You made a mistake in your calculation because you ignored leverage. Most people buy a house using some combination of equity and debt (usually 20% / 80%).
You need to calculate the return based on the equity invested. Assuming they paid 20% down that's $125K. The house appreciated $773K over the initial purchase price. That's a 6x return on equity, not a 2x.
But thanks for the lecture about how other people don't understand inflation / math.
My point was more about how journalists too often spout "PRICES DOUBLED!" to get attention like blood in the water, including here. And, in too many cases, it's over a time period that's 10+ years, so it's not really doubling, but 6%/year.
And, yes, leverage can profit, but it can bite hard too. Plenty of people bought at $500k with $100k down, then saw the value drop to $300k, meaning they lost 200+100 = $300k if they had to sell.
All fun math, with, yes, GROSS simplifications here.
Hey, not sure if you'll see this, but we'd love to write about the decline of the domain parking business at Priceonomics (or feature a guest post on the topic if you're interested).
If you have any interest, you can email me at rohin@priceonomics.com
Rohin from Priceonomics here. Thanks for the kind words.
Well, we're trying to build a company that one day has hundreds of writers and engineers working together. So, we've been writing all along and want to do more of it for sure.
Hi, I'm a co-founder of Priceonomics. Basically we started seeing more traction from two things (that weren't our consumer price guide).
First, the traffic from our blog was dwarfing the traffic (and engagement) on our price guide. We originally started our blog just to get links to drive SEO to our price guide. But, it turns out we love blogging so we really put our hearts into it.
Second, we started getting a lot more revenue from helping companies acquire and structure data than we were making from the price guide. All those blog posts we write were we crawl the web and do analysis based on the data? That was testing this out. We'll be writing more about that soon, so stay tuned.
The result is that we decided to focus on helping businesses get data and writing about data via our blog. About a month ago we started depreciating the consumer price guide.
So you switched to client-services basically? What sort of clients? I'm guessing buy-side (hedge funds) and maybe a touch of sell-side (investment banks)? Those are the only client-service relationships that immediately come to mind which are profitable enough to pursue entirely.
Some of this yes. But really, our first customers were / are other startups that were dedicating a lot of engineering resources to crawling and analyzing data. Eventually one company we were helping asked if they could pay us. We sort of stumbled into our first revenue and then realized there was a business there.
Good to know and good luck! On the financial clients, stick with the buy-side as they have substantially larger budgets and are willing to pay quite well for exclusivity. Providing data to sell-side analysts rapidly dilutes the value of your information.
On startups aspect, I'm surprised to hear that they aren't just using readily-available tools like Mozenda for basic crawling/scraping. Guessing you're able to provide either the scale or deep data that those tools are lacking? There's of course the legal implications with selling someone else's data / marketing leads / etc to be mindful of which can definitely get tricky as times. Yelp is notorious for pursuing with legal action those who scrape + sell their data. Yet everyone in the SMB marketing world still craves it.
Glad to hear you folks are still around and only pivoting to something (hopefully) sustainable.
I've always been a curious follower of Priceonomics for two reasons. One: the sheer research/depth of your posts that hit HN frequently. It's rare to find blogs that deep dive into such a diverse set of topics while writing eminently readable prose. Would love to read a post on how you find experts/how they research topics sometime.
Two: your name - Rohin Dhar - is a deprecation of my name - Rohin Dharmakumar. You've also been quicker than me in signing up with the @rohin usernames on most web services, HN included :) Glad to make the acquaintance!
But are you sure all the revenue coming from "helping companies acquire and structure data" is not correlated with the price guide access? That people that are long and short-term users of the price guide are the ones bringing their companies to your site?
Thank you Rohin and congratulations! I'm happy for you. It sounds like you've hit a market fit and will do well.
I am still sad for the loss of priceonomics as it was. I would be more sad to hear the business was not working out so this news is better. Still could the pricing engine continue to be a feature of priceonomics? Maybe remove the auto-generated image and the ads thus stripping the pages down to just the engine's pricing? Please?
I sent you guys an email back a couple of months ago and you never responded.
Most of the new articles, I have to say I like. I don't read all of them but I do read some of them.
I don't understand how you're turning this into value for yourselves. Where is this all heading?
I understand you're collecting data but how? How does that help you and other companies specifically?
