A software firm that served as the springboard for Zillow Group Inc. to establish a major presence in Irvine has been sold—but don’t expect the online real estate marketer to close up shop in OC.
Zillow paid $7.8 million for Diverse Solutions in 2011. The Seattle-based buyer tapped the chief executive and founder of the software-as-service specialist, Justin LaJoie, as vice president of industry solutions, reporting to Zillow Chief Executive Spencer Rascoff. Last month Constellation Software Inc. in Toronto struck a deal on undisclosed terms for Diverse Solutions, whose main product enables real estate agents and brokers to post MLS listings to their websites.
The sale was bittersweet for LaJoie.
“I was sad to see it go, but I completely understood the business decision around it,” he said. “I’m very happy that it continues to live on with a company that I know will do right by it, and continue to invest in it.”
The deal also pointed to a honed focus for Zillow, which recently came to the conclusion that Diverse Solutions was not “a core competency of Zillow Group.”
“We are not necessarily in the business of selling software,” LaJoie said. “We are a media company that sells advertising.”
Over the last five years “the industry has changed, and not everyone needs (the) type of software” Diverse Solutions provided, he added, with agents “looking to Zillow and Trulia as far as advertising is concerned versus doing their own advertising.”
Marketplace
Zillow Group’s online consumer brands combine to serve as one of the largest real estate and rental marketplaces in the nation. Its flagship Zillow and sister website Trulia primarily focus—alongside competitors such as Redfin and Realtor.com—on selling leads to real estate agents in specific markets. Zillow collects leads by providing consumers data from more than 700 Multiple Listing Services throughout the U.S., including properties on and off the market, foreclosures and sales by owner.
The group also has developed local brands.
Its Naked Apartments and StreetEasy are dedicated to New York City’s rentals and residences for sale, respectively, while HotPads provides rental listings across the nation.
“We have a living, breathing database of all homes that has past sale price in there, tax history, and what its estimated value is—our Zestimate,” LaJoie said. “We provide consumers real estate information and in turn, when they’re ready to talk to a professional, we match them up with real estate agents and brokers that are interested in getting consumers in those various cities and zip codes.”
The Irvine office now has about 250 employees, reflecting a strong run of growth since Zillow landed here five years ago.
Diverse Solutions had some 6,000 clients and 18 employees in Irvine when Zillow bought it. The bulk of its staff is staying in Irvine, as they’ve already shifted their duties to fit the refined focus of the parent company.
LaJoie’s title has remained the same since the 2011 acquisition, but his role at the company has evolved. The change started with the decision to move Diverse Solutions’ team in with a small group of sales staff from Zillow at the group’s office on Michelson.
LaJoie’s moxie and the aftermath of the Great Recession conspired to give the OC office a boost.
“We knew that we’d be expanding the operation that we had down here with engineers, customer service, sales, so we were in a search for new office location to accommodate that,” he said. “Around the same time I was hearing that the team up in Seattle was looking to expand their sales initiatives and hire a significant number of sales employees for Zillow, and I made a pitch that they should really consider doing it here in Orange County, in Irvine, now that Zillow has a footprint down here. This was late 2011, a couple of years after the real estate downturn, and there was a tremendous talent pool of exceptional men and women that were down here who were familiar with the real estate industry and the mortgage industry.”
Adding Value
The joint office enabled LaJoie and his team to start getting involved with different aspects of Zillow “where we thought that we could add value,” well past the initial project.
“When we joined Zillow, one of their main reasons for acquiring us was to offer more real estate software to their clients, to their premier agents and brokers across the nation,” he said adding that his team “widened the depth of how we contribute to Zillow Group” soon after and “got involved in aggregating that data from all the different MLS sources,” and “building software for the industry like the Tech Connect program that allowed leads that came off Zillow to be distributed to franchises and brokers throughout the nation,” among other things.
“Essentially we started just seeing voids, and putting our resources to work where we thought we could get best bang for the buck,” LaJoie said. “In turn, the office continues to grow,” with new hires expected to add to the current 250, a total that includes the customer service and marketing departments, 10 software development teams and their “product” counterparts, as well as some 140 sales people.
“It’s a good cross sample of what we have at Zillow (in Seattle),” he said. “We started with one floor, added a second floor, and now we are adding a third floor.”
