Jun 14, 2021 · 1h 3m · how-i-built-this
Expedia & Zillow: Rich Barton
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of NPR's 'How I Built This,' serial entrepreneur Rich Barton shares how his core philosophy of empowering consumers and dismantling information asymmetry led to the creation of transformative marketplace platforms including Expedia, Zillow, and Glassdoor.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 35% of the talking time here. How this is scored →
Guy as informed peer 3.1 Guest teaching 2.7 Guest disagreement 1.3 Guy pushing back 1.4
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 55:35 Barton rejects replacing agents narrative
Barton firmly rejects the premise that Zillow aims to disintermediate brokers, telling Raz that anyone who believes that is mistaken.
Hardest push from Guy ▶ 58:43 Raz presses on persistent lack of profitabilityRaz bluntly confronts Barton with the fact that despite major revenue lines, Zillow has yet to turn a consistent profit.
Biggest teaching moment ▶ 43:38 Barton re-educates Raz on agent sentiment and provocationBarton corrects Raz's assertion that realtors were purely enraged, reframing the Zestimate as a deliberate provocation and professional sales tool.
Guy holds their own ▶ 1:02 Raz outlines information asymmetry and Nobel economic researchRaz demonstrates strong conceptual mastery by linking Barton's startups to George Akerlof's foundational Nobel prize economic framework.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Information Asymmetry and the Philosophy of Consumer Disruption | 0 | 0 | 0 | 0 | Host monologue framing George Akerlof's Nobel-winning economic theory on information asymmetry and introducing Rich Barton's career trajectory. Host-side interactive scores are zeroed out per monologue guidelines. | |
| Rich Barton's West Coast Migration and Stanford Years | 3 | 2 | 1 | 1 | Friendly biographical discussion where Barton recounts his drive to Stanford and getting hired at Microsoft to manage MS-DOS 5. Raz injects personal recollection of early computing environments. | |
| Transferring to Microsoft's Consumer Multimedia Division | 3 | 3 | 1 | 2 | Raz questions the logic of portable travel CD-ROM encyclopedias given computer weight in 1994. Barton agrees and explains how navigating booking systems on Prodigy sparked the core travel marketplace concept. | |
| Pitching the Online Travel Concept to Bill Gates | 3 | 2 | 0 | 1 | Raz contextualizes the pre-Netscape era of early online interfaces while Barton explains pitching Bill Gates on consumer travel booking inside the proprietary MSN network. | |
| Empowering Consumers Against Rigged Legacy Industries | 3 | 3 | 2 | 2 | Barton reframes the narrative from pure industrial disruption toward consumer empowerment against rigged legacy structures. Raz probes whether competitors were already attempting similar ventures. | |
| Naming Strategy and the Creation of Expedia | 3 | 4 | 1 | 1 | Barton details his strategic rules for corporate naming and overcoming hostility from traditional airline executives by creating a licensed electronic agency within Microsoft. | |
| Pivoting from MSN to the Web and Launching Expedia | 4 | 3 | 2 | 1 | Raz reviews Expedia's spin-out and IAC acquisition while Barton clarifies that his focus was entirely consumer-led rather than orchestrating industry disruption for its own sake. | |
| Experiencing the Opaque Real Estate Market in 2005 | 3 | 2 | 1 | 2 | Raz prompts Barton on the genesis of Zillow following his return from Italy, and Barton describes the complete lack of accessible residential data in 2005 as shopping in the dark. | |
| The Emotion of Real Estate and External Skepticism | 3 | 2 | 1 | 1 | Barton explains their early experimental failures attempting online house auctions with printed flyers before realizing the emotional entertainment value of browsing homes. | |
| Whiteboard Brainstorming and Bootstrapping the Name Zillow | 3 | 3 | 2 | 2 | Raz suggests the team was stuck during year one, which Barton firmly counters by detailing the eureka whiteboard moment linking residential addresses to stock valuation charts. | |
| Marketplace Mentality: Aggregating Audience Before Monetization | 3 | 3 | 1 | 1 | Barton articulates his philosophy of aggregating audience and proprietary valuation data before attempting monetization, drawing parallels to liquid financial exchanges. | |
| Licensing Fragmented Public County Real Estate Records | 4 | 3 | 1 | 2 | Raz explores how county records were digitized while Barton explains cutting expensive licensing checks to third-party data aggregators and designing automated valuation algorithms. | |
| The Wall Street Journal Leak and Launch Day Crash | 3 | 2 | 1 | 1 | Barton recounts the stealth marketing rollout, Walt Mossberg breaking the embargo in the Wall Street Journal, and the immediate server crash that overwhelmed their infrastructure. | |
