell those tracings to my parents, friends. So I was always hustling and trying to create businesses and make money. And I saw a lot of entrepreneurship all around me. My grandfather was a really successful entrepreneur in the apparel space. He had started a clothing company. My dad was a very successful entrepreneur. He started out as an accountant. And then he became through a lot of hard work and also some good luck ended up starting a business management company and tour production company that [00:03:00] had clients like the Rolling Stones and U2, David Bowie, Paul Simon, Pink Floyd, Leonard Skinner, and many, many others. And so I watched him pivot his career many times as the technologies of the music industry changed. So when. Platform shifted from eight tracks to, I guess, records to eight tracks to tapes to CDs to streaming that had profound implications on how his business had to evolve as the concert industry changed, he moved more into touring and helped pioneer many aspects of the touring industry that we take for granted today, like The 360 tours where producers and promoters buy tours outright from the acts and flip this story on who works for whom and sell broad sponsorships for these international tours, et cetera. So as a kid, I watched a lot of entrepreneurship and that was inspiring to me and helped encourage me and my path to entrepreneurship. Ilana Golan: When you look [00:04:00] at your dad like that, And he's probably worked really, really hard. Did that create that hunger from early age or did that scare you? Like, I don't want to work that hard as crazy as my dad. Like, what did that do as a kid? Spencer Rascoff: I've always worked hard. I worked hard when I was a kid. One of my most formative experiences early on was playing chess. And I was basically a, well, not quite a professional chess player, but I was a very competitive. Serious chess player as a kid. I think at age 12, I was the fourth best chess player in the country. I was the captain of our chess team that won middle school championships and were the basically the best middle school chess team in the country. basically every weekend I was playing. Chess tournaments around the country. And you learn a lot from chess as a kid. You learn about the importance of hard work and preparation of concentration of just mental focus and mental agility [00:05:00] and ultimately the importance of hard work. So that was my sport. If you will, we can debate whether chess is a sport or not, but to me at the time it was a sport and I treated it as such, and then through high school and then beyond, I've always been hardworking. You know, I'm not sure if I got that from my parents or just from intrinsic motivation, but that's always been a personality trait. Ilana Golan: So you were an overachiever from a very early age. You showed it in school, student body, president, all of that. Am I right? You were always kind of pushing yourself. Spencer Rascoff: Yes, That's my thing. My main high school activities were, I gave up chess by high school, and I was what was called first prefect, which was basically the president of the school, and editor in chief of the high school paper, and high school journalism was also a very formative experience for me. I learned a lot about management, leadership, journalism, attention to detail. Time management, working under [00:06:00] pressure. These are all things that you learn when you're running what is basically a professional level newspaper, which my high school paper was. Ilana Golan: So when you went to college, did you already have in mind that it's going to be entrepreneurship because you went to investment banking and that route? Was it by definition? Did you just roll into it? How was it, Spencer? Spencer Rascoff: I wasn't really sure. I worked so hard in high school that when I got to college, I, needed to exhale for a moment. Um, so I don't think I was that focused. I did not know what I was going to do after graduating from college when I started college, but I went into investment banking because I wasn't really sure what else to do. And that was a pretty common path back then in the late nineties coming out of my college. And so I started my career at Goldman Sachs. I found that I learned a lot in investment banking, but I wasn't totally satisfied. I wanted to do something a little bit more entrepreneurial and closer to the [00:07:00] business operations of companies. And so I left investment banking after my two year commitment was complete. I moved to San Francisco. I worked in private equity, which of course buys and sells larger companies. And I enjoyed that. I liked being closer to business operations, but I wanted to be in a smaller, more entrepreneurial environment. And that's how I found my way into startups. Ilana Golan: So you left a very lucrative, well paying roles, right? In Goldman Sachs, private equity, very safe in order to parachute into starting Hotwire. So how did that happen? And why did I happen? Spencer Rascoff: I was at TPG, Texas Pacific Group, in the late 90s, and TPG was back then one of the largest buyout firms, and they still are today. TPG got its start by buying a couple of airlines. They bought America West Airlines out of bankruptcy. They bought Continental Airlines out of