Interview on Small Businesses for the Washington Post

May 14, 2008   

3

I was interviewed by Big Think as part of a series on small businesses for the Washington Post. You can see the interview below.

For more interviews on the topic you can visit:
http://bigthink.com/users/fabricegrinda

  • always informative – fabrice, and as a girl who grew up with the washington post every morning, you did me proud! congratulations.

    Reply

  • fabrice,

    nice interview, however let me ask, your 3rd or 2nd selection criteria stated that you need to know about the business model and margins, etc. How did you think about this when you evaluated the opportunity for OLX. At this point, it seems OLX is all free with targeted adsense, are you looking at following craigslist model in terms of having companies pay for jobs and other categories or are you waiting to get to scale and then figure out a model at that point (which wouldn’t fit with your criteria)?

    Reply

  • For OLX, I did not use Craigslist as it is currently run for the analysis. At OLX we never intend to charge listings fees so the comparison would not have worked. Instead, I looked at the CPCs we could expect to get from Google AdSense (by looking at AdWords CPCs and dividing them by two – assuming Google takes 50%) in the relevant categories of OLX: real estate, jobs, cars, merchandise sale and personals. Then I used the average Google click through rate. The hard part was modeling our traffic and traffic growth.

    If Craigslist was run the way I run OLX, it would be worth $20+ billion. They do around 10 billion page views per month in the US. In the US, we get a $12 eCPM from Google on a non-negotiated deal. They could probably get 95% of the revenues from Google -> $23 eCPM.

    Let’s be conservative and say $10 eCPM on 10 billion page views per month -> $100 million per month -> $1.2 billion per year. Conservatively saying they have $200 million in hosting costs, salaries, etc. (and they are only 25 people), that’s $1 billion in EBITDA. Given their growth take a p/e of 20 and that’s a $20 billion market cap company.

    Reply