

Craigslist Valuation: $80 Million in 2008 Revenue, Worth $5 Billion - parker
http://www.alleyinsider.com/2008/4/craigslist_valuation_80_million_in_2008_revenue_worth_5_billion

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trekker7
I'm genuinely confused about valuations. Craigslist is making $80 million in
revenues, and of course less in profits. Say someone buys the
company/organization for $5 billion. Won't it take a good many years to
recover the price paid via the site's profits? In general, when companies
acquire other companies, they should want to make back their purchase cost
quickly and hopefully make a lot more in the near future right? Even if the
acquirer thinks they can hack the business model, add more advertisements, or
charge for more things, isn't it a huge gamble to pay so much over the
_current_ profits? I'm missing something but don't know what.

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halo
The current $80m in revenue is an extremely misleading figure to base a
valuation upon. Craigslist exploit the absolute minimum of their assets and
any company taking control could make considerably more with little additional
expense without even considering the potential of international expansion or
using its ability to expand other brands or services.

While I think the article is more than a hyperbolic with its projected
revenues and valuation, I certainly think a valuation of a few billion would
be fair, especially when you consider Skype was bought for €1.9b, YouTube was
bought for $1.65b and Bebo was bought for $850m.

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maximilian
"Craigslist's content is not at all bandwidth intensive--all light text, no
computation or transactive processing like eBay or Google--so this should keep
its costs well below those of other huge global sites. Let's call it $50
million a year. (This is probably high--grateful for any help in refining)."

What is he smoking? Sure they have a lot of page views, but man, you can do a
lot for $50 million a year. Craigslist's site is as bare as it could be. All
static html, that is probably just generated using whatever scripting language
it wants. I'm there is some engineering challenges and that they go through a
good bit of bandwidth, but i mean, I feel like this guy is off by like an
order of magnitude. Now, I don't know squat about serious big iron servers and
doing stuff that large, but its definitely not $50million to run it. A guy in
the site's comments puts the yearly cost at $1 million and he even over-
estimates a bit in my book.

Also, all these analysts always speculate about how much money craigslist
could make if they charged for _all_ job postings and ads. As soon as they
started charging for anything more than what they do they would probably get
an order of magnitude less postings. Then they would just another
monster.com/careerbuilder.com/etc crappy clone. Whats great now is that people
can post whatever they want for free, with the few exceptions that help pay
for it all (and still probably make Craig rich). The author obviously didn't
study engineering or physics because his back-of-the-envelope calculations
suck.

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parker
My favourite part about this article is in the comments, where someone
estimates CL's hosting costs about about $1 million a year for over 100
billion page views. But you can do that on a page load average of 6 kb. I used
to work at a company whose nav images were each 50 kb.

Text-only = everyone's best interest!

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wallflower
I had a sense of Deja Vu reading this. Old "analysis".
[http://www.startupboy.com/journal/2006/2/6/craigslist-is-
wor...](http://www.startupboy.com/journal/2006/2/6/craigslist-is-worth-more-
than-ebay.html)

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wallflower
Everything is for sale on Craigslist, and Craigslist itself is not for sale
(imagine sponsored ads on the main CL page - it's antithetical to CL)

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ilamont
This is Henry Blodget talking here, folks. Keep that in mind as you read his
analysis.

Also, his definition of startup is a bit off -- Craigslist shouldn't be
included in this group.

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byrneseyeview
Why? Is he using an alternative currency system? Does he do math in base 8? Is
there some other flaw in _reasoning_ that makes this argument not worth
listening to?

~~~
ilamont
His argument is based on guesses and assumptions, including:

\- Uncertain data: "We've struggled to get formal business metrics for
Craigslist"

\- Assumptions -- count how many times he says "let's assume"

\- Doesn't acknowledge potential competition

\- Doesn't note that Newmark has repeatedly ruled out selling Craigslist

You don't think these are problematic?

~~~
byrneseyeview
Thank you! These are all problems I noticed, too. Interestingly enough, when I
went into 'view source' and changed the byline to 'ilamont', _the problems
were still there_. Almost as if they had nothing to do with the author.

In fact, the whole article is pretty specious. 'Value', as ex-analyst Blodget
surely knows, can refer to either the price someone else will pay for an
asset, or the present value of the future cash flows generated by that asset.
The first one doesn't make sense because Newmark says he won't sell; the
second invalidates all of the assumptions in the article because Newmark
appears determine to run it the way he likes it. By that standard, CL is
probably worth something like $250 million.

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ardit33
strange world on how facebook is worth 3 times more than CL?

