Slashdot Mirror
Craigslist Eyed for Possible Future IPO
An anonymous reader writes "Eric Hellweg wonders if everyone's favorite want-ad site will join the ranks of eBay, Amazon, Yahoo, and, yes, Google. Hellweg guesses it makes $25 million a year by charging for only 12 percent of its ads. If it ramped up payments on more ads throughout its many-city network, it could hit $100 million. That's a monster margin for a 14-person staff! And they may even consider going public."
They'll eventually buy out Tomshardware if this falls through...
When you're raking in that much cash, why go public and turn over control of your company to shareholders? If you just want cash, sell the whole company.
ON DELETE CASCADE
Or is Craigs List the ghetto of the internet? It's always appeared to be fairly trashy to me with it's ugly ameturish interface and rampant crappy advertising.
AccountKiller
Craig's List was great because it spread by word of mouth. The community had accurate ads for good values. Also, every user I ever heard of, on either side of any transaction, was encountered almost like a "friend I hadn'y yet met". That kind of transitive trust within the community will be exploited, and destroyed, by the IPO frenzy. If there's even any left now that it's been front page news on Slashdot.
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make install -not war
The place geeks go to get laid.
It's precisely the ads that no one would bother to post if they had to pay which are the reasons I read craigslist.
Sometimes advertisers charge a fee to raise the bar to keep quality up -- like a coffeeshop requiring a dollar tip to the waiter to post a flyer, to keep the place from being plastered in Christian rants. With some forums, it's exactly the opposite, if you charge the good stuff leaves. For example, if I couldn't set my viewing level to -1, I'd miss the good stuff on slashdot.
It seems OK to continue to charge the SF area though. Those people basically pay to breathe, if they are dumb enough to keep paying California taxes and cost of living, they might as well subsidize one of my favorite websites too.
The thing is, as a business owner, why would I want to dilute my investment in a business by going IPO? Wouldn't I want all the profits for myself? And, did everyone forget that the purpose of owning a business is to make money by profit, rather than making money through share trading?
IPOs are pointless if you're already a massively profitable business and if you don't need anymore investment in your business. You *MIGHT* gain some return by going public, but that's not going to be likely in todays market...
No seriously... what capital projects could they be planning that they would need an equity offer for? If the company is generating ~$2M/employee right now, I am willing to assume that they are making a fine profit and should be able to present a strong enough balance sheet to either get loans or simply pay for a reasonably-sized project without any debt or equtiy.
At least with google there's a scale issue as they add more features/services and attempt to attract a larger userbase. Is Craigslist moving toward doing the same?
As someone who used craigslist when it was a (gasp) email list, and also lived on the same block as the cl headquarters for 3 years in SF, this article is utter nonsense.
The whole point of craigslist is the micro-personal connection of real people, in close physical proxmity, buying & selling stuff. I've known a great many people who've purchased, sold, and gave away: airline vouchers, couches, desks, etc...
Even while living in SF during the dot com boom and bust, I know virtually nobody who ever got a job off of craigslist. Further, nobody in their right mind would use craigslist to find a home to purchase...
Oh - and back to the basics - craigslist expands thru word of mouth. How do you suppose they would charge for any of the garbage this tech-moron suggests? A great feature of cl is that you can include html in your posts - good posters often do, and include images, formatting etc... design resumes often include good css styles, images, and look pretty darn sweet - try that on hotjobs!
So, this guy thinks that without additional cost/strain/staff they're going to just quadruple his totally BS estimate of their revenue?
Why would they want to go public anyhow? With only 14 staff, and no reason to buy-out other companies or invest in serious R&D, does it ever come to mind that a businessperson with a small company making serious $$$ might just want to keep it that way?
Hellweg guesses it makes $25 million a year by charging for only 12 percent of its ads. If it ramped up payments on more ads throughout its many-city network, it could hit $100 million.
Hellweg needs to go back to school and learn arithmetic.
Lets start with Yahoo. How do geeks and nerds see Yahoo? A wealth of information? Or just a pile ads with some search results in the middle?
