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Illustration: Anna Haifisch for Bloomberg Businessweek

How Managing by Moonshot Doomed Zillow’s Home Flipping

CEO Rich Barton loves a BHAG—a big swing, an all-in flywheeling Manhattan Project to the mountaintop of his super app. It’s worked for him, mostly.

In the 1994 book Built to Last: Successful Habits of Visionary Companies, the management guru Jim Collins introduced the concept of the Big Hairy Audacious Goal. The BHAG (pronounced “bee-hag”) describes a method of stimulating progress by setting a clear, possibly unreasonable objective and chasing it relentlessly. Collins was thinking of Boeing’s race to develop the 707, but he also applied the concept more broadly. Climbing Mount Everest is a classic BHAG. So is sending humans into outer space. Some executives may find the term uncomfortably anatomical, preferring to pepper their PowerPoint presentations with true norths and north stars, Manhattan Projects and Marshall Plans, and, most of all, moonshots.

Rich Barton, chief executive officer of Zillow Group Inc., likes Collins’s formulation. “I find big, hairy, audacious goals are really motivating and inspirational,” he says. Barton founded an online travel agency inside Microsoft Corp. in 1994. Five years later, he walked into a meeting with future CEO Steve Ballmer and asked for a $100 million marketing budget. Ballmer laughed the young executive out of the room but later blessed a plan to take Expedia Group Inc. public. Eventually, Barton left Expedia and tackled the housing market. His first effort, a plan to sell homes at auction, was a dud. But in the process of pursuing it, he and his co-founders hit upon a better idea: They would track home values as if they were stock prices.