from The Oakland Tribune, April 4, 2002
Craigslist founder committed outsider
Site's creator spurns suitors to preserve independence
By Alan Zibel
Craig Newmark started his career at IBM, a company long known as a bastion of blue-suited insiders.
But even there, he saw himself as an outsider, more comfortable talking to other computer geeks than IBM salesmen.
"Back then, a nerdy tech guy was an outsider," said Newmark, the affable, sometimes sheepish, consistently self-deprecating founder of www.craigslist.org, the much-loved Bay Area community Internet site that has expanded to 13 cities worldwide.
Craigslist began in early 1995 when Newmark sent out an e-mail advertising a local technology and arts event to about 12 friends. His list grew from there, and Newmark created a corresponding Web site by the end of the year.
Seven years later, the site, including all of its cities, was visited by 768,000 people in the United States this January, according to Nielsen/NetRatings. The Bay Area version is by far the most popular, but the New York and Los Angeles sites are gaining substantial traffic, Newmark said.
"It expanded in ways I never expected, but once I'm committed, I'm committed," said Newmark, a balding 49-year-old bachelor who sports a goatee.
On the site, people buy and sell motorcycles, futons and mobile phones. They find apartments, blind dates, child care, rides across the country and jobs. The site takes in more than 9,000 new listings per day, nearly all of which are free.
While Newmark describes craigslist as a "mom and pop" business unconcerned about making much money, it challenges the foundation of existing businesses such as newspapers, roommate services and apartment-listing services -- turning services for which people used to pay money into free ones.
Craigslist's expenses, including salaries for 17 employees, are paid with revenue from $75 help-wanted ads placed by for-profit employers. With about 150 paid job listings each weekday, the site does "a little better than break even," said Newmark, who wouldn't disclose specific numbers.
While countless dot-coms have staged spectacular flameouts over the past two years, Newmark's site has grown and kept growing by staying mostly free of charge. The site has retained its community-oriented focus and gradually become easier to use.
It's all quite an achievement for an endeavor that started out partly as a way for Newmark to spice up his social life and overcome what he describes as his "socialization issues." Newmark portrays himself as a stereotypically awkward computer geek, though these days he is media friendly and quick with a joke.
Newmark's refusal to sell out and desire to keep the site low-key is a crucial component of its success. For example, he prefers not to use a capital 'C' in the site's title, to avoid calling too much attention to his own name.
Craigslist's drab gray design and lack of advertisements are distinct and appealing to users in an online world replete with bombastic, intrusive ads. The site shocked gullible users on April Fool's Day when it placed flashy banner ads around the site, including ads for cat food, helmets and caffeinated cigarettes.
"There's a lot of junk everywhere," Newmark said. "We have less junk than most."
Though he could have made millions off his creation, Newmark has chosen not to take venture capital or advertising, instead preferring to keep the operation small, thrifty and focused. The company's offices take up two floors of a house in San Francisco's Inner Sunset district. A group of graduate students lives on another floor.
Technology forecaster Paul Saffo said he believes that people who work outside the mainstream such as Newmark tend to come up with the most influential ideas.
"Insiders are incremental, but outsiders do the things that completely change the game," said Saffo, director of the Menlo Park-based Institute for the Future. "It never occurred to them that what they're doing can't be done."
The rise of craigslist and other online listing services have drawn users away from other companies. Joel Koosed, who founded a San Francisco-based roommate-referral service in 1975, closed his Haight-district storefront last October.
"All the Internet access to roommates has hurt business," said Koosed, who set up an Internet-only paid roommate-listing business, then sold it last month to RoommateService.com, a company with nationwide listings.
For Bay Area employers looking to hire workers, using craigslist is "almost like a no-brainer," said Forrester Research analyst Charlene Li. At $75 per "help wanted" posting, it's inexpensive and simple to use. Local employers say they are able to find educated, qualified professionals in the Bay Area through the site.
"Once I post an ad, I get a tremendous response, immediately," said Sarah Rosen, office manager for the San Francisco office of SmithGroup, an architectural firm.
Craigslist poses a threat to newspapers, Li said, because of its low (or free) prices and ease of use.
"Unless the newspapers can figure out how to fight their way back with really good electronic venues, they don't have a chance," Saffo said. "Why would you ever use a paper-based classified again?"
A January report by the Houston-based media-analysis firm International Demographics said readership of newspaper classified ads declined 11 percent in the past three years. That largely was due to the rise of Internet classified sites such as Monster.com and HotJobs.com. The shift was most marked among high-income people, the report found.
