Wednesday, June 10, 2009

Does Craigslist make $96 million in profit?

The AIM Group is estimating that Craigslist is doing about $100 million in annual revenue. Given that you can physically count the number of paid listings on their site, I take this to be a solid estimate of their revenue.

The more remarkable fact is that Craigslist achieves this revenue with only 30 employees. They've built a product so compelling that they don't need any sales and marketing to achieve this revenue. Customers just show up and hand them money. If you assume a fully loaded average wage of $130,000 per employee, that comes out to a cost base of only $4 million.

So is Craigslist making $96 million dollars in profit? This leaves a heck of a lot of money to pay dividends to it's owners (and the government).

When I first started Personforce, I met with a former senior exec at Monster. The advice he gave me was try to be more like Craigslist and less like Monster. His point was that running a sales force is expensive and pushing a product that no one is excited about is not fun. Instead, build something that is so unique and compelling, it sells itself. Who wouldn't want to run a company with 95% net margins?


Anonymous said...

Working for Pure Software was a similar experience.
You only had to demonstrate the product once and then companies would start throwing checks at you.

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