{ "docId": "019dd923-622c-750b-8b99-74af5c9e9edb", "docSlug": "de028a1085e6", "documentTitle": "Zillow Group, Inc. (Z)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2024-03-05 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 48, "pageCount": 103, "prevPage": 47, "nextPage": 49, "slideType": "quote_slide", "function": "expose_contradiction", "density": "dense", "nDataPoints": 2, "notes": "The slide uses yellow highlighting to emphasize critical operational hurdles (low conversion rates, profitability timelines, and agent dependency).", "elementsJson": [ "headline_text", "data_table", "paragraph", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-74af5c9e9edb/48", "deckHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb#slide-48", "components": [ { "bbox": null, "kind": "callout", "text": "So to go roll out a bunch of markets, which is why we took a massive step back, it's like Zillow would've been not profitable for a very long time to be able to not only flip these markets, get these agents, identify the top agents that actually can convert, get these agents to convert with the lack of inventory on the market, wait for these leads to actually convert.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f42-76f3-adc9-c2ee2bd57542", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.98, "x": 0.01, "y": 0.0017800000000000001 }, "kind": "paragraph", "text": "Research Interview", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9dae2ccd-714a-452b-8edc-1d635c405cfa", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.55, "w": 0.83, "x": 0.15, "y": 0.004 }, "kind": "quote", "text": "So the goal of Flex was to be a massive, massive, massive lift in revenue. So if they take 30%, they're obviously you can do math there pretty quickly of a 3% buyer side agent commission, they're making a lot more on that lead. Now that's under the assumption though that the agent is able to convert those leads. So there's give or take, there's a bunch of leads that they're not going to charge for that an agent won't convert. So let's just say if the conversion rate is 3%, they're sending a hundred leads out, maybe only three or four of those will convert. And so then they have to say, okay, should I give up that cost per lead up front there versus the hopes that they'll convert like at a three, four, 5% and then we get the margins here on the backend and have a lift in revenue or do we have a security blanket and charge up front? That's kind of where the debate has been. So to go roll out a bunch of markets, which is why we took a massive step back, it's like Zillow would've been not profitable for a very long time to be able to not only flip these markets, get these agents, identify the top agents that actually can convert, get these agents to convert with the lack of inventory on the market, wait for these leads to actually convert. So that could take nine to 12 plus months in this type of market because everyone's bidding on the same homes. And then when that happens, it's like wait for that escrow and then get that check. And then that's all under the assumption and the hope that these agents are updating the app and it's being truthful and all the things that we need them to do to be able to make this work.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "23d7fc6a-b70a-48d0-8a20-94f7eaf88a86", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.83, "x": 0.15, "y": 0.0025 }, "kind": "quote", "text": "Could you talk a little bit about the economics between Flex and MBP and what disruptions, if any, there would've been from changing over to Flex and then ultimately was Flex a lift to revenue over the long-term or was it more of a breakeven business?", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "675998e3-86eb-42f4-b7fb-359acf32405b", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "So to go roll out a bunch of markets, which is why we took a massive step back, it's like Zillow would've been not profitable for a very long time to be able to not only flip these markets, get these agents, identify the top agents that actually can convert, get these agents to convert with the lack of inventory on the market, wait for these leads to actually convert. — Former Senior Zillow Employee", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f42-76f3-adc9-c66be55e4651", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.18, "x": 0.01, "y": 0.97 }, "kind": "source-note", "text": "Source: Spruce Point Interview", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c698cded-c141-4383-b9dd-ae6eaf0fdd37", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.03 }, "kind": "title", "text": "Expert Interview on Potential Disruptions of Rolling Out The Flex Model", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "edb29db3-be47-4a08-9a02-c95687c9cc94", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 50, "from": 21, "beatId": "2825f36d-3055-4526-b439-677abc0e48a8", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Evidence", "beatSlug": "evidence", "evidence": "The document presents evidence to support Spruce Point's claims, including data on Zillow's declining site traffic and revenue per visit.", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }