Teen Trades up on Craigslist from Phone to Porsche in 2 Years

http://www.mercurynews.com/top-stories/ci_15558973

by dpatru • 16 years ago

69 56 16 years ago

makeramen• 16 years ago

Reminds me of my pokemon card days in elementary school. I started with ~5 cards a friend gave me and somehow traded up to a deck of 400-500 with a decent amount of holographics too.

The only time I ever bought cards were a couple booster packs, but that was after I already had 200 some.

Good times.

The art of trading comes from knowing that value is relative, you just need to find the people who want what you have more than others.

lkozma2• 16 years ago

Is that what is called arbitrage ?

SkyMarshal3• 16 years ago

Not exactly. Arbitrage is exploiting mispricings of the same item in different markets.

For example, say you buy an iPhone from Craigslist for $100, then turn around and sell it on Ebay for $150, netting you $50.

Or conversely, you get an iPhone for your birthday for free, sell it on Ebay for $150, then buy a second one from Craigslist for $100, netting you an iPhone+$50.

That's arbitrage. It sounds like makeramen's Pokemon trading all happened in basically the same elementary school market.

johnnyg• 16 years ago

It was alarming to read that people tell him he is a con artist. He's a good businessman.

InclinedPlane• 16 years ago

He's a businessman, but whether or not he's good is a question for debate. Most people working the same hours have a higher income. Do the math, if the Porsche trade represents all of his "income" from bartering he made $3.6 an hour, if it represents half of his income then he made minimum wage.

It's interesting, and somewhat novel, but hardly astounding or terribly impressive.

KingOfB• 16 years ago

The drive is incredibly impressive. The kids 17! You can use math to water down time spent to gain any result:

Kid plays quake through middle school to determine he wants to learn computers so he tinkers 6 hours a day through high school. Then goes to college and spends another 8-10 hours a day working on school for 4 more years, then he works for 3 years to save up enough money to buy a porche in cache.

Hah, nice spelling mistake. Back to fixing this bug in my cache.

Unseelie• 16 years ago

He's demonstrated being a pretty poor businessman. He's traded down, knowingly, on multiple occasions, and furthermore declined trades of businesses, which generate income, for cars, which depreciate.

philwelch2• 16 years ago

He started with a phone and ended up with a Porsche. OK, maybe he's not Richard Branson or something, but he gets results.

PostOnce• 16 years ago

He started with an old phone. By your logic, if he started with a million dollar item, he'd be worth over a quarter billion dollars now, and he'd have been making a lot more than minimum wage.

So, rather than say his achievement is unimpressive, say "imagine what he'll do once he comes into some real capital".

Possibilities -- it's what HN is about.

Qz• 16 years ago

Tomato, tomahto. It's the same thing if you really take the time to think about it. The only difference is in the implied value judgment.

noelchurchill2• 16 years ago

He spends five to six hours a day on his i-Phone scouring the website for good deals.

zokier• 16 years ago

That sounds kinda crazy. 5-6 hours daily for two years could have easily earned him money to buy a Porsche, for cold cash.

noelchurchill2• 16 years ago

That's what I thought. But I doubt he actually spends that much dedicated time. Rather he's probably multi-tasking, checking in periodically over the course of 5-6 hours.

I bet he's mastered some important negotiating skills.

hristov• 16 years ago

Yeah, but he probably likes doing the ebay thing, and would probably hate any job he can get as a teenager.

He should probably be able to start a good career as a professional pawn shop or antiques dealer.

houseabsolute• 16 years ago

Sounds like an exaggeration.

travisro• 16 years ago

I wonder if he has each trade he made published somewhere. It would be interesting to see the exact progression trade-by-trade.

turnersauce• 16 years ago

This guy went from a paperclip to a house: http://www.oneredpaperclip.com/about/.

