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Teen Trades up on Craigslist from Phone to Porsche in 2 Years
- makeramen 16y agoReminds me of my pokemon card days in elementary school. I started with ~5 cards a friend gave me and somehow traded up to a deck of 400-500 with a decent amount of holographics too. The only time I ever bought cards were a couple booster packs, but that was after I already had 200 some. Good times. The art of trading comes from knowing that value is relative, you just need to find the people who want what you have more than others.
- lkozma 16y agoIs that what is called arbitrage ?
- SkyMarshal 16y agoNot exactly. Arbitrage is exploiting mispricings of the same item in different markets. For example, say you buy an iPhone from Craigslist for $100, then turn around and sell it on Ebay for $150, netting you $50. Or conversely, you get an iPhone for your birthday for free, sell it on Ebay for $150, then buy a second one from Craigslist for $100, netting you an iPhone+$50. That's arbitrage. It sounds like makeramen's Pokemon trading all happened in basically the same elementary school market.
- electromagnetic 16y agoIt's certainly the same market, however it's still hardly a level playing field. There's social niches, even in elementary schools, that people generally avoid drifting out of, however a nomad can drift between these niches and exploit mispricings in an individual market. It's not so much changing market, but being a supplier who looks for clients who haven't met the other suppliers in the market. It wouldn't be arbitrage, but it would be a nice way of exploiting newbies in a market. Sort of how Bestbuy profiteers off of having a well recognized names whilst being far off from having the best prices (I bought a surge protector the other day that they were selling for $20 more than the place across the street, I was smart enough to bring the other stores flyer and got 10% off extra).
- sigstoat 16y agodepends on what you consider to be the market(s). the north and south sides of the playground might have rather different valuations of a card. if you can realize that and safely transport your goods that distance, you've got an opportunity.
- SkyMarshal 16y agoI guess that when I think of kids trading cards like Pokemon or Baseball cards, I envision kids from different social strata all religiously reading the Pokemon websites and having a similar idea of the value of the cards. But having done no card trading of any kind myself, I wouldn't really know, that's just an assumption based on a few observations and anecdotal evidence.
- eru 16y ago> Arbitrage is exploiting mispricings of the same item in different markets. There seem to be narrower and wider definitions of arbitrage. Some narrow definitions require arbitrage to be risk-free. Some wider definition accommodate things like statistical arbitrage (http://en.wikipedia.org/wiki/Statistical_arbitrage http://en.wikipedia.org/wiki/Statistical_arbitrage), which is far from certain and doesn't even use the same items, but just items with correlated prices.
- SkyMarshal 16y agoTrue. A broader definition is probably 'exploiting price differentials of correlated assets'. Market is irrelevant, and both 'same item' and 'different but correlated items' are both subsets. And 'mispricing' presumes there's a true value, which may or may not be case.
- eru 16y agoMy personal definitions are backwards from that: I just define `mispricing' as anything that allows arbitrage. (Especially risk-less arbitrage. But you can -- in theory -- make almost all arbitrage as risk-less as you want, with the right derivatives.)
- maukdaddy 16y agoTrue arbitrage has to be riskless.
- johnnyg 16y agoIt was alarming to read that people tell him he is a con artist. He's a good businessman.
- InclinedPlane 16y agoHe's a businessman, but whether or not he's good is a question for debate. Most people working the same hours have a higher income. Do the math, if the Porsche trade represents all of his "income" from bartering he made $3.6 an hour, if it represents half of his income then he made minimum wage. It's interesting, and somewhat novel, but hardly astounding or terribly impressive.
- KingOfB 16y agoThe drive is incredibly impressive. The kids 17! You can use math to water down time spent to gain any result: Kid plays quake through middle school to determine he wants to learn computers so he tinkers 6 hours a day through high school. Then goes to college and spends another 8-10 hours a day working on school for 4 more years, then he works for 3 years to save up enough money to buy a porche in cache. Hah, nice spelling mistake. Back to fixing this bug in my cache.
- Unseelie 16y agoHe's demonstrated being a pretty poor businessman. He's traded down, knowingly, on multiple occasions, and furthermore declined trades of businesses, which generate income, for cars, which depreciate.
- zach 16y agoOn the contrary. This article is great personal marketing -- who can deny the hook of "from phone to Porsche?" He gets a great anecdote and branding angle for the rest of his life. I'd say the lifetime value of appearing in this article is easily worth the trading down. And besides, we can't necessarily exclude the possibility that he negotiated a little cashish on the side while trading down.