Would love to learn more about the direction you're taking.
thank you for answering, your mentions tracker program must be working. I understand that blog traffic trumped your price guide, and you love it, and it brings in more money but did you ever think of your user/customer? it seems as though just from this thread and the tweet that was linked (amongst myself) there are a number of users that saw tremendous value in what you do. ever thought of turning the price guide into some sort of UGC engine powered by the people and moderated by a thin staff?
One of the competitive advantages the company I work for has is that it dogfoods its own software, which for some odd reason is a bit rare in its space -- we don't just think we know the problems our customers face, we're suffering them every day.
Somewhat relatedly, the managers I respect the most are the ones who continue to hammer out software themselves -- they don't just think they know the problems that software development faces, they're suffering them every day.
In both cases, it shows.
As such, I'm curious how you're planning to keep a healthy business helping other companies if you're not keeping your skills sharp on your own forge. I ask this in the nicest way possible. :)
I find the worst managers are those who try to pretend they are still developers. Managing is a full-time job, you need to be available for your team to interrupt; if you're writing code you're not. And since you will be interrupted, you can't pair-program or do anything that someone else is going to depend on.
Priceonomics is looking for a developer to help make some improvements to our blog. We have an internal CMS that needs a few improvements to make it easier for our writers. We also need to make a number of front end improvements to improve the design and reader experience. Python, Django, AWS, d3.js, jQuery background needed.
2) Data crawling engineers
We crawl a lot of websites to figure out the price of things and other insights. We are looking to talk to engineers that are wizards at crawling and parsing complex websites for a few projects we have. Python required.
I have 2 years experience with web development and in recent time I have done exactly the second thing you need. I have written python scripts for product price identification as an alternative for google shopping api.
So I can help with either of the two.
I'd suggest listening to this interview with the the CEO of Xhibit for even a few minutes to get a sense of the kind of "value" their team is bringing to the table.
His meandering string of banal platitudes and buzzwords is seriously next level:
"I personally refer to Xhibit as a multi-dimensional digital ad agency. Our gaol was to build a company with combined strengths of design, development, and distribution, to be a one stop shop for a clients digital marketing and advertising needs. Our synergistic array of software suites, tools, and offerings have been engineered from the ground up to help companies maximize results from digital strategies. I really want to emphasize results, Nick. Since we build our concepts from the ground up to help businesses maximize revenue, I always have the belief that if a client made money from a marketing campaign, they will in turn spend more money. This is why we have integrated some performance result models into our work today. The long term success any business or product relies on monetization."
The difference is that that Ballmer is talking about a company with real products that makes billions of dollars, and this guy is talking about a company with no real products and no revenue to speak of.
I don't know if it's next level so much as it is more or less standard verbiage from leadership at the agencies I've worked for.
I've tried to figure out why it is that some of the jargonized business talk seems more concentrated there than other places I've worked -- and the bigger the brand names involved, the more concentrated it seems to get.
My guess when you earn your bread and butter being the third party vendor that management turns to solve their problems, you do better in the marketplace when you speak the language they do.
It's just so charming when an interviewee answers by reading pre-written responses in an style that would never be used in a real (even somewhat formal) conversation.
So they're basically a company doing adwords PPC/CPA (cost-per-action) campaigns and they managed to become public via reverse takeover?
A big portion of the PPC industry has always been shady. I build software for diabetics and constantly came across highly-optimized landing pages promising to cure diabetes for $99. With highly questionable diets or videos.
They buy up all the expensive adwords health keywords (competing with big pharma), so they must be raking in money.
I also have friends who worked as adwords marketers for people making millions selling non-FDA approved health products (for ex. cleansers and skin bleaching products).
My wife got scammed by one of those nutraceutical "trials" once. You get some sample pills on a 14-day trial. The phone number to cancel the trial is disconnected. 14 days later, your card gets charged $80.
I've noticed a lot of them advertising on Facebook.
Is there any reason you know for the decline outside of your article? Has the merger hit snags since then? Did you ever look into the 10%+ beneficial holder "XSE LLC".
Rohin from Priceonomics here. Tumblr added this new button to our site this week I believe. We'll figure out some way to change / remove it; it's annoying.
You need to calculate the return based on the equity invested. Assuming they paid 20% down that's $125K. The house appreciated $773K over the initial purchase price. That's a 6x return on equity, not a 2x.
But thanks for the lecture about how other people don't understand inflation / math.