Waxman sees one bright spot—AI. Like every other company in the world, generic AI presents both opportunities and risks to Zillow’s business. Waxman prefers to stay on top. “We think AI is really a component rather than a threat,” he said on the earnings call. “Over the past few years, the LLM revolution has really opened all of our eyes to what is possible,” he told me. Zillow is integrating AI into every aspect of its business, from the way it displays homes to the way agents automate their workflow. Waxman marvels that with General AI, you could find “a house with a fenced yard, near my kid’s new school, for less than $3,000 a month.” On the other hand, her customers can ask the same questions on chatbots powered by OpenAI and Google, and Waxman has to figure out how to make her next move on Zillow.
Throughout its 20-year history – Zillow celebrates the anniversary this week – the company has always used AI. Waxman, who joined in 2009 and will become CEO in 2024, notes that machine learning is the engine behind those “gestimates” that estimate the value of a home at any given time. Zestimates became a viral sensation that helped make the app irresistible, and sites like Zillow Gone Wild — which also has a TV show on the HGTV network — have built a business around highlighting the most interesting or quirky listings.
More recently, Zillow has spent billions of dollars aggressively pursuing new technology. An ongoing effort is to upgrade the presentation of homes for sale. A feature called Skytour uses an AI technique called Gaussian Splatting to transform drone footage into 3D renderings of a property. (I love typing the words “Gasian splatting” and can’t believe no indie band has adopted it yet.) AI also powers a feature called Virtual Staging inside Zillow’s Showcase component, which supplies homes with furniture that doesn’t actually exist. Here’s the risky ground: Once you let go of the authenticity of the original photo, the question arises as to whether you’re actually looking at a faithful representation of the property. “It is important that both buyers and sellers understand the line between virtual staging and photo reality,” says Waxman. “A virtually staged image must be clearly watermarked and disclosed.” He says he’s confident that licensed professionals will follow the rules, but as AI becomes more prominent, “we have to evolve those rules,” he says.
Currently, Zillow estimates that only a single-digit percentage of its users take advantage of these attractive display features. Particularly disappointing is an effort called Zillow Immerse, which runs on the Apple Vision Pro. Upon rollout in February 2024, Zillow called it “the future of domestic tourism.” Note that this does not claim to be the near future. “That platform hasn’t come into widespread consumer prominence yet,” Waxman says of Apple’s underperforming innovations. “I think VR and AR are going to come.”
Zillow is on more solid ground using AI to make its own workforce more productive. “It’s helping us do our job better,” says Waxman, who adds that programmers are churning out more code, customer support tasks have been automated, and design teams have had shorter timelines for implementing new products. As a result, he says, Zillow has been able to keep its headcount “relatively flat.” (Zillow had recently cut some jobs, but Waxman says it’s adding “a handful. People were involved who were not meeting performance standards.”)
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