Some people have a weakness for chocolate; I have a weakness for travel websites. Yes, it sounds ridiculous, but as someone who feels the need to discover a new destination more than once per month, I spend a lot of time trying to find the best deals. I’ve probably spent weeks of my life searching sites just to shave pennies off a vacation—10 more minutes could save me $5! You get the idea. Pathetic: maybe. Worth it: definitely.
Hotwire is one of my favorites. After a recent trip to Hawaii (bet you can’t guess how much it cost me), I decided to look into the back-story of the company. Turns out, Hotwire wasn’t born out of a basement like most tech startups. Instead, it came out of the brain of Spencer Rascoff, who, in 2000, was working at TPG Capital, a private equity firm with involvement in the airline industry.
Rascoff thought it’d be fun to start a competitor to Priceline, so with $75 million in seed money (thanks to TPG), he and a few co-founders launched Hotwire. The company was such a smashing success, it caught the attention of competitor Expedia, which acquired it in 2003 for $685 million in cash. Nice!
From there, Rascoff joined up with Expedia founder Rich Barton to start another company—this one in the real estate industry. It was 2005, and the idea turned into Zillow—now one of the most popular sites in the space—which also went public (Z on the NASDAQ) in July to the tune of $800 million. Rascoff, 36, is Zillow’s CEO. Quite the resume.
I wanted to learn more about Rascoff, so I called him up.
Q: What was it like during the early days at Hotwire?
A:Â From 2000 to 2001, we were on a rocket ship; things were fantastic.
Q: What challenges did you face?
A: After 9/11, our business came to a screeching halt. We had customers stranded all over the country; it was a massive disruption to our business. The demand for leisure travel for the six months after was anemic. We had to lay people off and went from 150 employees to 100. We also did a ‘down round,’ which means we were forced to raise capital at a lower valuation. It was a hard time.
We did bounce back, though. By 2003, we were back up to 200 employees.
Q: How did the Expedia deal come about?
A: We weren’t looking to get acquired; we were actually looking to go public. But then Expedia called and the offer was tremendous. It was an exciting, stressful and exhausting time.
After the deal, I worked at Expedia for one year, but then decided to leave. I missed being in an entrepreneurial environment.
Q: How did you get hooked up with Zillow?
A: After a year at Expedia, I called Lloyd Frink, one of the guys who bought Hotwire but had since left the company. I told him I wanted to start another company and asked him what he was working on. He introduced me to Rich Barton. They’d been kicking around an idea of a real estate tech company. It sounded great to me. I told them, ‘Whatever it is, I want in.’ Rich and Lloyd are the co-founders of Zillow.
Q: What was your experience at Zillow in the beginning?
A: They asked me to run marketing in the beginning. I didn’t know anything about marketing. For a time I was also in charge of finance—CFO and CMO at the same time. I finally recruited Amy Bohutinsky from Hotwire to come over to Zillow to help, and she is now our chief marketing officer.
I love working at Zillow. It’s been a lot of fun to see the company grow and now go public.
Q: What are your plans for the future?
A:Â I plan to be at Zillow indefinitely.
Q: Do you worry about a loss of entrepreneurial spirit?
A:Â No. As CEO, whether Zillow maintains that spirit is within my control this time. I do think entrepreneurism is possible in medium-to-large companies as long as management retains it. And within Zillow, we are doing really exciting things like creating new product lines, new platforms, expanding our rental category and acquiring companies.
Q: What lessons have you learned throughout your career?
A: First, hire great people. Always hire better than you. Don’t be afraid to be one-upped by your team.
Second, dream big. It takes the same effort, blood, sweat and tears to swing hard for a homerun as it does to swing for a single. I believe it is important for one’s mental health to be ambitious and aim big.
And third, listen to your wife. The people that are closest to you are sometimes better at telling what is good for you than you are.