‘We make it up as we go along’

Financial Times

Profile of Craigs List founder

January 19, 2005

With balding pate and slight paunch, Craig Newmark, founder of Craigslist, the US online listings company, is a self-described nerd. “I’m the company’s glamorous spokesperson,” he says.

Mr Newmark, 52, can afford to be self-deprecating. Craigslist, which began as Mr Newmark’s hobby during his off-hours as a computer programmer, is one of the most-visited classified advertising sites on the internet with only eBay and Monster.com claiming larger US market share, according to Hitwise, the online intelligence company.

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The folksy “online community” is how 6.5m users a month in more than 65 cities around the world find everything from jobs and apartments to jogging partners. The no-frills site, which generates 1.6bn page views per month, has affected the real-estate market in New York and the newspaper classified advertising business in San Francisco.

That is no small feat considering that the unassuming company has no advertising or marketing budget, no venture capital and has grown purely through word of mouth. Not to mention that Craigslist is run from a “dilapidated Victorian” house in San Francisco with a staff of just 18.

Now the company is stepping up its international expansion and creating an unlikely global empire built on a hodgepodge of used sofas, tech jobs, French tutors, golden retrievers and “casual encounters” – to name just a handful of offerings.

In the past few months it has added sites for cities such as Manchester, Paris, Tokyo, São Paulo and Bangalore, with many more in the offing. The company is considering launching sites in Spanish, French and German some time this year.

Craigslist grows organically, adding more cities as people ask for them. “We make it up as we go along,” says Mr Newmark, whose official title is “founder, chairman and customer-service representative”.

But in spite of this broad title, when asked about strategy he defers to Jim Buckmaster, the company’s chief executive. He explains that Craigslist’s sites do well in cities with good internet penetration and transient populations.

Mr Buckmaster points out that Bangalore, for example, is a well-wired city where English is commonly spoken. It also has strong connections to the San Francisco Bay area because of its community of people working in high-tech industries.

Bangalore has only a smattering of listings so far but a site typically takes a year to become established. In any case, adding cities poses little risk since additional investment is minimal.

Mr Buckmaster, who is also a former programmer, acknowledges that starting multi-language sites is a much more ambitious undertaking. An adherence to simplicity is a hallmark of Craigslist and the main reason it has been so successful. The website is fast, simple and, most importantly, free. Charlene Li, an analyst at Forrester Research, notes that Yahoo’s classified advertising business “really died off” when it started charging a few years ago.

Craigslist can afford to be free to small users because profits are not at the top of its agenda. When Microsoft approached the company about running banner ads on the site in 1997, Mr Newmark declined. “We have a non-commercial approach because we are not looking to maximise revenue,” he says. “There are a lot of things we don’t do. We don’t have banner ads or a marketing programme, or post any ads ourselves. We’re not selling lists [of users to other companies].”

Craigslist’s priority is to offer a community service, he adds, in keeping with its origins as a list he started sending to a dozen friends in 1995 to inform them about “cool events” around San Francisco.

The list grew, fuelled by the dotcom boom of the late 1990s when employers in the Bay Area were desperate to hire and people were searching for a forum to exchange goods, services and ideas. As a reflection of its public-service roots, Craigslist helps Bay Area non-profit organisations.

In terms of revenue, Craigslist is small. It makes money by charging employers in San Francisco, New York and Los Angeles a small fee to post jobs, usually between $25 and $75. This generates between $7m and $10m in annual revenue for the company. By comparison, the total revenue at Monster.com, another classified advertising site, was more than $679m in 2003. “We don’t charge for anything unless it improves service for all concerned. We don’t charge individuals,” says Mr Buckmaster. However, this low-key approach unintentionally siphons off as much as $65m in jobs-listings revenues a year from newspapers in the Bay Area, according to US consultancy Classified Intelligence.

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