bankruptcy. And they sold part of their continental stake to Northwest. So by the time I got to TPG, [00:08:00] they basically controlled three us airlines and one European airline. And so we set about at TPG thinking through ways that we could. Leverage our airline relationships and airline ownership to create an online travel company. And so I helped incubate the idea that would become Hotwire. And then once it was more than just an idea, once it became the beginnings of a company, I asked TPG if I could leave and help run it. And so I left with, My co founder, a guy named Carl Peterson, we both left TPG together to start Hotwire as sort of a spin off of TPG, the private equity firm that we were both working at. That was in 1999. Things were going very well for the first two years. We raised 75 million from TPG and from the airlines. We became one of the top online travel sites. We built a well known brand that even to this day, 20 something years later, people still talk about and recall. And then September 11th happened in 2001 [00:09:00] and September 11th was a huge disaster for the company and for the country and the world. But for the company in particular, it was a near death experience. I mean, we had to do layoffs. We did a down round. We had customers that were stranded all across the world that couldn't travel after 9 11. We had customers that were scared. We had airline partners that were going out of business. It was a grim time in 2001 to be running an online travel startup after 9 11 when people did not want to travel. We were able to turn the company around and by two years later, 2003, we were on a path to go public and we ultimately sold to Expedia for about 700 million. So, it was a very successful turnaround. But it was a roller coaster and every startup is Ilana Golan: every startup is, but I want to take you through that moment because I think people, they probably can't really understand what you went through, but they can start relating to it because that feels like a [00:10:00] disaster when you run a company and you know, that you have some piece to your In this disaster, how do you wake up? How do you take care of yourself, Spencer? Because I think that scares a lot of people and that's really hard to. Spencer Rascoff: I don't think I took care of myself at the time. That was not, there was a long list of priorities and it started with our customers and then our employees and then our investors and then our prospective customers. And at the very bottom of the list is founder health. That is very hard, very, very hard on founders who are managing their companies during crisis and also on their families. And unfortunately, that's startup life. When things are going okay or when they're going well, I think there is enough time to prioritize those types of things. But in a crisis, there's just not. [00:11:00] And as I said, every startup is a roller coaster. Even people would look maybe at Zillow and say, Oh, it's wildly successful. And sure it is. But there were huge ups and downs along the way. And The downs get ignored when people think about the history of these companies, founders of startups who are listening to this. If you want a simple, safe, stable job, go do something else. That is not what startups, especially tech startups or really any startups are. Startups are hard and they will require that you deprioritize Yourself and your family unfortunately for periods of time doesn't have to be all the time It's not sustainable for it to be all the time but for periods of time during the evolution of your company Ilana Golan: I think you're right because Spencer one of the things that we see all the time Is that when people are going through these near death experiences they quit you didn't quit on hotwire You continued [00:12:00] But I think there's some areas where you're, you're like, I'm suffocating. So how do you go through this? Spencer Rascoff: I think there's some founders who think of their company as an extension of themselves. And so failure is not really an option. Some companies in that category still fail. Nonetheless, and then there are other founders that view every startup that they do as a learning experience, but by the way, it's quite clear in pitches, which category founders fall into. I have been pitched founders of a second or third startup, for example, and I'll say, well, tell me what happened to your first startup. And they'll say, oh, well, it failed because of X, Y, Z, and I'll ask a couple of probing questions. And in their description, they're clearly too blasé about. Their prior company's failure. I want to see from them that. It weighed on them, that they cared deeply, that they gave it their all. So that's a turn off if people shrug their shoulders about past failures. In terms of how [00:13:00] we persisted at Hotwire, I think it helps, frankly, when the world is falling apart all around you because it's not quite as lonely. So we were in a category of online travel that the whole thing was a bit of a mess, right? And so it didn't feel That personal, it wasn't like, Oh, we made a mistake and therefore our company is failing. I think that would be a lot harder Zillow. I managed through a very similar set of circumstances in 2008 through the financial crisis. And