Craigslist, Inc.

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Craigslist, Inc.

1381 9th Avenue
San Francisco, California 94122
U.S.A.
Telephone: (415) 566-6394
Toll Free: (800) 664-0633
Fax: (415) 504-6394
Web site: http://www.craigslist.org

Private Company
Incorporated: 1999
Employees: 24
Sales: $25 million (2006 est.)
NAIC: 516110 Internet Publishing and Broadcasting

1994–99: FROM ONE MAN’S SOCIAL CALENDAR TO INTERNET PHENOMENON

2000–04: MAXIMIZING SOCIAL CAPITAL, GIVING BACK TO THE COMMUNITY

2005–07: CHALLENGING CLASSIFIEDS ADS WITH ITS ASTRONOMICAL GROWTH

PRINCIPAL COMPETITORS

1994–99: FROM ONE MAN’S SOCIAL CALENDAR TO INTERNET PHENOMENON

In the early 1990s, Craig Newmark, a systems security consultant for Charles Schwab, was looking for a way to improve his social life. Newmark had had a long career in computers; from 1976 to 1993, after leaving New Jersey and earning undergraduate and master’s degrees in computer science from Case Western Reserve University, he became a senior associate programmer and then an advisory open systems specialist for IBM. Newmark, a self-described “nerd,” planted the seed for craigslist in 1994 with the “honest intent of connecting with community, of trying to connect with other people. ... In our culture, I think we crave that,” he explained in a San Francisco Chronicle article in 2004. Newmark’s e-mail list, which he circulated among friends and acquaintances in his new hometown of San Francisco, contained events and happenings in and around the Bay Area.

Newmark’s list grew by word of mouth and became extremely popular. “[M]ore people wanted in on the thing. Over time people started to say, ‘Hey, can we put this job on there?’ or ‘Can you post this thing I want to sell?’” Newmark recounted in the San Francisco Chronicle in 2004. When the dot-com boom created an apartment shortage in San Francisco, he started to post apartment listings. By the middle of 1995, Newmark had about 240 names on his list, and the e-mail tool he was using started to break down. Consequently, he began to use a list server, which meant he needed a name for his undertaking. He thought about calling his brainchild SF Events, but people were already calling it craigslist; he went with the eponym instead.

Soon after Newmark started craigslist, he left Schwab and started doing software contracting in 1995. This arrangement gave him more time off as well as more income. Newmark made use of his coding expertise, and craigslist metamorphosed into an unadorned web site. According to Newmark in a 2004 San Francisco Chronicle article, “[I]n December 1998, I was told by some of our customers that things needed fixing. After a certain amount of procrastination and denial, I admitted they were right. I left the startup I had briefly joined and started making a real company.”

By 1999 it became clear, according to Newmark in the same 2004 San Francisco Chronicle article, that “we had to become a serious business. ... We were trying to do it with volunteers, and things were falling apart.” He incorporated his company as a for-profit venture with a staff of four, using the “.org” designation to indicate craigslist’s commitment to community and nonprofits. “The org indicates intent, in the sense that we’re like a commons,” he explained in the Economist in 2004.

The following year, Newmark hired Jim Buckmaster, who had been doing web programming and who had posted his resume on craigslist in late 1999. Buck-master became the company’s president and chief executive in 2000. His background included a biochemistry degree from Virginia Tech, a stint at medical school, and a decade in a commune in Ann Arbor, Michigan.

Together, Newmark and Buckmaster split up the responsibilities of running the business, whose staff numbered about 12, according to their talent and inclination. Buckmaster, who was far less social than Newmark, took on the administrative issues of the business. Newmark took over customer service, following up on complaints about postings and personally answering all of his e-mail from a café in his neighborhood called the Reverie.

2000–04: MAXIMIZING SOCIAL CAPITAL, GIVING BACK TO THE COMMUNITY

From the start, craigslist steered clear of banner ads, pop-ups, give-aways, stock quotes, sports scores, and hot links. In addition, customers did not need to register to use the site. Because the company did not attempt to maximize revenues, it was able to exist without sales, marketing, or advertising teams or a plan for business development. It used open source software, such as Linux, which meant it had no licensing costs to pay. “We try to maximize social capital rather than financial capital,” explained Jim Buckmaster in a 2006 Daily Telegraph article of the philosophy that held sway at craigslist from the start. “We get a lot of personal satisfaction from all the thank-you notes we get from people. We have it pretty darn good. We just don’t see any reason to try and put a bunch of zeros at the end of bank balances that are perfectly adequate.”

