Craigslist is a classic American success story: boy with a couple of bucks buys a computer, thinks up an idea of posting free ads online and turns it into a global company. What no one predicted, however – least of all founder Craig Newmark – was that Craigslist would not only become one of America’s most popular websites, but that its simple business model would drive America’s media companies crazy. Janelle McCulloch meets the man behind Craigslist; now worth a reported US$5 billion
As a city, San Francisco is a plucky place, full of confidence, creativity and sheer audacity. This cheeky, sometimes rebellious spirit shows up in the way San Francisco does business: ideas here are bold, punchy and often so innovative that even their instigators wonder if they’ll work. But this is precisely how San Francisco has advanced far ahead of the rest of the United States: its pluckiness has pushed it to the very front of the business pack.
Some of this pluckiness, it could be argued, stems from the technology sector. Half a century after Haight-Ashbury’s hippies influenced the rest of America with their free spirit and forward-thinking ideas, San Francisco is once again pulsating with confidence and creativity – and generating new business ideas by the minute.
It is actually in Haight-Ashbury where one of San Francisco’s – and arguably America’s – most intriguing IT geniuses spends most of his day, happily ensconced in either his headquarters or his favourite café. It seems somehow fitting that the founder of one of America’s most popular website prefers to hang out in the Haight. In fact, there is almost a symbiosis with what Craig Newmark does and this place in which he does it. The business model of his website Craigslist is loosely based on a ‘community spirit’ and both the café and Haight-Ashbury offer perfect location for inspiration.
Essentially, Craigslist is a modern-day ‘trading post’; a central network of online communities offering everything from jobs to sofas, cars, apartments and even people. (It has a widespread reputation across America for being the place to meet people online.) The key to its success is that it is community driven. There are now Craigslists in 550 cities in 50 countries across the world. The raging success of it means it has become the twelth most popular website in America, according to web data researchers Alexa (it was ninth in late 2008), coming in behind such giants as Google, Yahoo, Myspace, YouTube, Facebook, eBay, Wikipedia and Amazon.
Craigslist is successful possibly because it’s all about lists. It’s even set out in a simple way, like a list. In a nutshell, Newmark is the man who has digitised the common urban list – and then made a fortune from it.
Just like his site, the man is a quiet, understated guy whose unassuming appearance belies a wealth of knowledge. When we meet at his favourite café in Haight-Ashbury, he looks less like a billionaire and more like your brother’s best friend. Dressed awkwardly in an ill-fitting blazer and Wal-Mart-style shirt, which looks like an outfit he borrowed from his brother (despite the fact that he has enough money to buy 10 clothing factories), he immediately welcomes me to his table with a congenial smile. Having shut his laptop, he has left only a business card between us, which – rather than hand over – he begins to scribble notes, lists and ideas on.
“Is this how Craigslist started?” I ask, amused and curious at the same time. “As a light-bulb moment writing out lists?”
“No,” he says smiling, in response to my
raised eyebrow. “It started off as being my idea of fun really. I used to email
lists of San Francisco’s events to friends, and then whoever wanted to be kept
in touch with what was going on. I did it for a few years and then people began
saying ‘How about putting more info on it?’
Newmark also did it as a way of meeting people – he had just moved to San Francisco, so the story goes, and felt isolated, as many newcomers do. Having already observed people helping one another in social ways on the Internet, he decided to create a similar model, only more entertaining.
Soon, word of mouth led to rapid growth: the subscriber numbers grew, as did the quantity of listings. Then people started using the mailing list for non-event postings, such as job vacancies. The popularity of the site grew so fast that by April 2000 Newmark had taken on nine employees, all of them working out of his tiny apartment. Craigslist expanded into nine more U.S. cities in 2000, four each in 2001 and 2002, and 14 in 2003. It’s now in 550 cities in 50 countries.
In short, it has become a phenomenal success. It has also become an unexpected nightmare for the media since it started taking classified ads away from newspapers and magazines. Indeed, Craigslist’s obstinate insistence on giving away what newspapers have made their bread and butter on has gotten the company a lot of media attention.Even Newmark admits he’s astonished at how successful his ‘lists’ have become.
