Our seed fund partners, firstminute capital, interviewed Spencer Rascoff, co-founder and ex-CEO of property marketplace platform Zillow ($11B market cap), co-founder of online travel agent Hotwire.com (acquired by Expedia) and co-founder of dot.LA, a media and events company. Spencer also sits on the boards of TripAdvisor and Hutch; is an investor, a professor at Harvard Business School, and created ‘Office Hours’, an interview podcast on building company culture.

Spencer was CMO, CFO, and COO at Zillow, then CEO from 2010–2019. As CEO, he led Zillow through IPO, grew the company from 200 to >4,000 employees and increased revenue from $30 million to $1.3 billion while Zillow acquired 15 companies. He was Glassdoor’s ‘Highest Rated CEO’ in 2017.

During the conversation, Barry Smith, co-founder of Skyscanner, and Brent Hoberman, co-founder of Lastminute.com (and, of course, firstminute capital and Founders Intelligence) were able to add colour from their experiences in online travel; Spencer’s 10 year old son, who has his own podcast, ‘Dad I have a question’ also joined for some Q&A.

At Founders Intelligence, we help business leaders reinvent their industries by tapping into insights from the tech and venture world; below are our key take-aways from the conversation with Spencer Rascoff:

Decisiveness, empathy and vision will see you through a crisis

  • Post September 11, travel went through a deep crisis and Hotwire was heavily affected. Some key lessons from that time were:
  • Cut the company to the right size to survive the crisis, ideally in one fell swoop so you only need to do it once (today’s challenge being that we don’t know the shape of the curve or how long it lasts).
  • Show empathy and treat people generously and fairly when making redundancies, and give them choices — some people want to leave. Placement, insurance, share options are all areas where you can be generous; today we’re seeing online directories of ex-employees to help with hiring.
  • The next day, you need to set the vision for the future and re-win the hearts and minds of the survivors. If done right, this can unleash a more dynamic company with a high sense of urgency, creativity and mission that has to do more with less (and sometimes it’s also just easier to move quickly with fewer people).
  • Crises are a key opportunity for funded start-ups, who can benefit from a moment when new consumer habits are being formed and suppliers are looking for new routes to market. Incumbents retrench, so are less able to serve changing customer needs, and it’s harder for early-stage companies to get funded, giving disruptors with an existing business an edge to capture market share. This happened with both Hotwire an online travel agent in 2001 and with Zillow in 2008.

Unless you curate yourself as the company you manage scales, you’re not truly scaling

  • Every 6 months / year, you need to think what you would do if you were coming in as CEO at this stage of the company. Be deliberate and thoughtful about how you change your work habits and style — and, importantly, communications style — as your company grows.
  • Your time is your most important asset: vote with it and consider what meetings you need to be attending and where you add value; as the company grows, you should stop many and, of course, start others.
  • Focus on what only you can do and where your unique comparative advantage lies, even if you’re potentially better than someone else in a specific area — as a CEO, your leverage may be in PR or recruiting senior hires. Hire people better than you who work well as a team — and if you’re starting a company, even better if you’ve already worked together as a team. Likewise, Zillow’s board brought together individuals with diverse expertise who respected each other and made it more powerful as a result.

Often more important than making the right decision is how you communicate your decisions across different channels

  • Mission orientation and motivating the whole team is a key area where you can uniquely bring value as a senior leader; prepare and plan for them — a small group of people properly motivated is a hugely powerful force.
  • As CEO, your voice has more weight as the company gets bigger and you need to be more careful about what you say and how you say it.
  • Repetitive communication is essential to ensuring the message hits home. Most people — internally and externally — don’t pay that much attention to you. You need to keep repeating talking points across different channels, and use proxies to hit the same points in order for alignment to happen at scale.
  • Building a strong company culture with remote work is possible — but it’s harder, and better if everyone is remote than if some are remote (avoiding ‘us and them’ thinking). The same ingredients apply: strong mission orientation, celebrating small wins and excellent communication.

‘Ads are a tax on mediocrity’ and other marketplace wisdom

  • Once the product is awesome, advertise. Until then don’t buy traffic — use your money to develop your product, value proposition and growth hack to greatness.
  • Jumpstarting one side or the other the marketplace is fundamental — you need a shortcut to this or it’s very tough.
  • Niche marketplaces aren’t per se a bad investment but they are not a strong VC play: either the addressable market is too small for VC economics or they are open to attack from larger players entering from adjacent markets.
  • Using auctions rather than flat fees for priority placement is the special sauce that Booking.com used and the trick online travel agencies initially missed — of course, Google practically invented it. This shifts blame for pricing to client’s competition and other participants on the platform, rather than the auctioneer.
  • Knowing the above and applying it are two different things: a key challenge to shifting business models as a public company comes with the long-term financial intricacies baked in to securing supply — an essential reason why incumbents were slow to adopt Booking.com’s model and missed a huge opportunity for value creation in the process.

Many thanks to Spencer and firstminute for this fascinating conversation. We look forward to more myfirstminute chats in the coming weeks.