“We’re not so much anti-capitalist,” said Buckmaster, who lived in a rented house and had never owned a car. “We’re fortunate enough to have built a very healthy business, even though we haven’t attempted to.” Newmark, who owned a modest home in San Francisco and drove a Toyota Prius, explained it thus in the San Francisco Chronicle in 2001. “I have no objections to being rich, and I’m sure not anti-commercial, but we made a conscious decision about what craigslist was all about. And it’s not about making money.”

The craigslist team also dedicated itself to giving back to the nonprofit community. Each year beginning in 1995, it held an annual craigslist party in San Francisco. In 1999, it organized a nonprofit venture forum where six nonprofits (from among 40 that auditioned) could present their cause and solution to social entrepreneurs who possessed the financial and technical means to make things happen. In 2000, it distributed most of its revenues of about $60,000 to charities or to community groups as cash grants through the new nonprofit craigslist Foundation. It also teamed up to work with Bay Area nonprofits dedicated to bringing technology to grassroots organizations. In recognition of its many accomplishments on behalf of the community, craigslist won a Webby in 2000 for being the best community web site from the International Academy of Digital Arts and Sciences.

COMPANY PERSPECTIVES

Using a common sense, down-to-earth approach, craigslist strives to make the ’net more personal and authentic, while advocating social responsibility through the promotion of small, non-profit organizations.

The list continued to grow, although it kept its noncommercial aesthetic; it featured no fancy graphics or moving pictures, which would slow down page loading, and stuck to plain text and hyperlinked words for navigating among its various categories. It had “all the visual appeal of a pipe wrench,” according to Buckmaster in a 2007 Globe and Mail article. Beginning in 2000, craigslist began to add other cities. Boston was first, followed by Chicago, Los Angeles, New York, Portland, San Diego, Seattle, Washington, D.C., and Sacramento.

Newmark explained the process for adding a new city to the site in a 2004 San Francisco Chronicle, “We put up a city based on how many people are asking us to do so. It’s also based on Jim’s perception of a city’s demographics and the city’s broadband penetration and intuition. We use word of mouth to get the word out, though sometimes the local press is kind.” All cities came under the umbrella of craigslist and used the same URL, although each relied upon its own local volunteers. “Our philosophy is, find people in other places with the same spirit as craigslist. We’ll provide the technical backup,” Newmark explained in a May 2000 Investor’s Business Daily article.

By 2001, there were 13 American cities and one Canadian city on craigslist, which together received a total of 60 million page hits per month and published 170,000 classifieds and 54,000 postings on discussion boards. By the start of 2004, there were close to 30 craigslist cities across the United States, one in Canada, and one in England. Five million unique visitors came aboard craigslist each month and totaled up one billion page views. By the end of the year, craigslist hosted close to 60 different cities in the United States, the United Kingdom, Canada, Ireland, Australia, Japan, the Netherlands, Singapore, India, and Brazil.

As the number of postings on craigslist soared into the multiple millions, there were, of course, some bad apples in the bunch. The site made a policy of tolerating no hate-filled postings and none that took advantage of minors, but there were no site moderators. Craigslist relied upon site visitors to alert it to offending postings, which it would then remove, as Newmark explained in the 2004 San Francisco Chronicle article: “[I]f anyone sees an ad they feel is wrong, they can flag it for removal. If enough people agree, it’s removed. ... Whenever there is a problem and a person just keeps doing this [posting inappropriately], we try reasoning with them. That usually works.”

Revenues grew apace with craigslist’s popularity and its steadily increasing flow of traffic, as did its staff. In 2003, the staff of 12 made the decision, after polling users to see what they thought, to start charging $75 for employment ads on its San Francisco site to solve the problem of repeated listings for the same position. By 2004, revenues had reached around $7 million and the staff numbered 15. The mayor of San Francisco pronounced October 10, 2004, craigslist Day in the Golden Gate City. A documentary on craigslist, called 24 Hours on craigslist, also appeared in 2004.

