Where Real Estate Gets Its Dirt

The death of “peoplework” – Zillow acquires dotloop.

SellingOutSignA few thoughts after the smoke has cleared on the announcement that dotloop will be acquired by Zillow.

Why did Zillow buy dotloop?

I thought the aquistion was odd and said so in a tweet. But the simple answer is Zillow needs to charge more money for what it offers. The industry will collectively shit their pants with conspiracy theories but its all still hooey.

Spencer Rascoff’s response to my tweet summed it up.

How much did Zillow pay for dotloop?

We will find out soon enough (Zillow is a public company) but I would look to Zillow’s previous acquisition of RentJuice for some guidance. RentJuice was a “rental relationship management service for landlords, property managers and rental brokers that helps them market their inventory and client relationships.” Sounds a bit familiar doesn’t it? The acquisition was pre-IPO for Zillow and was for 40 million cash. $40 million seems very high and Zillow now has paper money. But I’m sure Austin will be able to buy a lot more v-neck sweaters t-shirts. BTW, RentJuice’s CEO, David Vivero, left Zillow just 13 months later.

What’s is dotloop’s future?

A lot of their customers are not happy with the deal. I heard one person quip–“Peoplework” is dead (a reference to dotloop’s much marketed mantra of “people work not paperwork”.) Despite many agents making tons of money working with Zillow it still garners a high degree of FUD factor from agents. Facebook has been blowing up with mostly negative comments, and 3 of 4 comments on dotloop’s own blog post announcing the acquisition were negative. Dotloop will have to do a lot of damage control with their agent and enterprise customers. Also my guess is that dotloop’s CEO, Austin Allison, will leave about 12 – 18 months after the acquisition is complete (Austin isn’t going to be a 4th banana).

What to expect next?
A lot of spin control as I previously mentioned. Also, if I were anyone at Instanet Solutions, Ziplogix, Reesio, or any other transaction platform that competes with dotloop I would be launching landing pages courting disgruntled dotloop agents now, with the messaging “Dotloop agents get XXXX free for XX days”, or “Dotloop agents can trust us with their business”.

Interesting times….

  1. Mark Thomas

    Hey Greg! Two things:

    1) Reesio already offers a “Switch Incentive Program”, whereby we’ll buy customers out of their competitor product contracts that they’re currently stuck in. It’s a great program and we’re definitely going to court existing Dotloop users over to it:

    https://www.reesio.com/switch-incentive

    2) I think the purchase price of Dotloop was SIGNIFICANTLY higher than the $40M that they paid for Rentjuice. Dotloop was doing in the neighborhood of $12M-$15M in revenue. But more importantly, Dotloop had raised nearly $14M in funding. The last round they raised was in spring 2012 from Trinity Ventures for $7M. Most VC’s in Silicon Valley take a 20% cut when investing, which means they invested in Dotloop on a $35M post-money valuation. No way would the investors approve anything less than a 3x-5x multiple on that. So the purchase price was likely in the $100M-$150M range.

  4. Pingback: Zillow’s dotloop Acquisition: It’s About Trust | Rob Costabile

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