StartupBoy

Bill Burnham, formerly an analyst at DMG and CSFB, and then a VC, continues his interesting analysis of the online classifieds market with his take on where Google Base is headed. He has some good predictions, and Vast is mentioned in the piece.

Vast.com has launched a new category, Credit Cards! Why waste your time doing comparison shopping, when you can get what you really want, free stuff! Our "deep" crawler now recognizes and extracts credit card numbers accidentally posted all across the web, and enables you to shop with them. What's the business model, indeed!

The Vast.com (developer) Preview is finally available! If you’ve been wondering what we’ve been up to, here it is, in a nutshell - we are building a search service that extracts classified ads from across the web, structures them, and then makes them available via an open REST API for commercial and non-commercial uses.

A little more detail:

- We are crawling the web and large parts of the blogosphere with a general crawler, similar to the ones operated by Yahoo!, Google, Ask, MSN, and Gigablast.

- The crawler activates forms, and digs deep to find even dynamic data (although it certainly doesn’t fill in any logins and passwords)

- We automatically recognize classifieds listings - currently cars for sale, job postings, and personals profiles, and extract and normalize the surrounding metadata (make, model, price, mileage, salary, location, title, age, gender, etc.).

Currently, we have some of the largest databases anywhere, of over 15 Million classified listings across these three categories, automatically extracted and structured with no human oversight, from nearly 50,000 web sites and blogs. (We actually crawled many, many times that number, but these are just the sites that have results to date).

If you are an end-user, you should be able to search for that hard-to-find listing without having to visit hundreds of sites, and compare cross-site results, with images, sorting, and statistics.

If you are a web-site owner or web developer, we’re offering a no-hassle API to show this data to your visitors, or to mash it up to your hearts content. You can use it build a huge destination site, an interesting application, or to supplement content and listings that you have today. You CAN use it for commercial purposes, and as long as it’s being shown to real end users, there’s NO LIMIT on the number of queries. Everything you see on the site is built on our API, so you should be able to replicate Vast.com on your own site or blog.

If you have a classifieds site or a blog and would like your ads to be included in our results, you shouldn’t have to do anything. Just post like you normally would, and we’ll find you. If we’re not getting your results or not getting them all, drop us a note at help - at - vast - dot - com and we’ll try and fix it.

We’re going to keep this site and the API as open as possible, and like a good net citizen, link directly back to the results. We don’t compete with the people that we crawl by taking direct listings. We don’t rely on explicit tagging. And we do an enormous amount of de-duplication and spam filtering to keep the results clean.

Of course, this is a search service, not a listing service, so you can expect some spam and mis-classified results will sneak through. Some links will break due to changes, expirations, and finicky databases that were not designed to be “deep crawled.” In those cases, the cache is your friend. There’re also rivers of pornographic content that had to be filtered out, and occasionally, we miss a few. Please help out by reporting bad results using the links next to each result.

We will be adding more sources, better crawling, improved classification, and many more categories over time - this is just a start. We want to support the web community that wants to take highly-structured content and build applications on top of these massive data flows. When we start making revenue through syndicating this data, we will share it with the developers and sites distributing it via the API.

What more would people like to see? How can we help or improve?

Update: Some coverage of the launch and reviews from TechCrunch, Paul Kedrosky, Peter Ripand CNet.

Rich Skrenta dissects why Craigslist is so effective, in a must-read piece. Now it's time to consider exactly how effective it is.

If the Genie of the Market were to offer you all of the future earnings from EBay or Craigslist, which would you take? I'd take Craigslist.

Note that I'm talking about the strengths of the business models here. I'm fully aware that EBay owns 25% of Craigslist, so to say that Craigslist the company is worth more than EBay the company, I'd be saying that the capitalized Craigslist business model earnings are equal to twice the capitalized EBay business model earnings, and that is not what I'm saying. For evaluating the above numbers, look at the earnings generated by the business models, or assume that EBay owns 0% of Craigslist.

Estimating Valuation by listings

Craigslist currently carries 6M ads per month. At least 200,000 of these listings are job postings. They are in close to 200 cities (looking at their home page). They probably only have critical mass in about ten of those cities or less (from some casual browsing).

