

Teen Trades up on Craigslist from Phone to Porsche in 2 Years - dpatru
http://www.mercurynews.com/top-stories/ci_15558973

======
brc
I 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.

------
makeramen
Reminds 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
Is that what is called arbitrage ?

~~~
SkyMarshal
Not 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.

~~~
eru
> 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>), which is far from
certain and doesn't even use the same items, but just items with correlated
prices.

~~~
SkyMarshal
True. 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
My 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.)

------
jaytee_clone
Five 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
The 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
Porsche'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
The 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.

------
johnnyg
It was alarming to read that people tell him he is a con artist. He's a good
businessman.

~~~
InclinedPlane
He'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.

~~~
Unseelie
He'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
On 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.

------
dpatru
One of the points that Charlie Munger makes in his talk on worldly wisdom
(<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
YCombinator'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
Relative 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/sb20070...](http://www.businessweek.com/smallbiz/content/sep2007/sb20070926_620433_page_2.htm).
2\. [http://www.thecrimson.com/article/2010/3/31/financial-aid-
pe...](http://www.thecrimson.com/article/2010/3/31/financial-aid-percent-
students/)

~~~
philwelch
That's more a result of YC's popularity and limited capacity than any desire
to be selective. A VC who dicks around with you for months on end and only
makes 5 investments a year is selective--YC is just popular.

------
noelchurchill
_He spends five to six hours a day on his i-Phone scouring the website for
good deals._

~~~
zokier
That sounds kinda crazy. 5-6 hours daily for two years could have easily
earned him money to buy a Porsche, for cold cash.

~~~
noelchurchill
That'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
Yes, 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
Perhaps it would have been even better for the guy, if he had traded in
person?

~~~
SwellJoe
Perhaps. But, effective ad copy is also valuable. Negotiation is
negotiation...though it does take a whole different set of skills to negotiate
face to face.

That said, I suspect he _did_ deal in person quite a bit, even if the meeting
was made on craigslist. I've sold tons of stuff on craigslist, and there's
often a bit of back and forth, either on the phone or when the person comes to
look at the item. All things are negotiable.

------
replicatorblog
I 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
NotifyWire automates Craiglist monitoring. I don't know if it would help the
barter system, though, since that relies on judging each trade opportunity.

~~~
euroclydon
I'm sure NotifyWire violates CL's terms of service.

------
turnersauce
This guy went from a paperclip to a house:
<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.

~~~
plusbryan
the red paper clip guy actually hired a pr firm to help him gain publicity and
achieve his goal (I knew a guy at the pr firm he hired)

~~~
eru
Seems like a legitimate tactic to me.

~~~
ianferrel
Only if he obtained their services by trading something to them that started
from the paperclip.

~~~
eru
Yes, you could hold him to such standards. On the other hand, he has to do
some PR for getting his goals -- does it matter, if he does his own PR or
hires an agency?

------
travisro
I wonder if he has each trade he made published somewhere. It would be
interesting to see the exact progression trade-by-trade.

------
jbail
That 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
Insurance 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
> 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.

------
eru
It would be interesting to read about all the counter parties to the swaps.
Are they still happy with their trades?