| Spinning Server Crashes and Navigating Agent Backlash | 4 | 4 | 3 | 2 | Raz notes how furious real estate agents were about the Zestimate. Barton corrects Raz's framing from pissed off to provoked, arguing top brokers leveraged the estimate as a conversation starter. | |
| Monetization Strategy: Targeted Ads and Transaction Ambitions | 3 | 2 | 1 | 1 | Barton discusses the evolution of native contextual real estate advertising and the long-term vision of digitizing the entire closing transaction. | |
| Co-Founding Glassdoor for Corporate Salary Transparency | 3 | 3 | 1 | 1 | Barton shares how Glassdoor originated to get a former colleague out of the basement and reflects on surviving workforce layoffs during the 2008 financial crash. | |
| Leadership Transitions: Spencer Rascoff and Barton's Return | 3 | 3 | 1 | 1 | Barton details handing the CEO role to Spencer Rascoff for the IPO, stepping back in to lead Zillow Offers, and removing the logistical nightmare of residential open houses. | |
| Balancing Industry Partnerships with Real Estate Agents | 4 | 4 | 3 | 2 | Raz presses Barton on how he balances working with agents while building competing tools. Barton counters that the idea Zillow aims to replace agents is completely mistaken. | |
| Prioritizing Long-Term Growth Over Short-Term Profitability | 4 | 3 | 2 | 3 | Raz challenges Barton on Zillow's lack of steady profitability and personal wealth management. Barton cites Amazon and Buffett to defend reinvesting in market scale over short-term earnings. |
Statements from this episode (34)
Barton: Egghead Software Held First Midnight Madness Sale for MS-DOS 5
“MS-DOS-V was the first time that Egghead Software, which was the big retailer, software retailer at the time, had ever seen, they ran a midnight madness sale on the first day that the DOS-V upgrade was released, and they had people camping out and lining up ou…”
Barton spoofed travel agents on Prodigy to access airline reservation systems
“There was a service on Prodigy that enabled me to access directly the airline and hotel reservation systems. I could spoof being a travel agent.”
Barton pitched Bill Gates on a graphical online travel booking service
“I showed him Prodigy, and it was all a command line really ugly thing, but I talked about how I could see him doing a Kind of a Windows version of this and giving it to consumers could be a complete game changer for consumer empowerment. And he agreed, yeah.”
Barton: You only need to see slightly further ahead than others to win
“You don't have to see too far into the future. If you can see a little bit further into the future than the rest, you know, you can really get way ahead.”
Barton: Coining a made-up brand name is harder but much more valuable
“Creating a new word is very ambitious, and very long-term, and very difficult. But if you are successful, you completely own that word in the dictionary, so to speak, and you get to fill it with whatever meaning you can infuse into it. So it takes, it's a lot …”
Two-syllable brand names sounding like dog names make the best verbs
“Since then, I've liked two syllables. I think that's the most memorable. I think having it sound like a dog's name, a good dog's name can be turned into a verb.”
Barton: Microsoft formed a travel agency to access airline reservation systems
“We knew that if we started a travel agency, that from an equal access perspective, we ought to be able to plug into these electron, these big mainframe based reservation systems that ran the industry and act like a travel agent. And if we got discriminated aga…”
Barton's Microsoft team secretly pivoted Expedia from MSN to the open web
“We were building for MSN, which we recognized wasn't going to probably succeed as a platform. And so we quietly pivoted to building a web app and we kind of didn't tell anybody. And so we launched, we never launched on MSN, we launched on the broad internet.”
Barton: Aggregate consumer demand first, and business models and partners follow
“These are about empowering consumers and then let the chips fall where they may from an industry perspective, right? Building for the future of what consumers want was what we were trying to do, and we were really secondarily thinking about the organization of…”
Barton: In 2005, consumers could not find home listings or addresses online
“Like, it's 2005, and the web has been around for now nine years or 10 years, but still, I couldn't get pictures of homes and complete listings and prices and addresses even. Like, I couldn't get the address of a home I was shopping for online.”
Barton: Pre-Zillow real estate was like a dark grocery store
“It was, I liken it to shopping in a dark grocery store with a flashlight, you know. Worse than that, the flashlight is being held by an agent who You have to ask to point it at something.”
