19 ms·

How Craigslist Makes Money

256 points by sytelus 10y ago

ouid 9y ago
If Craigslist makes ~600M in profit, Why the hell is Forbes giving them a valuation of 3B? That's a Price to Earnings ratio of 5. That's not conservative, that's insane. Am I missing something?
- debacle 9y ago
  For companies that aren't going to eat the world, only exist on the network effect, and are happy in their space, a P/E of 5 is reasonable. How much would you pay to buy craigslist?
  - wand3r 9y ago
    I assume they could effortlessly ramp to $1B if that estimate is semi-close. It would cost virtually nothing to add more paid markets and services; maybe allow the gravity algo to be tweaked. Figure very low costs for a site like that you could make your money back in 5-6 years; which is insane at that scale. I bet if they put it up for sale for $3B it would be sold by the end of the week
  - eanzenberg 9y ago
    At least 10x their yearly profit? What other investment provides a consistent 10% yearly return on the scale we're talking about? At P/E ratio of 5, you literally just wait 5 years and you've just made as much as your initial investment.
    - AnimalMuppet 9y ago
      If you get five years before someone disrupts it. That's not a given.
      - accountyaccount 9y ago
        Given craigslist has been around for 20 years I think it's fair to assume they could take an upwards of 5 years to unseat. Even Myspace continues on to this day.
  - ouid 9y ago
    A p/e of 5 is NOT reasonable. Has everyone gone mad? Blue chips run at about 20. Therefore I would pay 10B for craigslist in a heartbeat. I could probably even get a bank to loan me the money.
- wand3r 9y ago
  I think largely because they are estimates; I think Craigslist is likely worth way more given the ubiquitous nature, high margin, low costs and the decisions to not monetize everything. That said, IMO this article is not about Craigslist but a subtle advert for the 2 "competing firms" that are mentioned. I have seen an uptick in articles about Craigslist mentioning them and had never heard of them before. Potentially cynacism on my part.
  - samclearman 9y ago
    Well spotted.
  - ouid 9y ago
    I read the article and still haven't heard of them...
    - wand3r 9y ago
      I'm passed edit window; but Google: "craigslist" + "offerUp" You will see a lot of articles about how Craigslist makes money; is dangerous; potential revenue models; is going to finally get dethroned. The one that made me think a campaign to promote these 2 companies was about bad site design.
- deleted 9y ago
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- deleted 9y ago
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- yeukhon 9y ago
  If 600M is profit (not revenue), that's 400M short from 1B. That's not a bad valuation, also consider the user base is quite strong. Using both yield 3B is very conservative IMO. If you buy it for 3B, then you will get your investment worth in a couple years.
  - ouid 9y ago
    they said "most of 690M is profit" in the article. I used bayes theorem to go through all of the numbers out of 690M that I would have said "most" for, and arrived at a guess of 600M. Even if it were the lower bound of values for which the word "most" technically applies that's still earnings of 345M. An 11% a year on an investment of 3 billion. That's still insane. CL revenue is not terribly speculative.
    - yeukhon 9y ago
      I am not much of an investment person, but 600M for a classified site is actually pretty impressive for an old, well-established company. If they are able to maintain a high profit with low operation cost, then buyer can project more earning in the future. There is no absolute Craigslist will always make 600M a year. They may lose 10M next year or go bankrupt in ten years. So for 3B for the ten-year forecast (I don't have the data) may not be all that insane. I'd say if 3B is insane, look at all the startups out there, valuation is 10x more and they barely make any profit.
      - ouid 9y ago
        I think you are assuming that I meant insane in the sense that this was not a conservative estimate. That's sort of what I said, but it's clear from context that I meant the opposite. This estimate seems far too conservative to even count as an estimate, more of a trivial lower bound.
        yeukhon 9y ago
        Actually when I read it again it still sounded like you think the valuation is too high. I think this is because you instantly said insane after saying the valuation is 3B. That's how I read it "that 3B valuation? It's insane." It is hard to guess which sentiment was applied. But now you cleared up your opinion on this, I appreicate it. You were trying to say "3B valuation? Wow that's impressive!"
- mrweasel 9y ago
  Snap and Twitter both have valuation much higher than $3 billion and have zero profit. I would agree that the valuation seems high, but not compared to other tech companies.
  - ouid 9y ago
    The valuation seems absurdly low.
  - deleted 9y ago
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wand3r 9y ago
I was wondering how they got that number; basically they use a $690M revenue guess from a third party, apply a valuation multiple from eBay and then multiply by the 42% Newmark owns. Craigslist is unique; it isn't entirely profit driven and as far as Alexa 1000 sites; it might have stayed closest to it's original founding philosophy. I am not sure how they make money; iirc it was only a few select markets and select offerings like realestate. Costs are probably the lowest out of a site that size. Awesome product; seemingly great philosophy; Newmark was early but he was principled and to that Craigslist owes much of it's success
- gwern 9y ago
  > I was wondering how they got that number; basically they use a $690M revenue guess from a third party, apply a valuation multiple from eBay and then multiply by the 42% Newmark owns. It's not that dubious. The methodology is as simple and straightforward as it gets: > AIM's Zollman, who called his company's Craigslist revenue estimate "conservative," said the AIM Group counts up listings for each category in various markets and then multiplies that by the known fee associated with that listing. (Fees can range from $7 to $75 per posting, depending on location.)