Zillow general counsel Kathleen Philips ()
The U.S. Securities and Exchange Commission in April issued rules allowing public companies to share information on social media. Almost immediately, wheels began turning 2,700 miles away, in the Seattle headquarters of online real estate company Zillow Inc.
Zillow hit upon the idea of taking questions via Twitter during the company’s next earnings call, only 35 days away. Everyone liked the idea, but no U.S. company had ever done such a thing. It wasn’t clear how, exactly, a public company could exchange information on Twitter and still comply with SEC regulations on investor relations.
Zillow’s legal department went to work, parsing the new regulations and developing a road map for how Zillow chief executive officer Spencer Rascoff could take questions from the Twittersphere. On the day of the quarterly earnings call, Rascoff fielded nine questions that arrived as tweets. The SEC raised no objections, and other companies have since copied the practice — including Twitter itself.
“It’s symbolic of the type of company that we are,” said Kathleen Philips, Zillow’s general counsel and chief operating officer. “It’s also emblematic of how our legal department functions as an innovative business partner to the rest of Zillow.”
Members of Zillow’s seven-member legal department rely on nimbleness, innovation and collaboration to maintain their company’s rapid growth while still playing by the rules. Marlee Myers, managing partner for the Pittsburgh office of Morgan, Lewis & Bockius, represented San Francisco-based HotPads when Zillow bought the real estate search company for $16 million in late 2012. Zillow’s legal team came into the negotiations with clear goals, she said. “They knew why they wanted to make this acquisition and they knew what their criteria were. I thought the Zillow team was extremely professional.”
Doing legal work for a rapidly growing company presents plenty of ­challenges. Since Zillow’s first full year of ­operation in 2006, the company’s annual ­revenues have increased by 2,624 percent, to $112.5 million, according to financial statements. Zillow earned $5.9 million during 2012. The company’s work force has more than doubled in two years, to about 850 at the end of 2013.
The rapid growth has kept Zillow’s legal department busy with SEC compliance, product rollouts, licensing and partnership agreements, stock offerings and acquisitions, to name a few. “The real growth at Zillow is what makes this job exciting,” assistant general counsel Brad Owens said. “The legal team gets to work on new and different issues every day.”
Sometimes those deadlines stack up. In August 2013, the company issued two major announcements on the same day: Zillow said it would acquire the New York real estate website StreetEasy for $50 million in cash, and announced a public offering of 2.5 million shares of Class A common stock. “You can imagine the pressure on the team,” Philips said. “It was an around-the-clock effort for the last 10 days.” In the end, the team hit the mark.
Name of company: Zillow Inc.
Industry: Online Real Estate
Number of lawyers in Seattle area: 3
Number of lawyers in the U.S.: 4
Number of lawyers worldwide: 4
Name of general counsel: Kathleen Philips
KEYS TO SUCCESS
► Hire great people for your company’s in-house legal team and for the outside counsel that you use. Don’t be afraid to hire someone who is better than you. It encourages an innovative culture.
► Be nimble. Create a workplace culture in which team members can take on a wide variety of projects and one where they can adjust quickly to changing priorities. This approach helps your team’s professional growth.
► Treat your outside counsel like you would a business partner. If you do so, you’ll get more value from the relationship.
—Brad Owens, assistant general counsel