similarly, the mortgage meltdown and the foreclosure crisis was affecting the whole country, the whole world, but certainly our industry. Of real estate. And so we were not alone. And I think that helped quite a bit because this wasn't of our own making. This was macro and now we have to fight through it as best we can. Ilana Golan: That makes sense. I don't know if that makes it a lot less scary, but maybe a little less lonely. Spencer Rascoff: So Ilana Golan: [00:14:00] you recover. From 9 11, you sell it to Expedia and you spend some time in Expedia. Why then start Zillow? How did that form? And I think there's also some people that also left Zillow. Can you share a little bit of that story? Spencer Rascoff: I joined Expedia in 2003 and left in 2005. I wanted to be at a size company where I felt I could make more of a difference and where there was a ton of innovation happening that I could be a part of. And so I basically want to be back at a startup again. And so I left Expedia and I reached out. I is the co founder of Hotwire that had recently sold to Expedia. I reached out to the co founders of Expedia. Who had recently left Expedia and we joined up and spent a couple months brainstorming startup ideas and all three of us were shopping for homes at that time I was buying my first home. We were pregnant with our first child and it felt like the right [00:15:00] time to buy a house and I was surprised here we are in 2005 the Internet is more than 10 years old. Yet the state of websites for shopping for home was pretty terrible and we started messing around with doing mashups of Google Maps with Craigslist listings, with listings from MLS data, with county data that we could glean from King County, which is the county data. County that Seattle is in and, you know, it became clear that although there were plenty of websites out there, there were no real estate sites that prioritized the consumer. Everything back then prioritized the real estate agent, and we thought that was backwards that we could build something that prioritized the consumer experience. Rather than the agent experience. And so that was the Genesis of Zillow and the product insight was rather than focusing on what's for sale, which many other real estate websites do, why don't we try to answer a different question, which is what's my house worth. And [00:16:00] that's where this estimate came from. And this estimate is Zillow's opinion of what every home's value is. And so figuring out that first version of this estimate was what we then took another couple months to launch. And we launched in 2006. I forget what month, but when we launched Zillow, um, We had a million visitors on our first day. We had 4 million visitors in our first month. It was one of the fastest launches of any consumer product. And that's because the voyeurism and virality of seeing what people's houses are worth is so significant of being able to Zillow all your friends and see what your ex girlfriend's house is worth and what your parents house is worth and what your boss's house is worth and what your. Podcast interviewer's house is worth all of that is super fun and a little creepy, but you know, creepy is not necessarily bad being provocative helps drive virality and that's certainly one of the ways that Zillow grew. Ilana Golan: did you realize that what you're creating will go so [00:17:00] viral or was it an experiment and feels more like you created your own luck to some extent? Yeah. Spencer Rascoff: We did not know that it would grow so big so quickly. We hoped, I think when we started to know was a couple of weeks before launch, when. There was a good product in test and we were able to start using it and we could see and the employees, I think there were probably 20 or so employees at the time we could see the addictive nature of being able to zoom over a neighborhood with a God's eye view and see the price of every home. And so we hoped at that point, but it actually, you know, although we had a very fast start, what really catapulted Zillow was mobile. And that wasn't until a couple of years later with the creation of the smartphone and. The GPS enabled smartphones and the creation of the app store. Ilana Golan: I definitely want to go there. I want to go into two things that I think are fascinating for our listeners. Because first of [00:18:00] all, there's this notion, at least in the Silicon Valley world, get out as fast as you can, get out scrappy, etc. But when you get out very scrappy, There's needs to be a little bit more baking in order to get to the millions that you've seen. So first of all, how do you balance between the MVP or the minimal viable product versus going with something that is good enough for it to really go viral? Spencer Rascoff: It's a great question. And I teach a course on entrepreneurship at Harvard to undergrads, and we spend a whole week on this exact question. So I'll try to answer it briefly, more briefly than I do when I teach it. There's an adage, which I do subscribe to, which is that if you're not somewhat embarrassed by the first version of your product, then you waited too long to ship it. So in general, you just want to get something out there and start learning. And that's what building an MVP is all about. There are Some