That's a fair point; the essay doesn't do much to distinguish whether they didn't know they needed to take losses, or couldn't take the pain of the losses.
Nevertheless, it's a pretty good analysis of what a company needs to do, in order to build a model relevant to their own actual business. They need to both know about the pain involved, and be prepared to take it. (And even then it might not work!) Third-party data (and suffering) might not be a good substitute.
Risk aversion and launching a new business strategy do not work well together.
That is a common pattern, but when you see a company launch a new venture and the primary goal is to not lose money, often, the desire not to lose money leads to decisions that prevent actually making money.
Around 2008, some investment banks famously had a single division manage to lose significantly more money than the entire rest of the company made over the same time period. Zillow not wanting to replicate their mistake isn't necessarily a bad decision.
CEO said cut! Way to go!
This loss was not immaterial but it also wasnt too material as they werent even leveraged on the homes. They had orders of magnitude more capital to risk if they really chose to dive into this or take it at least to real estate 2008 levels. Far from it.