Google? Well, I have noticed as well as others have the current search results have not been as good as before.
It seems that greed and advertising always tarnishes everything it touches. It will be interesting to see what the 14 staff memebers of CL.com decide to do with their up and coming fame.
Good luck.
Useless sig.
In an IPO, you are selling your whole company, to the public (that's the "P"). Except for any part you hold back. And you can sell that later, while all the equity is price inflated by the IPO hype^Wadvertising. Sounds like a better deal than just selling the keys to the building to one private buyer.
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make install -not war
throw craigslist down the crapper.
in memory of Bill Hicks
Money, is that all it is for you people!
You have obviously never actually lived in SF, Anonymous freeloader Coward, and are parroting some kind of rightwing "antitax" propaganda against California. I lived there in the last "recession", and it was easy to live well on the cheap. And I never noticed the taxes pinching me that hard, despite the much higher earning power of geeks there - not to mention the better stuff to spend it on. Oh, and the air they breathe (for free) is better than yours, too, unless you're posting from a Pacific island.
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make install -not war
want an ipo. Lets say Craiglist is making 25 million a year in profit and they file for an ipo. So what will the market capitalization of the company? Most likely some where between 250 million (p/e of 10) to 2.5 billion (100 p/e which is about yahoo p/e ratio) depending on how fast people will think your revenue will grow. By ipoing you can get the next 10 years of profits now. There are tons of details (ie founders have limits on how fast they can dump stock) but effectively you can get the next 10 years of profits now and the best part is you don't have to work for the next 10 years.
Personally I think they will have problems charging for a lot of thier services. The reason people use CL personals is because they are free not because it is a great service. Same thing for a lot of other categories where people are trying to get rid of junk
BTW It is the VC which prcess really founder equity more thab ip process.
What the fuck is up with people spelling "article" as "artical"? Jesus Christ. Learn to spell simple words.
Websites with people names in them just kind of fail in the long run... I mean, kids have their own websites with names like "Billy's Site" and they just don't have that "appeal" to em...
Zing!
Craig Newmark is an awesome human being. Check out his blog. He's not only an open-source software user (SuSE on a Thinkpad T40) and the creator of the largest and most useful (and OSS-based) community bulletin board in the world, but also a progressive Democrat and all-around humanitarian.
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Comment removed based on user account deletion
The article is a speculation about what might or would happen if Craigslist did go public. The Craislist CEO points out that, "We have no plans to go public." So, I'll be really disappointed if people post things claiming the Craigslist is selling out, because that would mean that you didn't RTFA.
If you made $25 million last year, you wouldn't have to work for the next 10 years anyway.
I guess you didn't read the article, because the founders don't want to go public. In fact the CEO says, "We have no plans to go public." The only one who seems to want an IPO is the author of the article.
I really hope they don't IPO. I use craig's list at work quite often to get rid of ancient "enterprise" grade hardware we get stuck with. Stuff that the local PC recyclers want to charge us for (can't blame em, its huge!), and the local scrap metal yards won't come pick up. Craig's list is a killer way to find local geeks, who will take the gear, use what they can, and dispose of the rest. Don't clutter this up with ads, it usually works better than Usenet too.
When encryption is outlawed, ou++1!@(93j++js-d9298yIUH(*Y24JKB!~
Well Craigslist finally made it to Indianapolis, and it sucks. The only buy/sell ads listed are SPAM. Perhaps this could change in 5 years, but doubtful.
I use CL NYC quite religiously, found my apartment, couch, vacuum, and even a few surprisingly good dates there (no really). I've surfed it daily, and placed one or two ads, never once have I seen a paid advertisement or been asked for money. There's a lot of gak to sort through, but you can find what you need if you search right. So... how are they making 25 mil a year?
If all the world's a stage, who's buying tickets?
never drink kool-aid from a big vat
Not to mention that there is a lot of competition on the internet.
http://www.traderat.com
http://www.mjmls.com
I personally like tradeRat.com, because it allows me to list my garage sales and sell within my neighborhood, saving me shipping $$$.