exceptions where it makes sense to slow things [00:19:00] down in order to have a more fully formed MVP. One is in categories where you can't have it be just okay. And this is things like blood testing, for example, right? Like, you know, you can't have a high degree of inaccuracy. Another, though, is if there's just like a really obvious product feature that's really important for the launch. So in the case of Zillow, I made the very unpopular decision. To delay the launch by, I want to say it was maybe a month or two. And this was by the way, after it took us almost six months to come up with the idea and then six months to build it. So about a year that this team had been eating ramen noodles. And not collecting salary and not being able to tell friends or family what we were working on and everyone kind of wondering why did you leave Expedia, etc. So to delay that by an extra 2 to 3 months was a lot and the extra feature that I slowed [00:20:00] things down to include was. To allow homeowners to claim their home and edit their home facts because I knew that people were going to see this estimate of their home and they were going to have an opinion about it, and the opinion probably wouldn't be so great, and so we wanted to give them something to do, and there's something to do is that they can actually impact it by saying, No, no, no, hold on. I have three bedrooms, not two bedrooms, or I have 3000 square feet, not 2000 square feet. Because a lot of the inaccuracies of those earliest estimates were because of incorrect property data that we got from public record information. So we slowed things down to build that feature where people could claim and edit their home, and I think that was a worthwhile delay. And so I use that as an example, there are many products out there where perhaps there's one or two features that just delaying for a little longer might make sense. Even though in general you want to get your MVP out there as quickly as you can. Ilana Golan: Got it. So now you are literally jumping on the wagon of mobile, which I think is something really, really interesting because As we [00:21:00] know, some companies completely missed the boat. First of all, how did you realize that you need to be mobile first? And you changed everything. You changed Zillow completely to be mobile. Spencer Rascoff: The iPhone had been out for a year. And everybody had one, or everyone at our company had one. But there were no apps on the early iPhone. It's hard to imagine that today. But the only apps on the first iPhones were the Apple apps. So you had mail. You had text, you had calendar, you had stocks, you had weather. And that was about it, uh, calculator. And that was it. There were no apps. And I remember sitting at my desk and watching Steve Jobs at WWDC, the worldwide developer conference of Apple. announcing that they were going to create an app store and they were going to let third party developers, people like Zillow, build apps that people could then download in the app store. And I was floored. I stood up from my desk. I ran over to my co founder and said, we need to pivot the whole company to mobile. [00:22:00] This is going to change everything. Because. This is when you want Zillow is when you're untethered from your desk. It's when you're driving around looking at houses. It's when you're walking around a neighborhood. It's when you're at a cocktail party at someone's house. That's when you want Zillow. It's not when you're at your desk. It's when you're away from your desk. And so if this can work on a smartphone through an app, oh my god. By the end of the week, we had changed the name of the company from Zillow. com to just Zillow because dot com really denotes a website. And I felt strongly that we were not a website anymore. We were a website. Service, which is going to be mobile. First, I had announced to the company that every product and design meeting had to start with mobile screenshots and anyone that showed desktop screenshots before mobile screenshots, the meeting would just be ended right at that moment. I think I only had to do that once or twice where I would just walk out of a meeting and declare the meeting over and people learned pretty quick that we were going to be a mobile first company. And within a couple of months, we had the first version of the [00:23:00] Zillow iPhone app out. And. I was right. We have three things that were special. Number one, as I already said, the consumer wanted to use our app on mobile. Number two, we had much less competition on mobile than on desktop because the real estate brokerage companies that had decent websites that we competed with, they were nowhere on mobile. So it was a Much better competitive landscape for us. And number three, you sort of alluded to this. we actually monetized on mobile in a way that most other companies didn't. So if you think of Facebook, for example, when they went public, half of their usage was on mobile and they had never run an ad on mobile before. And that's why the Facebook IPO was such a debacle, because it was unclear how they were going to monetize on mobile. And with a small screen on mobile, there's less real estate, no pun intended to pop up ads or whatever. And so a lot of advertising models monetize very badly on mobile. Well, Zillow monetizes much better on mobile because of click to call.