post capitalist ethos

[jk]

Craigslist Meets the Capitalists

December 8, 2006, 12:51 pm ny times- dealbook
Jim Buckmaster, the chief executive of Craigslist, caused lots of head-scratching Thursday as he tried to explain to a bunch of Wall Street types why his company is not interested in “monetizing” his ridiculously popular Web operation. Appearing at the UBS global media conference in New York, Mr. Buckmaster took questions from the bemused audience, which apparently could not get its collective mind around the notion that Craigslist exists to help Web users find jobs, cars, apartments and dates — and not so much to make money.

Wendy Davis of MediaPost describes the presentation as a “a culture clash of near-epic proportions.” She recounts how UBS analyst Ben Schachter wanted to know how Craigslist plans to maximize revenue. It doesn’t, Mr. Buckmaster replied (perhaps wondering how Mr. Schachter could possibly not already know this). “That definitely is not part of the equation,” he said, according to MediaPost. “It’s not part of the goal.”

“I think a lot of people are catching their breath right now,” Mr. Schachter said in response.

The Tech Trader Daily blog ponders this question: “If YouTube was worth $1.65 billion, who knows what Craigslist would be worth if Jim and [site founder] Craig Newmark ever considred becoming — what’s the word? — capitalists.”

Craigslist charges money for job listings, but only in seven of the cities it serves ($75 in San Francisco; $35 in the others). And it charges for apartment listings in New York ($10 a pop). But that is just to pay expenses.

Mr. Schachter still did not seem to understand. How about running AdSense ads from Google? Craigslist has considered that, Mr. Buckmaster said. They even crunched the numbers, which were “quite staggering.” But users haven’t expressed an interest in seeing ads, so it is not going to happen.

Following the meeting, Mr. Schachter wrote a research note, flagged by Tech Trader Daily, which suggests that he still doesn’t quite get the concept of serving customers first, and worrying about revenues later, if at all (and nevermind profits). Craigslist, the analyst wrote, “does not fully monetize its traffic or services.”

Mr. Buckmaster said the company is doubling in size every year, as measured by page views and listings.
Larry Dignan, writing on Between the Lines blog at ZDNet, called Mr. Buckmaster “delightfully communist,” and described the audience as “confused capitalists wondering how a company can exist without the urge to maximize profits.”

[Jim Nickerson]

Re: post capitalist ethos

I wrote jk last night that this article is a breath of fresh air in our world where everthing seems to be about getting more dollars through almost any means possible. The humor in this is that the two guys Jim and Craig seem to be frustrating those who would look at anything and ask how does one make more money from this?

I know nothing about Craigslist except what is in the article, but what is missing in the article was anyone asking the question of why are these fellows doing what they are doing as they choose to do it?

Does anyone know what Buckmaster and Newmark's ultimate goals are?

Perhaps they realize money does not buy happiness, or if they are ultimately all about making as much money as possible, they have patience and realize if they continue to succeed that later the value will be greater, or perhaps they are just un-American and do not understand greed.

I always thought that given a job, if one did it well, the compensation would take care of itself. I guess that is naive.

[lobodelmar]

Re: post capitalist ethos

Jim, in an earlier thread you had suggested you wanted to ask the question "how much money do you want?" I've been trying to catch up on all the threads that I've missed...still havent' seen that you've asked it. So I guess I will do it for you?

So, iTulipers --- How much money do you want? Or maybe I should ask "How much is enough for you?"

Craig Newmark is a personal hero...I was an early user back when I lived in SF during the dotcom wave, before it grew into the massive board that it is now...it all started so that Craig could keep his friends informed where the happening stuff was going on around town. Basically a cool party list...It evolved from a weekly email into a powerful website in hundreds of cities where people post for sale items, job listings, and personal ads...to their credit, they could have made a ton more cash, but Craig isn't interested. I think they only have 20-30 people working there...none of them are making obscene wages, though I'm sure they are comfortable. Way to go. Glad to see that he hasn't succumbed to greed/growth for growth's sake, and turned something remarkable into a typical company.

When I was in business school, everyone talked about growth as the ultimate goal. I always wondered why that was the case (Finster - to battle inflation?)...it still doesn't make sense to me to follow the mantra grow just to grow. I guess that is the capitalist greed thing going on. I think you should have a reason to do it. Yes, maximize shareholder revenue, blah blah blah...that is why private companies sometimes just appeal to me so much more. What does that make me, capitalist with a sprinkle of socialism?