...As the founder of 3Taps, Kidd built an interface for programmers that pulled classifieds data from Craigslist and was able get an accurate picture of the total number of listings on the site. He published a 2011 white paper that pegged Craigslist's annual revenue at $300 million, a number he said has certainly risen as Craigslist has increased or rolled out more fees. This is hard to screw up, and if anything, counting listings ought to be a drastic underestimate - crawls of a hostile large high-turnover website will be incomplete, and Craigslist has other potential revenue sources like selling feed data to hedge funds or real estate or HR agencies. This makes it all very puzzling. As the quoted employee says: > "Eventually we realized we were making a lot of money and it was more than we needed to just cover costs," the employee said, noting at one point in the early 2000s Craigslist was making $40,000 a day on Bay Area jobs ads alone. "We could all do the math, and we'd wonder where all the money would go." So CL is making at a bare minimum $300 million a year by 2017, of which a large fraction is profit; the few employees say there are no major capital investments a la Amazon (and no one has ever pointed to major software or hardware investments attributed to Craigslist that I've ever seen), and you never hear of Craigslist billionaires or millionaires aside from Newmark, so the profit isn't simply being spent on datacenters or employee stock compensation; thus, around half would go to Newmark if it's distributed as dividends, so he could have an income of easily >$50m a year over the past 7 years after taxes or >$350m on top of whatever he earned before 2011 on that increasing revenue. The Craigslist Charitable Fund is disbursing $10m/year or less (and donations to that wouldn't be taxed), so that leaves >$300m (7 * 50-10). But Newmark claims to be worth much less than $400m total. So... where does it all go? It's hard to see how two different groups counting listings could be high by an order of magnitude, what Craigslist could be spending it on, or what Newmark is spending it on, unless he's making huge anonymous donations every year through other nonprofits (but why avoid his own CCF?) or simply lying (for privacy to avoid the attention or maintain his self-image, or just in order to make look bad "a fake market intelligence group who I won’t name").
madamelic 9y ago
I think they are doing it right. Just find a niche and work at it progressively through life. No need to raise $100M D Rounds, no need to have an explosive exit, whatever. I think it would be nice to just steadily have six figures, work on something I love and live life (a la Basecamp). Most of all: Have complete control of your destiny. No investors, no bosses, etc.
- coldtea 9y ago
  >Most of all: Have complete control of your destiny. No investors, no bosses, etc. Here's a useful guideline to add to what you said: unless some person makes way more than the Basecamp founders (e.g. through some unicorn deal or whatever) and enjoys the same freedom to shape their product, then they have absolutely no leg to stand on to criticize their model much less to sneer. I mean, some startup multi-millionaire/billionaire sneering at "lifestyle businesses" I can understand (though not agree with). But some ramen eating wannabe sneering at them, it's inane, since the majority don't end up nowhere near as succesful.
  - draw_down 9y ago
    Ugh, I know! I hate it when broke people have opinions.
    - coldtea 9y ago
      Obviously my comment was not about not liking broke people having opinions. It was about not liking broke "wannabe startup billionaires" sneering on people with lifestyle businesses as if they somehow "failed".
      - Mz 9y ago
        Nonetheless, you are understanding of the sneering of the folks who are rich enough. Sneering is a bad habit no matter your income level. Justifying it for the rich while dismissing it for people who are broke remains an expression of classism, no matter how much you try to clarify your intent.
Fluid_Mechanics 9y ago
Great service for selling used electronics, renting out an apartment, or sucking a strange man's penis.
- deleted 9y ago
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- nathanvanfleet 9y ago
  I guess that explains your username.
- softawre 9y ago
  Or renting out a strange man's electrodong
brndn 9y ago
Why doesn't Craigslist have mobile apps?
- mysterydip 9y ago
  What for? The website is simple enough to render fine on mobile devices, and it avoids the whole app ecosystem and update issues.
- dammitcoetzee 9y ago
  Craigslist is one of the best pages on the internet. It's functional, it loads fast, it doesn't have a stack built of buzzwords and bullshit. It works on every device everywhere. I mean, what business does a page have being megabytes and megabytes if it's gonna display a couple bytes of text? None. It doesn't matter if it's "technically free" these days, that's just bad design and engineering.
  - sytelus 9y ago
    Craiglist design actually sucks. When I first used it, the whole thing was almost revolting from design perspective. Where some people see simplicity, others see utter lack of modernity, friendliness and affordability. I still can't get some of my relative to use it (they ask me to post on their behalf!). Before you cite page counts, revenues and unique users, think about how many people are not using it despite the fact everyone has heard about it and everyone has a need to sell something on and off. Amazon UX is almost complete opposite of craiglist but is usable by much much wider audience.
    - ams6110 9y ago
      I like websites that don't change. I can come back to Craigslist once or twice a year, year after year, and it's exactly what I remembered. No hunting around, no discovering new gestures and behaviors. It's simple, obvious, and it for what it does, it works.
    - trowawee 9y ago
      I mean, we can't prove who "isn't" using it. We can prove that millions and millions of people are using it and seem to be content with it; we can provide anecdotal accounts (including by many people in this thread) that the simplicity and straightforwardness and consistency is what brings them back to the site. I can tell you that everyone I know looks at Craigslist when they're looking for apartments. But I get that you don't like it; I just think you need to acknowledge that's a preference, rather than an objective fact.
pkamb 9y ago
> 25. A Craigslist competitor. Craiglist is ambivalent about being a business. This is both a strength and a weakness. If you focus on the areas where it's a weakness, you may find there are better ways to solve some of the problems Craigslist solves. http://old.ycombinator.com/ideas.html http://old.ycombinator.com/ideas.html
- sillysaurus3 9y ago
  Remarkably prescient for 2008. 1. A cure for the disease of which the RIAA is a symptom. Something is broken when Sony and Universal are suing children. Actually, at least two things are broken: the software that file sharers use, and the record labels' business model. The current situation can't be the final answer. 8. Dating. Current dating sites are not the last word. Better ones will appear. But anyone who wants to start a dating startup has to answer two questions: in addition to the usual question about how you're going to approach dating differently, you have to answer the even more important question of how to overcome the huge chicken and egg problem every dating site faces. A site like Reddit is interesting when there are only 20 users. But no one wants to use a dating site with only 20 users—which of course becomes a self-perpetuating problem. So if you want to do a dating startup, don't focus on the novel take on dating that you're going to offer. That's the easy half. Focus on novel ways to get around the chicken and egg problem. Tinder launched in 2012. 17. New payment methods. There are almost certainly things whose growth is held back because there's no way to charge for them. Bitcoin.