[00:24:00] So when I'm looking at a home, On my iPhone or Android, I can now click and call or click text, and so it generates more leads and more highly qualified leads than desktop where you can't click to call. So not only do we have a better product that consumers liked that had a less competitive landscape, we made more money. From mobile usage, then desktop usage, and that was a really rare thing for a startup or for any tech company to have at that time. Ilana Golan: So if I'm hearing you correctly, it sounds like you're basically relentless on understanding your audience avatar. You understand that they're not going to be on desktop. They will be roaming around, they will be driving, and you're relentless on trying to understand what do they need when they. are driving around. They are looking for homes and together with being very attentive to what's coming. So it sounds like it's that constantly being relentless about what is really needed versus what I'm building. Spencer Rascoff: Absolutely. So [00:25:00] At Zillow, we use the word persona, Beth, the buyer, Susan, the seller, Harriet, the homeowner, Alan, the agent. Those are the most important personas at Zillow. And if you walk the halls of Zillow, well, I guess you can't do that anymore because it's a remote company now. But when I was CEO, it was in an office company. If you walked the halls back then, you would see posters of these personas and you'd hear employees talking about Oh, Beth wants this feature or Rachel the renter wants that feature or we should build this for Susan. So Yes, understanding your consumer and your professional personas and building for them is critically important. And that's exactly how we ran Zillow. Ilana Golan: you did allude a little bit to the 2008 crisis. How did you? Maneuver that Spencer Rascoff: it was, it was hard, not easily. I wrote a blog post in 2007, uh, that's probably out there on the web still somewhere on Zillow's blog. The headline was the tidal wave is coming. And it was quite easy for us to see in our [00:26:00] data that we were going to have a foreclosure crisis. You could see the increasing number of. Late payments and mortgage delinquencies and the increasing number of short sales and the reduction in homeowners equity so you could sort of see it in 2007. I wish I had had the foresight to play some giant short trade on mortgage backed securities you know, and then maybe I would have been in the movie, the big short, but I did not. But anyway, so we saw that in 2007 when 2008 happened in the mortgage meltdown happened. We right size the company. Unfortunately, we did layoffs. We went for about 200 people to about 150. We refocused the company. We closed down some initiatives. We tightened the belt. We worked harder and smarter. We increased the level of communication with our employees to make sure they stayed motivated and focused. We became more metrics focused. We just became a better run company in order to make it through that recession. What I learned from it all was to increase the level of [00:27:00] communication with employees and to see the silver lining because there definitely was a silver lining for us at Zillow. The silver linings were that the industry, the real estate agents, brokerages, and MLSs were willing to experiment with new Things more during that downturn they cut back advertising on newspapers so that they could lower their spend and when the coast started to become more clear and the dust settled and the clouds lifted. They were more willing to spend more on online advertising like Zillow online lead generation than they were before. So it accelerated the pace of the migration from offline real estate advertising to online real estate advertising, which Zillow benefited from. It increased the industry's willingness to syndicate listings to sites like Zillow. And it turned out it was very similar to 2001 with online travel. 2001 after 9 11 accelerated the pace with which consumers shifted their behavior from offline to online purchases. It accelerated the embrace of [00:28:00] hotels and airlines of online distribution. So it sucked. You know, I'm not glad that it happened, these two downturns, but in some weird way, it actually made both those companies more successful, even though it was a really challenging time to manage through. Ilana Golan: First of all, you as a company or as an individual, there is a little bit that you get a little more creative when things are hard, right? So you have to figure things out and that creates more efficiencies. And we saw it, we'll go into the pandemic later, but we saw it in the pandemic, how much innovation actually happened in the pandemic, because it kind of accelerated a lot of the things that people didn't necessarily adopt until they had to. I still want to go into Zillow for a second, because you. At some point become CEO, and you've played a lot of different roles, which I think is also a big part of when you need to be number one, it really helps when you understand you have a very broad [00:29:00] look at different things. How did you become CEO, Spencer? What would you say to someone else that wants to get on a fast path? Spencer Rascoff: So when we