Currently, Craigslist charges only for Job postings, and only in three cities. Taken from Craigslist itself, we can see the rates:

And now they are adding fees for apartments in NY, and jobs in Washington DC, San Diego, Boston, and Seattle. Basically, as soon as a category in a city hits unassailable critical mass, look out!

So, jobs alone is today worth about $5 Million per month ($25 * 200K). Craigslist isn't monetizing it all, but the direction and the intent are both clear.

Of course, Craigslist will eventually be able to charge for jobs, apartments, real estate, cars, a little bit for personals, vacation rentals, services, big local items, and in some countries, small EBay items. Notice that online, each of those 7-8 other categories is on the same order of magnitude as jobs, or bigger. The EBay items part may need some clarification - in countries where the development of the Internet precedes the development of a reliable postal system, more product commerce will happen over a Craigslist-style local system than over an EBay-style national system.

If Craigslist only monetizes half of these, that's $20M per month. All of them and it's $40M per month.

But Craigslist is still growing. A LOT.

Here are some stats that Craigslist itself has been handing out (these are about three months old):

Growth

Overall Page View Growth Rate (all cities combined) for last 12 months: 195%

Raleigh, NC: 13M pages/month +800% last 12 mos
Vancouver, BC: 21M pages/month +675% last 12 mos
Dallas, TX: 22M pages/month +650% last 12 mos
Minneapolis: 21M pages/month +625% last 12 mos

Can they double in size within a year? Easily. More likely, Craigslist will triple or quadruple in size before growth starts slowing significantly. Our previous range of $20-$40M / month now goes to $40 - $160M / month (as we make more guesses, our accuracy goes down, of course). The midpoint has us at $100M in revenue per month, or about $1.2B per year!

Try it another way: Take 6M listings a month. Multiply by 10 as they hit critical mass in 100 cities, as opposed to approximately 10 cities today. Multiply by 2 since existing cities like NY, LA, SF will continue to grow. Charge for a mere 10% of the listings, and charge $10 per listing (that's a steal compared to the newspapers, and lower than Craigslist's current rates. It's also an average charge of $1 per listing). That's $1.4 Billion in revenue per year. Their cost is near-zero (no content, no marketing, community-based customer service, a dozen engineers). After taxes, that's still $1B in profit per year. Give them EBay's P/E and it's worth $50+ Billion.

I'm not adjusting the P/E for the fact that they are growing much, much faster than EBay (although that will inevitably slow down), or that their international opportunity is larger than EBay's (that pesky postal system thing again).

Traffic Check:

Here's another fun way to look at it. Alexa and other ranking sites mis-classify Craigslist as a community site. It has a traffic rank of 33 on Alexa (up from #40 when I wrote my first draft of this article last November!!), but if you were to consider it as a commerce site (it's classifieds, after all), it would be the 4th largest one, right behind Amazon, Ebay, and Yahoo.

Craigslist's growth has actually picked UP. How many big, successful companies are doing that?

2005 has been a great year for Craigslist.

Of course, for the other classifieds sites, it's a massacre:

So, will Craig take the money? Well, 25% of the company already belongs to EBay (they bought it from a co-founder of Craig's). Of the remainder, undoubtedly some is in the hands of employees. Craig is probably somewhere between 50% and 60%. He may want to give some of it to charity. Or family. Inevitably, he will own less than 50%. At that point, you can bet that the company will embrace capitalism and the virtues of liquidity.

Craigslist is a dot-org no more. It's a supercharged monopoly in the making for the single most monetizable category in the world (high-ticket items and classifieds), tripling or better year-over-year. And Craig Newmark, Customer Service Representative, is worth more than Larry Page or Sergei Brin.

The real story is that Craig is well on his way to building an EBay / Yahoo! sized business with no venture capital, no big-shot management, no marketing, no patents, no real technology, etc. He's taken all the value from newspapers with none of the cost. And everyone loves him for it (probably because he's leaving the money on the table). That's the power of the Internet.