Why is it news when a stupid columnist points out the obvious? Yeah yeah, the craigslist people could make a lot of money if they chose to exploit their site as much as they could. But they've shown no interest in doing so. If that every changes, then we'll have a news item.
I found the article very speculative and high-floating. "They will may make this much if this and that, the future may be very bright but then again who knows" and so on. I actually got the impression the author bought some stock, got cold feet and is looking to off it at a higher price - but now I am speculating.
I do understand the "they could make a ton of money by charging" theses, but then again Slashdot would automatically make trillions if they made it for-paying-members-ONLY and charged $100 for a membership. Or.. would they?
9/11: Never forget it was a false-flag operation
This is a big contrast to the traditional purpose of an IPO: raise a lot of capital to finance some business need.
This seems like an interesting new approach.
Craigslist has pretty much made moving to a new city bearable, and I didn't have to put up with the commericial bullshit on other sites. If Craigslist dies (which it would were this to happen), I would be willing to invest my time in creating a new non-commercial craigslist-ian type site so I could give back what it gave to me.
I'm not kidding either, I got my current job through Craigslist and my apartment. I didn't get any responses from any of the crappy commercial job posting sites and the apartment results sucked from other sites.
Anyone willing to make a new craigslist when (it's only a matter of time, let's be realistic) craigslist either dies or kills itself (IPO).
I dunno about anyone else, but I got pretty worried when they expanded to new cities, I figured the more exposure it got, the chances of it becoming commercial became greater and greater.
If you lived in the Bay Area, you would have. People here find their apartments, their jobs, their furniture, their cars, and their girlfriends/boyfriends on Craigslist. I think it's popular in some other cities in the US, but it's almost essential here.
No. You are alone--utterly alone--in that opinion. You read Slashdot, right? Craigslist is kind of like that, except it's about everything in the real world. The ordinary world. Vacuums. Couches. Dates. Tables. Friends. Sometimes, contract jobs. Rarely, housing. To put it in the abstract, Craigslist is about creating human-centric local area networks, and it exceeds at that task. There. Now you've heard of it, and you didn't have to click any of those links.
Hope is what you say and do.
"drives a Ferrari" ...
Where the hell did that come from?
Why is there no link to the craigslist website? Neither in the cnn article, nor the slashdot summary. I had to guess that it was probably something like craigslist.com, which redirected me to craigslist.org..
Really fucking bad reporting, guys!
So why does he vote to limit the ability of others to be generous with _their_ own money?
I thought it died with the dot-com boom, along with SFgirl.com.
Dude, he lives in San Francisco, where Dianne Feinstein is a right-winger, and the Republican Party is 5 guys hanging around George Shultz's living room. It doesn't matter how he votes.
We charge employers $75 to post a job ad in San Francisco, and $25 in LA and NYC. In fact, we only started charging for NYC and LA this past week. Every day, there are hundreds of job ads just in San Francisco. It's a (very) decent chunk of change. Sean @ CL
"Stars and Stripes Forever would work well, don't you think?"
If this IPO goes through? It'll be "Bring in the Clowns".
what craigslist ads do you pay for?
Or am I just on the A-list no-pay-filter and don't even know it?
So, they get $250 Million cash. What do they do with it? If they are lucky they can invest it in shares that returns a steady $25M pa ... i.e. what they started with. At the same time, they have dipped out on the opportunity to grow the company from one that returns $25M pa to a $250M or $2.5B pa.
This might make sense if they thought that the long-term growth and profit prospects were poor. However, the fact that the VC's are sniffing around is indicative that prospects for growth in particular are actually pretty good.
If they simply wanted to get out of the grind, they could hand over management responsibility to someone else ... like Bill Gates has done. If they get a good CEO, the money will roll in regardless. AND, the CEO won't have to keep looking over his shoulder at the stock price. Which will be more conducive to a sound long-term strategy.
BTW It is the VC which prcess really founder equity more thab ip process.
Sorry, I can't parse that.
