Transparency: Cutting Edge or Status Quo?

Investor Transparency: Cutting Edge or Status Quo?

Last quarter, Zillow made investor relations history by becoming the first company to answer questions from investors and sell-side analysts submitted via Twitter. We created a Twitter hashtag (#ZEarnings), and I read questions aloud that were submitted using that hashtag, interspersed with questions submitted verbally on the earnings conference call. We didn’t have time to answer all the questions that were submitted, so I did a follow-up post afterward to address some of the remaining questions.
There are several reasons why we decided to field questions via Twitter. Zillow has always been at the forefront of social media. In 2006, we were one of the first companies to post comments on blogs that referred to us – this now seems downright quaint. By 2013 we were connecting with our users, our partners and our investors through dozens of different social media channels, as do most major brands. So it seemed only logical for us to connect with investors during our earnings discussion via the two most popular social media platforms, Facebook and Twitter. The internal discussion at Zillow on whether we should do this mostly focused on “how” not “whether.” Even our lawyers were supportive!
I’ve been somewhat amused by how controversial our decision has been in the media and investor community, given that our goal was to deliver more transparency to all investors. After all, I’m sure it was considered controversial when some company (probably AT&T?) in the late 1970s decided for the first time to use the newfangled technology of a “conference call” to discuss earnings with investors, rather than just put out a static press release. And now conference calls are of course de rigueur. Someday I’m sure we’ll all look back at this and laugh. For now though, Zillow is considered cutting edge, and when our Director of Investor Relations recently presented at a conference of IR practitioners on how Zillow has integrated social media into our investor relations strategy, he was met with a combination of puzzlement, awe, jealousy and probably a bit of disdain by his peers.
Despite our trailblazer status, Netflix one-upped Zillow this quarter with its announcement that it would A) broadcast a video discussion of earnings results based on questions submitted via email and Twitter, and B) the Q&A would be hosted by a journalist and a research analyst. For now, Zillow does not have plans to broadcast video of our earnings call. Our decision to take questions via Twitter is fundamentally different because it allows individual retail investors a quick-and-easy way to interact with management regarding earnings; video of an earnings discussion doesn't seem to do that. As far as having a Q&A hosted by a journalist, I also don’t foresee Zillow doing this because I don’t see how it adds value to investors. And allowing one analyst preferential access and exposure at the expense of his competitors at other banks seems unnecessarily provocative to the sellside research community without providing additional transparency. These are solely my own opinions, and perhaps there are arguments I’m not considering. But this is my perspective.
In future quarters, including our upcoming 2nd Quarter earnings discussion on Aug. 6, we will again utilize Twitter and Facebook as channels to field questions from investors and analysts. We’ll also continue to look for additional ways to make management more accessible to investors and to utilize additional emerging channels to communicate with investors each quarter.
For those who want to ask us a question, the lines are open. Just tweet a question to the @zillow Twitter handle, or post it on Facebook. Use the hashtag #ZEarnings. We’ll answer select questions during our call.
>Connect with me (@SpencerRascoff) on Twitter

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