Zillow's AI Bought 27,000 Houses and Lost $500 Million in 90 Days
Zillow built an AI algorithm to 'flip' houses at scale — buying homes, making improvements, and reselling them for profit. The algorithm confidently predicted housing prices using machine learning and by 2021 Zillow had purchased 27,000 homes. Then it catastrophically mispriced the market. Zillow wrote down $304 million in losses in Q3 2021, shut down the entire iBuying division, and laid off 25% of its workforce — 2,000 employees — in one of the most spectacular AI business failures ever.
Zillow built an AI algorithm to 'flip' houses at scale — buying homes, making improvements, and reselling them for profit. The algorithm confidently predicted housing prices using machine learning and by 2021 Zillow had purchased 27,000 homes. Then it catastrophically mispriced the market. Zillow wrote down $304 million in losses in Q3 2021, shut down the entire iBuying division, and laid off 25% of its workforce — 2,000 employees — in one of the most spectacular AI business failures ever.
Weirdness Classification
9/10 — Deeply unhinged
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