Anyway, I was chatting with two other students and we got into a discussion about that same question. My answer was $3 million...I estimated how much money I would need today to drop out of the system and just do what I wanted to do. They looked at me as if I was smoking something...their estimates were $15 million, 20, 25... But I was considering how that much would have let me live relatively comfortably $35k a year, at least for a few years, and still start a small business, rather than working for the "man." I guess it wouldn't be enough to completely go off the grid until I kicked it...but it would have been a start. I guess, all things being equal (and assuming no massive recession/inflation/deflation scenario occurred), I think my answer would still apply.

I am no where near even 1/10 of that, so I have a long way to go, moot point, basically...won't be retiring any time soon...still workin for the man...

- Lobodelmar

[jk]

Re: post capitalist ethos

part of the problem, lobo, is wondering what your x million dollars is going to be worth next year, both in terms of investment performance and buying power. so you need x million, plus you need the confidence that you can keep it WORTH x million after the effects of withdrawals and inflation.

[Jim Nickerson]

Re: post capitalist ethos

Jim, in an earlier thread you had suggested you wanted to ask the question "how much money do you want?" I've been trying to catch up on all the threads that I've missed...still havent' seen that you've asked it. So I guess I will do it for you?

So, iTulipers --- How much money do you want? Or maybe I should ask "How much is enough for you?"


Anyway, I was chatting with two other students and we got into a discussion about that same question. My answer was $3 million...I estimated how much money I would need today to drop out of the system and just do what I wanted to do. They looked at me as if I was smoking something...their estimates were $15 million, 20, 25... But I was considering how that much would have let me live relatively comfortably $35k a year, at least for a few years, and still start a small business, rather than working for the "man." I guess it wouldn't be enough to completely go off the grid until I kicked it...but it would have been a start. I guess, all things being equal (and assuming no massive recession/inflation/deflation scenario occurred), I think my answer would still apply.

I am no where near even 1/10 of that, so I have a long way to go, moot point, basically...won't be retiring any time soon...still workin for the man...

- Lobodelmar

LoboDelmar,

The reason I never posted the question is I thought it would not provoke any real discussion.

I quit work as an oral surgeon when I was a few months over 50 y/o, and as I have told those who asked why, it was because I got to hating what I was doing--it became so that it was not worth the money or twice the money or any amount of money I could earn.

I did not then know if I had enough money to stop working. I had been putting money into a pension plan I had set up in a professional corporation about 12 years before I went to work the last four years at a university which had a 401K plan. I never in any year of private practice fully funded the $25K contribution that was initially allowed and then adjusted upward in subsequent years. I never had any children to raise and educate, so my "need" for money was not as great as it is for those who have children and intend to educate them. I divorced twice and paid lawyers a total of $1350 and one wife a settlement of 5K and and about 60K over 10 years. I had a good friend who practiced orthodontics who usually paid more in federal taxes than I grossed, so you should conclude that I was never any sort of big-time income producer. Somewhere here previously I noted an old physician having said he never knew a doctor who did not have more money than he needed, and nothing I ever came across in 16 years of moving in both dental and medical circles disproved the old doctor's assertion. I always had more money that I needed or had the good sense to manage. When I quit work, I did so with the notion that it was for good, and that I would discipline myself to live off what I had and hopefully never have to eat those words.

When I quit I had about about $667K in my IRA and about $535K in three condos and a piece of lakeside property on a great big lake in AL, importantly no debt. I had so little cash, I remember living for about $1K per month for 8-10 months, and I was single with a dog--a malamute--Gorby, named after Gorbachev. About a third of the $535K in real estate was due to profits I had made in selling two previous homes (one bought in 1975 for $90K and sold in 1986 for $270K, and then the $500K deduction did not exist).

I sold my properties for a bit of profits on three of them and moved to my present house which I bought for $60K. I got some inheritance and put about $50K into my present house. When I reached 62, I started taking my social security, because if you die you lose it all, and I am always worried about dying.

At the market top I got up to a net worth of about $2M, mostly in the market. At the market bottom, I had a net worth of about $765K. Whew!

Still the question: How much money does one need, or if you like, how much money does one want?