“Oh I’m constantly surprised at the success,” he admits “I never really had a vision for the company; it’s just grew. But I think the key to it – apart from the fact that it’s simple and easy to use – is that it connects people and allows them to get in touch with their community at a street level again.”
I ask him if he thinks Craigslist is successful because it’s part of the new wave of change that’s seeing people seek to reconnect with their villages and communities, and to interact with people rather than machines.
“Definitely!” he says. “Craigslist works because it gives people a voice, a sense of community trust. It’s also a very down-to-earth site. It’s about simplicity.”
Does he ever think that it’s a little ironic: the fact that all this socialising and community spirit is all done online, using the very medium – the Internet – that’s traditionally been considered isolating and anti-social.
“Oh, the Internet is more personal now.”
You have to give the man credit: he’s certainly a visionary. But he’s also something of a maverick in this industry. In an age when his online competitors are making billions, he has chosen the road less profitable. You see, Craigslist is determinedly non-commercial. It was established as an ‘org’ domain, then incorporated as a for-profit in 1999, but still uses ‘org’ to symbolize the relatively non-commercial nature of the site, as well as its service mission and non-corporate culture. Newmark has turned down offers to make more money from advertising, and even reportedly turned down billions for the whole company. In December 2006, at the UBS Global Media Conference in New York, Craigslist CEO Jim Buckmaster told Wall Street analysts that Craigslist had little interest in maximizing profit, instead preferring to help users find what they wanted in life.
Ironically, this kind of focus has paid off, so to speak. When Buckmaster gave an interview to the Wall Street Journal in 2006, he revealed that Craigslist was in the black where many other Internet companies were now in the red.
“In the big Internet boom, thousands of companies were set up with the primary objective being to make a lot of money. And yet almost all of those businesses went under and never made any money,” he said. “Even businesses like Amazon still haven’t made any money. They are still, over their entire lifetime, net negative. Here we are, we’ve been in the black since 1999 – six or seven years.”
This may be because Craigslist has few overheads and only 25 employees. But it may also be because the site is so user-friendly that most of its content is managed by users. It is a true, free ‘community notice board’– albeit an online one.
Analysts and commentators have reported varying figures for both its annual revenue, which has ranged from a paltry $80 million to $150 million (noteworthy when you realise its peers among the Internet’s top 10 rake in billions) and its worth, estimated to be around $5 billion. (Newmark has reportedly turned down several billion for the company.) One Silicon Valley insider suggested that Craigslist is so valuable precisely because it’s run as lean as a not-for-profit company. It also has the potential to earn more through charging for ads – a whopping $750 million a year more. (Although it would lose the ‘community spirit’ attitude that Newmark has worked so hard to maintain.) All of this – the low overheads, the enormous future potential of it – means Craigslist has come under intense scrutiny in recent years, especially from potential buyers. One website ranked it in the world’s most valuable start-ups.
The company is believed to be owned by Newmark, Buckmaster, and eBay, but, interestingly, as much secrecy surrounds this as surrounds its revenue.
Rather than asking Newmark if he’s ever going to sell (and at what price), I ask him where he thinks the Internet is going; what direction he thinks the current revolution is turning in.
“Blogging,” he says without blinking. “Blogging is where the real power is now in the media. There have been bloggers for years throughout history, but we just haven’t seen them. Look at William of Oranges’ men.”
Newmark blogs voraciously on his website – and reads countless others when he has time. His appetite for knowledge leads one to wonder if he really does have his finger on the Internet pulse. Or, in this case, the keyboard.
“The Internet is changing all the time but its primary benefit will always stay same: it connects people,” he argues.
Whether through lists, blogs, forums or classifieds, the Internet certainly is linking people. And Craigslist is one of the main mediators in our modern global village.
You could argue that Craig Newmark is the corporate and Internet world’s last great rebel, eschewing, in what is a
very San Franciscan gesture, any ideas of profit to
focus on a philosophy of community spirit. If San Francisco is all about being liberal, breaking the rules and standing up for free speech and the hippie spirit, then Craig Newmark is surely the city’s most notable advocate. Say what you like about the man’s dress sense, but his business principles are to be admired.