FAW #18: Craig Newmark of Craigslist
The birth of Craigslist
Craigslist began as a weekly email newsletter that Craig Newmark would send to friends notifying them of interesting upcoming cultural events in San Francisco. Newmark kept the quality of the emails high and gradually more and more people asked to be added to the email. Mid-’95 his pine email program was unable to accommodate the number of recipients and he migrated it to a donated listserv and called it “Craig’s List.” He was using the listserv as a database of sorts and wrote some perl scripts that would extract the emails and publish them as web pages and Craigslist the web site was born.
On the philosophy of not charging
Newmark made a decision that he wanted to keep the free of cluttered advertising and when Microsoft Sidewalk approached him in ‘97 to run ads for their local cityguide, Newmark turned them down. He felt he was making enough money through his consulting and was willing to sacrifice the revenue to keep Craigslist a pristine ad-free system for handling classifieds. In 1999 Newmark brought Jim Buckmaster on board as CTO in order to pursue it as a full business. Jim later took the role of CEO and helped put business structure to the hobby site that was Craigslist at the time. They’ve managed to keep 99% of the site free to use. Newmark said, “‘The principle is: charge people who would otherwise be paying more money for less effective ads.’ [Users] specifically said, ‘It’s cool to charge for job ads and to charge landlords or apartment brokers.’ Beyond that, there was some mix of opinion, but we stuck with that.”
We made a similar decision that we wanted to keep JumpBox free in it’s most basic version for people. We considered making all JumpBoxes run under a time-limited constraint until registered but ultimately decided that by giving away something of value and not crippling the usage by deactivating after a certain time period, we’d see more loyalty and eventually convert more people to paying customers as they grew to rely upon it and realize the value. The power users that need features like automated backups and shell access are theoretically using it frequently and are either making or saving money with it, and therefore can justify the nominal license fee.
On keeping lean
Craigslist has grown to over five billion pageviews per month and has a staff of twenty people to handle operations. It is still orders of magnitude smaller in staff than sites that have less traffic. The way they were able to scale things effectively with so few people was by pushing much of the duty of policing against spammers out to the users. They developed both the tools for the site as well as the right culture amongst users to be able to make the site self-policing. The concept of “flagging” has been instrumental in bubbling up abuse from listings so that they can be dealt with by a staff member. Newmark says, “[Flagging] works great in all sorts of ways, and it’s also an expression of our values. Mutual trust. This is kind of democracy in real life. Everyone wins, except for the bad guys.”
On the general nature of humankind
Newmark says, “What surprises me, in a way, is how almost universally people are trustworthy and god. There are problems, and sometimes people bicker, which is a pain in the ass, but people are good. No matter what your religious background, we share pretty much the same values. There are some minor differences that we disagree on, but the differences are at the 5 percent level. That’s pretty good.” Throughout his interview, Newmark constantly refers to the “moral compass” that guides every activity with how they run the company. “I’m not implicitly judging anyone here. We’re not anti-traditional by any means. We just made a specific decision based on our specific values and followed through.”
In 2004 eBay took a 25% stake in the company via a stock purchase from an ex-employee. Craigslist is still privately-held though and has massively disrupted the classifieds business for local newspapers. It’s currently in the top ten most trafficked sites in the US.