Ohhh... a nice chunk of change indeed! Well congratulations on money well earned and thank you for a great service!
never drink kool-aid from a big vat
Sorry, nobody is going to make $250 million running ads for free couches.
/. - News for the nerds of united states america. "Everybodys favourite" - sigh, there is an entire world outside who hasn't heard about craiglist.
never heard of it until today either, but obviously it's succesful so i will be registering craigslist.co.uk sometime today for the London Massive.
I certainly wouldn't mind making the modest amount of 25/14 millions of income while doing something I love...
I think the really interesting thing about this is that the web pages that are really successful in the new web (post bubble) are ones that are super stripped down and basic. Google and Craigslist two of the main sites I use. Blogs and blogging are big. Slashdot has basically the same design as ever, with the exception of the top banner ad. It seems that people didn't end up wanting lots of complexity in their web sites.
The printed word ends up (again) being the most important thing out there. It goes to show that you don't need heavy-duty graphics and don't want flashy ads if you're delivering on content.
-- Bird in the Bush: The Renewable Energy Blog http://www.birdinthebush.org
"drives a Ferrari" ...
Where the hell did that come from?
It's a song called "The Ballad of Jerry Curlan" by the Angry Samoans, an old school hardcore band.
They also have such gems as "They Saved Hitler's Cock" and the like.
Think they have an opening for a 15th worker?
(\_/)
(O.o) This is Bunny. Add Bunny to your signature
(> <) to help him achieve world domination.
Around the end of the dot.com era, I found a decent full-time (tech) job on craigslist.
I know a ton of people who found apartments and other stuff there, too.
I thought craigslist was my little secret. :p
Anonymous for obvious reasons.
More importantly, owners do IPO's in order to diversify their holdings. While Craig might be making $25 mil per year in profit now, if the market changes, his company will no longer be profitable, and Craig goes broke. By selling, say, 75% of the company, Craig can use the proceeds to invest in other business, stocks, bonds, etc., so that if craigslist's business falters, his personal wealth will not be in danger.
Sig (appended to the end of comments you post, 120 chars)
Why you would bother with an IPO if you're making $100 million dollars?
meh
You must read this
And for some more:
Best of Craigslist
D O T . C O M . B U S T
I use craigslist every day to buy and sell music stuff, and I sold my car thanks to craigslist. I have never been charged a penny, or needed an account. How does craigslist make money? They don't have ads. (other than the classifieds themselves) Last I heard craiglist was run by a bunch of volunteers. Could someone be pulling this reporter's leg?
It has listings for Canada and the UK as well. It's basically news for people who speak English. =)
I thought Craigslist was a non-profit company. If it is, I can't imagine it is allowed to go public, right?
Comment removed based on user account deletion
Until now I thought Craigslist was nonprofit, but I guess not. Its "mission and history" page seems to support that: "After being approached toward the end of '97 about running banner ads, he decided to make craigslist non-commercial. 'Some things should be about money, some shouldn't, and I make enough doing contract programming.' He was joined by other folks who proposed running face-to-face parties to make the sense of virtual community more physical, and who proposed creating a nonprofit foundation as part of craigslist." Also, the author of that article didn't mention that craigslist also charges for rental and real estate listings posted by agents.
The author lives in a dream world: Craiglist isn't nearly as popular as eBay, google, etc. Until recently it didn't even cover my city of 2.5 million people and even now it only has a whopping 290 housing listings and 156 jobs. Sorry Craigslist, but you have a long way to go before you reach the ranks of eBay or Google, might be great if you live in San Francisco but the rest of us are left in the cold.
my karma will be here long after I'm gone
Take the money and run, use the cash to start something new. "He not busy being born is busy dying."
The key bug in your argument is the "except for any part you hold back." That amount is typically at least 70%! And selling off the remainder is difficult (sends bad signals -- lemons theory).
But in the meantime, you would get to give away 8% or so of the money raised to a fatcat banker, get to personally certify your financial statements (Sarbanes), and get to field phone calls from investors, analysts, and everyone else in the public market ecosystem.
