from San Francisco Examiner, February 8, 2001
Dot-orgs surving in wake of dot-com failures
By Nina Wu
In a time when many dot-coms have hit the dust and others are scrambling to shape up their revenue models, some local dot-orgs have quietly been growing in impact and size.
Craigslist.org, which started as a simple community bulletin board in 1995 for people to exchange postings of available jobs, items for sale and rooms for rent, has bloomed into a Web site with millions of page hits per month. It's logging more than 22 million page hits per month, compared with 7 million hits only last year.
"It was spontaneous," founder Craig Newmark said of the site's birth. "Basically, we do something useful and entertaining, and as a result, we created something positive."
The secret of craigslist's success despite the recent dot-com shakedown is that it never relied on banner ads or VC funding. It never paid for any conventional advertising, either, growing in popularity simply on word-of-mouth.
Postings pay expenses
The site pays for its operations with revenues from its job postings -- about 7,000 per month at $75 each -- and free services from various legal and financial corporations.
A more recent nonprofit startup, charityfocus.org, also has grown rapidly. Since founder Nipun Mehhta, a former computer programmer at Sun Microsystems, launched it in April 1999, the dot-org that builds Web sites for nonprofit groups has garnered $7,500 in donations from various foundations - and two laptops. It gets at least 1,000 page hits a month, but make no profit from the site, which is completely run by volunteers.
Charityfocus's volunteer base multiplied from 50 to 700 this year. It pays no rent, advertising fees or overhead because it operates purely on the Internet. Like craigslist, its publicity is generated primarily by word of mouth.
"I think nonprofits are in a better position because they've learned how to use the medium without relying on venture capital funding," said Jim Billings, president of the Association of Internet Professionals. "I don't think the grant money has dried up."
Most dot-coms, on the other hand, are now scrambling to prove to venture capitalists that they have a path to profitability and the ability to make money from Day One.
While grant money may still be available, dot-orgs that are funded privately have felt the impact of shrinking donations during the market downturn, particularly if the contributions were made in stocks. Craigslist provides an interesting model because it was able to generate its own funds.
Newmark referred to craigslist as "non-commercial" rather than "nonprofit" because he said they have done too well too qualify as such. He equates it to a mom-and-pop shop that has managed to attract the attention of human resources managers across the nation at the same level as monster.com and hotjobs.com.
Though he could make a profit from craigslist -- and at one point someone on staff wanted to -- Newmark decided to keep the site a community service. "Some things should be about money, some shouldn't," he said. Before dedicating himself to craigslist full-time in 1999, Newmark did contract work for Bank of America.
The site's goal is to serve as a medium of exchange for the Bay Area community. One of the key factors in its success is the simplicity of the site, which has no fancy graphics or animations. One column lists community events and personals, another lists housing and items for sale, and the third lists jobs -- all in small caps. Recent additions include a political forum and housing directory.
"On our site, people give each other a break," said Newmark. "Our culture is that people treat each other as people and not necessarily as consumers or eyeballs."
Branches of craigslist have sprouted in Boston, Chicago, Sydney and Washington, D.C., though the information listed there is not yet as extensive.
In an effort to do more work with other nonprofit groups on the Web, Newmark formed the Craigslist Foundation in September . It is in the process of registering for 501(c) status.
While craigslist will continue to be run privately, the foundation arm will run an annual nonprofit venture forum, grant donations and spotlight one organization per month. It recently launched a self-automated wishlist program in which schools and other nonprofits can list their needs.