  - placeybordeaux 9y ago
    w.r.t bitcoin being the new payment method, so far bitcoin hasn't enabled the really game changing thing: frictionless micropayments. It's possible that lighting networks will enable this (load up your browser with 5 bucks and lock that up in a connection to the LN, pay for articles then pay 1 cent to skip ads, buy premium features one at a time etc), but we haven't seen this yet.
    - DINKDINK 9y ago
      >we haven't seen [frictionless micropayments from the lighting network] yet. You post should be corected: Frictionless micropayments are already running on the lighting network, are already operational: https://www.youtube.com/watch?v=baHHMNA8yf4 https://www.youtube.com/watch?v=baHHMNA8yf4
iamatworknow 9y ago
>It also charges fees to list postings in categories including ... automobiles offered by dealers This was a huge thing in my industry. I work with a lot of independent car dealers that used to list everything on their lots with Craigslist, then they started charging the dealers $5 a pop and many of them just quit using it. There are too many other car listing sites out there now that offer more than just an ad (vehicle reports like Carfax, market trends, valuation, et cetera), so Craigslist just wasn't worth the cost to them.
- coredog64 9y ago
  I'm happier for it, as otherwise you wind up with garbage ads from the smaller lots. For example, they'll list the monthly payment instead of the price, which makes wading through 'sort by increasing price' a PITA. Or they'll put a bunch of SEO keywords into the ad such that their vehicle shows up on a search that it shouldn't.
  - Declanomous 9y ago
    Not to mention the places that post the same ad every day or even more frequently. Hmm, I'm interested in a Subaru. (I search Subaru) 500 listings of the same BMW x5 come up. Nevermind, let's see what Hondas are on the market. 500 listings of the same BMW x5 come up. I throw my computer out the window.
    - Neliquat 9y ago
      Yup, if i search for 'honda' i have to throw in '-nissan -ford -financing -credit' or some abomination to actually get results, and flag whats left.
  - iamatworknow 9y ago
    Yeah, I do understand that. But to comment on one point: >For example, they'll list the monthly payment instead of the price, which makes wading through 'sort by increasing price' a PITA. Every conference I've been to about the auto industry the experts say that, especially for low-income individuals, the monthly payment is what customers tend to be the most concerned about. In fact, many prefer to pay more total money over a longer term if it means a lower monthly payment.
miguelrochefort 9y ago
Craigslist has one of the worst UX. How come has it not been improved in years? Why doesn't Craigslist get any competition? It should be trivial to implement something that's 10 times better...
- bluedino 9y ago
  What's wrong with the UI? If I could change one thing about craiglist it would be the junk/scammers. Competition for craigslist is hard because of network effects.
  - rkho 9y ago
    The comment you responded to specifically mentioned UX, not UI. Junk and scammers are definitely part of the UX.
    - WWKong 9y ago
      What isn't?
      - rkho 9y ago
        I can't think of anything at this exact moment that does not contribute to UX. My response was regarding the assumption that the parent comment of mine equating UI with UX.
- trowawee 9y ago
  Counterpoint: their UX works perfectly well for them (see: $690m in revenue) and any proposed overhaul would carry potentially disastrous costs (see: Digg's site-killing redesign). Redesigning for the sake of change is not inherently good. Also, on a personal level, I've come to appreciate CL's design, and I very much appreciate its consistency. I don't use CL all the time - I go to it sometimes for things like furniture I know I can't get too attached to, or rental listings. It took a little time investment maybe 15 years ago to learn how the site worked, but once you know how it works, it's fairly easy to navigate, and they have never required me to relearn the site, no matter how long I go without using it. There's serious value in that. Add in the network effect that's killing the new apps trying to challenge it and you have a behemoth.
ry_ry 9y ago
Craigslist is ubiquitous in its niche, but i never really engaged with it beyond having a laugh at the occasional Craigslist meme post that worked it's way into the internet at large. At the same time, for years now I've been banging on to any of my industry friends about how global social networks are an internet anachronism and that local networks are the future. It's only just dawned on me that my misplaced futurism was simply describing a very successful long term business. A billion dollars later, it turns out Craigslist isn't niche at all - my thinking was.
djsumdog 9y ago
I remember looking up this exact question a few days ago. I really prefer to sell things like used electronics on Craigslist over eBay. I really like their business model too. They made enough to keep going, but not enough that they aspire to take over everything. It's a really simple concept, and there are very few business ideas that can pull it off.
- harlanji 9y ago
  > It's a really simple concept, and there are very few business ideas that can pull it off. The vast majority of businesses bootstrap themselves. Not on HN of course :)
  - derefr 9y ago
    I think the GP was right—there are very few business ideas that can pull off bootstrapping. The space of business ideas executable with funding is a superset of (and probably much larger than) the space of business ideas executable without funding. Also, most of the ideas you can only execute with funding are such because they'll never make any money. ;) The majority of all successful businesses, meanwhile, operate off a very small sub-space of the space of all business ideas. The part of the space called "workable business models." I'd agree that if you look at the space of workable business models, probably the majority of them are either bootstrap-friendly, or common and low-risk enough that regular consumer banks are willing to finance them with debt-capital (i.e. "business loans".)
- easilyBored 9y ago
  Craig probably did some math and found out that even if he lives to 800 years old, he will not be able to spend it all so why go nuts? This way everything is manageable and he doesn't need to report to anyone.