- 16y ago
- noelchurchill 16y agoHe spends five to six hours a day on his i-Phone scouring the website for good deals.
- zokier 16y agoThat sounds kinda crazy. 5-6 hours daily for two years could have easily earned him money to buy a Porsche, for cold cash.
- noelchurchill 16y agoThat's what I thought. But I doubt he actually spends that much dedicated time. Rather he's probably multi-tasking, checking in periodically over the course of 5-6 hours. I bet he's mastered some important negotiating skills.
- SwellJoe 16y agoYes, for a kid, this was probably an extremely valuable use of his time, and he seems to have had fun doing it. He probably learned more than he would have working a retail or service job, even if he made less money per hour. My parents are antique dealers, and my grandmother was a junk dealer who owned a thrift store. I grew up going to flea markets and garage sales, and my first business was started when I was twelve (I bought broken Commodore 64s, Apples, and TIs, among others, at garage sales and flea markets, fixed them, and sold them for four to eight times what I paid for them). I worked at my parents store and in their booths at flea markets throughout high school. I'm a ridiculously good salesperson when it comes to interacting directly with a customer, and people are often amazed when they see me in that context because I'm an introvert in nearly every other situation. In short, having the ability to buy/sell/trade your way up from nothing is an incredibly useful skill, and it can make it possible to weather bad luck in other aspects of life.
- eru 16y agoPerhaps it would have been even better for the guy, if he had traded in person?
- travisro 16y agoI wonder if he has each trade he made published somewhere. It would be interesting to see the exact progression trade-by-trade.
- turnersauce 16y agoThis guy went from a paperclip to a house: http://www.oneredpaperclip.com/about/ http://www.oneredpaperclip.com/about/. A couple of my friends actually got a barbecue from him off of Craigslist. Sadly, I think the transaction only involved money.
- jbail 16y agoThat it only took 14 trades to go from phone to Porsche is most impressive. He's gonna have an awesome last year of high school with that ride. Wonder what his insurance costs?
- noahc 16y agoInsurance rates, while higher because of type of car and age, shouldn't be too absurd. Even if he wrecks the thing, the company is only out ~9,000 or so.
- jonknee 16y ago> Even if he wrecks the thing, the company is only out ~9,000 or so. Car insurance isn't expensive because cars are expensive, but because people are expensive. You can hurt a lot of people in a fast car, even if it's not expensive.
- HeyLaughingBoy 16y agoI beg to differ. Collision/comprehensive on a sports car isn't the expensive part, liability is. Totalling the car may only cost the insurer $9k, but an accident can cost $100k+ Male, under 25, driving a used old sports car? Been there, done that, paid the insurance...and it wasn't fun!!
- replicatorblog 16y agoI feel like this is a YC start up in the making. AirBNB = Couchsurfing/Craigslist rentals Daily Booth = The "Pic a Day" meme Along those lines a startup where people can trade their "junk" in a slightly competitive aspirational way. A more social eBay, based around local and some competitive game mechanics that reward big scores.
- nhebb 16y agoNotifyWire automates Craiglist monitoring. I don't know if it would help the barter system, though, since that relies on judging each trade opportunity.
- euroclydon 16y agoI'm sure NotifyWire violates CL's terms of service.
- dpatru 16y agoOne of the points that Charlie Munger makes in his talk on worldly wisdom (http://ycombinator.com/munger.html http://ycombinator.com/munger.html) is that good investors tend to bet heavily when the odds are grossly in their favor and not bet at all the rest of the time. The teen in this story illustrates how consistent application of this principle yields good results. This is also how Paul Graham operates YCombinator: he carefully evaluates all the investment opportunities that come his way and only bets on the few that seem to him to be particularly good deals. More generally, the key to highly profitable business seems to be to focus on servicing profitable customers.
- jacoblyles 16y agoYCombinator's strategy is better described by Nassim Taleb's "Extremistan" parable. In Extremistan, most of your gains from stock investing happen from the few investments that make you a lot of money. So it's wise to distribute your investments over a large number of small investments, counting on the fact that your winners cover your expenses for your losers. This is the opposite of the small number of large investment strategy.