A couple of my friends actually got a barbecue from him off of Craigslist. Sadly, I think the transaction only involved money.

plusbryan• 16 years ago

the red paper clip guy actually hired a pr firm to help him gain publicity and achieve his goal (I knew a guy at the pr firm he hired)

eru7• 16 years ago

Seems like a legitimate tactic to me.

jbail• 16 years ago

That it only took 14 trades to go from phone to Porsche is most impressive. He's gonna have an awesome last year of high school with that ride.

Wonder what his insurance costs?

noahc• 16 years ago

Insurance rates, while higher because of type of car and age, shouldn't be too absurd. Even if he wrecks the thing, the company is only out ~9,000 or so.

jonknee• 16 years ago

> Even if he wrecks the thing, the company is only out ~9,000 or so.

Car insurance isn't expensive because cars are expensive, but because people are expensive. You can hurt a lot of people in a fast car, even if it's not expensive.

HeyLaughingBoy• 16 years ago

I beg to differ. Collision/comprehensive on a sports car isn't the expensive part, liability is. Totalling the car may only cost the insurer $9k, but an accident can cost $100k+

Male, under 25, driving a used old sports car? Been there, done that, paid the insurance...and it wasn't fun!!

replicatorblog• 16 years ago

I feel like this is a YC start up in the making.

AirBNB = Couchsurfing/Craigslist rentals

Daily Booth = The "Pic a Day" meme

Along those lines a startup where people can trade their "junk" in a slightly competitive aspirational way. A more social eBay, based around local and some competitive game mechanics that reward big scores.

nhebb• 16 years ago

NotifyWire automates Craiglist monitoring. I don't know if it would help the barter system, though, since that relies on judging each trade opportunity.

euroclydon• 16 years ago

I'm sure NotifyWire violates CL's terms of service.

dpatru3• 16 years ago

One of the points that Charlie Munger makes in his talk on worldly wisdom (http://ycombinator.com/munger.html) is that good investors tend to bet heavily when the odds are grossly in their favor and not bet at all the rest of the time.

The teen in this story illustrates how consistent application of this principle yields good results.

This is also how Paul Graham operates YCombinator: he carefully evaluates all the investment opportunities that come his way and only bets on the few that seem to him to be particularly good deals.

More generally, the key to highly profitable business seems to be to focus on servicing profitable customers.

jacoblyles• 16 years ago

YCombinator's strategy is better described by Nassim Taleb's "Extremistan" parable. In Extremistan, most of your gains from stock investing happen from the few investments that make you a lot of money. So it's wise to distribute your investments over a large number of small investments, counting on the fact that your winners cover your expenses for your losers.

This is the opposite of the small number of large investment strategy.

dpatru3• 16 years ago

Relative to the amount of opportunity it has, YC is very selective. According to Business Week, YC's acceptance rate is 4.4% (1). For comparison, Harvard's rate is 6.9% (2).

I'm just realizing that besides launching early, working hard, iterating rapidly, listening to your customers, persevering, etc, a big part of success in business seems to be selection: having the discipline and patience to pick the best deals. Deals can involve physical trades (as in the posted article), investments, customers, or even tasks to do. Whatever your process is, a good way to make your outputs above average is to select above-average inputs.

It seems obvious that the way to trade up from a phone to a Porsche is to carefully select your trades. It's not so obvious, at least to me, that the way to run a very profitable YCombinator is to carefully select your founders. Simple selection may be more important than locating in Silicon Valley, having regular dinners with great speakers, offering legal and technical help, and introducing investors. When you start off with great entrepreneurs it's not so hard to make them even better.

I'm naturally a believer in transformation. * If the trade as advertised is not a good deal, let's negotiate and we'll make it work. * If a person is not a good entrepreneur, that can be fixed with the right training program and environment. * If the product is not right for this customer, we'll add features and cut the price until it is right. * If a person has the wrong political beliefs, what is needed is some good logical argument.

This sometimes works, but it is often more efficient to simply look for a better deal: Find someone with a better trade; find someone who's more entrepreneurial, find a customer with more of a need, find a voter who already agrees with you.