  - accountyaccount 9y ago
    I'm surprised that more successful people don't do this? Is the drive that lead them to absurd success what leads them to continue well beyond needing to? I find it hard to imagine hitting $10 million and not just dropping everything and spending the rest of my life on random hobbies and traveling. Maybe that's why I don't have $10 million?
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pascalxus 9y ago
just look at how successful a business that is, so simple, so little innovation and yet so much revenue. But despite all that, they have the best feature (X factor) in the wolrd: market timing. ohhh what i wouldn't do, to time travel back to 1995.
- ptr_void 9y ago
  If you are going back, just buying stocks and sitting back would be easier than building a business. Almost guaranteed to be the richest person by 2017.
- jzawodn 9y ago
  What's innovation have to do with it? Sounds like someone has convinced you that things have to work a certain way and you've found your first counter example...
  - pascalxus 9y ago
    It's a broadly held belief by many. It's good to look at craigslist to see how simple solutions are all that's necessary. Any yet, too frequently, we see companies spending soooo much money on useless features and so called innovations that don't help them solve their problem. This happens for both failing companies and very successful ones too. It can be difficult to isolate, exactly why something works, when you have so many confounding factors.
  - pascalxus 9y ago
    Actually, this day an age where all the simple problems have been solved, we're especially susceptible to this line of thinking. As entrepreneurs, we all know the saying: "It has to be x10 better than the existing product". Without new problems to solve, increasing desperation mounts, culminating lots of failures where a product is supposed to be x10 better.
troncheadle 9y ago
Forbes is unequivocally the worst website I have the displeasure of being linked to on a regular basis. Readability is quickly approaching 0. This page kept hijacking my scroll thru the article to keep an ad at the top of my window. Horrible, horrible, horrible.
- metaphor 9y ago
  I honestly don't even bother anymore: https://outline.com/xX7xe3 https://outline.com/xX7xe3
  - Amygaz 9y ago
    Nice! I didn't know that. Thanks!
    - metaphor 9y ago
      First time I encountered the service was while sitting on the pooper reading a NYT article that was linked using Outline's service. Realized something was amiss while I was wiping my ass and realized that I hadn't seen a single ad in the entire story. True story.
      - throwaway10199 9y ago
        https://mobile.twitter.com/UseOutline/status/864364794417000448 https://mobile.twitter.com/UseOutline/status/864364794417000...
  - circadiam 9y ago
    Pro-tip: Add outline.com/ to the front of the article's URL. Much faster and works nicely on mobile.
    - intrasight 9y ago
      Thank you!
  - 9y ago
reducesuffering 9y ago
Craiglist, because of its age, is interestingly built on Perl[1] and four years ago brought on Perl's founder, Larry Wall.[2] [1] https://www.craigslist.org/about/thanks https://www.craigslist.org/about/thanks (CL tech stack) [2] http://blog.craigslist.org/2013/10/15/artist-formerly-known/ http://blog.craigslist.org/2013/10/15/artist-formerly-known/
- derefr 9y ago
  Craigslist are so quiet about their tech; I'm surprised there's even that much. I'd love to hear their opinions on operating some of those things at scale, given that their problems are likely much more like those of the average CRUD-y SaaS business (scaled up) than they are like those of e.g. Twitter or Facebook, who have to care about things like "realtime demand-based geographic read-only partial replication of event streams."
  - ouid 9y ago
    I believe this based on a thing I think I read a long time ago, but isn't all of CL's tech focused solely on preventing any indexing of the site? It's no wonder they would keep it quiet.
    - derefr 9y ago
      I would like to believe this, but given the amount of spam that gets posted to CL—and given how well a sophisticated, heuristic anti-indexing WAF would block spambot request traffic as a simple side-effect—I find the idea a bit dubious.
      - jzawodn 9y ago
        Dubious indeed.
      - dismantlethesun 9y ago
        A lot of spam on CL isn't created by bots, but by human beings. As little as 3 years ago, I knew people who'd make job ads on elance asking someone to 'automate' their craigslist renewals and postings.
Animats 9y ago
How's Wales doing with Wikia? That was his attempt to monetize the Wikipedia concept. It ended up as a huge repository for fancruft. Does it make serious money?
- bostonvaulter2 9y ago
  Ugh, wikia has so many ads. Super annoying, especially when it's the only source of the content that you're interested in.
quickConclusion 9y ago
I often wish Facebook would have followed that approach. They made money very early with small ads on a lots of page views, did not need investors. But they went into the VC religion of revenue growth, took their money, then Wall Street money, and they cannot go back now because all employees and stockholders have been promised more. So more ads, more snooping on users, more worldwide control, we need to feed the beast. Zuckerberg could have continued managing it a-la Craigslist, and still make a few billion for himself. We would all feel much better about using FB.
- soperj 9y ago
  >more snooping on users It's Zuckerberg, that would have happened regardless.
- acdha 9y ago
  Facebook is at least successful at that: Twitter jeopardized their core business, took on huge operating costs, and is struggling to pay for it despite making what would otherwise have been a quite successful revenue stream.
ChuckMcM 9y ago
I found it useful that they could use spam as a signal for what to monetize. When doing Blekko (search engine) we noticed that spam was a solid indicator of the search categories that made the most money.
6502nerdface 9y ago
> At 64, Newmark has long said that he is not involved in management decisions at Craigslist, though he still continues to do customer service. I'm kind of curious what this means at a 50-person company. Is he still handling routine support tickets just for the love of it?
- mcherm 9y ago
  > Is he still handling routine support tickets just for the love of it? I've always understood that this is PRECISELY what he is doing. I hope it's true.
marcusjt 9y ago
The very first sentence of the article - "On March 1, 1995, fired off an email to his friends." - is not a valid sentence, it's missing the subject! facepalm
- marcusjt 9y ago
  Aha, I was viewing it at https://outline.com/xX7xe3 https://outline.com/xX7xe3 but in fact his name IS present and hyperlinked in the original article, so it's Outline.com that's at fault. UPDATE: I've reported the issue to Outline.com