- dpatru 16y agoRelative to the amount of opportunity it has, YC is very selective. According to Business Week, YC's acceptance rate is 4.4% (1). For comparison, Harvard's rate is 6.9% (2). I'm just realizing that besides launching early, working hard, iterating rapidly, listening to your customers, persevering, etc, a big part of success in business seems to be selection: having the discipline and patience to pick the best deals. Deals can involve physical trades (as in the posted article), investments, customers, or even tasks to do. Whatever your process is, a good way to make your outputs above average is to select above-average inputs. It seems obvious that the way to trade up from a phone to a Porsche is to carefully select your trades. It's not so obvious, at least to me, that the way to run a very profitable YCombinator is to carefully select your founders. Simple selection may be more important than locating in Silicon Valley, having regular dinners with great speakers, offering legal and technical help, and introducing investors. When you start off with great entrepreneurs it's not so hard to make them even better. I'm naturally a believer in transformation. * If the trade as advertised is not a good deal, let's negotiate and we'll make it work. * If a person is not a good entrepreneur, that can be fixed with the right training program and environment. * If the product is not right for this customer, we'll add features and cut the price until it is right. * If a person has the wrong political beliefs, what is needed is some good logical argument. This sometimes works, but it is often more efficient to simply look for a better deal: Find someone with a better trade; find someone who's more entrepreneurial, find a customer with more of a need, find a voter who already agrees with you. 1. http://www.businessweek.com/smallbiz/content/sep2007/sb20070926_620433_page_2.htm http://www.businessweek.com/smallbiz/content/sep2007/sb20070.... 2. http://www.thecrimson.com/article/2010/3/31/financial-aid-percent-students/ http://www.thecrimson.com/article/2010/3/31/financial-aid-pe...
- jaytee_clone 16y agoFive hours a day at $10/hr for two years could have earned him $30,000 (5x10x600, i'm sure he was bartering during weekends too) His car only worths $15,000.
- eru 16y agoThe article estimates his current car (the Porsche) to be worth $9,000. (By the way, I always thought a Porsche would cost more, even used. Hey, I may get myself one for this price.) We also don't know what other trades he has made during this time. Judging by the description in the article, he seems to be quite prolific, and has probably also made some money with refurbishing electric gadgets and so on. And we also learned that he still worked at a sushi bar (but lost the job at some point in time). So he has quite a lucrative hobby, but still did a day job.
- blizkreeg 16y agoPorsche's seem to depreciate in price pretty rapidly. I was surprised to find that my used 98 Boxster is now worth only 9k. Bad investment, these cars. And I bought mine used for less than the price of a new Accord. But fun rides!
- brc 16y agoThe only cars which are investment grade cannot be driven, and you've got to be an absolute expert to make money on them - like an art expert, knowing what will be in demand in the future. No car is an investment, unless you're making money from driving it, ie a limo or rental car. Porsches have some of the best depreciation resistance in the business, but even they can't resist the pull of gravity that comes with use, and the inevitable production of newer, better models. A pristine, low mileage used Porsche is a good buy, a well-used cheap model is best avoided and admired from a distance.
- ryanelkins 16y agoYour 98 Boxster is 12 years old. They cost about $60k brand new. Holding 15% of it's value over that time isn't too bad, considering you're down to about 55-60% original value in the first year alone. You're probably at 30-35% after 3 years. Not that I'm complaining - I picked up a 97 back in 2004 for about $13k (when I worked at a car dealership), drive it for 2 years, and sold it for $14k. What's nice about the Porsche was that a 97 looked just like a 2006 since they rarely change their body styles. I did have to replace 2 tires though which was like $500. Not cheap to own, but plenty of fun to drive.
- eru 16y agoIt would be interesting to read about all the counter parties to the swaps. Are they still happy with their trades?
- brc 16y agoI read the article, trying to find what he traded for the upkeep and insurance on a 10 year old Porsche. Unsurprisingly, he's going to sell it (trade it?) soon. There's a reason why old sports cars seem to cost so little : it's because they'll cost their purchase price again in a few years in maintenance. They have expensive engines, expensive tyres, expensive suspension, expensive interiors. Plus, they get bought by people who like to drive fast and so wear out quicker. And, largely, they aren't servicable by the home mechanic. Consdier the Boxster in the article - you have to have a hoist just to even look at the engine- there's no engine cover or user-accesible access panel. While a used Porsche is probably the best of a bad bunch of old sports cars (Corvette excepted, to a point) they are only for the person who really knows what they are doing. There's a reason many Ferraris don't ever get past 12,000 miles or so : because they need servicing all the time, and that servicing costs a bomb. In some cases you have to remove the engine for relatively routine jobs like changing a clutch, spark plugs or a water pump, and that costs serious money. Anyone thinking of buying a 'cheap' sports car should watch one of the many 'Top Gear' episodes where they purchase a cheap sports car from the classifieds/internet and then try and drive them a certain distance, outperform a standard Honda, etc. That should put your dreams on hold for a bit.