Zoopla Offers, the company’s house flipping arm, lost nearly $400 million in the last quarter. Zoopla is now chopping off that arm.
Still, this blowing of such gargantuan sums is what makes this whole capitalist free market thing work. This best economic system centers on allowing anyone to have a go with a new idea or product. If it catches on, then the person gets rich. This system has led to us being the richest generation ever.
Zoopla Offers rested on the idea that it could take advantage of the national database of residential property for sale. Or at least a large enough sample of that database to be representative of price assessments. Would that be enough to overcome the known granularity of the housing market? Each house being just that slightly different. As it turns out, no.
But it’s useful that someone had a try at this. At least for the moment, we know the idea doesn’t work. There’s also the depressing possibility that real estate agents really are necessary and that they can’t be automated out of existence!
Again, however, the ability to experiment is what the free market system gives us, along with profit if the experiment turns out to produce what people want. Of course, any system of widespread experimentation is going to be strewn with mistakes. The joy of the system of private experimentation is that when people make a mistake large enough to lose all their money, they stop.
Bankruptcy, or the fear of it, is the system’s great backstop. It’s the thing that kills off the mistakes before they become system-threatening — which is exactly what Zoopla Offers has just shown.
This helps explain why government systems trying to do the same thing don’t work over time. It’s not the starting of experiments, it’s the finishing of them. Government doesn’t fold until it’s run out of other people’s money!
