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Craigslist: a $10 Billion Company?
By Mark Evans | October 11, 2007
(Note: The following is 100% speculation. As well, my original math was wrong as the number of pageviews was under-estimated by 70%)
Craigslist attracts about 2.5 eight billion pageviews a month but only begrudgingly charges people to use the service - although it recently implemented a $25 fee for some classified ads that could adding another $75-million in revenue, according to my friend, Mathew Ingram.
Just for fun, let’s do some math to see what Craigslist could make if it started charging for three ad slots/page.
$1/CPM = $7.5 $24 million/month or $90- $288 million/year
$3/CPM = $22.5 $72-million or $270-$864-million/year
$5/CPM = $37.5 $120-million or $450-million $1.44-billion/year
Of course, Craigslist - and its senior executives, Craig Newmark and Jim Buckmaster - isn’t a “normal” company driven by things such as revenue and profits so while the numbers above are sexy, there’s little chance they will materialize unless the company has a dramatic change of heart. But in the name of speculation, let’s press forward.
Can you imagine what Craigslist could be worth if it changed course and started to aggressively monetize the business? For the sake of argument, let’s assume the company now makes about $150-million a year in revenue. And let’s be “Henry Blodget Outrageous” by being ultra-enthusiastic on potential revenue by using the $450-million $1.44-billion a year scenario spelled out above.
Now, you’ve got a $600-million, $1.5-billion, high-margin business. What’s that worth these days: $6-billion? $10-billion? Why not $15-billion? If Craigslist ever did an IPO, investors would be falling over themselves trying to get a piece of the action, which is why investment firms are salivating at the prospect.
More: Freakonomics published a lengthy Q&A with Newmark yesterday. Meanwhile, Valleywag had a fascinating post focused on the 25% of Craigslist sold by Phillip Knowlton to eBay in 2004. Valleywag contends the deal was structure so that Knowlton received $16-million, while Newmark and Buckmaster were given $10-million and $6-million respectively. For bubble watchers, check out this Wall St. Journal story on some interesting bubble indicators are emerging.
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Topics: Advertising/Marketing |