256 points by sytelus 10y ago

ouid 9y ago

If Craigslist makes ~600M in profit, Why the hell is Forbes giving them a valuation of 3B? That's a Price to Earnings ratio of 5. That's not conservative, that's insane. Am I missing something?

debacle 9y ago
For companies that aren't going to eat the world, only exist on the network effect, and are happy in their space, a P/E of 5 is reasonable. How much would you pay to buy craigslist?
- wand3r 9y ago
  I assume they could effortlessly ramp to $1B if that estimate is semi-close. It would cost virtually nothing to add more paid markets and services; maybe allow the gravity algo to be tweaked. Figure very low costs for a site like that you could make your money back in 5-6 years; which is insane at that scale. I bet if they put it up for sale for $3B it would be sold by the end of the week
- eanzenberg 9y ago
  At least 10x their yearly profit? What other investment provides a consistent 10% yearly return on the scale we're talking about? At P/E ratio of 5, you literally just wait 5 years and you've just made as much as your initial investment.
  - AnimalMuppet 9y ago
    If you get five years before someone disrupts it. That's not a given.
    - accountyaccount 9y ago
      Given craigslist has been around for 20 years I think it's fair to assume they could take an upwards of 5 years to unseat. Even Myspace continues on to this day.
- ouid 9y ago
  A p/e of 5 is NOT reasonable. Has everyone gone mad? Blue chips run at about 20. Therefore I would pay 10B for craigslist in a heartbeat. I could probably even get a bank to loan me the money.
wand3r 9y ago
I think largely because they are estimates; I think Craigslist is likely worth way more given the ubiquitous nature, high margin, low costs and the decisions to not monetize everything. That said, IMO this article is not about Craigslist but a subtle advert for the 2 "competing firms" that are mentioned. I have seen an uptick in articles about Craigslist mentioning them and had never heard of them before. Potentially cynacism on my part.
- samclearman 9y ago
  Well spotted.
- ouid 9y ago
  I read the article and still haven't heard of them...
  - wand3r 9y ago
    I'm passed edit window; but Google: "craigslist" + "offerUp" You will see a lot of articles about how Craigslist makes money; is dangerous; potential revenue models; is going to finally get dethroned. The one that made me think a campaign to promote these 2 companies was about bad site design.
deleted 9y ago
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yeukhon 9y ago
If 600M is profit (not revenue), that's 400M short from 1B. That's not a bad valuation, also consider the user base is quite strong. Using both yield 3B is very conservative IMO. If you buy it for 3B, then you will get your investment worth in a couple years.
- ouid 9y ago
  they said "most of 690M is profit" in the article. I used bayes theorem to go through all of the numbers out of 690M that I would have said "most" for, and arrived at a guess of 600M. Even if it were the lower bound of values for which the word "most" technically applies that's still earnings of 345M. An 11% a year on an investment of 3 billion. That's still insane. CL revenue is not terribly speculative.
  - yeukhon 9y ago
    I am not much of an investment person, but 600M for a classified site is actually pretty impressive for an old, well-established company. If they are able to maintain a high profit with low operation cost, then buyer can project more earning in the future. There is no absolute Craigslist will always make 600M a year. They may lose 10M next year or go bankrupt in ten years. So for 3B for the ten-year forecast (I don't have the data) may not be all that insane. I'd say if 3B is insane, look at all the startups out there, valuation is 10x more and they barely make any profit.
    - ouid 9y ago
      I think you are assuming that I meant insane in the sense that this was not a conservative estimate. That's sort of what I said, but it's clear from context that I meant the opposite. This estimate seems far too conservative to even count as an estimate, more of a trivial lower bound.
      - yeukhon 9y ago
        Actually when I read it again it still sounded like you think the valuation is too high. I think this is because you instantly said insane after saying the valuation is 3B. That's how I read it "that 3B valuation? It's insane." It is hard to guess which sentiment was applied. But now you cleared up your opinion on this, I appreicate it. You were trying to say "3B valuation? Wow that's impressive!"
mrweasel 9y ago
Snap and Twitter both have valuation much higher than $3 billion and have zero profit. I would agree that the valuation seems high, but not compared to other tech companies.
- ouid 9y ago
  The valuation seems absurdly low.
- deleted 9y ago
  [deleted]

wand3r 9y ago

I was wondering how they got that number; basically they use a $690M revenue guess from a third party, apply a valuation multiple from eBay and then multiply by the 42% Newmark owns. Craigslist is unique; it isn't entirely profit driven and as far as Alexa 1000 sites; it might have stayed closest to it's original founding philosophy. I am not sure how they make money; iirc it was only a few select markets and select offerings like realestate. Costs are probably the lowest out of a site that size. Awesome product; seemingly great philosophy; Newmark was early but he was principled and to that Craigslist owes much of it's success