started the company, I was CMO marketing officer, and my co founder was CEO. And then I think it was about a year into the company's history. Basically, once we raised the series a and it looked like we were probably going to make it, then he stepped back and became chair of the board and I became CEO. And then I was CEO for, I think, 10 or 11 or 12 years. And then when I retired from that, he stepped back in from chair to move back to CEO for a couple of years, and he just stepped down and one of my former colleagues is CEO. So it's quite helpful for a CEO to have played many roles for a while there. For that first year, I was the CMO, I was the CFO, I was the COO, I was head of industry relations. I sort of had lots of jobs just as I did at Hotwire. I think the benefit of that is you have a lot more empathy for your direct reports and you [00:30:00] become more well rounded. Because you have a broader perspective on things, and I think that helps you make better decisions and helps you manage and motivate your team better. Ilana Golan: So you knew from the get go that you'll take the CEO role or was that? Spencer Rascoff: No, not necessarily. Well, it was sort of implied when we started the company. I don't think it was explicit. My co founder had taken Expedia public previously and didn't feel the need or want to run another company at that point in time. Or take it public. So the plan all along was essentially once we got on a good path and it looked like things were going to be okay, then he would move into that role and I would step into the CEO role. So that was the expectation. It wasn't explicit. It was sort of implicit. And that's how it played out. Ilana Golan: How did you feel about the difference between being CEO and all the rest? Because it is different being sort of the buck stops here. And most of the decisions need to be channeled, although there's boards and stuff, but still. Spencer Rascoff: [00:31:00] I tend to lead by consensus and view the role of the CEO as more of a coach than a boss, so I don't really feel like it takes on that much more responsibility or stress. It's more the CEO is the air traffic control that's trying to get everybody to work together. Keep them motivated and coordinate from different parts of the organization. So I never really felt like, wow, now heavy weighs the crown. You're the CEO and all eyes on you or whatever. I think if I managed that way, then maybe I would have felt that way, but that wasn't really how I managed. I try to be a consensus builder and manage it as a team rather than giving directives. Ilana Golan: What about when things are really, really hard or scary or you need to lay off, do you still have the same or does it still weigh on [00:32:00] the CEO a little more than others? Spencer Rascoff: It does weigh a little more, but like, I mean, I remember the meeting in 2008 where we did layoffs. It sucked. I lost sleep over it. It was brutal. It was brutal. But frankly, I'm pretty sure that my direct reports felt equally crappy about it and had all the same stress because, as I say, the way I managed was, hey, we're all running this company together. My title might be CEO and your title might be CTO and your title might be CMO, but. We're a leadership team together, so we all should feel responsibility for things. So, yes, I think it's a little bit more as CEO, but I'm not sure it's that different, at least the way we ran the company. There, see, I just did it. I just said, subconsciously, the way we ran the company, not the way I ran the company. Ilana Golan: Yeah, I heard that. So you grew it to incredible market size. And then at some point, I think 2019, if I'm not wrong, you decide to [00:33:00] leave. First of all, why? And we're going to talk a little bit about all the great things that you're doing now, Spencer. Spencer Rascoff: So about five years earlier, maybe four, four years earlier, when I was still CEO of Zillow, I moved from Seattle to Los Angeles. I'd been in Seattle for about 15 years and I wanted to be in Los Angeles because my parents were there. My wife's parents were there. And we needed to move closer to home where we both grew up, which is Los Angeles. So for several years, for three or four years, I was commuting from L. A. to Seattle every single week. That was hard. That was very exhausting. And so by 2019, I started the company. I'd taken it public. I'd got its profitability. I got it to 20 billion market cap. I had launched these new businesses. And felt like I accomplished everything I hoped to accomplish there. And I was tired of commuting. So it seemed like a good time to retire from that role. So that's why I stepped down in 2019 and it was a seamless transition because my co founder had been chairman all that time, just stepped in as CEO. So easy, squeezy. Ilana Golan: And then there's [00:34:00] pandemic for you. Spencer Rascoff: Yeah, I didn't predict that. You know, I stayed on the board for about a year and then started starting new companies at that point, and once I started starting new companies, it didn't really make sense for me to stay on the board of Zillow. The pandemic, I was gone from Zillow by the time that was in full swing. So I can't really speak to how Zillow managed through it. You've heard now two of my