The answer to the "need" question seems more realistic to try to answer, and I do not think one can really figure it out as there are so many variables and assumptions.

If one has some notion of "the American Dream," whatever that is, then pershaps one "needs" a whole lot, depending upon how vividly one dreams.

Some things I may have learned from giving up earning new capital by quitting working and from sustaining the losses I sustained and without having sustained such losses I doubt I would have learned:

(These lessons probably only apply to me, and no one else should pay them any attention,)

If one can basically spend money on the things one needs, then based on my experience living reasonably well in America for the last 15 years could not cost an annual income of 80% of what one earned on average of their last 5 years of working. I've never come close to spending that much money in any year, and I have been around the world and a number of places otherwise in it before 9/11 and around the US since 9/11. As we go through life we accumulate things, furniture, clothing, appliances, rugs for some, nicknacks, whatever. At some point one should have accumulated enough of such stuff so that one should not be expected to continue accumulating it right up til the time of death. So after I quit working, I rather much stopped accumulating much new stuff.

I have learned that my third wife and I can survive in our circumstances nicely with one car which is never serviced at the dealership. Saves on cost of second car, insurance, worry. In fact to state an old truism: less is more. The less stuff one has, the less there is to worry with. If you like worrying then the more things one has to look after, insure, keep up, move around, then you get it, more worrying.

I learned that catalog shopping is way too expensive a way to buy things if one injects "need" into the consideration.

When I worked and needed painting or house repairs, I hired someone. Since I quit work, I have learned to do a lot of things myself, and I think do them well. When I worked if I had to go to the grocery store, I went to the closest one and bought whatever it offered that I needed without ever shopping. Being retired, we don't spend a lot of money that others do by virtue of our having the time to shop, especially if faced with buying something besides ordinary household supplies and food. Had to buy a washer a year ago, shopped for it and saved a bundle, but then it won't do 17 pair of jeans in one load either. Lettuce from Walmart Supercenter tastes just like lettuce from Krogers as does everything else rather much, and whatever is saves, it saves.

Prior to the market bottom, we used to go to the movies, sort of because of just doing something. Stopped that. Three reasons: movies cost too much and most are not worth the cost, and most will show up on TV after a while.

I stopped drinking alcohol about 25 years ago mainly because it interfered with my accomplishing other things--made me sleepy. If I still drank, I definitely would not pay the cost of booze in restaurants these days. A couple of drinks cost more than what I usually order, and out of nature, I am not a big eater. Buying booze is definitely pissing away money.

Since I quit work, I have succeeded on living on a budget--actually stating to myself each month X dollars is how much I or we have to possibly spend in a given month. The problem I encountered, and appreciated mostly in retrospect, is how to figure out an amount that could be spent each month if one has a certain amount of assets. What I figured out probably near the bottom of my net worth in 2002, was to take the amount of assets we have, basically liquid assets is what I use; I use my wife's life expectancy (an assumption) and plug it into the PMT function of Excel. The only other variable I believe is some assumed interest rate. For that I use the actual rate my IRA's have appreciated since 12/31/1987 which for me is a realistic number. Last month it was 4.5727%. Whatever that function returns is the amount above which I would hope we do not have to spend in the coming month, and almost always we succeed.

Boy!, I wish I had been using that method at the top of the market in 1999. I would hopefully have sold all my stocks and averaged into long bonds, which had I done so, I would have had a gross of $115K per year, which might be a lot or not much. Based on trying to limit our buying to things we need 98% of the time, it would have been a lot. What that Excel function allows one to see is how much a given amount of money is worth over time without consideration of inflation.

Most of my life, right or wrong, I have not lost sleep over inflation. Finster's FDI makes me queazy. I felt badly in 1975 getting an 80% mortgage at 9%, but I lived through it. When I quit I had a net worth of about $1.2M, at the market top about $2M, at the market bottom about $765K, today about $1.25M, so someway I, we, have managed to make it 15 years of retirement on variable amount of assets.

I think I read last night, poor memory, somewhere that for the world, people with assets of $500,000 are in the top 1% of weath in the world. Personally, had I been taking an income of $115K for the last 5 years there is no way we could have spent that much UNLESS we just went out and spent it on stuff we don't truly need. When I read or hear some Wall Street dude is getting a bonus for the year of 40+ million dollars, I shake my head in disbelief. Some one is being badly ripped off, probably us, but then if we are the "rippees" we do not have have any burdens on our consciences as should one who might think he could possibly do anything to earn such money--assuming the guy is given to reflection, his conscience is burdened.

