Craig Newmark: ‘My Exit Strategy Is Death’

With that statement at last week’s Google Local Markets Symposium, Craig Newmark seemingly put to rest (in peace) one of the persistent questions that analysts and others have been asking: “When is Craigslist going to sell?”

As many people know at this point, Craigslist was founded in 1995 as a technology and arts events listings site. Newmark decided to add apartment listings to the site because of San Francisco’s famous historically low vacancy rates. The site grew entirely by word of mouth. In one way of looking at it, Craigslist might be considered the original social network.

Newmark made the casual observation that “people want to help each other.” He said he saw that principle very much on display with Craigslist. He said he also saw the Internet as an emerging way to help people in local communities and cited the now cliche statement “think globally, act locally” as one of the ideas that he embraced with Craigslist.

As the site started to grow he asked people what he should do about its name. People apparently told him to keep it as “Craigslist” because that’s how people were referring to the site anyway.

From the beginning Newmark established what might be called a “collaborative” relationship with his users and audience. That has worked very well for the most part but he also conveyed anecdotes where that was not true.

He said at the end of 1997 he was approached to run the site as a non-profit. After pursuing that he acknowledged, “it was a mistake.” And he characterized the site in 1998 as an “ongoing failure.” At that point it was still only in San Francisco.

In 1999, Newmark made Craigslist “a real company” and in 2000 hired current CEO Jim Buckmaster (who was also an engineer like Newmark and not an MBA). One of Buckmaster’s decisions was to launch Craigslist in 5 additional cities. (Today Craigslist is in 450 cities globally, with 50 more about to launch.)

But by 1998, Craigslist had already achieved what Newmark considered “critical mass.” (That doesn’t sound like an “ongoing failure.”) “We had a million page views per month,” said Newmark. “[Microsoft] Sidewalk approached us about running banner ads.” Newmark considered it but ultimately decided against accepting the ads because he personally didn’t like banners and said “they tend to slow a site down.” He wanted the front page to be “fast and simple.” (The focus on simplicity and page load times offers an interesting parallel with Google.)

That decision not to accept banner ads would prove prescient but perhaps in a totally unself-conscious way.

Newmark polled the community on what his business model should be. In 2000 he asked users “What’s the right way to pay the bills and do a little better than that?” The community responded with an answer, and today Craigslist only charges for recruitment listings (and apartments in New York).

I was struck by how much Newmark’s instincts, values and trust for his users guided the development of the site. He also repeatedly stressed community and “human values” (as opposed to corporate values) as guiding principles.

Newmark said that “In the race between tortoise and hare, we’re the tortoise.” And he described the site’s now 12-year history as one of “slow, continuous, undramatic growth.”

Beyond listening to the community and not being greedy, this may be the only lesson that perhaps can be generalized from Craigslist’s experience. And this is the challenge and problem for many local sites today: a too-short time horizon.

Last week the Financial Times quoted Web “founder” Tim Berners-Lee who made this critical remark about Silicon Valley culture and thinking:

“I think there’s a lot of concern the web companies are thinking short-term. They’ve been taught to look short-term by the dot-com bubble, [it] has made everyone very conscious of short-term returns on investment, and this has trickled down to research funding.”

This may go double for local sites.

The winners in local will ultimately be those who can build businesses and long-term value in a very fragmented marketplace. Of course there will be acquisitions and successes that defy this; but the stories of InsiderPages, Backfence, Judy’s Book and others are instructive on this point.

VC investors want to “get out” in three to five years or less. One of the things I always joke with people about is that if Craigslist had taken investor money in the beginning it probably wouldn’t be around today because it would have had to make different choices.

I asked Newmark during the Q&A session whether he thought Craigslist would succeed if it was launched today. He said that its early mover advantage was significant but also speculated that the culture, competition and conventional wisdom might force him to take VC money which he felt would be counter-productive.

Newmark has previously spoken about “the blessings of limits” and Craigslist’s lack of resources. This almost Zen-like axiom may also hold lessons for entrepreneurs in local.

One of the things I marvel about is Craigslist’s “restraint.” It drives some people crazy that the site isn’t making more money or monetizing more categories. But Newmark doesn’t want or need more money. (At this point, given Craigslist’s reach, the site has plenty of revenues, with only 25 employees.)

“We’re not going to sell the company,” explained Newmark. “We just don’t feel an emotional need to do that. I have everything I need pretty much.”

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Related: Here’s a recent Q&A interview with Craig from Computerworld.

9 Responses to “Craig Newmark: ‘My Exit Strategy Is Death’”

  1. earlpearl Says:

    One simple limitation on new sites successfully and aggressively making their way into local and successfully monetizing the arena is Craigslist.

    It is so darn inexpensive and so popular to boot.

    In the past if someone came up with a new prouct or technology, subsequent competitors would figure out a way to produce something similar at a lower cost.

    Well how are you going to compete with ads that are free or $25.

    Its awful hard to monetize local sites when they have to compete with craigslist.

  2. State of Local » 5 Lessons From Craigslist Says:

    […] to listen to a keynote from Craigslist founder Craig Newmark recently. From Sterling’s report, we noted some important lessons for local Web […]

  3. Yuri Says:

    I guess I shouldn’t really replace my text template with a graphical one, then? I too love the speed and ease of use =)

  4. Andy Sack’s Local Recommendations « Screenwerk Says:

    […] Recall my joke/formulation about Craigslist, which Newmark recently agreed with: […]

  5. Craigslist: What Web 2.0 Should Have Been » Webomatica - Technology and Entertainment Digest Says:

    […] Nice summary on Screenwerk of the values of Craigslist from Craig Newmark himself. Some choice quotes that gives me the warm fuzzies, which is why I continue to use – and root for – Craigslist: “[Microsoft] Sidewalk approached us about running banner ads.” Newmark considered it but ultimately decided against accepting the ads because he personally didn’t like banners and said “they tend to slow a site down.” […]

  6. Estimate: $81 Million in Craigslist Revenue « Screenwerk Says:

    […] See my related post: Craig Newmark: ‘My Exit Strategy Is Death’ […]

  7. db Says:

    What an idiot. Craig is a self-absorbed idiot. If you don’t ‘want or need’ the money, then simply donate it to starving and dying children all over the world. Donate it to cancer research or ANYTHING. HIS choice.

    HE’s being an immature little brat. “but I don’t need any more money…” worthless human.

  8. Greg Sterling Says:

    That’s a bit harsh. I agree that one could “cash out” and then donate lots of money to charitable causes. But perhaps they simply want to run the business.

    The internet entrepreneur mentality is one of real-estate speculation. Almost no one is starting Internet-based businesses to actually run them as businesses. They want to blow them up as fast as possible and then “flip them.”

    So as a result I’m always intrigued when people buck the dominant mindset.

  9. AhmedF Says:

    Ahh db – I have a feeling you a good friendly anonymous troll.

    At the end of the day, it is his site. You don’t like it, make your own version. The fact that you are calling him self-absorbed while you whine about *his* site makes for some delicious irony.

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