IPOs are not the bed of roses most people assume them to be.
most (if not all) of the housing ads advertised as "listed by owner" are in fact actually sneaky brokers who do nothing other than collect a fee for renting a place out.
I went through and reported every one I ran across, but they just kept coming...
That is here in New York where the market is insane, so I am sure it might be okay in other places, but if you live in NYC don't bother messing with it, or be very very careful and call first and specifically ask "Are you a broker or an agent?" and 90% of the time they will say yes.
just a CL tip from manhattan
anime+manga together at last.. in real time.
...14-person company is making $25M a year Profit/employee = $1.7M/year What the heck do they need to go public for? It'd be much easier just cut everyone a check for $1.7M every Christmas...no SEC, no lock-up period, no Sarbanes-Oxley, everyone still gets rich
It's no bed of roses - that sounds more like a grave :). The IPO is the cradle; that's what the "I" stands for: "initial". Holding back is no bug - because the bigger demand of the public market increases the value of the still limited supply of shares, the amount held back can be much greater than the value of the total to a single private buyer (lower demand).
Selling off the remainder after a successful IPO is the name of the game. Insider trading has SEC rules, "golden handcuffs" agreements with other investors, and can affect the demand by signalling the market. But insider traders make lots of money selling their retained stake - and buying it back, then reselling it, when that's their best bet in the market. Sounds like work, including the other reporting requirements, but the work is very profitable, so it justifies hiring receptionists, accountants, PR people, etc. They field the phonecalls. Sarbanes and other disclosure rules are actually probably less invasive of privacy than they need to be to protect the market from racketeering. It's not winning the lottery, but played smart, an IPO is much less hassle than it is yachting.
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make install -not war
Basically, we work to get established in a particular region and after we hit a critical mass (posts in general, users, spam), we introduce paid job postings. There's the obvious profit for us, but also just as important is that this cuts down a lot of irreputable job posts, increasing the overall quality of that category. Like in SFO, there's a big drop of postings right after the charging starts, but it picks back up with in a couple months (and ends up significantly stronger).
Redonkulus.
--Petey
It's a great place to find queer-friendly roommates.
See also The Buckmaster Institute, Inc.
...but if Craig is already netting $25mil/yr, he should have plenty of dough to spread around, unless he's living like an NBA player or Mike Tyson. (While undoubtedly a "nice" ride, a Bently Continental is probably not a good investment).
Somehow I don't think his personal wealth, at this point, is in danger of anything, if he has any amount of brain at all.
By selling 75% of the company, he loses control of the company. Then, the outside investors take control. If they decide they have no more use for Craig, they can fire him if they're evil, or buy out his shares, and then turn Craigs List into another Yahoo/MSN portal.
umm... http://london.craigslist.org/
They beat ya to it. I hear that the London CL is a fine fine place to get laid.
Charging for Craigslist will drive its users away
you're really good at open source, send a resume to craig@craigslist.org.
(more to come later, swamped, in a customer service trance)
brokers to craig@craigslist.org
I pursue each and every one
[more to come]
We can tweak the flaggign system per category/city. Let us know at the feedback forum:
http://forums.craigslist.org/?forumID=8
all the rest of those ads wouldnt be affected. But I'mnto sure it woud be imediately scalable to other cities. In the bay area, CL is THE most efficient job listing forum, by far. In other cities that may not be true, so the incentive to pay for a job listing might not be there.
The economics of a website like Craigslist, or your local weekly want ad flyer, is pretty interesting stuff. Both of these publications specialize in the one & only form of advertisement that people all over the place are actually interested in: classified ads. Lots of people pay for their local newspaper just to throw away everything but the jobs section, the automotive & real estate listings, the movie listings, and similar classified ads.
Publishers know and depend on this fact about their audiences, and use the revenue stream they get from these ads to help subsidize the unprofitable work they do in other areas -- journalism, for instance, or printing a dead tree newspaper every day, or running a bunch of servers.
