In October 2002, eBay, the giant online auction site, purchased the fast-growing payments company, PayPal, for $ 1.5 billion. Founded at the end of 1998, PayPal had become the de facto way to pay for goods on eBay, powering 70 percent of auction payments. The purchase was the exclamation mark on the rocket ship of PayPal’s growth.
It wasn’t obvious at the time, but eBay’s acquisition of PayPal would be an important turning point for the Internet itself, as key founders and team members of the payments platform left shortly after the purchase to start a new wave of online startups that marked the rise of Web 2.0.
These PayPal alumni, coined “The PayPal Mafia” by Silicon Valley press, included luminaries Elon Musk, founder of SpaceX and Tesla, and Peter Thiel, founder of Palantir and first investor in Facebook. Others from PayPal, such as Reid Hoffman, Steve Chen and Jeremy Stoppelman, went on to start influential companies that defined the future of the Web: LinkedIn, YouTube and Yelp, respectively.
Twelve years later, it’s hard to imagine what today’s Internet would look like were it not for the “mafia” that dispersed after the mega-deal between two often-bitter rivals. Real estate may be poised for a similarly seminal moment on the heels of the Trulia-Zillow merger. As the two big winners of online real estate’s “portal wars” consolidate into a single entity, Trulia and Zillow alumni are leaving to start the next wave of innovative companies in the real estate space.
A decade from now, will the portal merger be the moment we look back to as a turning point in the real estate industry? Will it be the formative moment of a new landscape that redefines real estate in much the same way that the PayPal Mafia redefined our understanding of the Web itself? It’s much too early to say, but it’s clear that the newly minted “Zulia mafia” will definitely make a run at it.
In the months leading up to the merger announcement, Trulia saw several members of its ranks jump ship to new startups. Eric Wu left to team up with a Silicon Valley powerhouse, Keith Rabois, to create Opendoor, a radical new way to sell homes quickly online. Ginger Wilcox, former director of industry for Trulia, joined Sindeo, a new mortgage marketplace. And Pierre Calzadilla, a seven-year vet, left Trulia to join RealScout, a company that’s redefining how agents generate more offers.
And let’s not forget Pete Flint, former CEO of Trulia, who will now have new opportunities to back and advise dozens of new real estate startups that will further innovate and push real estate forward. Whether he will choose to do so (or not) remains to be seen, but seeing as the merger just closed, he has some time to figure out his next move.
The former ranks of Trulians and Zillow employees who have left either voluntarily or involuntarily after the merger, from the CEO’s office to the sales floor, all carry with them some of the DNA imprinted with their companies’ respective visions for the real estate industry. That worldview doesn’t disappear with a job change. The values carry on, and the vision will be executed in varying degrees and new ways all across the industry by the new teams arising from this merger.
October 2002, the month that PayPal was acquired by eBay, in many ways marked the end of the dot-com era. The dot-com bust had peaked, the euphoria of the early Web was thoroughly stomped, and yet PayPal emerged as a serious company that not only changed how payments were handled online but also whose “graduating class” went on to usher in the next big wave of innovation on the Internet — Web 2.0.
The Web 2.0 movement was all about person-to-person connectivity. A Web designed for transparency and collaboration. Where Web 1.0 was focused on replicating traditional models online (such as e-commerce), Web 2.0 was about taking advantage of the inherent strengths of the network.
These ideals powered PayPal.
Peer-to-peer money transfers were just one manifestation of this vision. When you invent digital money transfer online, it’s not a huge leap to explore other opportunities of the network. That’s exactly what happened with the creation of companies such as Yelp, LinkedIn and Facebook.
Trulia and Zillow have their own ethos. They have emerged from a housing meltdown that took more than a few companies of lesser resolve with it. Their diaspora now has an opportunity to improve the real estate industry, to reinvent what online real estate really means and does. They now get their chance to mark the next wave of real estate innovation.
It’s no short order.
These alumni face the same challenges as others trying to innovate in real estate — data fragmentation and accessibility chief among them — and a relative lack of venture investment interest that will make it difficult to win at scale.
Yet there has arguably never been a more qualified group to run down the opportunities ahead for real estate. They have been through the fire; they have seen success; they have encoded within them a sense of what the future of real estate should and can look like.
The question looms: Will they build real estate’s equivalent of LinkedIn, Tesla and Facebook?
It’s far from a certainty. But no one can argue that the next decade won’t be interesting as they attempt to write the future. My money’s on this merger, this moment, as one that we look back on as the starting point for much of what we hope the future of real estate will be.
Former PayPal employees and their companies:
- Elon Musk, founder, Tesla, SpaceX
- Max Levchin, founder, Affirm; chairman, Yelp
- Peter Thiel, founder, Palantir; board member, Facebook
- Dave McClure, founder, 500 Startups
- Jeremy Stoppelman, co-founder, Yelp
- David Sacks, founder, Yammer
- Steve Chen, co-founder, YouTube
- Reid Hoffman, founder, LinkedIn
Former Trulia employees and their companies:
- Sean Black, co-founder of Crunched (sold to ClearSlide)
- Ginger Wilcox, chief industry officer, Sindeo
- Pierre Calzadilla, director of strategic partnerships, RealScout
- Eric Wu, CEO of Opendoor
- Charis Moreno, vice president of sales at NextHome