gwern 9y ago
> I was wondering how they got that number; basically they use a $690M revenue guess from a third party, apply a valuation multiple from eBay and then multiply by the 42% Newmark owns. It's not that dubious. The methodology is as simple and straightforward as it gets: > AIM's Zollman, who called his company's Craigslist revenue estimate "conservative," said the AIM Group counts up listings for each category in various markets and then multiplies that by the known fee associated with that listing. (Fees can range from $7 to $75 per posting, depending on location.)...As the founder of 3Taps, Kidd built an interface for programmers that pulled classifieds data from Craigslist and was able get an accurate picture of the total number of listings on the site. He published a 2011 white paper that pegged Craigslist's annual revenue at $300 million, a number he said has certainly risen as Craigslist has increased or rolled out more fees. This is hard to screw up, and if anything, counting listings ought to be a drastic underestimate - crawls of a hostile large high-turnover website will be incomplete, and Craigslist has other potential revenue sources like selling feed data to hedge funds or real estate or HR agencies. This makes it all very puzzling. As the quoted employee says: > "Eventually we realized we were making a lot of money and it was more than we needed to just cover costs," the employee said, noting at one point in the early 2000s Craigslist was making $40,000 a day on Bay Area jobs ads alone. "We could all do the math, and we'd wonder where all the money would go." So CL is making at a bare minimum $300 million a year by 2017, of which a large fraction is profit; the few employees say there are no major capital investments a la Amazon (and no one has ever pointed to major software or hardware investments attributed to Craigslist that I've ever seen), and you never hear of Craigslist billionaires or millionaires aside from Newmark, so the profit isn't simply being spent on datacenters or employee stock compensation; thus, around half would go to Newmark if it's distributed as dividends, so he could have an income of easily >$50m a year over the past 7 years after taxes or >$350m on top of whatever he earned before 2011 on that increasing revenue. The Craigslist Charitable Fund is disbursing $10m/year or less (and donations to that wouldn't be taxed), so that leaves >$300m (7 * 50-10). But Newmark claims to be worth much less than $400m total. So... where does it all go? It's hard to see how two different groups counting listings could be high by an order of magnitude, what Craigslist could be spending it on, or what Newmark is spending it on, unless he's making huge anonymous donations every year through other nonprofits (but why avoid his own CCF?) or simply lying (for privacy to avoid the attention or maintain his self-image, or just in order to make look bad "a fake market intelligence group who I won’t name").

madamelic 9y ago

I think they are doing it right. Just find a niche and work at it progressively through life. No need to raise $100M D Rounds, no need to have an explosive exit, whatever. I think it would be nice to just steadily have six figures, work on something I love and live life (a la Basecamp). Most of all: Have complete control of your destiny. No investors, no bosses, etc.

coldtea 9y ago
>Most of all: Have complete control of your destiny. No investors, no bosses, etc. Here's a useful guideline to add to what you said: unless some person makes way more than the Basecamp founders (e.g. through some unicorn deal or whatever) and enjoys the same freedom to shape their product, then they have absolutely no leg to stand on to criticize their model much less to sneer. I mean, some startup multi-millionaire/billionaire sneering at "lifestyle businesses" I can understand (though not agree with). But some ramen eating wannabe sneering at them, it's inane, since the majority don't end up nowhere near as succesful.
- draw_down 9y ago
  Ugh, I know! I hate it when broke people have opinions.
  - coldtea 9y ago
    Obviously my comment was not about not liking broke people having opinions. It was about not liking broke "wannabe startup billionaires" sneering on people with lifestyle businesses as if they somehow "failed".
    - Mz 9y ago
      Nonetheless, you are understanding of the sneering of the folks who are rich enough. Sneering is a bad habit no matter your income level. Justifying it for the rich while dismissing it for people who are broke remains an expression of classism, no matter how much you try to clarify your intent.

Fluid_Mechanics 9y ago

Great service for selling used electronics, renting out an apartment, or sucking a strange man's penis.

deleted 9y ago
[deleted]
nathanvanfleet 9y ago
I guess that explains your username.
softawre 9y ago
Or renting out a strange man's electrodong

brndn 9y ago

Why doesn't Craigslist have mobile apps?

mysterydip 9y ago
What for? The website is simple enough to render fine on mobile devices, and it avoids the whole app ecosystem and update issues.
dammitcoetzee 9y ago
Craigslist is one of the best pages on the internet. It's functional, it loads fast, it doesn't have a stack built of buzzwords and bullshit. It works on every device everywhere. I mean, what business does a page have being megabytes and megabytes if it's gonna display a couple bytes of text? None. It doesn't matter if it's "technically free" these days, that's just bad design and engineering.
- sytelus 9y ago
  Craiglist design actually sucks. When I first used it, the whole thing was almost revolting from design perspective. Where some people see simplicity, others see utter lack of modernity, friendliness and affordability. I still can't get some of my relative to use it (they ask me to post on their behalf!). Before you cite page counts, revenues and unique users, think about how many people are not using it despite the fact everyone has heard about it and everyone has a need to sell something on and off. Amazon UX is almost complete opposite of craiglist but is usable by much much wider audience.
  - ams6110 9y ago
    I like websites that don't change. I can come back to Craigslist once or twice a year, year after year, and it's exactly what I remembered. No hunting around, no discovering new gestures and behaviors. It's simple, obvious, and it for what it does, it works.
  - trowawee 9y ago
    I mean, we can't prove who "isn't" using it. We can prove that millions and millions of people are using it and seem to be content with it; we can provide anecdotal accounts (including by many people in this thread) that the simplicity and straightforwardness and consistency is what brings them back to the site. I can tell you that everyone I know looks at Craigslist when they're looking for apartments. But I get that you don't like it; I just think you need to acknowledge that's a preference, rather than an objective fact.

pkamb 9y ago

> 25. A Craigslist competitor. Craiglist is ambivalent about being a business. This is both a strength and a weakness. If you focus on the areas where it's a weakness, you may find there are better ways to solve some of the problems Craigslist solves. http://old.ycombinator.com/ideas.html http://old.ycombinator.com/ideas.html

