Teen Trades up on Craigslist from Phone to Porsche in 2 Years | Hacker News Reader

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

mercurynews.com

69 pointsdpatru56 comments

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.

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.

Is that what is called arbitrage ?

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.

It's certainly the same market, however it's still hardly a level playing field. There's social niches, even in elementary schools, that people generally avoid drifting out of, however a nomad can drift between these niches and exploit mispricings in an individual market.

It's not so much changing market, but being a supplier who looks for clients who haven't met the other suppliers in the market. It wouldn't be arbitrage, but it would be a nice way of exploiting newbies in a market. Sort of how Bestbuy profiteers off of having a well recognized names whilst being far off from having the best prices (I bought a surge protector the other day that they were selling for $20 more than the place across the street, I was smart enough to bring the other stores flyer and got 10% off extra).

> Arbitrage is exploiting mispricings of the same item in different markets.

There seem to be narrower and wider definitions of arbitrage. Some narrow definitions require arbitrage to be risk-free. Some wider definition accommodate things like statistical arbitrage (http://en.wikipedia.org/wiki/Statistical_arbitrage), which is far from certain and doesn't even use the same items, but just items with correlated prices.

True. A broader definition is probably 'exploiting price differentials of correlated assets'.

Market is irrelevant, and both 'same item' and 'different but correlated items' are both subsets. And 'mispricing' presumes there's a true value, which may or may not be case.

My personal definitions are backwards from that: I just define `mispricing' as anything that allows arbitrage. (Especially risk-less arbitrage. But you can -- in theory -- make almost all arbitrage as risk-less as you want, with the right derivatives.)

depends on what you consider to be the market(s). the north and south sides of the playground might have rather different valuations of a card. if you can realize that and safely transport your goods that distance, you've got an opportunity.

I guess that when I think of kids trading cards like Pokemon or Baseball cards, I envision kids from different social strata all religiously reading the Pokemon websites and having a similar idea of the value of the cards.

But having done no card trading of any kind myself, I wouldn't really know, that's just an assumption based on a few observations and anecdotal evidence.

True arbitrage has to be riskless.

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

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.

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.

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.

On the contrary. This article is great personal marketing -- who can deny the hook of "from phone to Porsche?" He gets a great anecdote and branding angle for the rest of his life. I'd say the lifetime value of appearing in this article is easily worth the trading down.

And besides, we can't necessarily exclude the possibility that he negotiated a little cashish on the side while trading down.

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

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.

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.

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.

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.

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!

The only cars which are investment grade cannot be driven, and you've got to be an absolute expert to make money on them - like an art expert, knowing what will be in demand in the future.

No car is an investment, unless you're making money from driving it, ie a limo or rental car.

Porsches have some of the best depreciation resistance in the business, but even they can't resist the pull of gravity that comes with use, and the inevitable production of newer, better models. A pristine, low mileage used Porsche is a good buy, a well-used cheap model is best avoided and admired from a distance.

Your 98 Boxster is 12 years old. They cost about $60k brand new. Holding 15% of it's value over that time isn't too bad, considering you're down to about 55-60% original value in the first year alone. You're probably at 30-35% after 3 years.

Not that I'm complaining - I picked up a 97 back in 2004 for about $13k (when I worked at a car dealership), drive it for 2 years, and sold it for $14k. What's nice about the Porsche was that a 97 looked just like a 2006 since they rarely change their body styles. I did have to replace 2 tires though which was like $500. Not cheap to own, but plenty of fun to drive.

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.

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

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.

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.

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...

That's more a result of YC's popularity and limited capacity than any desire to be selective. A VC who dicks around with you for months on end and only makes 5 investments a year is selective--YC is just popular.

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.

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.

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

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

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.

Yes, for a kid, this was probably an extremely valuable use of his time, and he seems to have had fun doing it. He probably learned more than he would have working a retail or service job, even if he made less money per hour.

