Craigslist
As Homer said: “Stupid like a fox”
In a recent post, my friend Tony Hung of Deep Jive Interests has taken an audio interview that David “Everything is Miscellanous” Weinberger did with Craig Newmark of craigslist.org and concluded that Craig was essentially just in the right place at the right time and lucked into what has become one of the most successful online communities around — one that could be worth as much as $500-million, depending on how you measure such things.
As Tony describes it, “Craig Newmark is no visionary. He’s no guru. And he’s no soothsayer. He’s a guy who lucked into his business, and it continues to succeed in spite of his lackadaisical efforts at starting it and running it.” Because he was early, he gained a “first mover” advantage, Tony argues, and therefore developed network effects that now make the site virtually unassailable. But what really seems to tick Tony off — as it does most of Wall Street, I’m sure — is craigslist’s determination not to monetize itself:
“Not wanting to take advantage of an enormous opportunity to create an efficient business and maximize revenue — especially to do more Good … well, that doesn’t strike me as being wise. It just strikes me as being lazy.”
Lazy? Maybe. In fact, in his keynote with Mark Evans at the mesh conference last week — which we will hopefully have video of soon (and which Tony himself live-blogged ) — Buckmaster said laziness is actually one of the reasons why craigslist makes any money at all. He said implementing fees was one of the laziest ways to cut down on job-listing spam, instead of trying to come up with new and complex technological solutions. But it worked.
I think craigslist’s success is a lot more nuanced than Tony suggests. Yes, Craig was lucky with the timing — but I think that his and Jim Buckmaster’s laser-like focus on the user, without being distracted by the lure of AdSense and banners and pop-ups and so on, has a lot to do with why the site has become as successful as it has, and has stayed there.
If craigslist had gone the same route everyone else has, the uniqueness of the service would have been lost and it would have floundered and failed. You can’t separate one from the other.
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Where one might see nuance to explain non-action, I see them succeeding in spite of it. I mean, I'd love to see some further case studies on the matter, but do you really think that people would use it less if there was one or two ads on it?
I think you can also look of it as a case of the few dominating the perception of the whole: there might be a few hardcore vocal users that might stop.
But I don't think for a second that most would. In fact, I think there's almost an expectation that all web concerns need to have some method of sustaining itself -- and having one or two ads surely meets this reasonableness standard, doesn't it?
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And Bjorn, thanks for letting me know the real quote. That's what's so great about the blogosphere.
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Craigslist doesn't need the money -- in my market (Toronto) it's free, and as the column states, Craig Newmark only starting charging for ads to cut down on spam. The fact that the business stayed afloat was almost a nice-to-have.
And you should never discount how faithful a user community can be. If a craigslist competitor showed up, it might work for a while, but it probably wouldn't steal any craigslist regulars unless it was easier to use, had better stuff or suddenly had half a million regular users.
Finally, there's my experience with craigslist -- I had a bunk bed that I wanted to get rid of, so I posted an ad, asking for just a six pack or a bottle of wine in exchange. I didn't go with the first person who responded, but with the young mother who wanted the bed for her son. I helped the father load the IKEA parts into his car, he handed over a bottle of Chilean wine, and we both felt good about the deal.
No, the opportunity would happen when craigslist goes and 'monetizes' itself with splashy ads and irritating pop-ups, and someone else quietly introduces a simple, text-only competitor. That's the kind of business I want to start. :)
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