sillysaurus3 9y ago
Remarkably prescient for 2008. 1. A cure for the disease of which the RIAA is a symptom. Something is broken when Sony and Universal are suing children. Actually, at least two things are broken: the software that file sharers use, and the record labels' business model. The current situation can't be the final answer. 8. Dating. Current dating sites are not the last word. Better ones will appear. But anyone who wants to start a dating startup has to answer two questions: in addition to the usual question about how you're going to approach dating differently, you have to answer the even more important question of how to overcome the huge chicken and egg problem every dating site faces. A site like Reddit is interesting when there are only 20 users. But no one wants to use a dating site with only 20 users—which of course becomes a self-perpetuating problem. So if you want to do a dating startup, don't focus on the novel take on dating that you're going to offer. That's the easy half. Focus on novel ways to get around the chicken and egg problem. Tinder launched in 2012. 17. New payment methods. There are almost certainly things whose growth is held back because there's no way to charge for them. Bitcoin.
- placeybordeaux 9y ago
  w.r.t bitcoin being the new payment method, so far bitcoin hasn't enabled the really game changing thing: frictionless micropayments. It's possible that lighting networks will enable this (load up your browser with 5 bucks and lock that up in a connection to the LN, pay for articles then pay 1 cent to skip ads, buy premium features one at a time etc), but we haven't seen this yet.
  - DINKDINK 9y ago
    >we haven't seen [frictionless micropayments from the lighting network] yet. You post should be corected: Frictionless micropayments are already running on the lighting network, are already operational: https://www.youtube.com/watch?v=baHHMNA8yf4 https://www.youtube.com/watch?v=baHHMNA8yf4

iamatworknow 9y ago

>It also charges fees to list postings in categories including ... automobiles offered by dealers This was a huge thing in my industry. I work with a lot of independent car dealers that used to list everything on their lots with Craigslist, then they started charging the dealers $5 a pop and many of them just quit using it. There are too many other car listing sites out there now that offer more than just an ad (vehicle reports like Carfax, market trends, valuation, et cetera), so Craigslist just wasn't worth the cost to them.

coredog64 9y ago
I'm happier for it, as otherwise you wind up with garbage ads from the smaller lots. For example, they'll list the monthly payment instead of the price, which makes wading through 'sort by increasing price' a PITA. Or they'll put a bunch of SEO keywords into the ad such that their vehicle shows up on a search that it shouldn't.
- Declanomous 9y ago
  Not to mention the places that post the same ad every day or even more frequently. Hmm, I'm interested in a Subaru. (I search Subaru) 500 listings of the same BMW x5 come up. Nevermind, let's see what Hondas are on the market. 500 listings of the same BMW x5 come up. I throw my computer out the window.
  - Neliquat 9y ago
    Yup, if i search for 'honda' i have to throw in '-nissan -ford -financing -credit' or some abomination to actually get results, and flag whats left.
- iamatworknow 9y ago
  Yeah, I do understand that. But to comment on one point: >For example, they'll list the monthly payment instead of the price, which makes wading through 'sort by increasing price' a PITA. Every conference I've been to about the auto industry the experts say that, especially for low-income individuals, the monthly payment is what customers tend to be the most concerned about. In fact, many prefer to pay more total money over a longer term if it means a lower monthly payment.

miguelrochefort 9y ago

Craigslist has one of the worst UX. How come has it not been improved in years? Why doesn't Craigslist get any competition? It should be trivial to implement something that's 10 times better...

bluedino 9y ago
What's wrong with the UI? If I could change one thing about craiglist it would be the junk/scammers. Competition for craigslist is hard because of network effects.
- rkho 9y ago
  The comment you responded to specifically mentioned UX, not UI. Junk and scammers are definitely part of the UX.
  - WWKong 9y ago
    What isn't?
    - rkho 9y ago
      I can't think of anything at this exact moment that does not contribute to UX. My response was regarding the assumption that the parent comment of mine equating UI with UX.
trowawee 9y ago
Counterpoint: their UX works perfectly well for them (see: $690m in revenue) and any proposed overhaul would carry potentially disastrous costs (see: Digg's site-killing redesign). Redesigning for the sake of change is not inherently good. Also, on a personal level, I've come to appreciate CL's design, and I very much appreciate its consistency. I don't use CL all the time - I go to it sometimes for things like furniture I know I can't get too attached to, or rental listings. It took a little time investment maybe 15 years ago to learn how the site worked, but once you know how it works, it's fairly easy to navigate, and they have never required me to relearn the site, no matter how long I go without using it. There's serious value in that. Add in the network effect that's killing the new apps trying to challenge it and you have a behemoth.

ry_ry 9y ago

Craigslist is ubiquitous in its niche, but i never really engaged with it beyond having a laugh at the occasional Craigslist meme post that worked it's way into the internet at large. At the same time, for years now I've been banging on to any of my industry friends about how global social networks are an internet anachronism and that local networks are the future. It's only just dawned on me that my misplaced futurism was simply describing a very successful long term business. A billion dollars later, it turns out Craigslist isn't niche at all - my thinking was.

djsumdog 9y ago

I remember looking up this exact question a few days ago. I really prefer to sell things like used electronics on Craigslist over eBay. I really like their business model too. They made enough to keep going, but not enough that they aspire to take over everything. It's a really simple concept, and there are very few business ideas that can pull it off.

harlanji 9y ago
> It's a really simple concept, and there are very few business ideas that can pull it off. The vast majority of businesses bootstrap themselves. Not on HN of course :)
- derefr 9y ago
  I think the GP was right—there are very few business ideas that can pull off bootstrapping. The space of business ideas executable with funding is a superset of (and probably much larger than) the space of business ideas executable without funding. Also, most of the ideas you can only execute with funding are such because they'll never make any money. ;) The majority of all successful businesses, meanwhile, operate off a very small sub-space of the space of all business ideas. The part of the space called "workable business models." I'd agree that if you look at the space of workable business models, probably the majority of them are either bootstrap-friendly, or common and low-risk enough that regular consumer banks are willing to finance them with debt-capital (i.e. "business loans".)
easilyBored 9y ago
Craig probably did some math and found out that even if he lives to 800 years old, he will not be able to spend it all so why go nuts? This way everything is manageable and he doesn't need to report to anyone.
- accountyaccount 9y ago
  I'm surprised that more successful people don't do this? Is the drive that lead them to absurd success what leads them to continue well beyond needing to? I find it hard to imagine hitting $10 million and not just dropping everything and spending the rest of my life on random hobbies and traveling. Maybe that's why I don't have $10 million?