My parents are antique dealers, and my grandmother was a junk dealer who owned a thrift store. I grew up going to flea markets and garage sales, and my first business was started when I was twelve (I bought broken Commodore 64s, Apples, and TIs, among others, at garage sales and flea markets, fixed them, and sold them for four to eight times what I paid for them). I worked at my parents store and in their booths at flea markets throughout high school. I'm a ridiculously good salesperson when it comes to interacting directly with a customer, and people are often amazed when they see me in that context because I'm an introvert in nearly every other situation.

In short, having the ability to buy/sell/trade your way up from nothing is an incredibly useful skill, and it can make it possible to weather bad luck in other aspects of life.

Perhaps it would have been even better for the guy, if he had traded in person?

Perhaps. But, effective ad copy is also valuable. Negotiation is negotiation...though it does take a whole different set of skills to negotiate face to face.

That said, I suspect he did deal in person quite a bit, even if the meeting was made on craigslist. I've sold tons of stuff on craigslist, and there's often a bit of back and forth, either on the phone or when the person comes to look at the item. All things are negotiable.

Would you talk about what makes you good at sales?

There are several aspects that are pretty ephemeral...it's just a demeanor and a way of interacting joyfully with people. But, the stuff that I can put into words (and if these fall into place, you'll probably acquire the ephemeral bits with practice):

I love what I sell. And I won't try to sell something I don't love, no matter what it is. If I don't love it, I'm not in the right business, and I'll quit. My current product is one I've been working with for over a dozen years, I've written a (published) book about it, and answered thousands of questions on mailing lists and forums. My appreciation of the product I currently sell runs very deep.

I hate wasting people's time. I hate wasting my time more than anything. So, I qualify people immediately. With my current product, I'll ask, "Do you do any system administration?" and follow up with, "What kind of things do you do?" If the answers don't match what my products do exactly (UNIX/Linux not Windows, website-oriented stuff not desktop or enterprise, etc.), I send them on their way. I'll recommend something else or shrug my shoulders and wish them luck. I won't try to figure out some way to sell them something they don't need. There are millions of people out there who will be well-served by my products...I don't need everyone I meet to buy to make me rich.

I get satisfaction from the whole process, not just the money. I enjoy helping people scratch exactly the right itch. This applies to anything you'd want to sell. At the end of last year, I decided to move into a motorhome and travel the country for a year or two...this meant downsizing dramatically, so I sold thousands of dollars worth of stuff I'd collected over a couple of decades of collecting. Guitars, synths, bikes, antiques, books, furniture, etc. I spent way more time than the money justified to make sure my ads were incredibly descriptive, the photos clear and numerous, and that the person buying knew exactly what they were getting. Some items were only selling for $50...and I probably spent an hour or more on every item I sold, once everything is tallied up. My hourly rate for contract work five years ago was $125/hour, and I wouldn't work for anywhere near that little today...but the process of selling is fun. Coming back to only selling stuff I love and believe in, I took everything I didn't consider awesome to Goodwill or threw it away. I won't sell something that isn't worth talking to someone enthusiastically about. I also like to know a lot about the stuff I sell. A friend asked me to sell some luxury goods she wanted to get rid of at the same time (they were in my closet when I was doing the purge), but I just couldn't do it...I don't know luxury goods and I don't care anything about them. I could never be a luxury goods salesman, no matter how much money was involved.

Of course, the big thing is just practice. I was raised in a world where all the stuff surrounding me, no matter how nice, had a price and was for sale (my mom rotates stuff through her house, so things come and go). I've spent a few hundred weekends at flea markets and garage sales...you can't help but get a feel for negotiation and sales in that environment.

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.

Sounds like an exaggeration.

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.

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

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

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.

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)

Seems like a legitimate tactic to me.

Only if he obtained their services by trading something to them that started from the paperclip.

Yes, you could hold him to such standards. On the other hand, he has to do some PR for getting his goals -- does it matter, if he does his own PR or hires an agency?

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

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?

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.

> 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.

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!!

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

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