1. http://www.businessweek.com/smallbiz/content/sep2007/sb20070.... 2. http://www.thecrimson.com/article/2010/3/31/financial-aid-pe...

vannevar• 16 years ago

At this point in his career, the fact that PG is investing in them is by far the single most valuable thing about any of his startups, much more valuable than their respective business models. The businesses succeed because he invests, he doesn't invest because they succeed.

That doesn't mean any business model can succeed with funding, only that once you're funded you've got a lot more flexibility to adapt your business model to the reality of the market you engage and this flexibility makes you much more likely to be successful.

dpatru3• 16 years ago

I think YC is on a virtuous spiral. A YC investment increases a candidate's chances of success. This attracts a lot of candidates which enables YC to select the ones that have the greatest chance of succeeding. Which further improves YC's record.

Harvard is in a similar situation. A Harvard graduate is impressive because the students selected by Harvard are impressive because a lot of students want to be Harvard graduates. This is why elite schools can give away their curriculum on the Internet. If the content of the curriculum were critical, then top schools would guard it more closely. However, if the best students are already attending, then top schools don't have much to fear from the left-behinds who follow along for free on the Internet.

This is an example of something you can't copy. As long as the best high school graduates keep choosing Harvard, Harvard has little to fear from a competitor who meticulously copies its fine classrooms, libraries, and curriculum. Similarly, as long as the best entrepreneurs choose YC, YC would still do well even if all of its dinners were broadcast free on justin.tv.

jaytee_clone• 16 years ago

Five hours a day at $10/hr for two years could have earned him $30,000 (5x10x600, i'm sure he was bartering during weekends too)

His car only worths $15,000.

eru7• 16 years ago

The article estimates his current car (the Porsche) to be worth $9,000. (By the way, I always thought a Porsche would cost more, even used. Hey, I may get myself one for this price.)

We also don't know what other trades he has made during this time. Judging by the description in the article, he seems to be quite prolific, and has probably also made some money with refurbishing electric gadgets and so on.

And we also learned that he still worked at a sushi bar (but lost the job at some point in time). So he has quite a lucrative hobby, but still did a day job.

blizkreeg• 16 years ago

Porsche's seem to depreciate in price pretty rapidly. I was surprised to find that my used 98 Boxster is now worth only 9k. Bad investment, these cars. And I bought mine used for less than the price of a new Accord. But fun rides!

lkozma2• 16 years ago

Probably he doesn't like working for anyone else and it's worth this opportunity cost for him.

piaskal• 16 years ago

That's one way to look at it. Having a job will get him $15,000 every year, after two more years he would have $60,000. It would be interesting to see if can trade up to, for example $100,000 in next two years using that $15,000 as starting point.

eru7• 16 years ago

It would be interesting to read about all the counter parties to the swaps. Are they still happy with their trades?

brc2• 16 years ago

I read the article, trying to find what he traded for the upkeep and insurance on a 10 year old Porsche. Unsurprisingly, he's going to sell it (trade it?) soon.

There's a reason why old sports cars seem to cost so little : it's because they'll cost their purchase price again in a few years in maintenance. They have expensive engines, expensive tyres, expensive suspension, expensive interiors. Plus, they get bought by people who like to drive fast and so wear out quicker. And, largely, they aren't servicable by the home mechanic. Consdier the Boxster in the article - you have to have a hoist just to even look at the engine- there's no engine cover or user-accesible access panel.

While a used Porsche is probably the best of a bad bunch of old sports cars (Corvette excepted, to a point) they are only for the person who really knows what they are doing. There's a reason many Ferraris don't ever get past 12,000 miles or so : because they need servicing all the time, and that servicing costs a bomb. In some cases you have to remove the engine for relatively routine jobs like changing a clutch, spark plugs or a water pump, and that costs serious money.

Anyone thinking of buying a 'cheap' sports car should watch one of the many 'Top Gear' episodes where they purchase a cheap sports car from the classifieds/internet and then try and drive them a certain distance, outperform a standard Honda, etc. That should put your dreams on hold for a bit.

Teen Trades up on Craigslist from Phone to Porsche in 2 Years

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