Former Zillow engineer Jason Tan now calls striking out in his interviews for Microsoft, Amazon and Google the best thing to ever happen to him. It’s what led him to become employee No. 63 or so at Zillow, where he would develop a love for startups and eventually go on to become the founder of fraud detection company Sift.
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“Because I was able to witness at Zillow firsthand how much impact I could have and how quickly you could move and how decisions could be made collaboratively … I just really admired that type of environment and I realized that was one of the big benefits that you get by working at a startup,” Tan said. “More impact, more opportunities for growth, and more connectivity to the organization.”
His experience at Zillow, which Tan joined in 2006 after graduating college, prompted him to go down the path of startups. He joined smaller companies following his time at Zillow and eventually founded fraud detection company Sift, which is one of several companies to be founded by former Zillow employees.
In a way, Zillow is a prime example of how one company can spawn subsequent generations of highly valued startups.
Founders of numerous funded startups all list Zillow among their former employers. Those startups include Sift, proptech startup Divvy Homes, health care financial wellness company Amino, proptech startup Pacaso–which helps people own second homes–as well as career and salary website Glassdoor.
The network effect
It’s fairly common for early employees of tech startups that successfully exit to go on to found other companies.
Or as Zillow co-founder and former CEO Spencer Rascoff put it in a recent interview with Crunchbase News, “People like to work with people that they liked working with.”
The “PayPal mafia” is probably the most prominent example of a successful venture-backed tech startup that produced a slew of others. Among the most notable members of the group are early PayPal employees Max Levchin, now co-founder and CEO of Affirm, and Tesla and SpaceX co-founder and CEO Elon Musk. Several early PayPal employees, including Peter Thiel, Keith Rabois and Roelof Botha have become some of Silicon Valley’s most well-known investors.
Often people in these circles receive support—whether financial or otherwise—from their former colleagues. Zillow’s first intern Whitney Curry, for example, consulted for Pacaso through her marketing firm before joining the company full time as chief marketing officer. Zillow CEO and co-founder Rich Barton, meanwhile, was an early investor in Sift.
“By creating those networks, people are going through the same shared experience, trust builds up, investors know what they’re getting, and they’re much more willing to write those early checks,” said Rhonda Shrader, executive director of the University of California, Berkeley Haas Entrepreneurship Program.
Networks get even more granular than at the company level, Shrader said. She pointed to how Berkeley Haas alum Toby Sun founded Lime, “so all the Haas MBA students wanted to go work at Lime.” One Haas student who worked for Lime later founded Ridepanda.
The downside, however, is that people who aren’t already in those networks don’t have the same opportunities. There’s also the issue of how to reduce confirmation bias, Shrader said, or the idea that just because one solution worked for a certain problem, it will work for future problems.
“If you’re not a typically represented person, you’re not in that initial network, so it’s going to be much more difficult to be part of those spinouts,” Shrader said. “Because people go with what they know, whether it’s investors or folks starting their own companies.”
And of course, a very big part of the reason successful companies tend to lead to other successful companies comes down to money. If you’re an early employee of a company that ends up with a big exit, you’ve likely made a good chunk of money, and a big payday provides capital to start a company or invest in others.
Zillow itself is the product of another network effect: Several of its early employees came from Seattle-based companies Expedia and Hotwire.
Barton had co-founded Expedia while still at Microsoft before spinning it off into its own company. Post-Zillow, he co-founded career and salary website Glassdoor, before returning to Zillow as CEO in 2019. Former CEO Rascoff founded Hotwire, which was acquired by Expedia, before joining Barton to co-found Zillow.
Taking lessons from Zillow
Zillow went public in 2011—with the coveted one-letter ticker Z—and cemented itself as a real estate giant and a fixture of many late-night scrolls.
Part of the reason Zillow has given rise to so many startups from former employees is its culture, Rascoff said. “The culture of innovation was really important,” he said. “We were constantly reinventing the product and the business model.”
The constant reinvention created a workplace that drew entrepreneurial people in, he said. It also inevitably spun out people with that attribute too.
Another reason for Zillow’s track record of spawning other startups: the company’s acquisition history, Rascoff said. While he was CEO, Zillow acquired 17 companies, which brought a lot of entrepreneurs into the fold who became “intrapreneurs,” he said. But, “usually a couple years later those people want to give startup life another shot.”
Austin Allison is an example of that. After Zillow acquired Allison’s startup, Dotloop, in 2015, he stayed at Zillow for four years. He eventually left and founded Pacaso with Rascoff, whom he considers something of a mentor.
There were some clear similarities between how Dotloop and Zillow were run, Allison said. For one, Rascoff typically began company meetings by stating Zillow’s mission, which Allison also did at Dotloop. That’s a practice Rascoff and Allison carried over to Pacaso as well.
Pacaso also has personality-driven product development, similar to Zillow’s approach for designing products for fictional people (e.g. “Harriet the Homeowner”). It also adopted the idea of “personality tests” to help employees understand how they lead and work with others, Rascoff said.
Of course, several former Zillowers have joined Pacaso, which recently raised $75 million and achieved unicorn valuation less than a year after launching. Curry, who spent more than a decade at the company after joining as its first intern, was one of them, along with Zillow’s former head of sales.
“When we decided to start the next company, there were already people who had reached out to us and expressed interest in being part of whatever we were going to do next,” Allison said. “It sort of happened pretty naturally. When people work together for a long time and they develop a bond and relationship it’s sort of hard to disconnect that because we spend so much of our time awake at work in life.”
Though Pacaso and Divvy Homes are two notable proptech unicorns to come out of the Zillow family tree, the startups to come from former Zillowers aren’t just limited to proptech companies. Rascoff, for example, also co-founded technology news site dot.LA, and he and other former Zillowers are active angel investors in startups.
Many former Zillow employees work at each others’ companies, advise and invest in each other.
“That group of very tight knit people formed a lot of bonds through that experience, and therefore many of us invest in each others’ companies now,” Rascoff said.
Illustration: Dom Guzman
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