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Friday, September 21, 2012

3 Entrepreneurial Lessons From Trulia's Mega Success

As a graduate student at Stanford, Pete Flint put together a project for a new business that would transform the real estate industry. But it was more than a theoretical exercise, and in 2005, he went on to co-found Trulia (TRLA).

Smart move.

Today, Trulia pulled off an initial public offering, with TRLA shares up 41% in Thursday trading and its market value at about $633 million.

How did Flint make this happen? I talked to him this morning, and he boiled things down to three key factors:

new business that would transform the real estate industry Image representing Trulia as depicted in Crunchbase
Image via CrunchBase
1. Transform an Enormous Market

Few markets are as large as real estate. But when Flint started Trulia, there had been little innovation, especially compared to other categories like travel, autos and even dating.

Interestingly enough, the plunge in the real estate market proved fortuitous.

“Downturns are a great time to build a transformative business,” he said.

And, in fact, from 2005 to 2008, Flint was able to raise $33 million from Sequoia Capital and Accel Partners.

2. Build the Best Products

That strategy seems kind of prosaic, but that doesn’t mean it’s unimportant. Flint truly thinks his products are a key part of his marketing! Keep in mind that much of Trulia’s 23 million monthly users have come from organic sources, not ad spending. His product focus also has been helpful in dealing with tough competitors like Zillow (Z).

If anything, the real estate downturn also was a spur for innovation. After all, it takes a great offering to get jilted consumers interested, right?

3. Create a Capital-Efficient Business Model

Nowadays, it seems normal for startups to raise huge amounts of capital, but Flint — who raised no additional venture capital after 2008 — doesn’t think that’s the best approach. Flint says the focus on organic marketing was crucial for creating a low-cost operation.

However, Flint also mentioned that hiring top-notch people was also a big part of the strategy.

“Talented people will focus on what’s important.”

By Tom Taulli

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