Beginning around 2001, Newmark received regular offers to sell craigslist, which he summarily turned down. In August 2004, however, a former craigslist employee sold 25 percent of the firm to eBay for somewhere between $12 million and $15 million. New-mark had given the equity away some years earlier as a means of “establishing checks and balances” within the company. He admitted that the sale had not been part of his plan, but he was “happy with the results.” The partnership with eBay allowed the two companies to share knowledge, expertise, and programming. It helped craigslist expand into overseas cities, developing non-English-language versions and shutting down overseas spammers and scammers. EBay, for its part, benefited from craigslist’s listing model.

KEY DATES

1995:: Craig Newmark begins craigslist in San Francisco, California.
1999:: The company incorporates as a for-profit enterprise.
2000:: Jim Buckmaster becomes president and chief executive; craigslist wins a Webby for being the best community web site; craigslist begins to add others cities.
2001:: The company creates the nonprofit craigslist Foundation.
2003:: craigslist starts to charge for employment ads in San Francisco.
2004:: eBay acquires a 25 percent equity stake in craigslist; craigslist starts to charge for professional job listings in some cities.
2006:: craigslist starts to charge for brokered apartment listings in New York City.

2005–07: CHALLENGING CLASSIFIEDS ADS WITH ITS ASTRONOMICAL GROWTH

By early 2005, craigslist had grown to serve more than 75 cities and was attracting more than six million visitors and three million postings per month; by the end of the year, there were close to 200 cities and two billion hits by as many as eight million unique viewers. Nielsen/NetRatings ranked craigslist 13th on the top 20 list of general interest portals and community destinations on the Web. It earned between $7 million and $10 million in revenues from its New York, San Francisco, and Los Angeles job listings. Users viewed the job pages more than any other area, yet the 160,000 job postings monthly constituted only slightly more than 3 percent of the site’s five million classifieds. In New York alone, from mid-2004 to 2005, site usage grew 25 percent; during the same period nationally, usage of craigslist increased 73 percent. By year’s end, craigslist attracted 9.8 million users per month in the United States.

By this time, magazines and journals were beginning to talk about the effect that craigslist was having in the marketplace where sales of classifieds were sluggish and help-wanted ads were slow. In 2005, Knight-Ridder and Tribune Co. began to offer its own free classifieds for the sale of low-cost merchandise. Other Internet giants, such as Google, Microsoft, and eBay, all three of which had introduced rival classified services by 2006, presented their own increased competition. However, craigslist was not “losing sleep over competition,” according to Buckmaster in a 2006 San Francisco Chronicle article. “Use of our site continues to grow rapidly to the point of challenging us to keep up with it.”

In an impressive growth spurt, in November 2006 alone, the site added 130 new cities, and, by 2007, when it added the feature of a voice-over-Internet-protocol (VoIP) link that hid user contact numbers, there were 450 local listings services in 50 states and 50 countries. Revenues, still limited to fees for recruitment ads in seven U.S. cities—San Francisco, New York, Los Angeles, Washington, D.C., Boston, Seattle, and San Diego—and apartment ads in New York City had brought in an estimated $25 million in 2006. In addition, though still relatively unknown in the United Kingdom, where there were ten cities on craigslist, traffic there had tripled in 2006.

Newmark claimed in a June 2007 Presstime article not to notice the development. “We only look at numbers for our own curiosity and for the performance curve. We have no advertisers to keep happy, no investors to keep happy—which is a great relief.” Asked whether craigslist could be a model for a successful business in a 2004 San Francisco Chronicle article, Newmark replied, “Well there’s a basic cliché that I guess applies: ‘Doing well by doing good.’” At 15 million unique users and seven billion hits a month by mid-2007, craigslist was the ninth most popular U.S. web site and 37th most popular in the world, according to www.Alexa.com. The company, quite obviously, was helping further the vision of the Internet as democratic, accessible to all, and noncommercial, and serving as a powerful community-building tool around the world.

Carrie Rothburd

PRINCIPAL COMPETITORS

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