deleted 9y ago

[deleted]

pascalxus 9y ago

just look at how successful a business that is, so simple, so little innovation and yet so much revenue. But despite all that, they have the best feature (X factor) in the wolrd: market timing. ohhh what i wouldn't do, to time travel back to 1995.

ptr_void 9y ago
If you are going back, just buying stocks and sitting back would be easier than building a business. Almost guaranteed to be the richest person by 2017.
jzawodn 9y ago
What's innovation have to do with it? Sounds like someone has convinced you that things have to work a certain way and you've found your first counter example...
- pascalxus 9y ago
  It's a broadly held belief by many. It's good to look at craigslist to see how simple solutions are all that's necessary. Any yet, too frequently, we see companies spending soooo much money on useless features and so called innovations that don't help them solve their problem. This happens for both failing companies and very successful ones too. It can be difficult to isolate, exactly why something works, when you have so many confounding factors.
- pascalxus 9y ago
  Actually, this day an age where all the simple problems have been solved, we're especially susceptible to this line of thinking. As entrepreneurs, we all know the saying: "It has to be x10 better than the existing product". Without new problems to solve, increasing desperation mounts, culminating lots of failures where a product is supposed to be x10 better.

troncheadle 9y ago

Forbes is unequivocally the worst website I have the displeasure of being linked to on a regular basis. Readability is quickly approaching 0. This page kept hijacking my scroll thru the article to keep an ad at the top of my window. Horrible, horrible, horrible.

metaphor 9y ago
I honestly don't even bother anymore: https://outline.com/xX7xe3 https://outline.com/xX7xe3
- Amygaz 9y ago
  Nice! I didn't know that. Thanks!
  - metaphor 9y ago
    First time I encountered the service was while sitting on the pooper reading a NYT article that was linked using Outline's service. Realized something was amiss while I was wiping my ass and realized that I hadn't seen a single ad in the entire story. True story.
    - throwaway10199 9y ago
      https://mobile.twitter.com/UseOutline/status/864364794417000448 https://mobile.twitter.com/UseOutline/status/864364794417000...
- circadiam 9y ago
  Pro-tip: Add outline.com/ to the front of the article's URL. Much faster and works nicely on mobile.
  - intrasight 9y ago
    Thank you!
- 9y ago

reducesuffering 9y ago

Craiglist, because of its age, is interestingly built on Perl[1] and four years ago brought on Perl's founder, Larry Wall.[2] [1] https://www.craigslist.org/about/thanks https://www.craigslist.org/about/thanks (CL tech stack) [2] http://blog.craigslist.org/2013/10/15/artist-formerly-known/ http://blog.craigslist.org/2013/10/15/artist-formerly-known/

derefr 9y ago
Craigslist are so quiet about their tech; I'm surprised there's even that much. I'd love to hear their opinions on operating some of those things at scale, given that their problems are likely much more like those of the average CRUD-y SaaS business (scaled up) than they are like those of e.g. Twitter or Facebook, who have to care about things like "realtime demand-based geographic read-only partial replication of event streams."
- ouid 9y ago
  I believe this based on a thing I think I read a long time ago, but isn't all of CL's tech focused solely on preventing any indexing of the site? It's no wonder they would keep it quiet.
  - derefr 9y ago
    I would like to believe this, but given the amount of spam that gets posted to CL—and given how well a sophisticated, heuristic anti-indexing WAF would block spambot request traffic as a simple side-effect—I find the idea a bit dubious.
    - jzawodn 9y ago
      Dubious indeed.
    - dismantlethesun 9y ago
      A lot of spam on CL isn't created by bots, but by human beings. As little as 3 years ago, I knew people who'd make job ads on elance asking someone to 'automate' their craigslist renewals and postings.

Animats 9y ago

How's Wales doing with Wikia? That was his attempt to monetize the Wikipedia concept. It ended up as a huge repository for fancruft. Does it make serious money?

bostonvaulter2 9y ago
Ugh, wikia has so many ads. Super annoying, especially when it's the only source of the content that you're interested in.

quickConclusion 9y ago

I often wish Facebook would have followed that approach. They made money very early with small ads on a lots of page views, did not need investors. But they went into the VC religion of revenue growth, took their money, then Wall Street money, and they cannot go back now because all employees and stockholders have been promised more. So more ads, more snooping on users, more worldwide control, we need to feed the beast. Zuckerberg could have continued managing it a-la Craigslist, and still make a few billion for himself. We would all feel much better about using FB.

soperj 9y ago
>more snooping on users It's Zuckerberg, that would have happened regardless.
acdha 9y ago
Facebook is at least successful at that: Twitter jeopardized their core business, took on huge operating costs, and is struggling to pay for it despite making what would otherwise have been a quite successful revenue stream.

ChuckMcM 9y ago

I found it useful that they could use spam as a signal for what to monetize. When doing Blekko (search engine) we noticed that spam was a solid indicator of the search categories that made the most money.

6502nerdface 9y ago

> At 64, Newmark has long said that he is not involved in management decisions at Craigslist, though he still continues to do customer service. I'm kind of curious what this means at a 50-person company. Is he still handling routine support tickets just for the love of it?

mcherm 9y ago
> Is he still handling routine support tickets just for the love of it? I've always understood that this is PRECISELY what he is doing. I hope it's true.

marcusjt 9y ago

The very first sentence of the article - "On March 1, 1995, fired off an email to his friends." - is not a valid sentence, it's missing the subject! facepalm

marcusjt 9y ago
Aha, I was viewing it at https://outline.com/xX7xe3 https://outline.com/xX7xe3 but in fact his name IS present and hyperlinked in the original article, so it's Outline.com that's at fault. UPDATE: I've reported the issue to Outline.com