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."

Comments

Why bother?

[RayMarron]

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.

Re:Why bother?

[jusdisgi]

Yeah, totally. This story is pretty damn thin. This random journalist just 'guesses' that this website might go public and play with the big boys, and we're all supposed to bite? Whatever. These 14 people are running a website and pulling in 25M a year between them, I don't see them going anywhere but Tahiti. That's where I'd be. The people he quotes don't confirm his guesses at all...they basically say, "we've got plenty of money, why would we need VC's or going public?"...this is a stupid artical, and should never have graced /.'s main page.

RIP Craig

[Doc Ruby]

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.

Why would they want to IPO?

[mozumder]

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...

Re:Why would they want to IPO?

[mozumder]

Yes, they sell shares, and, in if you were the owner of a business, they would sell YOUR shares.
If I were making $100 million a year profit on my business, and an IPO diluted my ownership of my company by 75%, then I would end up making %25 million a year cash from my business, and who knows what the the value of the shares of my company would be worth. It could be worth nothing, it could be worth a billion.

Should the owners take such a risk on their already massively profitable business?

Re:Is it just my city...

[wankledot]

"... ugly ameturish [sic] interface..."

I believe the words you are looking for are: simple, clean, fast, appropriate interface.

why go public?

[incast]

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?

The article is mostly pontificated crap.

[noahbagels]

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?

Re:The article is mostly pontificated crap.

[faedle]

I also could not stop laughing when I read the article. Craigslist go public? WTF? Is this guy going to the same Craigslist I've been using forever?

It's apparent after reading this guy's article that he has no clue what Craigslist is. Hey, buddy, here's a clue: you haven't noticed the fact that the icon file you get when you bookmark it (or browse there on browsers like Safari) is a hippie peace sign?

Why craigslist works would be destroyed by any attempt to mass-market and package it, which would be seemingly required for an IPO. Besides, as I understand it, Craigslist is a labor of love for the founder and the staff, so an IPO would only destroy what they've built.

In short, this guy really needs to get a life... not everybody is out there to make a killing in the stock market. Some people are *gasp* just happy to make a modest living for themselves doing something they love.

Re:The article is mostly pontificated crap.

[Anonymous Coward]

Craig was talking about the possibility 5 years ago, shortly before the market went bust. If there was serious money to be made, I don't think he would hesitate.

What really happens when you make it "big"?

[damu]

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.

Re:What really happens when you make it "big"?

[Ohreally_factor]

From the article:

If Google can show sites like Craigslist that it's possible to be "good" and wealthy, I think you may eventually see a publicly traded Craigslist. And based on its growth rate and fanatical user base, I think it'd be a smash hit.

Since the Google IPO is still to come, and we aren't likely to see fall out from that for years, it seems sort of funny to hold Google up as some sort of exemplar.

Furthermore, if I wanted to run a business that was good or ethical, why would I need model my business after another company specifically for that reason? I know they now teach ethics classes at B schools, but are we so out of touch with what is ethical and good in ourselves that we need someone else's business plan to give us guidance? If you have to do a cost/benefit analysis of Ben&Jerry's to understand the benefits of good corporate behavior, you're not getting it.

more $

[Doc Ruby]

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.

Re:more $

[Doc Ruby]

You do if you want to make more than $25M:y, and you think the risk is relatively small. IPOs are underwritten by brokers, which means the brokerage is effectively buying the company from the private owner, before selling it to the market. That lowers the risk considerably, by validating the sale values, and by bringing the broker's bank into the scene. They aren't for everyone, but they are available to those who want the premium on equity that the scale of public markets can bring.

I'm sure "Craig" understands these market dynamics. Whether "he" goes for an IPO is theoretical, because this story is really just the IPO hype heartbeat resurfacing in its most fertile medium, the breathless press.

Do the math and you will understand why founders

[Anonymous Coward]

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.

Craig Newmark, awesome human being

[ortcutt]

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.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Another non-discussion about non-news

[fm6]

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.

Is this part of a new wave of IPOs?

[SteamyMobile]

If a company with a staff of less than 20 people, and no expenses beyond a bunch of server computers can make $100mil per year, they certainly don't need the capital raised by an IPO. They're doing it just because they can. That's exactly the same position that Google is in: they have plenty of revenue. They don't need to raise capital (which is the traditional purpose of an IPO). They are doing it just because they can.

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.

Re:Won't work

[NivenHuH]

Insightful???

Craigslist is one of the useful tools that most of the people in the Bay Area use.. Flaming it, and the citizens of SF is hardly insightful..

*took off karma bonus so i won't be modded down*

We charge for job postings

[bitchin_camaro]

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