Prudential Kicks Out Zillow and Trulia

So Trulia.com and Zillow.com booked booth space at Prudential Real Estate's convention this week in San Diego. 20 minutes before the show floor opens, they're asked to leave. Zowie.

Apparently, the Prudential / Yahoo partnership is to blame. Trulia and Zillow, with their no-referral-fee businesses, threaten the entrenched model that Pru/Yahoo have had for years.

What's less clear is who flipped his lid at the last minute. Was it someone at Yahoo saying, "Get my competitors out of here"? That's at least a little odd, because Yahoo and Zillow also have a partnership. Was it Russ Capper from Prudential? Most of us never think about the vast sums of money in the real estate lead referral business and it makes sense that some of that flows to Prudential from the Yahoo real estate search pages. But Pru has partnerships in place with these guys too.

Either way, the incident is merely the most recent hallmark of our massively shifting world. Like any innovator's dilemma, the old guard has to defend their bread and butter while the new guys eat away at the business. The scraps they take now are too small to sustain the existing players but enable the new guys grow to steal the whole loaf. Yahoo and Prudential are not alone as endangered incumbents here: HouseValues and HomeGain, and even Zip which has it's vast network of website referral partners - all face unbelievable risk.

As an aside - it is this essence that underlies my preference of the Trulia business model vs. Zillow's over the long haul. Of the basic questions that the sites answer: "what's for sale?" vs. "how much is my house worth?" the Trulia question is much closer to the transaction itself, and thus better positioned to capture a greater share of the referral dollars away from the incumbents.

Sami at Trulia takes the whole episode in stride, and it sounds like he got his customer meetings anyway, they just couldn't do the exhibit-floor booth. (Ironically, doing booth duty at these types of shows rarely results in new business. Rather it's simply a means for a partner to show a little support when they're going to be meeting and greeting anyway. Likely the Trulia and Zillow guys saved a few days of aching feet and a pile of throw-away business cards. I'd be saying Thank-you.)

The Sellsius guys, broke the story, natch.