This decline is significant because classified ads, specifically help-wanted, automotive and real estate ads, represent as much as 40 percent of a typical daily newspaper's revenue, the firm said.
Some mainstream media companies, though, don't see craigslist as a significant threat.
CareerBuilder.com, an online recruiting site owned by newspaper companies Knight Ridder and Tribune Co., is focused on dethroning Monster.com as the leader in Internet "help wanted" ads. On CareerBuilder, users pay $200 for an online-only help-wanted ad. Or they can buy ads that run both online and in member newspapers.
Barry Lawrence, a spokesman for CareerBuilder, called craigslist a "great little niche site," but one that doesn't have a national reach.
"We think that we're playing at a much higher level, obviously," Lawrence said.
Turf wars nothing new
The newspaper industry has for many years faced competition in the classified business from stand-alone classified publications featuring housing and cars, said Jim Conaghan, the Newspaper Association of America's vice president of market and business analysis. Newspapers will be competitive against online-only sites because they have better name recognition than their online competitors, he said, and attract a wider audience.
"We've faced competition for a long time, and we've been very active in the interactive world," he said.
At MetroRent, a service that lists roommates and rentals in the Bay Area and Los Angeles, Chief Operating Officer John McWeeny acknowledged that craigslist does compete with his company, though he said he sees Newmark's site as mainly attracting people trying to find low-cost living situations.
Unlike craigslist, MetroRent charges users $50 to view housing lists. But it provides services that craigslist doesn't, working with landlords who aren't computer-savvy to put their listings in a searchable online format, often with photos. Craigslist, he said, is "just an online list."
Unlike these businesses, Newmark, who describes his operating philosophy as "to try to do the right thing," has resisted attempts to turn the service into a more commercial venture.
In 1998, he joined with business partners and renamed the site ListFoundation.org. But he later wound up breaking off ties with one of his partners, who took the ListFoundation site and tried unsuccessfully to turn it into a commercial business.
Newmark now says that he "got involved with the wrong people." The ListFoundation name was too formal, he said, not in tune with the site's quirky, community-oriented feel.
Lucrative buyout offer
In early 1999, an Internet company that Newmark wouldn't identify offered him a buyout offer that would have made him a multimillionaire. He could have paid for his nieces' and nephews' college educations, but he decided to remain independent.
"I tell my brother this, and he thinks I'm crazy," Newmark said, adding that "it just didn't feel right."
Newmark said he is still approached by venture capitalists now and then. But he said he believes outside investors would be focused on maximizing revenue, not making the site as useful as possible.
"We've become increasingly serious business people, but also we're retaining our sense of idealism," Newmark said. "In my case, I'm getting more idealistic as I get older."
After moving to San Francisco in 1993, Newmark worked as a programmer and Internet expert for a series of companies -- including Charles Schwab. He achieved a comfortable, if not wealthy, lifestyle through this work, he said. That allowed him to devote himself full time to craigslist two years ago.
While the current economic downturn and the corresponding slowdown in "help wanted" ads has hurt revenues at craigslist, the company was not as severely affected as most Internet companies.
To cope with the downturn, the company slashed the amount of money it donated to nonprofits and watched its finances more closely. Also, Newmark and other senior employees took pay cuts.
Newmark still takes pride in keeping the site's online community a friendly place. When people set up programs to troll through users' postings for e-mail addresses to blitz with junk messages, Newmark tracks down these "spammers," telephones them and asks them, politely, to stop. In many cases, they do.
Within the last year and a half, Jim Buckmaster, the site's chief technology officer and president, has assumed much responsibility for the site's development. Newmark credits Buckmaster with the most recent improvements to the site's functions, such as the recent addition of garage sales and real estate listings.
As for the site's future, Newmark said he will add additional cities if people want them and keep on working to improve its search functions. All of the site's development has been in response to input from users, he said.
"We ask people for feedback," he said. "They give it to us. We do something about it."
As a community, craigslist works on several levels. There are people who use it to peruse job listings or sell their cars. There are more avid users who post messages on the site's "forums," or online discussion boards. Then there are people who attend the site's occasional parties and actually meet other community members face to face.
"What he has created is a very powerful electronic commons," Saffo said.
At a recent party, held at a bar near San Francisco's Pacific Bell Park, dozens of users danced to a Rolling Stones cover band, chatted over drinks, wore craigslist-labeled pocket protectors and put on stickers that said things like "I want a job," "I want a woman" and "I want shelter."
But despite all the attention, Newmark said he still doesn't see his creation as a big deal. "In my gut, it still feels like a little personal site."