companies, Hotwire, which had a crisis two years in, and then Zillow that had a crisis two years in with the financial crisis. My next company, Picasso, also had this crisis, which was the pandemic. So. We started Picasso right before the pandemic, and Picasso is co ownership of luxury vacation homes, like a NetJets for vacation homes. And the idea for Picasso is that people co own the home with other families that they don't necessarily know. So when, uh, The pandemic happened. I said, Oh, my God, it's happening again for a third time, because are people really going to [00:35:00] be willing? I mean, just remember how people were afraid of germs back then. We weren't even accepting. Packages, you'd leave your groceries at your front door or at the garage for six hours or your Amazon packages in order to let the cooties wash away. So are people really going to own a house together with strangers? Like, oh, my God, you know, people are never going to accept that health risk. So I was pretty worried about the impact that very word that it would have on Picasso. It turned out that the pandemic and the quarantine was very good for Picasso again, silver lining, just like Hotwire had just like Zillow had the silver lining was demand for second homes went through the roof when people started working from home and people wanted a place to get away from their primary residence. So Picasso had a rocket ship start. It was the fastest company to become a unicorn. We raised over 200 million of venture capital. We sold tons and tons of these vacation homes. And then the [00:36:00] next crisis that we faced was mortgage rates that skyrocketed. So within a six month period, mortgage rates went from about 2 percent up to 10%. Nobody's ever seen that type of increase in mortgage rates. And that had a huge chilling effect on interest in second homes. And so here we are again, I kind of made it through the quarantine issue, but facing yet another crisis in my company's history, and Picasso had to manage through that we close some markets, we downsize the company, we refocused, we tighten the belt, we did all the things that we did at Hotwire and Zillow, and now here we are, as we record this in late 2024, Picasso is on the upswing, and we've sold about a billion dollars of these vacation homes. Uh, we've got thousands of very happy owners, we're in over 40 markets in four countries, and Picasso is by no means out of the woods entirely, but feels a lot better today than it did a couple years ago. Ilana Golan: That's incredible adaptability. And if I'm not mistaken, you're also taking [00:37:00] outside investors into Picasso. Spencer Rascoff: That's right. So Picasso is doing something pretty cutting edge right now. We're doing what's called a reg a offering or a regulation a offering, which is a round of that retail investors, individual people. Are able to invest in and the reason we're doing this is it's very consistent with our mission. What Picasso tries to do is democratize access to second homes to something that is typically only available to very wealthy people and private venture funded companies are also typically not available to retail investors. They typically have to wait until these companies go public. The sec created something called reg a as part of the jobs act about 10 years ago, which lets private companies raise capital in this way. So we publish our results with the sec, just like a public company would, we sell shares to the public, just like a public company would, but the shares don't trade on an exchange just yet, not until the companies go public. So that's what Picasso is in the midst of. We just launched [00:38:00] this last week in early October of 2024, and it's an exciting, cutting edge way to allow individual people to invest in a private venture funded startup. Don't let the VCs have all the fun. Ilana Golan: Exactly. Which is usually closed. So that's a very exciting, and I think you're involved with a few other things. What is your mission now? And I want you to tell a little bit about these things, but how do you see your mission now? Spencer Rascoff: When I left Zillow, I started something called 75 and sunny ventures, which is my family office venture fund. And what we do is we start companies. So it's basically a personal startup studio. I've started seven companies in the last couple of years through this Picasso is the largest and best known and the most late stage of them of the seven companies. Three of them are former Zillow teams, teams that we used to work together. Three of the seven are in prop tech or in the real estate tech space for or not. The common theme across most of them is democratizing access to something that only a small [00:39:00] portion of people have access to. So Picasso is all about helping people. Own a second home that might not otherwise be able to or might not be able to afford such a nice second home and they're doing it through co ownership Libby or hey Libby. ai is one of my startups and hey Libby. ai is an AI sales receptionist for small businesses so big companies have artificial intelligence so Responders like if you call United Airlines or you go to American Airlines website, you'll interact with basically an AI chat bot and talk with. I want to change my flight or