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Former engineer now calls striking out in his interviews for , and the best thing to ever happen to him. It鈥檚 what led him to become employee No. 63 or so at Zillow, where he would develop a love for startups and eventually go on to become the founder of fraud detection company .

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鈥淏ecause I was able to witness at Zillow firsthand how much impact I could have and how quickly you could move and how decisions could be made collaboratively 鈥� I just really admired that type of environment and I realized that was one of the big benefits that you get by working at a startup,鈥� Tan said. 鈥淢ore impact, more opportunities for growth, and more connectivity to the organization.鈥�

His experience at Zillow, which Tan joined in 2006 after graduating college, prompted him to go down the path of startups. He joined smaller companies following his time at Zillow and eventually founded fraud detection company Sift, which is one of several companies to be founded by former Zillow employees.

In a way, Zillow is a prime example of how one company can spawn subsequent generations of highly valued startups.听

Founders of numerous funded startups all list Zillow among their former employers. Those startups include Sift, proptech startup , health care financial wellness company , proptech startup –which helps people own second homes–as well as career and salary website .听

Zillow itself, now a larger branch on the Seattle family tech tree, is the product of older tech giants in the Pacific Northwest: The real estate marketplace has roots in and .

The network effect

It鈥檚 fairly common for early employees of tech startups that successfully exit to go on to found other companies.听

Or as Zillow co-founder and former CEO put it in a recent interview with 附近上门 News, 鈥淧eople like to work with people that they liked working with.鈥澛�

The 鈥� mafia鈥� is probably the most prominent example of a successful venture-backed tech startup that produced a slew of others. Among the most notable members of the group are early PayPal employees , now co-founder and CEO of , and and co-founder and CEO . Several early PayPal employees, including , and have become some of Silicon Valley鈥檚 most well-known investors.

Often people in these circles receive support鈥攚hether financial or otherwise鈥攆rom their former colleagues. Zillow鈥檚 first intern , for example, consulted for Pacaso through her marketing firm before joining the company full time as chief marketing officer. Zillow CEO and co-founder , meanwhile, was an early investor in Sift.听

鈥淏y creating those networks, people are going through the same shared experience, trust builds up, investors know what they’re getting, and they鈥檙e much more willing to write those early checks,鈥� said , executive director of the Haas Entrepreneurship Program.

Networks get even more granular than at the company level, Shrader said. She pointed to how Berkeley Haas alum founded , 鈥渟o all the Haas MBA students wanted to go work at Lime.鈥� One Haas student who worked for Lime later founded .

The downside, however, is that people who aren鈥檛 already in those networks don鈥檛 have the same opportunities. There鈥檚 also the issue of how to reduce confirmation bias, Shrader said, or the idea that just because one solution worked for a certain problem, it will work for future problems.

鈥淚f you鈥檙e not a typically represented person, you’re not in that initial network, so it鈥檚 going to be much more difficult to be part of those spinouts,鈥� Shrader said. 鈥淏ecause people go with what they know, whether it鈥檚 investors or folks starting their own companies.鈥�

And of course, a very big part of the reason successful companies tend to lead to other successful companies comes down to money. If you鈥檙e an early employee of a company that ends up with a big exit, you鈥檝e likely made a good chunk of money, and a big payday provides capital to start a company or invest in others.听

Zillow itself is the product of another network effect: Several of its early employees came from Seattle-based companies Expedia and .听

Barton had co-founded Expedia while still at Microsoft before spinning it off into its own company. Post-Zillow, he co-founded career and salary website Glassdoor, before returning to Zillow as CEO in 2019. Former CEO Rascoff founded Hotwire, which was acquired by Expedia, before joining Barton to co-found Zillow.听

Taking lessons from Zillow聽

Zillow went public in 2011鈥攚ith the coveted one-letter ticker Z鈥攁nd cemented itself as a real estate giant and a fixture of many late-night scrolls.听

Part of the reason Zillow has given rise to so many startups from former employees is its culture, Rascoff said. 鈥淭he culture of innovation was really important,鈥� he said. 鈥淲e were constantly reinventing the product and the business model.鈥�

The constant reinvention created a workplace that drew entrepreneurial people in, he said. It also inevitably spun out people with that attribute too.

Another reason for Zillow鈥檚 track record of spawning other startups: the company鈥檚 acquisition history, Rascoff said. While he was CEO, Zillow acquired 17 companies, which brought a lot of entrepreneurs into the fold who became 鈥渋ntrapreneurs,鈥� he said. But, 鈥渦sually a couple years later those people want to give startup life another shot.鈥澛�

is an example of that. After Zillow acquired Allison鈥檚 startup, , in 2015, he stayed at Zillow for four years. He eventually left and founded Pacaso with Rascoff, whom he considers something of a mentor.听

There were some clear similarities between how Dotloop and Zillow were run, Allison said. For one, Rascoff typically began company meetings by stating Zillow鈥檚 mission, which Allison also did at Dotloop. That鈥檚 a practice Rascoff and Allison carried over to Pacaso as well.听

Pacaso also has personality-driven product development, similar to Zillow鈥檚 approach for designing products for fictional people (e.g. 鈥淗arriet the Homeowner鈥�). It also adopted the idea of 鈥減ersonality tests鈥� to help employees understand how they lead and work with others, Rascoff said.

Of course, several former Zillowers have joined Pacaso, which recently raised $75 million and achieved unicorn valuation less than a year after launching. Curry, who spent more than a decade at the company after joining as its first intern, was one of them, along with Zillow鈥檚 former head of sales.听

鈥淲hen we decided to start the next company, there were already people who had reached out to us and expressed interest in being part of whatever we were going to do next,鈥� Allison said. 鈥淚t sort of happened pretty naturally. When people work together for a long time and they develop a bond and relationship it鈥檚 sort of hard to disconnect that because we spend so much of our time awake at work in life.鈥�

Though Pacaso and Divvy Homes are two notable proptech unicorns to come out of the Zillow family tree, the startups to come from former Zillowers aren鈥檛 just limited to proptech companies. Rascoff, for example, also co-founded technology news site , and he and other former Zillowers are active angel investors in startups.听

Many former Zillow employees work at each others鈥� companies, advise and invest in each other.

鈥淭hat group of very tight knit people formed a lot of bonds through that experience, and therefore many of us invest in each others鈥� companies now,鈥� Rascoff said.

Illustration: Dom Guzman