Shopping for residential real estate functions primarily as aspirational consumer entertainment
“Shopping for homes is entertainment because it's, you're dreaming.”
Barton: Auctions Are an Interesting Price Discovery Mechanism for Real Estate
“We thought auctioning was quite interesting as a price discovery mechanism. Basically, it's pretty hard to figure out what a house was worth.”
Barton bought Zillow.com for $9.99 instead of Homes.com for $5 million
“And it cost nine 99 to buy the URL, which I was kind of cheap, and people wanted to sell us homes.com for five million dollars, and I was like, but I can make up a word and spend nine 99.”
Barton: Before Zillow, there was no resource for automated home valuations
“The way people did it was to just basically watch the market in their local neighborhood, right? Which was kind of hard to do, but if you keep some basic tabs on homes around your, you, or like yours that are being sold, what they're listing for, what they're …”
Barton: Great marketplaces require unique, hard-to-find pricing and transaction data
“We knew the elements of building a great marketplace, and it was unique and rich content that was difficult to find elsewhere. Having all kinds of pricing information, having historical transaction pricing information.”
Barton believes every home in the country ought to be for sale
“Every home in the country ought to be for sale at the right price.”
Barton: Interactive rooftop valuation maps were an obvious viral killer product
“We fantasized about having that godlike, that bird's eye view, looking down on the rooftops and neighborhoods and having little prices on, having little numbers, you know, values on every roof, and then having that updated every day, and we thought that was ju…”
Zillow's founders wrote personal checks to secure early real estate data licenses
“And so we didn't get the market leader at the time, wouldn't do business with us, but there were two other companies that would, because we just kept writing bigger checks. Lloyd and I are digging into our checkbooks to do it, but we wrote shockingly large che…”
Business managers will usually accept large checks to increase their personal bonuses
“Most, most managers of businesses, when you write a big enough check, will take it, because they get a bigger bonus.”
Barton: Zillow runs complex AI models to predict home values
“Now we run all of these, you know, galactically complex artificial intelligence models and just feed as much raw data as we can get our hands on into these machines, these software machines, and see what comes out. And then, of course, we get to test the resul…”
Barton: 'Beta' is a tech euphemism for releasing buggy products
“We figured we'd open it up as a beta, which was a cute way that technologists have of releasing buggy products.”
Barton: Walt Mossberg broke Zillow's launch embargo by three hours
“He had that personal technology column, and so I flew to DC to go pitch Walt, to give Walt a preview, secret preview, and we did that with several reporters, and we asked that it be embargoed until such and such a date, and Walt, just because he was Walt, kind…”
Barton: Zillow crashed by 8 a.m. on launch day from traffic
“No, I can't remember exactly, but it was down by eight a.m. It had tipped over and was sad and sick and dead by eight a.m. Of the launch day. Like, yeah, it immediately crashed.”
Barton: Zillow reaches 235 million monthly users
“Many do, but we have two hundred and thirty-five million users a month, many of them real estate agents.”
Barton: Highly targeted in-product advertising is perceived as valuable content, not spam
“When you can have super targeted, relevant advertising in the product experience, it isn't viewed as intrusive or advertising by the consumer. It's actually viewed as valuable content. And so a real estate agent advertising alongside a listing to say, hey, if …”
Barton: Zillow's original founding goal was end-to-end real estate e-commerce
“Our dream right from the start was to bring e-commerce to real estate. With right through to the transaction and to take all this kind of frustration and inefficiency and scariness out of the transaction.”
Zillow maintained traffic but slashed its 150-person staff during the 2008 crash
“Truthfully, our traffic held up quite, quite nicely throughout the whole thing, but because of massive uncertainty around business model and the pretty high expense burn rate we had, because at the time we had about 150
People at the company.
This was the most…”
Barton: Zillow's pivot to digitizing transactions required startup leadership
“We had accomplished the kind of first false summit That we were after in amassing a huge audience that we empowered with information they hadn't had before. But as we were speaking about before, we had not yet streamlined and integrated and digitized the trans…”
Zillow charged 5% to 7% of transaction values as a market maker
“We charge around, you know, five to seven percent of the transaction to be the market maker.”
Rich Barton: Zillow is not trying to replace real estate agents
“You're mistaken if you think we're trying to replace the agent and replace the industry.”
Barton admits Zillow's pandemic stock surge outpaced its actual business value
“Obviously the company isn't in reality that much more valuable in the space of one year, which just highlights how the stock price is not the business.”