In the case of Craigslist or the want ads, they dispense with the journalistic front matter and let the audience have the ad listings. This has the dual effect of eliminating a major cost center while also making it obvious to the public that this is a place that focuses on just the kinds of ads they like, and not those nasty popup ads or whatever that the other commercial sites all have.
The funny thing is that Craigslist has done this so well that they've been able to make a very nice living for themselves while more than covering their expenses and they haven't even had to charge most of their customers for the service.
Other publishers are aware of this phenomenon, and terrified of it.
Consider what Craigslist's competition must be thinking. Ebay skims a commission off every sale that happens on their site; Craigslist doesn't. Match.com charges a listing fee to place a personals ad; Craigslist doesn't. Monster charges a fee for job placements; Craigslist doesn't. Your local sites charge fees for real estate listings; Craigslist doesn't. All of these publishers are being completely undercut by a competitor that can afford to do for free what they're trying -- and increasingly often, failing -- to get people to pay money for.
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About a year ago, NPR had a All Things Considered piece on the rise of Craigslist, and how by charging only for job listings in the San Francisco Bay area, they could subsidize what they were doing everywhere else for free. Among the people interviewed for this piece was the person in charge at a major regional newspaper's website. She had some bland remarks about how what Craigslist is doing is very interesting and has really caught the attention of people in the rest of the industry. *yawn*.
A few weeks after that interview was on the air, I ran into that person in Home Depot, so I stopped to say hi and to tell her that I heard her on the radio recently, and to ask what she thought about Craigslist. Her response, roughly, was this:
As you can imagine, this wasn't quite how she phrased her remarks on the radio, but it certainly expressed the same idea with a lot less ambiguity. :-)
***********
I'm not going to identify this person or the company -- you'll figure it out if you listen to the NPR piece off their web site -- but in any case the point is much broader than just with this one company.
Craigslist is doing some so radically & dangerously different than anyone else in the publishing industry that they are a major threat to all kinds of companies. That's both good and bad. Maybe we don't need to have every newspaper & tv station in the country publishing the same news wire feeds that you can get anywhere else. Maybe we can do without that. But if these companies get out of that kind of work, will they also feel they have to get out of local news coverage online? If so, where will people turn to for that -- blogs? Somehow I don't think that would work.
Moreover, is this also a threat to dead-tree publications who won't be able to depend on the classi
DO NOT LEAVE IT IS NOT REAL
It does happen, perhaps especially when
thoughtful people are making enough to
be secure, and have control.
since when?
What in the coldest hell is Craig on! He's got a niche market most of the assholes who post jobs are wanting free work, most of wich is complete crap. The rest are horny people spreading V.D's
Craigslist is THE place for finding hookers and buying stolen property.
My other first post is car post.
I always track the publisher of my info. Over the years I've developed a sense of their bias, so I know better where to look to corroborate or debunk their "facts".
The links are outbound from the blog to the websites they "log". That's their influence: feeding traffic to the sites they report.
There are many points to these news websites. One important one is their editing (or relative lack thereof), but I meant to weigh the relative difference in their other kinds of differences. The relative unimportance of those other differences, and their relative similarity in those properties, is what accounts for the blurriness of their difference. There's also the "brand" name, which is supposed to represent trust by their audience. But the modern media has abused that trust so much that newer audiences don't expect it, so even fun by nonrigorous rags like Slashdot get readership.
These old media can't sustain their privilege much longer. The barrier to entry to their fiefdoms is so low, especially on the limited functions of mobile devices, that little guys can compete with them. And compete better, if they offer the diversity of corroboration that people associate with accuracy. They will crash under the weight of their lies, and good riddance.
John Stewart is a hero. We've got plenty of smartmouths like him here in NYC, but we're usually too clever to get stuck on TV. Stewart seems to have come of age in his single digits, sparked to enlightenment by a rapture brought on by the overlap of Jackie Gleason, George Carlin and Johnny Carson. For more good American satire, look for the Firesign Theater out of San Francisco. Or 1980s Letterman, the 1970s movies _Kentucky Fried Movie_ and the _Groove Tube_ or the complete works of Frank Zappa.
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make install -not war