can you issue me a refund or whatever? So big companies have that, but small businesses don't. And so what hey, Libby dot AI does is it creates for any small business, whether you're a plumber, an electrician, a housekeeper, a wedding photographer, a spa operator, whatever. Hairdresser, et cetera. It lets you create your own AI sales receptionist that will do triage with your customers when they're reaching out to you for different [00:40:00] things. So that's that business. It's a former team from Zillow. We've raised a couple of million dollars in venture capital, and it's an early stage startup. And then I won't go through all seven. Don't worry. But, uh, you know, just to tell you about one other, for example, a company called Q, which is QUEUE is one of my startups that lets people track what to watch and. figure out what streaming services different TV shows or films are available on. So it's sort of like a social TV guide and it's solving the problem of figuring out what to watch because streaming has become so fragmented. That it's very hard to know what's where or what you're watching where it used to be easy when you could look in the paper and see the TV listings. Now it's it's too fragmented and so we've built a social layer on top of a TV guide essentially. So that's what Q does. We have millions of downloads. We've raised a couple million dollars of venture capital. Ilana Golan: it sounds like you're basically having fun and still creating an impact. That's [00:41:00] what I'm hearing. Basically, Spencer Rascoff: you asked a good question, which is what motivates me or what's the common thread here? The common thread is I'm trying to build products that I want to exist in the world, and I'm trying to do them With founding teams that want my mentorship and counsel. So for each of these seven companies, I'm not the CEO. I'm the chairperson, I'm the founder, and I motivate them and I mentor them. And it's just an extension of how I led at Zillow. And in that case, I was the CEO and I was leading my direct reports. And in this case, it's just across seven different companies, but I exist to help them achieve their full potential. And that's what motivates me and what I spend my time doing. Ilana Golan: And that's brilliant because mentorship at this level of somebody that builds such mega things, it is really remarkable. So I just love that. Based on everything you've done, what would be an advice to yourself or to our listeners that maybe they want more for [00:42:00] themselves? Maybe they don't exactly know what, but they know that there's more out there. They're just not sure what it is, how to get there, how to maximize their potential. What would be some of the advice? Spencer Rascoff: I would say, be curious, go deep on things. I'll give you a quick example. I teach a course. One of the things I do is I teach this course on entrepreneurship. I think I mentioned, and one of my students told me that she just became super obsessed as an undergrad in college, became obsessed with packaging with Amazon. She's like, how come this Amazon package? Has these airbags in it and how come this one comes in an envelope and this one comes in a box and how does Amazon make these decisions? She went super deep on this and listened to podcasts, watched YouTube videos, started interviewing experts on the topic, went super deep, kept all these notes, crazy, beautiful mind, like, uh, Yarn on a whiteboard kind of thing, trying to learn everything she could about this and coming out the other end from that has emerged a couple [00:43:00] startup ideas that she might go start companies or maybe she'll go work at one of these companies and so most people are curious about something and they just check it out. You know, they sort of shrugged their shoulders, but she decided to go super deep and learn. The second piece of advice I would say is to surround yourself with great people who are really smart and motivated and make you better. And that's been the key to success in my whole career because every of these, one of these successes that I've been involved in has been a team effort. So you need to be able to attract people that you can motivate and that motivate you and put yourself in situations where you'll be interacting with those types of people that will bring out the best in you and allow you to create and build. Ilana Golan: To me, that is so important because there's also a lot of negativity. There's a lot of naysayers. There's a lot of, I mean, if you want to surround yourself with things that will crush you, that's easy to do. I think it's harder to find the people that will actually lift you. Mentor you, tell you the truth when you need to [00:44:00] hear the truth, all of that. And that's incredible. And I think the curiosity is an incredible tip because you're right. People just move on. They see something, but instead of going deep, you want to be obsessed with whatever it is in order to take it to the next level, which is amazing to hear. Spencer, this was so inspiring. Thank you for sharing all your experience. been following you for a long time. And it's just been so great to hear the story in real life. Spencer Rascoff: I appreciate it. And thank you for having me and startups are hard. Hang in there, everybody.