Zillow’s failure isn’t AI, it’s hubris

Zillow’s recent exit from the house-flipping arena was big news recently. In business news, the plummeting stock price and looming massive layoff made headlines. In tech circles, the talk was about artificial intelligence, and how Zillow’s algorithms failed them. And while I love me some AI criticism, I don’t think that’s what’s at play here.

Other so-called “iBuyers” haven’t suffered the same fate as Zillow. In fact, they vastly out-performed Zillow from the reporting I heard. Now maybe the competitors aren’t as AI-reliant as Zillow and that’s why. But I think a more likely cause is one we see time and time again: smart people believing themselves too much.

Being smart isn’t a singular value. Domain and context play big roles. And yet we often see people who are very smart speak confidently on topics they know nothing about. (And yes, this post may be an example of that. I’d counter that this post isn’t really about Zillow, it’s about over-confidence, a subject that have a lot of experience with.) Zillow is really good at being a search engine for houses. It’s okay at estimating the value of houses. But that doesn’t necessarily translate to being good at flipping houses.

I’m sure there are ways the algorithm failed, too. But as in many cases, it’s not a problem with AI as a technology, but how the AI is used. The lesson here, as in every AI failure, should be that we have to be a lot more careful with the decisions we trust to computers.

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