"Startup Review will feature weekly, in-depth case studies on successful Internet start-ups. The companies profiled will have achieved either: a) significant exits, b) large revenue, and/or c) strong Internet brands."
His first profile is of craigslist, which he claims could be worth around $2.4 billion - if Craig Newmark wanted to sell (there are no indications he does). Nisan notes:
"Assuming they could make $200M in revenue at a 40% net margin, and applying an Ebay-type EBITDA multiple, that would place the value of the company at ~$2.4B. I have no doubt that if Craigslist were to sell, it could command more than a $1B purchase price as is today, and probably significantly more (Note: Craig is a better man than I!)
eBay would be the most logical acquirer, given that they already own a 25% stake through a rather dubious stock sale by a former trusted employee of Craig’s."
There's been a bit of talk about Facebook.com and YouTube asking for over a billion to be acquired, so by that measuring stick craigslist would certainly be at that level of value too.
]]>The big question in valuing Craigslist is what kind of revenues Craigslist could achieve without destroying the community feel. I don't think that $200M in revenue is unreasonable just in their core market of real estate classifieds. Another company that I plan to profile on Startup Review is Rent.com. Rent.com was acquired by eBay for $433M in early 2005. Rent.com helps landlords acquire tenants for their properties - mainly in cities with low vacancy rates. Rent.com was rumored to be doing $40M in 2004 revenue when acquired and on a significant growth curve. Guessing that Rent.com is probably ~$100M in annual revenue by this point, it feels like a safe assumption that Craigslist could be a $200M revenue company. This doesn't even include the other verticals that Craigslist is strong in, not to mention traditional advertising opportunities. Clearly there would be execution challenges in transitioning Craigslist from a mainly free service, but the revenue potential is enormous. Thus, I think $2.4B is actually quite a bargain!
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