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Zillow founder Spencer Rascoff: "I will never invest in a consumer startup with paid marketing”

October 03, 2023

In the clip below, Zillow co-founder Spencer Rascoff explains how the $10B+ company got its initial traffic:

“Very deliberately—and this is the advice I would give to any founder—we did no advertising. The philosophy for the first three years of the company was: any money that we might spend on SEM, Google, Facebook, whatever… Let’s invest that in product and try to build something viral.”

He continues:

“Most of the great companies and services that we use today—from Uber to Snapchat to Facebook to Instagram—followed the same philosophy.”

After three or four years, you do start seeing ads for these companies. But in the early days of those services, it’s all about product and not about advertising.

“The reason you do that is to build innovation and product development bonafides. When I do angel investing for example, I will never invest in anything B2C with paid marketing.”

Zillow launched with just consumer PR and a product that people liked.

Mark Zuckerberg echoed Spencer’s view in a previous Startup Archive answer:

“The traditional approach to growing and marketing is you have a communications group or marketing team and you buy ads. Sometimes there’s a place for that.. But if you’re actually trying to grow a product, the best levers for doing that are often within the product itself.”