Zillow and the Innovator's Dilemma - The Flywheel

Because Zillow’s main customers are agents, it can’t cut them out of the transaction, and ends up paying over 50% more than Opendoor on agent commissions. To lower this cost, it would have to risk pissing off the people who pay it the marketing fees that drive the majority of Zillow’s revenue and margin.

Shift risk from the customer to the platform. Transactions often carry significant uncertainty so aligning financial incentives in a way that maximizes results and places the risk on the business is a fantastic way to disrupt incumbents. Companies powered by Income Share Agreements, like Lambda School and Placement, as well as iBuyers like OpenDoor... See more