Episode 22: Zillow + Trulia (with Zillow Group CFO Kathleen Philips)

**Ben Gilbert** (0:00)
Hey, Acquired listeners. We hope you enjoyed this episode with CFO of Zillow Group, Kathleen Philips. just a quick heads up that the audio quality is a little bit rough this time around, and we recommend listening on speakers rather than headphones if you're able. We'll get back to our normal standards in the next episode. Thanks for bearing with us. Welcome to Episode 22 of Acquired, the podcast about technology acquisitions. I'm Ben Gilbert, I'm David Rosenthal, and we are your hosts. We're on a serious role here at Acquired, and we have an awesome, awesome guest for you today. We'll be talking about Zillow's 2015 acquisition of Trulia and their M&A strategy overall. Kathleen Philips is our guest. She is the CFO of Zillow Group and was formally Zillow's COO and General Counsel. She has run corporate development for her entire six-year history at the company. She's also previously been a VP and General Counsel for StubHub and Hotwire. Welcome, and thanks so much for coming on, Kathleen.

**Kathleen Philips** (1:13)
Well, thank you guys very much for having me. I'm super excited about having this conversation with you today.

**Ben Gilbert** (1:17)
So are we.

**David Rosenthal** (1:18)
So are we. Thank you.

**Ben Gilbert** (1:20)
This is a great time to tell you about one of our very favorite companies, crusoe.

**David Rosenthal** (1:26)
So crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. NVIDIA is one of their major partners and literally crusoe's data centers are nothing but racks and racks of A100s and H100s. And because crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (1:51)
Yes, we talked about that on our ACQ2 episode with crusoe CEO, Chase Lockmiller.

**David Rosenthal** (1:57)
The other element that makes crusoe special is the environmental angle. crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, et cetera, and uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (2:15)
Yeah. obviously, it's a huge benefit for the environment and for customers on costs since crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. These lower energy costs get passed on to customers.

**David Rosenthal** (2:31)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the internet happens because they are doing everything in their clouds.

**Ben Gilbert** (2:47)
Yep. If you, your company, or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusocloud.com/acquired, that's crusoecloud.com/acquired, or click the link in the show notes. All right. Well, I think it's time to dive in.

**David Rosenthal** (3:08)
With that.

**Ben Gilbert** (3:09)
Yeah. Normally, Kathleen David leads us through the acquisition history and facts. I figured the best way to cover it in this episode would be kind of David, you lead, and then kind of have a discussion with Kathleen on. Yeah.

**David Rosenthal** (3:23)
I'm sure lots of lots and lots of good stuff will come up. This was a as we joke on the show, and we were joking with Kathleen before we started recording. We love two things. We love public company acquisitions, two things on the show, public company acquisitions, where everything about the negotiations comes out in the SEC filings and lawsuits where the same thing happens.

**Ben Gilbert** (3:44)
So fortunately, we just have the former.

**David Rosenthal** (3:47)
Yes. Fortunately, just the former in this case, for I'm sure for Kathleen Sanity. So maybe I will do a very quick history and facts on the founding of both Zillow and Trulia, and then we'll jump into the acquisition process with Kathleen. So Zillow was founded in 2005 by Rich Barton and Lloyd Frank, who previously had worked together at Microsoft here in Seattle, and then had founded Expedia in 1996, which probably most of our listeners are familiar with. That was a lot of people don't know these days was founded within Microsoft. It was a division within Microsoft that they started, and then they spun it out from Microsoft and it became a separate public company in 2001 Then in 2005, they left and they started Zillow, and Zillow is focused, as is Trulia, on the US housing market and buying and selling of houses and real estate. And Zillow's big innovation that was the big brand that they launched with in 2006 was this concept of the Zestimate. So it was a data-driven estimate for every home in their database about what that home would be worth on the market. And this was, I believe, the first time that US homeowners had any idea of what, you know, any indication of what the value of their house might be without actually putting it on the market. And it was based on a whole bunch of factors, but especially access to comps of houses that were selling in the market around the house. So this was a big deal, generated a lot of press.