Once I finished training in oral surgery, I never had any further goals except to try to be a good surgeon. If I had had a goal to accumulate $3M by some point, it would have been a worrisome burden. For you, a goal of $3M by some point in your life may be realistic, or it might turn out to be an urealizable goal, or a goal that could divorce you from acting as you might otherwise act without such a goal. It is truly, I think, impossible to realistically determine an amount of money you will need in decades to come. I think all you can do is try to stay employed and as early on as possible become a saver and try to be a prudent investor, and take advantage of compounding when applied to assets.

I read somewhere else that there is some significant number of baby-boomers facing retirement who do not even have $50K in net worth. Personally I found that hard to believe, but perhaps it is true. If it is true, then who is to blame? Are they to blame, or is society in someway at fault? I personally think we are responsible for our own destinies. A net worth of $50K for anyone over age 50 is to me bleak. Assuming you accummulate weath, which I hope you do, whenever you may reach $500,000 ask yourself how many have that much money? The same at $1M or more. Sure there are people who wouldn't waste spit on $1M today and possibly in 10 years. If we have bad inflation, based on how people today are not saving money, $1M will still be ahead of the pack. Hopefully for all of us, inflation will not wipe us out.

One last thing, health insurance. It has been the biggest proportion of our expenses for a number of years even in using maximal deductibles, and basically we have been healthy. I do not know what will happen when Medicare fails, but for the moment I have come under its coverage, and it is an immediate savings of $6K per year in insurance premiums. At some point, hopefully during your full life-time, someway the cost of health care has to be lessened.

How much money do you need to retire? All you can save and earn by compounding, and live your life according to your means. Don't buy the crap you see on TV that the only way to tell your wife you love her is go give her diamonds which are forever. Just tell her you love her, mean it, and get her a decent vacuum cleaner.

Good luck.

[lobodelmar]

Re: post capitalist ethos

Jim, thanks for that incredibly well thought post, and for taking a great deal of time to share your personal philosophy. I very much appreciate your input to these discussions. Your probing questions on these threads are great, because they often help me understand the very complex ideas being tossed around.

Is anyone else game to answer the question? How much is enough? How much are you aiming for?

- lobo

[Tet]

Re: post capitalist ethos

Craigslist Meets the Capitalists

Ben Schachter wanted to know how Craigslist plans to maximize revenue. It doesn’t, Mr. Buckmaster replied (perhaps wondering how Mr. Schachter could possibly not already know this). “That definitely is not part of the equation,” he said, according to MediaPost. “It’s not part of the goal.”

who knows what Craigslist would be worth if Jim and [site founder] Craig Newmark ever considred becoming — what’s the word? — capitalists.”

Refreshing to see that Mr. Newmark enjoys his purpose in life and it has nothing to do with money. Now if we could just get some Wall Street hypsters to have the same appreciation of their jobs the world would be a better place.

[Spartacus]

Re: post capitalist ethos

edit: I suppose if you want a big house in an expensive area and want to send your kids to Harvard, the stuff below won't apply to you.
>>>>>>>>>>>>>
Get yourself a copy of "your money or your life" by Joseph Dominquez.

He outlines a complete financial system, a much better system than budgeting.

$3million ? $15 million?

Even if you do all of this -

if you quit your job and don't have to spend on job-related items (suits, "image car", etc ...)

if you move to a cheap apartment, somewhere that public transit does 90% of what you need (take a cab 2 or 3 times a week - no car, no insurance, no gasoline)

if you find some volunteer work that provide lots of satisfaction (so you don't have to fly all over the world on expensive vacations to get fulfilment)

develop some cheap hobbies (no $3,000 titanium bike frames and $2000 set of components, no $5000 ski vacations, etc ...)

Jim, in an earlier thread you had
suggested you wanted to ask the question "how much money do you want?"

My answer was $3 million...I estimated how much money I would need today to drop out of the system and just do what I wanted to do. They looked at me as if I was smoking something...their estimates were $15 million, 20, 25...

I am no where near even 1/10 of that, so I have a long way to go, moot point, basically...won't be retiring any time soon...still workin for the man...

- Lobodelmar